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A RESURGENT CHINA: RESPONSIBLE

STAKEHOLDER OR ROBUST RIVAL?

HEARING

BEFORE THE

COMMITTEE ON 

INTERNATIONAL RELATIONS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

MAY 10, 2006

Serial No. 109–225

Printed for the use of the Committee on International Relations

(

Available via the World Wide Web: http://www.house.gov/international—relations 

(II)

COMMITTEE ON INTERNATIONAL RELATIONS 

HENRY J. HYDE, Illinois, Chairman 

JAMES A. LEACH, Iowa 

CHRISTOPHER H. SMITH, New Jersey, 

Vice Chairman 

DAN BURTON, Indiana 

ELTON GALLEGLY, California 

ILEANA ROS-LEHTINEN, Florida 

DANA ROHRABACHER, California 

EDWARD R. ROYCE, California 

PETER T. KING, New York 

STEVE CHABOT, Ohio 

THOMAS G. TANCREDO, Colorado 

RON PAUL, Texas 

DARRELL ISSA, California 

JEFF FLAKE, Arizona 

JO ANN DAVIS, Virginia 

MARK GREEN, Wisconsin 

JERRY WELLER, Illinois 

MIKE PENCE, Indiana 

THADDEUS G. MCCOTTER, Michigan 

KATHERINE HARRIS, Florida 

JOE WILSON, South Carolina 

JOHN BOOZMAN, Arkansas 

J. GRESHAM BARRETT, South Carolina 

CONNIE MACK, Florida 

JEFF FORTENBERRY, Nebraska 

MICHAEL MCCAUL, Texas 

TED POE, Texas 

TOM LANTOS, California 

HOWARD L. BERMAN, California 

GARY L. ACKERMAN, New York 

ENI F.H. FALEOMAVAEGA, American 

Samoa 

DONALD M. PAYNE, New Jersey 

SHERROD BROWN, Ohio 

BRAD SHERMAN, California 

ROBERT WEXLER, Florida 

ELIOT L. ENGEL, New York 

WILLIAM D. DELAHUNT, Massachusetts 

GREGORY W. MEEKS, New York 

BARBARA LEE, California 

JOSEPH CROWLEY, New York 

EARL BLUMENAUER, Oregon 

SHELLEY BERKLEY, Nevada 

GRACE F. NAPOLITANO, California 

ADAM B. SCHIFF, California 

DIANE E. WATSON, California 

ADAM SMITH, Washington 

BETTY MCCOLLUM, Minnesota 

BEN CHANDLER, Kentucky 

DENNIS A. CARDOZA, California 

RUSS CARNAHAN, Missouri 

THOMAS E. MOONEY, SR., Staff Director/General Counsel 

ROBERT R. KING, Democratic Staff Director 

DENNIS HALPIN, Professional Staff Member 

JEAN CARROLL, Full Committee Hearing Coordinator 

(III)

C O N T E N T S 

Page

WITNESS 

The Honorable Robert B. Zoellick, Deputy Secretary of State, U.S. Department of State ........................................................................................................ 8

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

The Honorable Robert B. Zoellick: Prepared statement ....................................... 19

APPENDIX 

Material Submitted for the Hearing Record .......................................................... 57

(1)

A RESURGENT CHINA: RESPONSIBLE 

STAKEHOLDER OR ROBUST RIVAL? 

WEDNESDAY, MAY 10, 2006

HOUSE OF REPRESENTATIVES, COMMITTEE ON INTERNATIONAL RELATIONS, Washington, DC. 

The Committee met, pursuant to notice, at 10:10 a.m. in room 

2172, Rayburn House Office Building, Hon. Henry J. Hyde (Chairman of the Committee) presiding. 

Chairman HYDE. This meeting will come to order. Deputy Secretary Zoellick, we are pleased to have you here today. You are 

well known as a leading architect of the Administration’s China 

policy, and your extensive knowledge of trade policy is also germane to our hearing. 

Many in Washington have been discussing the policy implications of a ‘‘rising’’ China. I see this phrase as a misnomer, and prefer the word ‘‘resurgent.’’ ‘‘Rising’’ implies that China is emerging 

for the first time on the world stage. However, an exhibit held 2 

years ago at Chicago’s Field Museum, titled ‘‘Treasures of the Forbidden City,’’ pointed out that while our Founding Fathers were 

waging their struggle for independence in 1776, China was already 

not only the most populous, but the wealthiest nation in the world. 

From this apex of cultural, political, and economic influence, 

China plunged rapidly into two centuries of chaos involving war, 

famine, and revolution. 

Now as this new century dawns, China has reemerged into its 

traditional position of influence in Asia and the world. The Chinese 

people, while still suffering a sense of victimization from the periods of unequal treaties, the Opium War, the Nanjing Massacre, the 

Cultural Revolution, and the Tiananmen Massacre, look now to a 

new age. The Summer Olympics of 2008 is their symbol of this national reemergence from a dark cocoon of decline and isolation into 

the light of international recognition. 

Yet we can’t gloss over the many issues that continue to divide 

us from the leadership in Beijing. You, Mr. Zoellick, are famous for 

having coined the phrase ‘‘responsible stakeholder’’ last year with 

regard to American hopes for this resurgent China. Many in the 

Congress, however, retain a healthy skepticism as to whether this 

is possible. Some even fear that China instead will emerge as a robust rival. 

Will Beijing assume the role of a responsible stakeholder when 

Iran’s increasing nuclear recklessness requires the imposition of 

economic sanctions by Security Council permanent members, including China? Will Beijing put aside its quest for energy in Sudan 

2

to join the international campaign to stop the genocide in Darfur? 

Will China move beyond playing host at the ongoing meeting of the 

Six-Party Talks to put economic pressure on Pem Huang, its longtime ally? Will it ensure that North Korea makes a real commitment to end its nuclear program, to desist from counterfeiting 

American currency, to stop persecuting its own citizens, and to stop 

kidnapping citizens of its neighbors, including one with relatives in 

the State of Illinois? Will China suspend its missile buildup across 

from Taiwan as a confidence-building measure? 

I fear the answer to all the above is no. Yet while China marches 

with increasing confidence onto the stage of the 21st century, 

America’s attention is diverted. We have focused most of our military strength and spent much of our national treasure on the prolonged conflict with radical Islam. We all understand the implications of September 11 and what they require. 

My concern, however, is that in a few decades younger Americans will awaken, like a tired Richard the Lion-Heart returning 

from the battle for Jerusalem, to find themselves threatened on the 

home front as debtors at the mercy of creditors in Beijing. 

The President mentioned in his State of the Union Address that 

America is addicted to oil. I would add that America is also addicted to the label, ‘‘Made in China.’’ We now have a negative savings rate for the first time since the height of the Great Depression. That was a time when, as I recall, jobless people lined up at 

soup kitchens. Last year our trade deficit with China was a record: Over $200 

billion transferred across the Pacific to pay for our national buying 

binge. This level of trade imbalance does not seem sustainable year 

after year without ultimately impoverishing our children. Yet according to reports, no concrete measures to address this critical 

trade issue came out of the recent White House meeting between 

President Bush and the Chinese President. 

Well, if there is no action soon to alleviate this trade crisis, Congress will have to act. While we are distracted, Beijing is using a 

siren song of moderation to further isolate Taiwan. 

Beijing is also playing the history card to great effect with South 

Korea. As a World War II veteran, I am well aware of the history 

of the Pacific War, and know that the truth will prevail. But Beijing should remember that people who live in glass houses should 

not throw stones. I am concerned that as a result, the ripe apple 

of South Korea could soon fall into the lap of China. 

I fear that a future American generation may awaken from its 

Pacific slumber to find our influence removed entirely from the 

Asian mainland. Then a politically-unreformed and assertive China 

could be calling the shots in the most vibrant economic region of 

the world. 

I paint a bleak, but hardly implausible, picture. I would like to 

end on a more positive note. 

Last month I met the new Pope, Benedict XVI, in Rome. The 

Holy Father’s prayerful intention for the month of April was ‘‘that 

the Church in China may carry out its evangelizing mission serenely and in full freedom.’’ It is certainly the sincere wish of us 

all that China will have a new dawn, where human rights and religious freedom are fully respected. 

3

Mr. Zoellick, we welcome your comments on how China can reemerge as a responsible stakeholder, and not as a robust rival of 

America and its values. 

I now recognize my friend, Mr. Lantos, the Ranking Democratic 

Member, for any remarks he may wish to make. 

Mr. LANTOS. Thank you very much, Mr. Chairman. Let me first 

commend you for a very thoughtful and substantive opening statement. 

And before saying a few words about China, let me congratulate 

our distinguished witness, Deputy Secretary Zoellick, for his extraordinary work on Darfur. You have done extraordinary work 

with great personal commitment over a protracted period of time, 

Secretary Zoellick, and we are all in your debt. 

Mr. Chairman, the debate in Washington foreign policy circles as 

to whether China is a ‘‘responsible stakeholder’’ or a rising challenge presents a false dichotomy. Nearly three decades after we 

normalized relations, it is self-evident that China is both. 

Beijing and Washington have a mature, evolving relationship 

with areas of both conflict and cooperation. But even if our interconnectedness is assured, Mr. Chairman, decisions made in Beijing 

over the next few months will determine the tenure of our bilateral 

ties for years to come. 

In fact, China’s handling of a new Security Council resolution on 

Iran could well become the sine qua non of United States-China relations, and an indication of Beijing’s willingness to be a responsible stakeholder. 

China must support a strong, tough resolution demanding that 

Iran verifiably eliminate its nuclear weapons program. If it supports such a resolution, this will send a clear signal that Beijing 

recognizes that with global power and prestige comes global responsibility. If it is unwilling to tackle squarely the Ayatollah’s nuclear aspirations, this decision will severely damage United StatesChina relations. 

The North Korean nuclear issue will also determine whether 

President Hu receives an official state visit the next time he comes 

to Washington, or another downgraded official lunch. 

China has hosted the Six-Party Talks, and is willing to use some 

of its economic leverage to force Pem Huang to the table. Both of 

these are good signs. 

On my two visits to North Korea last year I stopped in Beijing 

for consultations with senior Chinese leaders. In many respects the 

United States and China see the North Korea situation in a very 

similar light. We both seek a non-nuclear Korean peninsula, and 

are frustrated with the endless prevarications emanating from Pem 

Huang. But good intentions and shared goals are not enough. 

Now that the Six-Party Talks are stalled, this is Beijing’s moment to demonstrate that it is an international leader. The flow of 

non-humanitarian trade and assistance from China to North Korean must end until Pem Huang returns to the bargaining table, 

ready to give up its nuclear program in exchange for international 

recognition and assistance. 

Cost rate relations will be another key factor in the United 

States-China relationship. The United States, under both Democratic and Republican Administrations, has done its part to proVerDate Mar 21 2002 19:06 Nov 28, 2006 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 F:\WORK\FULL\051006\27477.000 DOUG PsN: DOUG
4

mote peace by publicly and privately discouraging Taiwan from 

taking provocative steps toward independence. 

But the PRC has done little to promote stability. The alarming 

buildup of missiles into Taiwan and the enactment of the so-called 

anti-secession law have dramatically heightened tensions between 

Taipei and Beijing. 

China’s new generation of leaders should use their creative energies to build bridges to Taiwan’s democratically-elected government. They should not resort to schoolyard bullying tactics. 

Finally, Mr. Chairman, we will never have a fully normal relationship with China until there is measurable progress on human 

rights and religious freedom. Tibet is the perfect example of how 

Beijing could demonstrate its new role as a responsible stakeholder. 

We are pleased that China has held five rounds of discussions 

with representatives of His Holiness, the Dalai Lama, regarding 

the future of Tibet. But our patience is wearing thin. The talks 

have not produced concrete progress, but only more talks. 

Beijing should invite the Dalai Lama to visit China and Tibet in 

the near future. They should also negotiate a deal which preserves 

Tibet’s unique cultural and religious heritage, while maintaining 

China’s territorial integrity. 

Religious freedom is a right to all Chinese, whether Tibetan, 

members of the Catholic Church, or the Falun Gong spiritual 

movement. Just last week the Chinese Government appointed two 

Catholic bishops without Vatican approval. The last time I looked, 

Mr. Chairman, it was the job of Pope Benedict XVI to select 

bishops, not Communist atheists in the politburo in Beijing. 

The rights of Falun Gong adherents in China have similarly been 

denied. Tens of thousands have been locked away in psychiatric institutions, tortured and jailed, and even killed for refusing to denounce their faith. What a tragedy, Mr. Chairman. 

It is even more unconscionable that some American companies 

would be willing participants in the systematic denial of human 

rights in China, but that is exactly the decision made by Google, 

Microsoft, and Yahoo!. The executives of these high-tech companies, 

by turning themselves into Internet censors and e-mail police, have 

truly lost their moral compass. 

Mr. Chairman, thank you for calling today’s hearing, giving us 

all an opportunity to reflect on the United States-China relationship. It need not polarize the foreign policy establishment, for it is 

too complex to have only one dimension, as our witness today 

knows very well. 

Secretary Bob Zoellick has earned all of our gratitude for his indefatigable efforts to negotiate the Darfur peace agreement, and we 

look forward to hearing his views on China. Thank you, Mr. Chairman. 

Chairman HYDE. Thank you. The Chair will entertain very brief 

1-minute opening statements from the Members, but we wish to 

get to the witness as quickly as possible and maximize the use of 

his time. 

So if I could have the list. Mr. Leach. He yields. 

Mr. Smith of New Jersey. 

5

Mr. SMITH OF NEW JERSEY. Thank you, Mr. Chairman. Mr. Secretary, first of all, thank you for the extraordinary work you did 

to help broker the Darfur Peace Accord. Your personal interventions, your tenacity, your attention to detail, your focus, was crucial. And I truly believe without it, the hope of peace and reconciliation would have remained elusive. 

Of course, as you have said just a moment ago, prudent followup and aggressive follow-up is critical. But I have no doubt that 

you and the President are certainly up to that task. But thank you 

for the work that you did. 

On the PRC, it is time, I believe, for both Congress and the Executive Branch to significantly ratchet up our profound concerns over 

China’s horrific human rights record. Yesterday, not surprisingly 

but still shockingly, China was elected to the Human Rights Council, where it will continue what it has done so effectively for so long 

in the discredited Human Rights Commission: Run interference 

and suppress any meaningful scrutiny of its abysmal record. 

As you know, prior to President Hu Jintao’s visit, I chaired a 

hearing on China’s human rights record. And our witnesses, including three survivors of the Laogai—Harry Wu, for example, who 

spent 19 years in the concentration camps—gave chilling testimony 

on the pervasive use of coercive population control and the issue 

of gendercide. There are 100 million missing girls in China as a result of coercive population control, the use of genocide against the 

Uighurs and the Tibetans as part of their family planning program, 

the systematic use of torture, religious persecution, and the suppression of workers’ rights—— Chairman HYDE. The gentleman’s time has expired. 

Mr. SMITH OF NEW JERSEY. Thank you. 

Chairman HYDE. Ms. Lee of California. 

Ms. LEE. Thank you, Mr. Chairman. I want to thank you and our 

Ranking Member for this very important hearing. And I want to 

thank you, Deputy Secretary, for being here. 

Like all of my colleagues, I am concerned with a number of 

issues regarding United States-China relationship. And some include, of course, our exploding trade deficit with China, which now 

stands at over $205 billion, and, again, China’s human rights 

record. 

Additionally, I am also disturbed by our policy that engages 

China on one hand, yet embargoes Cuba on the other. So I would 

like to get your perspective with regard to this, what I consider 

very inconsistent, policy. And hopefully you will shed some light on 

that. 

Finally, let me just say I, too, want to congratulate you, and 

thank you for your very diligent and committed and hard work on 

Darfur. I would like to hear from you what you think China’s position has been with regard to the ongoing genocide, and, in fact, 

what their perspective is and their position is regarding the slaughter of hundreds of thousands of people. And I know you have some 

insight into that, and I would like to hear from you on that. 

Thank you again, Mr. Chairman. 

Chairman HYDE. Mr. Rohrabacher. 

Mr. ROHRABACHER. Thank you very much, Mr. Chairman. First 

of all, let me associate myself with the remarks of Chairman Hyde, 

6

and of course Mr. Lantos, who is a great spokesman, as well as 

with Chris Smith on human rights. 

As we go through this hearing today, let us note the Chinese people are freedom’s greatest potential ally, and America’s greatest potential ally. So no matter what we say about Communist China, we 

are not referring to the Chinese people. We recognize they are our 

allies. It is the Chinese Government that is the worst human rights 

abuser in the world, and hopefully we will be talking about their 

status as a rogue state, providing nuclear weapons materiel to 

Pakistan, to North Korea, and to others, in a way that threatens 

world peace. 

So what I also would like from the Administration, that I hope 

that you might address, I am very concerned when I hear the Administration is now asking the Director of NASA to go to China to 

talk about cooperation in space efforts. The last time we did that 

with this particular government, we had a transfer of technology 

that has put America in jeopardy. And we see Chinese rockets and 

missiles now with American technology components. 

So we should not be treating a government with a human rights 

record of that of China the same as we would treat a democratic 

country. 

Chairman HYDE. The time of the gentleman has elapsed. 

Mr. ROHRABACHER. That is it. Thank you. 

Chairman HYDE. Thank you. 

Ms. BERKLEY. Thank you, Mr. Chairman. And thank you for 

holding this important meeting, and thank you for being here. 

I have a hearing at 11 o’clock, so I am anxious to hear what you 

have to say. But I am hoping that you will incorporate in your comments to us information regarding the World Health Organization 

(WHO), and what the United States plans to do to help Taiwan obtain observer status in the WHO. 

The second issue that I am particularly concerned about is, I 

would appreciate if you could tell me what the United States is 

doing to discourage our European allies from lifting the arms sales 

embargo to the PRC. 

And finally, given the fact that the Chinese National People’s 

Congress passed the anti-secession law last year, and that, according to our Department of Defense, there are over 700 short-range 

missiles aimed at Taiwan from China, in light of the Chinese continued military buildup against Taiwan, what has the Administration done to urge the Chinese not to change the status quo unilaterally? 

And I will look forward to all of your comments as soon as you 

are allowed to begin. Thank you very much for being here. 

Chairman HYDE. Mr. Tancredo. 

Mr. TANCREDO. Thank you, Mr. Chairman. Mr. Secretary, welcome. I just want to make sure that in either your comments or 

in the questions, we do get to the points specifically raised, or a 

couple anyway, raised by Ms. Berkley in terms of our relationship 

with Taiwan. I want to make sure that the policy of ‘‘responsible 

stakeholder,’’ as I think you have identified it, does not include a 

change in our policy, vis-a-vis Taiwan. That seems to be happening, 

seems to be occurring, as evidenced most recently by the 

humiliating treatment of President Chen when he was not allowed 

7

to lay over in the United States, except at the very end when he 

was allowed to refuel in Alaska or Hawaii, but was not allowed to 

leave the plane. 

I mean, there has got to be an explanation for this. I am looking 

forward to hearing it. Thank you. 

Chairman HYDE. Mr. Berman. Mr. Royce. 

Mr. ROYCE. Thank you. Mr. Secretary, you and I worked together 

on promoting trade with Africa, and the African Growth and Opportunity Act has been a success. But Africa needs all the attention 

it can get right now, and I appreciate what you are doing and your 

involvement in the Sudan issue. 

I would just raise the point that many of us are becoming increasingly concerned about China’s role in Africa, about China’s 

role of support for the Sudanese Government that has worked in 

concert with the Janjaweed, China’s role in the past selling a million machetes to the Hutu militia that were involved in the genocide in Rwanda. China’s role also in backing Robert Mugabe, who 

is liquidating his country. 

I just don’t see any Chinese commitment to human rights, to the 

rule of law, and all the other positive things we are trying to encourage through the Africa Trade Bill, when Beijing is dealing with 

Africa. 

And so I think the critical issue is that Africa is in the balance. 

I would like to know if the Administration thinks China, on balance, is a positive or negative on-the-ground influence in Africa. 

And I would like to know if you think we need a greater diplomatic 

presence in Africa, given this Chinese push. 

Thank you, Mr. Secretary. 

Chairman HYDE. Mr. Paul. 

Mr. PAUL. I yield back. 

Chairman HYDE. Mr. Wilson. 

Mr. WILSON. Thank you, Mr. Chairman. And Ambassador, thank 

you for being here. My association and appreciation for the people 

of China; my dad served in China during World War II with the 

Flying Tigers. And he told me of how wonderful the Chinese people 

are. And so I am very hopeful. 

In fact, I visited China for the 60th anniversary of VJ Day, and 

I saw the great opportunities. I have been there several times, and 

I believe that we have more in common than differences. 

But I also believe that a stable Taiwan is to the benefit of the 

People’s Republic; a stable People’s Republic is to the benefit of 

Taiwan. And so I am really looking forward to your efforts to build 

a better relationship between the United States and China. 

Thank you. 

Chairman HYDE. Thank you. We have no further speakers, so let 

me welcome Secretary Zoellick. 

And let me just say by background, Secretary Zoellick holds degrees from Swarthmore College and several from Harvard University. I personally believe the Secretary symbolizes the bringing of 

good legal thinking to the Department of State, and that is very 

much respected. 

I think it is possible that you will be known for a picture more 

than words, however. And you are forgiven for loving pandas, if 

8

that is the picture of your life, with this panda, that has now gone 

around the world. 

In any regard, I think also on behalf of the Committee, we must 

express our appreciation for your work on Darfur, especially in recent weeks. 

Secretary Zoellick, the platform is yours. 

STATEMENT OF THE HONORABLE ROBERT B. ZOELLICK, 

DEPUTY SECRETARY OF STATE, U.S. DEPARTMENT OF STATE 

Mr. ZOELLICK. Thank you very much, Mr. Chairman, Mr. Lantos, 

Members of the Committee. And I very much appreciate your kind 

words, particularly about the work of the team we had in Abuja, 

Nigeria, dealing with Darfur. I will make sure I relay them to that 

hearty group. 

And as a number of you mentioned, this is an opportunity for 

peace and hope, but there is a lot of work to do, and we are going 

to have to do that in close concert with the Congress. Whether it 

is getting food, whether it is the money for the African Union 

forces, helping out with the UN mission, and a number of other aspects. So I am sure we will have a chance to work closely on these 

items as I know we have discussed. 

I prepared a PowerPoint which I thought might be a little more 

user-friendly to go through. And as a number of you mentioned, 

China is a country where you have such tremendous change taking 

place in a relatively short period of time. So the first page is just 

to give you some set of the context. 

First, the accomplishments. Per capita, GDP grew in China from 

1979—well, I first had a chance to visit in 1980—from $275 to now 

$1,700. That is an average annual growth of 9.6% a year. 

The GDP of the country is now $2.26 trillion. That is the fourthlargest economy in the world. The proportion of Chinese in poverty 

fell from 53% to just 8% over the course of 20 years. Total trade 

rose, from 1980, $38 billion to now $1.4 trillion, making it the 

world’s third-largest trading nation. 

In 2004 the total stock of foreign direct investment in China 

stood at about $250 billion, and the Chinese estimates are even 

higher. And Internet users, I know an interest of Mr. Smith and 

others, a key issue, are 111 million, 8.5% of the population. 

But at the same time you have got huge challenges that are 

inter-connected with these accomplishments. The population is expected to grow about 8% between 2010 and 2025. Half of China’s 

1.3 billion people live on 8.2% of its land mass; that is about the 

size of Texas, so that is about having 650 million people in Texas, 

the size of Texas. 

Only 13% of China’s land is arable. You have a rising disparity, 

particularly between the coastal areas and the interior. 

Even though progress has been made, you still have 160 million 

people living in poverty; that is less than $1.00 a day. You have 

150 million rural migrants, most under 30, working in cities. The 

banking sector is about 25% to 30% non-performing loans, most of 

the decrepit state enterprises. Seven of the world’s 10 most polluted cities are in China. There are great estimates for Chinese energy growth. And underneath all of this is a corruption that is very 

9

dangerous because it undermines the legitimacy of the government. 

China ranks 78th in Transparency International’s global survey. 

Now, as a number of you mentioned, United States-China relations really have to operate at at least two levels. At the one hand 

you have China at a historic process of transition. It is not outside 

the international system. Quite to the contrary; it is a rising influence within it. It is not isolated from globalization; its whole development strategy is linked to it. And it is no longer promoting Communist revolution and ideological struggle; its focus is to pursue its 

interest in a very calculated way: With economic growth, political 

and military strength, and interstate relations. 

So this is a different situation than the Soviet Union. In fact, the 

policy of China tends to be one of non-interference, which actually 

goes to some of the tensions that a number of you raise, whether 

it be Africa or Iran or others. 

So United States-China relations have to recognize we have got 

these two inter-connected levels. One, we are both global powers, 

and we have an agenda globally. We have some shared security 

and economic interests, but also there are tensions, because China 

is a growing global footprint. 

There are areas where we both have transnational threats to 

deal with: Disease, terrorism, environmental degradation. And one 

question, and the challenge is, If you could imagine any problem 

in the world, is it easier or harder to imagine dealing with that if 

you have China working with you as opposed to working against 

you? 

So we have to manage our disagreements while focusing on 

shared interests. 

We both also have domestic considerations that are very important here. We have concerns on both sides about economics in trade 

and access to markets. As almost all of you mentioned, the United 

States has a very strong view about human rights, political reform, 

individual freedom, including religious freedom. And the United 

States-China, therefore, are more interdependent, but we have got 

uncertainty and concerns about the future. 

Seeing Mr. Tancredo here, one of the other issues we deal with 

is, China is one of a large source of illegal immigrants. And so one 

of the things that Mr. Chertoff was doing is working to make sure 

he can return about 40,000 illegal Chinese immigrants. It gives you 

a sense of the inter-connections. 

So as a number of you mentioned, and I think Mr. Lantos focused exactly right, the policy goal is to try to have China be a responsible stakeholder. And the challenge of this agenda is to try to 

set up the items that would demonstrate that it is being such. 

Now, let me give you a little bit of the context of this idea that 

I outlined in a speech in September. As a number of you have mentioned, over the course of some seven Administrations over about 

30 years, the goal of United States policy has been to integrate 

China into the international system. 

But if you step back and you look at currency markets, capital 

markets, clothing, commodities, counterfeiting, you have to say 

China is integrated. There is not a part of the world market that 

China doesn’t affect. It is now a part of the WTO, it is part of the 

10

UN Security Council, a series of other structures, including ones 

with nonproliferation, where we have got some serious work to do. 

But it prompts the question: Integration to what end? What is 

the purpose of this integration? How will China use this new influence? 

It is not just a question of membership in the international system, but how does it exercise responsibility and a shared stake in 

this international system? 

A number of you and Chairman Hyde actually started out with 

this point, many of you know who spent time in China, as Mr. Wilson mentioned, there is a very strong sense of history in China. 

And so if you look just at a short time span from their perspective—say, the last 200 years—you would see that it has been a 

pretty tough period. 

They have gone to the end of a dynasty, they have gone to a civil 

war, then World War II, which for the Chinese started in the early 

1930s. Then you had the revolution, Mao, with all the killings related to those policies, the Cultural Revolution. 

In the 20th century, the only good period was the last 20 years 

in terms of growth and development. And those were years that 

were developed under the international system that the United 

States helped create and sustain after World War II. So the point 

here is to get the Chinese to recognize that it has a benefit in 

strengthening and perpetuating this system. 

So this notion of a responsible stakeholder is a broader notion of 

national interest. Like the United States, like the European Union, 

Japan, and others, a more influential China has a greater capacity 

than most to try to help a peaceful, prosperous, more open international system. 

So United States-China relations are not just a question of bilateral discussions. We want China to see its own interest in working 

with the United States and others to deal with this set of issues. 

So some of the questions are: How will the United States and 

China deal with the region and the world? 

Now, quite coincidentally, this has led to an active debate, and 

I think a very useful debate, in China. I wish I had said I thought 

of this, but it worked out fine. Since the word ‘‘stakeholder’’ had 

no easy translation in the Chinese, there ended up a whole literature to say, ‘‘Well, what do they mean by this concept?’’ And 

that actually helps create a debate in China which we want to try 

to encourage. 

And what I have emphasized to the Chinese, and it is a point a 

number of you said, is the Chinese have talked about peaceful rise, 

peaceful development. Well, we encourage this, but they need to 

recognize that no country is going to bet their future on it. And 

that is where Chinese policy, Chinese transparency, Chinese action 

on human rights will be critically important. And I couldn’t agree 

more with Mr. Lantos’ point. Exhibit A will be: How does China 

react with dealing with Iran? 

Now, let me move to slide five and just give you a brief sense 

of China’s perspective, both internally and externally. 

Internationally China asserts that it is committed to a process of 

peaceful development. And above all, what that means is, it wants 

11

to have a benign external environment because it has got so many 

challenges still on the inside. 

So it sees its international strategy as trying to support domestic 

political stability in the continued economic modernization. Keep in 

mind, if you are Wen Jiabao, the Premier, and you wake up in the 

morning and you have got 150 million people, half the size of the 

United States, moving between rural and urban areas, and you are 

not sure where they are going to spend the night, where you still 

have another 200 million people living in poverty, those are big 

challenges. And they want a benign external environment as they 

deal with it. 

So they don’t want China’s rise to cause anxiety. They emphasize 

they don’t want to overthrow the international system, as the Soviets did. But this is very important. As they grow more influential, 

they do want respect and acceptance of their larger role in the 

world. 

So the leadership is cautious. It has concerns for its own 

vulnerabilities, instability, and unrest. And one thing I think it is 

always useful to keep in mind, right now China’s political legitimacy is not based on democracy, and it is not based on an ideology 

of Communism. It is based on economic performance and nationalism. And that has some fragility, which you see in some of the 

actions. 

Much of the population is still poor. As President Hu told President Bush, they need to create 12–14 million jobs a year to deal 

with people coming into the work force, the downsizing of uncompetitive state firms, and the rural migrants. 

According to Chinese Government figures alone, they have had 

87,000 incidents of unrest last year. And as I mentioned, and as 

a number of you mentioned, China’s history has fostered a great 

sensitivity to their own sense of sovereignty. I know in the Congress this is often a point of concern; it is one in China, too. Because remember, in their recent historical past, they had the British, they had the Germans, they had the Japanese, they had others 

that basically started to take off pieces of the country. And there 

is a great aversion to the dangers of upheaval, whether it be the 

Taipeng Rebellion, the Boxer Rebellion, or others. 

And so this is in the back of their minds. And what they are emphasizing today is they say, ‘‘Look, we don’t want either blind xenophobia, a reaction to foreigners, or worshipping foreigners.’’ So instead their goal—and it fits with what Chairman Hyde said—is rejuvenating Chinese civilization through innovation. 

Now, you are now in the fourth generation of Chinese leadership. 

You had Mao, you had Deng Xiaoping, you had Jiang Zemin, and 

now you have got President Hu and Wen Jiabao, the Premier. And 

in the Chinese system it takes a little while to sort of develop your 

power base as you move forward. 

And so I just want to draw your attention that this new leadership just developed a new 5-year program. And it is interesting. 

They are no longer calling it a plan, it is a 5-year program. And 

it is a slight difference from the past, and there are some things 

worth drawing attention to. 

First, it is what they call a balance development model. They are 

trying to seek to redress some of the advantages that the cities had 

12

over the countryside, reliance on exports for growth as opposed to 

domestic demand, coast over the interior, growth without attention 

to the environment. They realize they are going to have to develop 

a social safety net to forestall unrest. 

And this could have some important economic implications, because if you look at China and at the United States, we are at opposite ends of the spectrum. They have a very high savings rate 

and less consumption. As some of you mentioned, we have got a 

negative savings rate and greater consumption. 

And if China actually helps build a safety net, deals with questions like pension and healthcare, frankly there are probably less 

reasons for people to save. Right now they have to do it all on their 

own. You could probably get more domestic consumption, and that 

could be important in redressing some of the trade imbalance you 

talked about. 

They are also going to focus on higher value-added sectors, such 

as knowledge industries. This, as many other things we talk about, 

is a double-edged sword. It makes them more attentive to IPR protections, but it also means you are going to have greater competition in these areas. 

The imbalances among savings, consumption, and investment— the basic components of a GDP equation—are very much a challenge. And what they now recognize is this is not only a domestic 

problem, but it is an international problem. Because this trade imbalance you talk about is in part a function of those consumption 

and savings and investment imbalances. And this is going to require some very significant structural changes. 

Well, now let us move to the U.S. perspective and start with economics and trade. 

What, from the President on down, we have emphasized is to 

keep this trading system going that has benefitted them. It has 

been a key to their growth. We have to be able to show the American people that our economic relationship is a fair, two-way street 

with mutual benefits. 

Since China’s accession in the WTO, United States exports have 

been booming: About 20% a year. They reached about $42 billion 

last year. That is their fastest-growing major trading partner. So 

if you talk to people in the aircraft industry or soybeans or cotton 

or some of the electronics, many in some of the service industries, 

there is great potential. But our imports from China are even coming in faster, at a 24% increase. 

One thing to note about this is that if you look at the overall 

trade we have from Asia, however, the share of imports from Asia 

as our total share has actually come down over the past 10 years. 

And what this is partly telling you is China has become a massive 

assembly point for the whole region. 

And so when we count the numbers of imports from China, we 

are counting the final product. Even though there are inputs, in a 

sense, they have to buy the amounts in between. 

So Asia’s share of our imports between 1995 and 2005 actually 

came down a little bit, from 40% to 34%. So it is important to consider how this fits in a global system. 

In addition, now that China is a WTO member, we are actively 

using that to try to make sure they do follow the rules. When I was 

13

USDR, we started to bring the first case, dealing with some semiconductor issues that I know was of particular interest to some in 

the California delegation. And China quickly came into compliance. 

Ambassador Portman threatened to bring a case dealing with craft 

linerboard, and the Chinese came into compliance. We are now 

doing one with auto parts. 

But an important point to recognize, and this is a change over 

the past couple years, China doesn’t just have a big bilateral trade 

surplus with us; it also has a global surplus. So that means when 

you take everything they buy, as well as what they are exporting, 

they are getting a much greater overall set of reserves. 

And frankly, that is one of the things that reflects these imbalances. And that is one of the reasons why you should have a currency adjustment, as well as other changes. 

There are major concerns that remain. The ones we have 

stressed are things, market access, opening up the market, intellectual property rights. A number of you have mentioned currency, 

labor practice. And one I will just draw attention to the Committee 

that I have a particular concern about is, China actually gets a little wealthier. One has to be concerned about whether they start to 

use industrial policies, as some have in Asia. They could start to 

use some subsidies as they start to develop favored sectors. 

For some of you who represent high-tech constituencies, this is 

an area of how they use standards, in particular. So this is going 

to be a major area we and others are going to have to focus on: 

What were some of the Chinese’s responses to our concerns in this 

most recent visit? 

Well, first, President Hu’s visit tried to focus on expanding some 

of China’s imports, emphasizing airplanes, software, auto parts, 

foam products, communications, and power station equipment, promoting IPR protection. They announced over $16 billion of purchases, and of course, what we emphasized is this has to be part 

of an ongoing set of a business exchange, it can’t just be a series 

of one-off progress. 

At a meeting that the Secretary of Commerce and Ambassador 

Portman, USDR had, Secretary Guttierez, had something called 

the JCCT, which got some progress on software, beef, medical devices, express delivery, getting China to agree to make a formal 

offer for the Government Procurement Agreement and the WTO, 

telecommunications. 

One modest point, but it is worth noting since we have Mr. Wilson here, too, is that the Chinese delegation also visited some of 

the places where they are starting to invest, including a higher 

plant in South Carolina, that I think emphasizes that two-way investment can create jobs on both sides. 

And I think as many of you watched, there was a senatorial delegation that went to China, had a good session with the Governor 

of the People’s Bank of China that emphasized a five-point plan to 

try to reduce this global current account surplus, including reforming its exchange rate and boosting imports. 

The good news is the policy direction is clear, the question is the 

time frame and whether it will be fast enough. 

Second, the importance of human rights and democracy, which I 

think almost all of you mentioned. What I want to make very clear 

14

is that this is a topic, as you know, that President Bush has very 

strong feelings about. He spoke very clearly to President Hu about 

our concerns. 

We have seen in this picture of change in China greater economic 

openness, but generally poor human rights records and weak legal 

protection and individual freedom. The President has emphasized— when he was in China, and particularly here—his concern in the 

area of religious freedom. 

But there is a message that all of us need to convey to China, 

and it is something I incorporated in the speech I gave in September. We need to stress that freedom doesn’t weaken China. 

Freer China will be a healthier China. 

Free press helps create accountability and deals with this problem of corruption that is undermining the country. Independent 

labor unions would better help represent worker interests and mediate disputes more effectively. China now has some village elections; that is a good start. But you read about this unrest with the 

land redistribution. Well, if you have got greater opportunity for 

people to participate in their own local governance, you have got 

a better way to deal with those problems, as opposed to resorting 

to violence. 

We believe, and I very strongly believe, that we need to press 

China to help turn human rights from a negative to a positive in 

our relationship. 

Right now China uses what I will call rule by law, not rule of 

law. They use law as part of the overall control system. But there 

is a very important need for China to bring rule of law into the system, have a more rights-based society and institutionalized protections. 

But there are going to be some serious questions remaining. 

When I was in China in January I met with a number of rule-oflaw groups, some that we have sponsored, some in universities, 

NGO communities. But the big question that I take away with is: 

Even if you build better judges, even if you have better members 

of a legal profession, what happens when that runs into control of 

the Communist Party system? And the Internet censorship issue is 

a good one that sort of shows this today. 

So we need to continue to press China, frankly raise our differences, but also explain why, ultimately, one of the lessons that 

we have all learned over the past 5 or 6 years is that it is societies 

that do not deal with internal freedom that create cancers that 

cause problems for all of us. 

Other aspects of China as a stakeholder are the security, political, and transnational issues. There is some evidence that China 

recognizes its growing stake in the system, seeks to work with us 

and others. On some of my visits I have emphasized the common 

interest we have in, say, Afghanistan and Iraq. Where China has 

put forward some aid, it hasn’t delivered the aid. In the case of 

Iraq, it wants to have a good relationship with the next Iraqi Government, in part because of oil ties, so the Chinese said they will 

invite the new Iraqi Government to come. There are also areas, 

when we work on the UN Security Council. 

As a number of you mentioned, however, there are some issues 

in the balance. In Sudan, as I think Mr. Lantos mentioned, others 

15

did as well, China, when it was President of the Security Council, 

put forward a President’s Statement over the course of the past 

month that helped move us in the right direction. It abstained 

when we moved forward on the sanctions for some of the individuals. That is better than using its veto; it is not as good as support 

right now, as Secretary Rice this week was pressing to move ahead 

with the UN Security Council resolution to get a peacekeeping 

force in this. 

I have a sense that if that is backed by the African Union, as 

I believe it will, that China will go along. China has actually committed to have some forces in Sudan as part of the North-South Accord, but it hasn’t yet put them in place. 

So I think we are all emphasizing the same point here. We are 

watching. China can play a positive role, lean sometimes in the 

right direction, but there is a lot more to do. 

China obviously sees Burma as partly the danger of narcotics 

trafficking and other problems. But at least it was encouraging 

that when Wen Jiabao went, the Premier, he emphasized the need 

for Burma to have a more inclusive political process. 

Hamas. Some of you might have seen there was a report by the 

new foreign minister of Hamas for the Palestinian Government sort 

of saying he was going to go to China. I raised this with the Chinese promptly. Within 2 days the Chinese said they did not invite 

him. 

And so this is where, again, a lot of this is going to take intensive work. Whether it is questions of Latin America, Africa, or Central or South and Central Asia. 

Now, we probably want to get through these in the questions, but 

I just highlighted. Obviously, the core ones on the list are some you 

have mentioned: Iran, North Korea, terrorism, weapons of mass destruction, proliferation, fundamental threat to international peace 

and security. 

During the Hu visit, President Bush had a chance to discuss a 

number of these items in some depth. In brief, you generally get 

a broad agreement on goals, take a run. China doesn’t want Iran 

to have a nuclear capability. But a difference is on tactics and how 

to approach this. 

And let me just give you an example of where I think we need 

to be shrewd with China on this. Obviously the Chinese know that 

our bilateral relationship is critical, going to be determined by how 

they act in Iran in dealing with this nuclear issue. 

When I was talking with some of the Chinese authorities, and 

they said, ‘‘Look, we have got our own interests there; we have got 

energy security concerns,’’ one of the points is, leave aside our interests. Consider China’s own interests and energy security. 

If you have got a country that believes Israel has no right to 

exist, that denies the existence of the Holocaust, has supported terrorism, and then develops a nuclear weapon, as I said to the Chinese, you have got to tell me if you think that is going to help energy security in the major energy-producing region of the world. 

The Chinese recognize this. But what we are going to have to 

work on is to try to help us solve the problem. 

So I think the way that it comes out with China is they want 

to be seen as sharing strategic interests with the United States. 

16

What we have to translate that into is common interests with complementary policies. And they may not always be the exact same 

policies. We don’t have any energy ties with Sudan. China does. 

Okay, well, let us have China use some of that influence and recognize, as I know Mr. Smith knows as well, right now you also have 

a Government of Southern Sudan. There is a lot of oil there. So if 

China wants to be cooperative in developing that energy relationship, it can help us implement some of these accords. 

On the security and military issues, and I know Mr. Rohrabacher 

has focused on this, you have seen the Chinese military budget. It 

has had double-digit increases in the official budget for more than 

a decade. We believe, and RAND and others believe, that that is 

an understated amount. And the core question is, if you have got 

China on the rise, and you have got insufficient transparency on 

military spending, weapons procurement, strategic intentions, doctrine, people are going to be uncertain; they are going to react to 

that. And so China can serve its own interests by being more transparent. 

There is a near-term military buildup, as a number of you said, 

focused on Taiwan. And one of the points that came out of, first, 

Secretary Rumsfeld’s visit to China, and, then, the visit of President Hu, is we want to try to drive down some of these exchanges 

to a junior officer level, and we have agreed to have a dialogue on 

strategic nuclear forces. I believe Admiral Fallon of Peicong, who 

I have discussed a lot of this with, is actually in China this week 

to try to move some of this ahead. 

A number of you emphasized the Taiwan issue, and we can go 

into this in greater depth. But obviously I think all of us share a 

pride in what the people of Taiwan have accomplished as a democracy. And it is very important to recognize, because I remember, 

when I was teaching in Hong Kong in 1980, my Chinese students 

were all excited about Deng Xiaoping’s rise. And they said democracy, that is something for the West, it only exists in Japan in 

some unusual form. 

Well, one of the benefits of age, one of the few, is that over 26 

years you can see, you know, democracy in Taiwan, in South 

Korea, the Philippines, Indonesia, Thailand. And there is no reason 

why it can’t come to China, if it is in Taiwan, as well. 

This Administration, like others, is governed by the one-China 

policy, the three communiques, the Taiwan Relations Act. I was 

pleased to actually, in President Bush 41’s Administration, to work 

on bringing Taiwan, China, and Hong Kong into APEC. And, as 

U.S. Trade Representative, did the same with Taiwan and China 

in the WTO in 2001. 

The United States has said that it makes defensive articles available to Taiwan, and we have stressed the need to have no unilateral change in status quo by either side of the Taiwan Strait. And 

we have encouraged a direct dialogue with the elected leaders of 

Taiwan. 

There are other areas of mutual interest. And one that I know 

is very much on everybody’s agenda is energy security. And look, 

this could go either way. You could have China and the United 

States at loggerheads, or you could have, actually, us working toVerDate Mar 21 2002 19:06 Nov 28, 2006 Jkt 000000 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 F:\WORK\FULL\051006\27477.000 DOUG PsN: DOUG
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gether. Our interests would suggest we should work together. Because what do we both want to do? 

Well, first we want to expand non-oil and gas types of supply. 

Second, we want to have more diverse oil and gas supply so you 

don’t have choke points. We want to lower demand and increase efficiency of usage. We have a strategic petroleum reserve; China is 

starting to develop one. As we saw in the Iraq War, that can be 

used effectively to deal with some fears and spikes in the market. 

And we want to have security of sources in transit. That is an 

agenda we can work on together, whether it is clean, cold technology or nuclear, or hydrogen gas and other items. 

This is similarly the case in the environment. And we are working with China with some of the other Asian-Pacific partners on a 

program for clean development and climate that I think could help 

contribute the use of technology development for global climate 

change, whether it be hydrogen cell research, methane-to-markets, 

carbon sequestration, or other topics. 

Avian influenza is another critical issue we have cooperation in, 

education and science and technology changes, and also in the law 

enforcement area. This is the one I was mentioning to Mr. 

Tancredo, about the importance of whether it be aliens smuggling 

or illegal immigrants. 

So in summary, I forgot whether it was Chairman Hyde or Mr. 

Lantos that said this, aside from dealing with the Islamic political 

radicalism and terrorism, how we deal with China’s growing influence is probably the central question of the 21st century or for 

United States diplomacy. We need to try to make progress in the 

short term, while building a foundation for our long-term interests 

and cooperation. 

And both countries have a dual agenda. We have got these domestic concerns, which they have in mind because they still see 

themselves developing. Obviously, we have in mind, too, but we 

also have global stakes. So we need to try to achieve concrete results on economic and trade, sustainable growth. We need to continue to press for rule-of-law development, political reform as essential elements of full development. 

We need to lay the groundwork for enhanced cooperation on strategic foreign and security policy, the transitional issues. And where 

we disagree—and we will—we just need to point out our differences, discuss and manage them so they don’t preclude cooperation elsewhere, and keep working at it, and set a stage for future 

efforts. 

And one last and important point. The hearing is on China, but 

one can’t see China without embedding it within the larger framework of our policies. So our positive relations with Japan, with 

South Korea, with India, with Southeast Asia, the EU, and our efforts—I think it was Ms. Berkley who asked the question about the 

EU arms embargo, or maybe it was Ms. Lee who obviously wanted 

to continue to keep that in place. 

So dealing with China is, in part, the bilateral relations, how we 

deal together with the world; but how we get the world to deal with 

China. And as one of the points that a number of you mentioned 

on human rights, there is a lot of human rights stylize going on 

now. And one of the things we are starting to do through someVerDate Mar 21 2002 19:06 Nov 28, 2006 Jkt 000000 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 F:\WORK\FULL\051006\27477.000 DOUG PsN: DOUG
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thing called the Burn Process is to try to coordinate these, and 

have a cooperative effort pushing on the core agenda of items. 

So thank you, Mr. Chairman. And I am happy to take your questions. 

[The prepared statement of Mr. Zoellick follows:]

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Chairman HYDE. Thank you, Mr. Secretary, for that extraordinary review of United States-China relations, as well as China 

and the world. 

I would just like to ask one question relating to the North Korean dilemma. If there are two places in the world where there is 

a possibility of great power confrontation, it is probably Taiwan 

and North Korea. As Mr. Lantos has noted, the Chinese have a 

major role in the North Korean circumstance. To some degree they 

have played a very constructive role, with hosting the Six-Party 

Talks. 

But part of the future relations between the United States and 

China relates to the direction of change in China. Part of it relates 

to policy and potential change in direction of the United States policy, as well. 

And with regard to North Korea, I would first want to say by 

contrast I think this Administration’s policy, vis-a-vis Taiwan, is 

extraordinarily thoughtful. I have not been as convinced with 

North Korea. 

And so my question is, because it has a great deal to do with the 

United States-Chinese relationship: What new steps are we contemplating, vis-a-vis the North Korean dilemma? Or are we exclusively going to be resting our foreign policy on the foreign policy 

of China? 

Mr. ZOELLICK. I know, Mr. Chairman, we had a chance to talk 

about this a little bit in another context. And what I would point 

you to is the Six-Party statement that China helped develop in 

September of last year. 

While it is a brief statement, it actually provides the elements 

of a roadmap with North Korea. It talks about the importance of 

denuclearization. But it also talks about some of the other opportunities, whether it be in the energy area, whether it be in retrieving 

a peace regime, ending this cold-war conflict on the peninsula; 

whether it talks about trying to open up this society. Those are the 

core elements that, in my view, Mr. Chairman, really start to 

present a choice to the North Korean system. 

One choice is where it could continue to be isolated and struggle 

along. The other—and this is where they differ a little bit—has to 

be North Korea’s decision about whether it really wants to open up 

and perform itself. Does it want to be like China, circa 1980, under 

Deng Xiaoping? 

Now, a couple of little points on this. It was interesting to see 

Kim Jong Il’s trip in China, which, not accidentally—those countries never pick itineraries accidentally—followed the Deng 

Xiaoping path. 

Frankly, it is still unclear. Was that a feint, or was that a serious 

effort on North Korea’s part to look toward an opening of economic 

reform? 

Now let me connect this to China, which you alluded to and Mr. 

Lantos referred to. I think China has been cooperative, but frankly 

I think here is China’s concern. It doesn’t want North Korea to 

have nuclear weapons, but it is concerned about a collapse on 

China. 

32

So I think, frankly, it is a little hesitant. It doesn’t use those economic ties in the full sense because it is worried about what a collapse in North Korea might do. 

So to pull that together, Mr. Chairman, I think what we can do 

and need to do with the Chinese and the South Koreans in particular, but also other partners, Japanese, is to make it clear to 

Kim Jong Il that there is a pathway if he wants to change the system. And we have offered, the President has made statements 

about the security issues. The statement about a peace regime in 

the peninsula is no small step if you consider, you know, what you 

have now after 1953 is just a cease-fire arrangement. You don’t 

have a peace accord there. So I think that is the path to pursue. 

The Presidents did discuss this somewhat. And one of the things 

I think we need to see is whether the North Koreans are willing 

to engage seriously. 

Where I think the Chinese are wrong is that they believe the status quo can hold. I don’t believe it can, in part because you have 

got an illegal regime that is living off of counterfeiting and narcotics and others. And one of the differences that we have had is 

to say, ‘‘Look, in our own self-interest, we have to protect our country. We can’t allow people to counterfeit, use money-laundering, 

narcotics.’’ And I think as one does those things, it is going to even force 

a choice more for the North Korean regime. So we need to give 

them a pathway, but ultimately it has got to be their choice. And 

I hope the Chinese can encourage them to take the right choice. 

Chairman HYDE. Well, I am with you. And I will just conclude 

with the observation that I think our pathway is credible, but there 

is a great deal in international relations, as in personal relations, 

in psychology. And there does not appear to be a major American 

commitment that is very personal. 

And I would strongly recommend that you consider a high-level 

demarche outside the Six-Party Talks, although maintaining the 

Six-Party framework that involves, personally, United States visits 

to North Korea. 

Mr. Lantos. 

Mr. LANTOS. Thank you, Mr. Chairman. Let me commend you, 

Mr. Secretary, for what the French would have called a four de raison. You covered the whole world, and you did so brilliantly. 

I just would like to add a footnote to what my friend, Jim Leach, 

was focusing on. One of the most useful things the Chinese can do 

to improve United States-North Korea relations is to explain the 

United States to North Korea. Let me be specific. 

The Chinese have understood over the course of many years now 

that we are able to cooperate, even be very friendly, on issue A 

through X. But we are very negative and confrontational on five or 

six other issues. 

The North Koreans took umbrage at our opposition to their counterfeiting of our currency. Now, the Chinese would have had a glorious opportunity to explain to them that the United States does, 

in fact, want to develop better relations with North Korea, but at 

the same time we will not be silent on the issue of their counterfeiting United States dollars. They haven’t done so. They haven’t 

done many other things. 

33

And I think you put your finger on it. They think that the current status quo can continue ad infinitum. It can’t. Relations with 

North Korea will either improve, or they will deteriorate. And it is 

in the Chinese interest to see to it that United States-North Korea 

relations improve. 

I would like to ask you, by the way, in all of your presentation 

I found no single item that I would disagree with, except perhaps 

one. I would be grateful if you would go back and sort of explore 

your figures. 

You have indicated, Mr. Secretary, that Asia’s exports to the 

United States on a global scale have actually diminished. While I 

believe that to be true, I think it is overwhelmingly in the last year 

the result of the explosion of petroleum prices. So it is not a decline 

in Asian exports to the United States, but it is a function of the 

dramatically higher prices we pay for our energy imports from the 

energy-exporting countries, which are not in Asia. 

So I think it is a post-hawk agro-proctor-hawk fallacy that I 

know you will want to correct. 

I would like to focus on Iran. Iran will be a touchstone of the tenure and quality of our relations. And I would be grateful if you 

could share with us the Department’s recent reading on where 

China stands on this. 

Secondly, I would like to ask you about Burma. China is a major 

financial backer of the ruthlessly authoritarian regime in Burma, 

which continues to jail Nobel Prize winner Aung San Suu Kyi. How 

seriously do they raise the Burma issue with the Chinese? And will 

China agree to a formal debate in the UN Security Council on Burma’s threat to regional stability? 

Finally, Mr. Secretary, I would like you to comment on the obvious: The two other great Asian countries are political democracies. 

We have a fundamental value affinity now with both Japan and 

India. Is China aware of the fact, in your many dealings with them, 

that the quality of our relations with them will have to be of a dramatically lesser order as long as they maintain the political and 

human rights-suppressing structure that they now have? 

Mr. ZOELLICK. First, I think you made a very good point about 

the role of China explaining the United States to North Korea. 

On the percentage, since I was U.S. Trade Representative, I have 

a slight advantage over you. It has gone up because of the oil numbers, is a good point. It was the case even before you had the runup on oil. It is a relative point. 

On Iran, when I was in Beijing in January, this is one of the 

issues that I was trying to highlight all throughout the system in 

trying to help lay the groundwork for President Hu’s visit. And the 

Chinese told me at that time, and they have emphasized again 

now, that they agree in principle; they don’t want Iran to have a 

nuclear weapon, and they understand the danger of that process. 

They have said to me that we may differ on tactics, and we are 

concerned, as I mentioned, about some of the energy security 

issues. They have been given a little bit of a cushion because of 

Russia. So again, I think this is connecting these items together, 

if we can bring Russia along with some of this, my own sense is 

that China will not be an obstacle in the process. 

34

They have shown some cooperation. They voted for the IAE 

Board of Governors at the February 4 resolution to report Iran. 

They joined the rest of the Security Council on March 29 in adopting the Presidential Statement. They have sent senior officials to 

Iran, and they have reported back to us. And we have a sense of 

the message that they are trying to deliver. 

Now, it is not a surprise that both they and the Russians will 

play themselves as a little bit of a mediator. But the Iranian total 

lack of cooperation has helped create an environment where we can 

try and bring others further along. And this is the process that Secretary Rice was engaged in this week. 

As you start to try to do two things, maintain an international 

coalition and also gear up the pressure, you are going to get people 

who get more anxious. So the notion of a Chapter VII resolution 

suggests to some the possibility of a use of force. And they may 

want to be willing to ratchet up the pressure, but they are worried 

about that aspect. In part because of some of their own history, 

they get worried about the use of sanctions as you move forward. 

But that is one of the reasons why I think you see, as Secretary 

Rice was saying yesterday, while recognizing that we need to work 

with dispatch, we need to work the diplomacy of this as we go 

along. 

It is my sense, Mr. Lantos—but this is where I think we all can 

continue to stress this, and I appreciate your remarks—is that 

China recognizes the very important issue in the United StatesChina relationship; we need to keep stressing that. 

But as my other comment said on energy security, we need to get 

them to understand their own interests in this. And one of the 

things that I have said to the Chinese is, ‘‘Okay, you agree they 

shouldn’t do this; if you have differences on how we do it, then how 

are you going to do it?’’ And this goes to this notion of taking some 

responsibility. 

So the last chapter on this isn’t written, but you can see, I think, 

the focus of our effort on this. 

You mentioned Burma. In the case of Burma, I think China historically is at a different position. It has a much broader relationship, obviously, with Burma than any we have, so it is in a position, I think, to use more influence. 

We have emphasized that the regime’s own sort of isolationism, 

non-inclusive political process, and crazy actions continues to isolate it, and that poses risk to the whole region. You have seen how 

some of the Ossiane countries have recognized this as well. 

It is a good area where part of this, in the challenge of the diplomacy, is getting people to recognize how it is in their own self-interest to try to change some of these things. 

I mentioned in my opening remarks the slight shift in Wen 

Jiabao’s statement to the Burmese. I don’t want to make too much 

of this, but I think it is of some interest. 

You asked particularly about the UN Security Council. China 

joined the consensus in December 2005 to discuss Burma in an informal consultation. However, they said this is a one-op exercise. 

So this is kind of the step-by-step of the process. 

But all these together, in a sense, are good examples of what we 

are trying to develop with this deeper dialogue on a whole host of 

35

issues. We had the questions from Mr. Royce about Africa; it is the 

same thing there. I mean, right now much of Africa or the interest 

that you see in China is driven by economics, whether Latin America or others. 

And frankly, I think what we need to point out to them is to say, ‘‘Look, whether in your relations with us or the Africans or others, 

how you behave and how you act is going to make a difference.’’ They won’t do it exactly the way we would do it, but we can get, 

I think, greater cooperation on these items. 

Chairman HYDE. The time of the gentleman has expired. The 

Chair would like to make a brief announcement. We have been informed that the Secretary must leave by 12:15. So as I go down the 

list, I am going to be pretty tight on time. 

Mr. Smith. 

Mr. SMITH OF NEW JERSEY. Thank you very much, Mr. Chairman. Let me just say, Mr. Secretary, thank you for your wonderful 

testimony, it was excellent. 

Pope John Paul II once said, ‘‘If you want peace, work for justice,’’ and at the core of what many of us do here is believing that. 

At the ground level, the Chinese love to talk about mutual respect; 

Hu Jintao said that during his visit. 

Yes, government to government, there is that mutual respect. 

But it also needs to be vertical with the people, and that is where 

it has been lacking. 

You mentioned dialogue on human rights. But I would respectfully submit that dialogue should be no substitute for deeds. And 

it has been my experience with the Chinese and with other dictatorships that they will talk, but we want to see tangible deeds, and 

they have been lacking. As a matter of fact, on virtually every area 

of human rights observance there has been significant regression 

year after year. And I find that very and profoundly disturbing. 

I am also concerned that the rule of law is subjected to a dictatorship-friendly redefinition by the Chinese Government. And I like 

to call it the rule of unjust law, designed to repress, crush, and control the people of China under the veneer of law. And I am concerned that all too often, we, both on the corporate side and government side, acquiesce to the rule of unjust law. 

And I would like to offer three brief examples and ask for your 

response. 

On the corporate side, Cisco, Yahoo!, and Microsoft stood where 

you are in mid-February, and I was appalled when Yahoo! and 

some of the others said, ‘‘Well, they are just following orders. Following the law locally.’’ Yahoo!, which obviously gave up several dissidents, including Shi 

Tao, who went to 10 years in the Laogai, I asked him: ‘‘Under what 

terms, conditions, and circumstances do you give information about 

a person who has an e-mail with Yahoo! to the government?’’ And 

he wouldn’t answer it; he said it would break Chinese law. And yet, 

you know, is it just anybody who walks in the door and says we 

want information on so-and-so? 

So they have acquiesced. And rather than changing China, they 

have changed these corporations. 

Another example. Mr. Lee, a Chinese Christian, was arrested 

and tortured, and faced a prison sentence for belonging to an unVerDate Mar 21 2002 19:06 Nov 28, 2006 Jkt 000000 PO 00000 Frm 00039 Fmt 6633 Sfmt 6633 F:\WORK\FULL\051006\27477.000 DOUG PsN: DOUG
36

registered house church. He escaped to the United States and got 

asylum here. The INS appealed. In 2003, the Board of Immigration 

Appeals (BIA) reversed the judge’s decision. The BIA found that 

Lee had honestly described how police beat him and tortured him 

with an electric shock device and forced him to sign a confession. 

But then, incredibly, it ruled that Lee was punished for violating 

laws on unregistered churches that it said China had the legitimate right to enforce. 

Later BIA included failure to legal action or prosecution, not persecution. And I would just add parenthetically that is absolutely 

contrary to the International Religious Freedom Act. And that language was completely bypassed in all of these proceedings. 

Eventually it went to a higher court, and still found that he was 

violating these laws about unregistered churches in China. Only 

after there was an uproar did justice finally prevail. This was a 

total miscarriage of justice, and he finally got his asylum. 

But it was amazing to me, in reading these cases, that they were 

saying, ‘‘Well, that is Chinese law, and we need to follow it.’’

The third and final example. One of my constituents, whose enterprise Motion Systems Corporation provides hundreds of highlyskilled manufacturing jobs in my district has been hit by unfair 

Chinese competition. He produces vital parts that go into high-tech 

products made for the Defense Department. For many of these contracts he doesn’t even know what they are used for, because it is 

all classified. 

He recently sued the Chinese for stealing his designs. He sued 

and won the first part of his case. The ITC ruled that he had suffered harm, and recommended quotas. But the USTR and the 

White House exercised their legal discretion to deny relief. 

If such unfair competition continues, he will ultimately have to 

cease manufacturing those items, which could leave a number of 

people without jobs. As we all know, and you said it yourself, there 

are no labor unions. Collective bargaining rights do not exist there. 

Many of the Laogai—and there are about 1,100 of them—produce 

parts that eventually find their way into U.S. manufacturing and 

onto our shelves at retail outlets. 

But in this specific case, here it was the ITC found in his favor. 

But it was then reversed, and it was clearly unfair. We are now 

bending to the rule of unjust law in all three of these cases, on the 

corporate side, as well as on the government side. 

Your response. 

Mr. ZOELLICK. Well, let me start with the Internet freedom one, 

which I know is a strongly-felt issue in this Committee and many 

others. And it is an issue, and I am glad you brought attention to 

it, Mr. Smith, it is not only going to be a China issue; it is going 

to be an issue in lots of different places of the world. 

On the one hand, the Internet offers some incredible possibilities 

for innovation and commerce and disseminating ideas in the world. 

And our goal as a country has to be to try to increase the freedom 

and flow of information and ideas. 

One of the things that we are trying to do, I know with the encouragement of you and others here, is to try to embed this more 

into some of our diplomatic work. We can press governments on 

37

these restrictions, we can build coalitions, which is a key on a lot 

of these items, to try to have other countries help us with it. 

There are going to be a lot of fights ahead of us in some of these 

international organizations. I know some of you have the scars 

about the free flow of information in some of these contexts. And 

we are going to start to include the Internet freedom issues in our 

human rights reports to try to institutionalize it. 

At Secretary Rice’s direction, Under Secretary Shiner, who I 

know many of you have worked with, helped create a global Internet freedom task force, where we are trying to work with companies, some of the same ones you met, NGOs, academics, and others. 

And one of the things that I think goes to your specific example, 

Mr. Smith, is whether it is in their interest to develop some best 

practices. 

If they are going to go and operate around the world, and I certainly see the benefits of them operating around the world, for example, transparency in policies. So what is your policy on censorship? What is your policy on giving up information? So that it is 

not something that people are unaware of. 

And another one, and it may be a small step, but a useful step, 

is to make sure that if there is some required action, just as there 

would be in our country, for information, you have to follow a due 

process and a legal system. Because then it is forcing the government not to just lean on somebody, but to take the formal steps. 

So I think this is a start in the process. I know you are deeply 

engaged in it. But I think you are right, it is a double-edged sword 

here. And I happen to believe that the spread of technology and information ultimately will be a good thing for these countries, but 

it certainly can be abused, as you pointed out. 

In terms of the religious freedom issue, this is a topic that President Bush, Secretary Rice, and I all sort of personally stress, particularly on this issue that you highlighted. So I don’t know about 

the prior court history, but what surprises me about it is that the 

Chinese have said, at our prodding, that there are possibilities for 

sort of private worship in homes—house worship—also education of 

minors. We have had, obviously, examples to the contrary. So that 

was one of the things that we were pushing that they should put 

this into a regulatory form. 

And they have emphasized they would protect those. But it is 

going to be a point where we need to keep vigilant about making 

sure that this gets full attention. And all I can tell you is, in our 

system it starts with the President, he has got a very strong interest in this. 

It surprises me, but I will follow up with you——

Mr. SMITH OF NEW JERSEY. It was Lee v. Gonzalez, and it was 

appalling. 

Mr. ZOELLICK [continuing]. Is that, you know, how they could 

base it on the Chinese law, when at least the Chinese tell us the 

rules are somewhat different. 

And in your third case, the trade case, I am afraid I am not familiar with it. If you give me the information, we will check. 

Mr. SMITH OF NEW JERSEY. If you can get back. And just let me 

conclude, Mr. Chairman. This man here is Bishop Shu of Baoding 

Province. I met with Bishop Shu in the early 1990s. He was then 

38

rearrested. He has spent more than 30 years in the Chinese prison 

camp. He has been tortured, mistreated, and his whereabouts and 

whether or not he is even alive now remain unknown. 

You know, talk about religious freedom, this man had nothing 

but compassion for those who suppressed him and those who tortured him, yet when I met him, he had already spent more than 

two decades in Chinese concentration camps. And that is the reality. 

Thank you so much. 

Ms. LEE. Thank you, Mr. Chairman. Let me say I, too, was quite 

fascinated by your very excellent presentation and testimony, Mr. 

Secretary. 

And for the life of me I keep thinking, I can’t understand why 

this same gentle approach toward China is not used with regard 

to Cuba. So that is the first question I want to ask you. 

Secondly, just with regard to Latin America and the Caribbean, 

we have seen, of course, over the last couple of years a deepening 

of the relationship between Caribbean and Latin American countries with China. Of course, I believe we missed our opportunity, 

because we have, quite frankly, neglected much of the region. And 

China sees that as an opportunity. 

So I would like to ask you with regard to what you see as the 

future. Will we ever become again the partner of choice for the region, the Western Hemisphere? Or have we lost that opportunity 

to China? 

And finally, just with regard to Sudan. I often thought, through 

this entire terrible period of hundreds of thousands of people getting killed, why we weren’t harder with China, given the trade 

preferences, given the relationships and our policy toward China. 

Why didn’t we come down pretty hard on them, and try to help 

them understand why they should not engage with the genocidal 

regime in Khartoum? 

Mr. ZOELLICK. Okay. On Cuba and China, I could add North 

Korea with Mr. Leach on this, I will take each one on its terms. 

And in a way your question reminded me of the dialogue that Mr. 

Leach started. 

You see, the difference in China is that when China, in 1980, decided on a development course, it decided to open up to the world. 

And we may have differences on how far they have gone and how 

they are doing it, but they have taken a path that we believe is, 

and a number of Administrations have believed—seven—that it is 

important to try to encourage that integration, because we believe 

it will transform the system. It has clearly reduced poverty, but it 

gives other opportunities to open up to society. 

Castro hasn’t done that. The fundamental difference—— Ms. LEE. But Mr. Secretary, let me just interject. The last time 

I looked, Cuba does have relations with the majority of countries 

in the world. 

Mr. ZOELLICK. I don’t think it is a question, Congresswoman, 

about whether it has relations. It is a question about whether its 

strategy is to open up. And I draw the analogy with North Korea. 

We have a lot of obstacles with North Korea, as well. If North 

Korea is willing to open up, as China would in 1980, there can be 

transformation of relations. 

39

I think the reality is that Castro has chosen a very different 

course for his country. And for many people here who are concerned about human rights, I would suggest that Cuba has got 

some serious problems, too. 

The Caribbean. I agree that the Caribbean is a region that we 

always need to devote attention to. Secretary Rice just went down 

to a meeting of the CARICOM Ministers in the past month, even 

while she was running around doing these other things, to help 

emphasize it. When I was USTR I used to go down there a lot, because I realize that these are economies and societies that are very 

close to the edge. It doesn’t take much in terms of a storm or something else to overwhelm them. 

And they have a particular agenda. Some of it is of concern for 

narcotics, some of it is economic development, some of it is dealing 

with these natural disasters. 

We as a country, and this as a Congress, too, has tried to give 

the Caribbean a special place. They have special trade preferences 

that have been developed, starting in the Reagan Administration, 

that pretty much give them open access to our market. 

As it links to China, you asked—and I think this is a broader 

question of Latin America—China’s engagement with Latin America and the Caribbean is fundamentally based on one of two issues: 

One, just economics. It is buying things, it is investing; the second 

is Taiwan. We have a number of countries in Latin America and 

the Caribbean that still recognize Taiwan, and China wants to leverage that away. 

As part of the discussions we have had with the Chinese, we 

have emphasized that while it has got a growing economic relationship, it is still much smaller that the United States’ is, that it has 

got to use its power responsibly. And I believe the Chinese appreciate this. The Chinese will not want to undermine their core relationship to the United States for misuse in the region. 

But it is one of the reasons, as a number of you mentioned, we 

need to have the discussion, because we want to make sure that 

they understand what we think—for example, Venezuela—may be 

sort of problematic areas. 

Our Assistant Secretary for the Western Hemisphere, Tom Shannon, actually was just in Beijing in the middle of April on this sort 

of discussion, talking about regional stability, terrorism, 

transnational crime, some of the economic issues. 

And just to give you a sense of how this can work constructively, 

part of our peacekeeping operation in Haiti includes some Chinese 

forces. 

So I think it is a challenge for us to say to the Chinese, ‘‘Okay, 

your economic footprint is bigger, you are going to be in these 

places. Be careful how you use it, be careful how it is perceived in 

the United States, and let us discuss how it might be done more 

constructively.’’

And I do think there are areas where we can cooperate, although 

on fundamental issues like human rights we are going to continue 

to have some differences with them. 

All I can say on this is that I have had extensive discussions 

with the Chinese as part of this senior dialogue, and I have highVerDate Mar 21 2002 19:06 Nov 28, 2006 Jkt 000000 PO 00000 Frm 00043 Fmt 6633 Sfmt 6633 F:\WORK\FULL\051006\27477.000 DOUG PsN: DOUG
40

lighted Sudan from the very start. And it is a good example of a 

number of things coming together, Congresswoman. 

One is, their interest in Sudan was primarily driven by energy. 

And what I partly said to them is, ‘‘Look, there may be sort of your 

state-owned energy companies that are going to Sudan because 

there are not other places that they feel they have available. But 

be careful about what impression it creates, not only in America, 

but in Africa.’’ And so I have tried to say, ‘‘You know, you may have your energy 

interests, but you can do it in a way that helps create peace, deal 

with the genocide, help us cooperate on some of these items.’’ And 

I think we have made some headway on some of these issues. 

And again, they have a different relationship with the Khartoum 

Government than we do, but maybe they can use that relationship 

to press the Government in Khartoum to take some of these steps. 

So it is a good example of how, whether it be Burma, whether 

it be Sudan, whether it be some of these other issues, at a minimum we need to make clear to the Chinese we are watching, and 

others are watching, if you want to have good relations in Africa 

over time. 

I was in Nigeria for these negotiations. Shortly before that President Hu had been there, and some of the people that are causing 

trouble in the Niger River Delta were obviously focusing now on 

the Chinese. 

The Chinese are going to have to be aware of this as they get 

a bigger footprint. It can backfire on them. And so they are better 

off trying to support some of the main objectives that we, the European Union, or others are trying to promote. 

Chairman HYDE. Chairman Rohrabacher. 

Mr. ROHRABACHER. Thank you, Mr. Deputy Secretary. And I will 

just note first that I think that this Administration treated President Chen, who is a democratically-elected leader, in a disgraceful 

way. And I will leave this to Mr. Tancredo to follow up on. But for 

us to throw ourselves on the ground in order to curry favor with 

a dictatorship by mistreating a democratically-elected leader 

doesn’t lend itself to the type of respect from the dictatorship that 

will lead to the positive things that you are thinking about or talking about today. 

I have been told over the many years that I have served here 

that if China prospers, and as China prospers, we can expect it to 

liberalize. And that has been used as an excuse by our corporations 

for investing huge sums of money there, and for us to have a policy 

that permitted the building of this great economy now that is 

booming in China. 

We have also been told that, as China prospered, it would mellow 

out internationally; become less of a force for instability, and more 

of a force for stability. I haven’t seen any evidence of that. I called 

the first, of course—the idea that we are going to make a dictatorship prosperous, and that will make the dictatorship more freedomoriented—I call it the hug-a-Nazi, make-a-liberal theory. I haven’t 

seen any evidence of that. 

Have you seen any evidence that opposition parties are being 

able to be organized? All the things that you told us about earlier 

in saying how China is progressing are all economic growth areas. 

41

And also the implantation of China into our international bodies, 

but not necessarily suggesting that that was, showing where that 

was, a positive movement. 

Has there been any movement toward opposition parties or freedom of the press that permits people to criticize the Communist 

Party, for example, in China? We have heard evidence, I haven’t 

seen any evidence of freedom of religion. In fact, we see a lot of evidence that there is actually some retreat from permitting people 

freedom of religion and labor rights, et cetera. 

Am I missing something? Or has there not really been any movement? Although we have had this massive increase in economic 

power. 

Mr. ZOELLICK. First, Congressman, on President Chen, which 

you raised, he had the opportunity to meet the First Lady and 

some of the congressional delegation just yesterday. One of my colleagues talked to him on the phone as he was leaving, talking 

about how we can continue to have a strong and good relationship 

with Taiwan, which we seek to have, within the terms of the Taiwan Relations Act and our One-China Policy. 

Mr. ROHRABACHER. Would the Taiwan Relations Act prevent us, 

in your position, from treating President Chen courteously and permitting him to refuel his airplane on a trip to other parts of the 

world? 

Mr. ZOELLICK. He was offered an opportunity to refuel, and I 

know of no requirement that he couldn’t get off the plane. You 

would have to talk with the Taiwanese about how they decided to 

schedule where they wanted to go. So I don’t believe he has been 

treated in any—— Mr. ROHRABACHER. Well, I found his treatment unsatisfactory to 

a democratic leader in an attempt to curry favor with dictators and 

gangsters in Beijing. 

But what about my other questions? Has there been any less restrictions on freedom of the press and religion in these last few 

years, that perhaps some of us have missed? 

Mr. ZOELLICK. I think if you compare the China of 1980, when 

I first visited, with the China of 2006, I think it is a more open 

society. 

Now, that is not to say that there aren’t tremendous challenges 

which we have all listed to try to address. But I do think it has 

moved more in that direction. 

Mr. ROHRABACHER. Well, certainly. And I would have to suggest 

to you that progress made in terms of liberalization, if there was 

any, happened before Tiananmen Square. But what only is significant to us now is what has happened since Tiananmen Square in 

terms of the trend of political and social freedom in China. And it 

seems to me that since Tiananmen Square they have gone the 

wrong way, but we have continued to build their economy. 

Mr. ZOELLICK. Well, I think there are a couple of elements, which 

I tried to touch on in my statement. 

Number one is they tried to build their economy, they are going 

to build their economy. And it is a question of, Do we also want 

to have influence in that process? And getting a couple hundred 

million people removed from poverty is also, I think, a positive development for the world. 

42

Secondly, as we discussed with some of your colleagues, we have 

worked with the Chinese, and we are going to set out an agenda 

of issues like Iran, North Korea, other topics. 

But third, that doesn’t at all dissuade us from making the point 

that you and others have made about pressing forward. At the 

same time that I set out these other concepts, actually the coverage 

of the speech I gave emphasized how I was pressing forward the 

democracy agenda, which I was doing. And I was suggesting that 

for their own interest, they should move from the village elections 

to provincial elections. They should move to a serious rule of law. 

Mr. ROHRABACHER. But they haven’t. 

Mr. ZOELLICK. I think it is important to recognize and be fair, 

Mr. Rohrabacher, it is something we all have to push on together. 

It is not going to be an overnight issue. And you have to decide. 

Do you want to detach yourself from China, or do you want to try 

to work with it? I believe we should work with it. 

Mr. ROHRABACHER. Would you say that is true of all dictatorships? 

Mr. ZOELLICK. No. It depends on the nature of the regime, and 

whether it is trying to head in a slightly different direction. In the 

answer I gave to Ms. Lee, I distinguished North Korean behavior 

from Cuban behavior from China behavior. So I think you have to 

take each one on its own terms. 

Mr. ROHRABACHER. Well, Mr. Chairman, if I could, just one last 

note. We have created a Frankenstein monster. We are the ones responsible for building this enormous Chinese economy, sometimes 

at the expense of our own middle-class people who work in manufacturing, et cetera. And it has not worked out as we were told it 

would. 

We do not now have a benevolent, liberalizing regime in China. 

Instead we still have the horrendous stories of repression of religion, of torture, and of political repression. 

Chairman HYDE. Would my friend yield briefly? With all due respect, Mr. Secretary, many of us believe, and I believe it strongly, 

we have a more open Potemkim Village, not a more open society. 

Mr. ROHRABACHER. Thank you very much, Mr. Chairman. 

Chairman HYDE. Ambassador Watson. 

Ms. WATSON. Thank you so much. And very quickly, I want to 

follow up on something that Mr. Rohrabacher brought to our attention. 

Just the day before yesterday we were in Costa Rica, and we met 

with President Chen of Taiwan. And he expressed the fact that his 

country felt disrespected, and he was hurt that we, our Administration, refused to allow his delegation to do an overnight transit stop 

in the United States. And he brought up the fact that we are dealing with China, and China is a Socialist country that denies 

human rights to its people. 

And our delegation, led by Dan Burton, responded that we would 

ask for an explanation and apology for not treating them with the 

proper protocol in a transit visit on its way to celebrate the election 

of the new President of Costa Rica. You can respond after I give 

you my main question, but I wanted to follow up on that, and let 

you know that it might have been a deliverable to the Chinese 

43

after the Hu visit. We don’t know. So you might want to expand 

on that in a moment. 

But right now I have the Hollywood Chamber of Commerce waiting for me in the anteroom. And we are all concerned about the 

protection of intellectual property. And we know that there are violations on the part of China, and they continue to plague our relationship. 

I represent Hollywood, and the entertainment industry represents a $500 billion industry. And a lot of our intellectual property is being stolen and sold on the street for a pittance. And that 

has a tremendous impact on our economy each year. 

And so we feel that China is the epicenter of worldwide IPR violations. And the United States Customs Service estimates that over 

50% of all pirated goods it seizes originate in China. Nearly 100% 

of the DVDs made in China are now pirated. And China’s IPR violations not only undercut the profitability of American companies, 

but also significantly complicate the ability of American companies 

doing business in China to play on a level playing field. 

And we have made it, in this country, a major issue in the World 

Trade Organization. The Chinese Government has repeatedly 

agreed to boost enforcement of IPR by increasing criminal prosecution of offenders, and improving cooperation among Chinese enforcement officials, and between United States and Chinese IPR officials. 

However, China has repeatedly failed to fulfill its pledges. Most 

recently the United States initiated a special process under WTO 

rules to request that China provide detailed information on its IPR 

enforcement efforts, and China responded by challenging the legal 

basis of this request. And so I would like you to comment. 

And finally, are trade barriers an appropriate response given the 

level of the inter-transigency of China on IPR issues? And it is very 

important—not only to my district, my community, but to the 

United States as a whole. 

Mr. ZOELLICK. Well, on your first one, it is a very important 

point. You used the term ‘‘country,’’ and the protocol attributed to 

a country. 

Ms. WATSON. Excuse me, wrong wording. Let us just say Taiwan. 

Mr. ZOELLICK. That is my point, is that we have got to be real 

careful here about the protocol attributed. It is an economy. And 

there are big stakes here, Congresswoman, where lives could be 

lost. 

We have had a One-China Policy since the time of Jimmy Carter. 

That policy is controlled by three communiques in the Taiwan Relations Act. 

We—and I said this in my opening comments—owe a great deal 

of respect for what Taiwan has accomplished in terms of creating 

a vibrant democracy, a strong economy. And I also pointed out that 

in 1991/92, I am the person that got them into APEC, and in 2001 

got them into the WTO. So it helps strengthen these economic relations. 

I was a little disappointed after we did so that I then had to 

spend about 2 or 3 years getting them to follow through on their 

obligations. But as they started to do so, we did respond again. One 

44

of my deputies went there, and there is going to be another deputy 

from USTR going on the economic side. 

But we have to be very careful, you see. And this is the balance, 

is that we want to be supportive of Taiwan, while we are not encouraging those that try to move toward independence. Because I 

am being very clear: Independence means war. And that means 

American soldiers——

Ms. WATSON. Would you yield for a minute, please? 

Mr. ZOELLICK. Pardon? 

Ms. WATSON. Would you yield for a minute? 

Mr. ZOELLICK. Yes. 

Ms. WATSON. Your bottom line. Would we deny anyone an overnight transit visit on their way to somewhere else? Is that part of 

the agreement? I think that is a lack of protocol and respect for 

any leader of any country, when we allow other leaders to come in. 

And I understand what you are saying. But would it be interpreted by Chinese, allowing them an overnight transit stop, would 

that be interpreted as more or less playing with Taiwan? That is 

what I would like you to——

Mr. ZOELLICK. Congresswoman, to go to your core point, we make 

our own decisions. We don’t clear them with China, we don’t negotiate them with China. So our decisions are our decisions. 

We offered President Chen an opportunity to have an overflight 

stop. He, in the past, has had overflight stops, where he has stayed 

overnight, and he has had a series of broader discussions with people. Sometimes those have raised some of the questions that I have 

mentioned. 

President Chen, in his inauguration, put forward five policy 

statements. 

Ms. WATSON. Let me cut to——

Mr. ZOELLICK. If you want to get into this, we will get into it. 

But I am honestly saying it is not——

Ms. WATSON. Excuse me for a minute. Would you yield? Let me 

cut through that. I am just repeating what he said. 

Now, maybe we lost a lot in translation, because he was speaking, and his language was being translated into English. And he 

said that the Administration denied him a transit visit overnight 

in the United States. And that he felt hurt. And we were embarrassed. And we asked to follow up, and maybe give an apology. Because I think it would have been proper protocol to say yes, no 

meetings or whatever. But that was what he described as his treatment when he got here. 

So if you will go on to my next point. I want to meet with my 

group out in the anteroom. 

Mr. ZOELLICK. Well, indeed, you can mention me to your constituents, because I went out and visited them to try to help on this 

very issue, as Mr. Berman knew before, on the issue of IPR. 

Ms. WATSON. Well, you can talk to them. They are watching you 

right now in the anteroom. 

Mr. ZOELLICK. And the core issue here is that—and again, I mentioned this in my earlier statement—there are tremendous problems with IPR violations throughout China. 

45

The Chinese say they recognize this as they now move to a 

knowledge economy, but we still have tremendous problems, particularly in the enforcement area. 

In the software area, and I know these industries tend to blur 

a little bit, there were some important improvements that they 

made. They agreed, for example, not to sell PCs that are pre-loaded 

with software, because you have tremendous piracy rights issues 

here. 

But similarly, in the broader issue in terms of the entertainment 

industry, one of the things that Vice Premiere Wu Yi, who is in 

charge of all this area, put forward a series of steps which, in a 

similar way as we have talked on the foreign policy, may look good, 

but we have got to focus on the overall delivery. For example, special IPR courts, so it is not lost in another process. Setting up 50 

locations around the country where you can be able to try to come 

and bring particular problems on issues. And this is true for small 

businesses, too, that some of your colleagues mentioned—trademark and other sorts of issues. 

So it is an important issue. But then there is a third point that 

you alluded to, and that I want to draw out. 

USTR has also said, trying to use the WTO provisions, that it 

wanted China to explain how it is using criminal penalties. China 

is part of this. The work we have done took other steps like destroying optical disks and others. But there is a requirement for 

being able to use criminal penalties. And China has not yet responded. That is a possibility that I think your constituents may 

have an interest in about how USTR can try to use the WTO procedures. 

And the challenge here, Congresswoman, is you have got these 

international rules in the WTO. We have to be careful, if we bring 

a case, that we bring a case that is framed in the basis so you can 

win, because some of these are generalized language. 

I think what USTR has done here is a very, sort of, well-designed 

approach to try to focus on one element where the case looks 

strongest if China doesn’t respond. And so I think that is how we 

are trying to use a little bit of the carrot-and-the-stick here in 

terms of encouraging China to try to take the steps, the type of 

things that I mentioned, but also say we will use the international 

legal process in the WTO to pursue it separately if they don’t. 

Ms. WATSON. Thank you very much. And what I am going to do 

is respond in writing to you, and let you know what we would like 

to recommend that might be helpful to our industry here. 

And also I will try to clarify what I just said about President 

Chen of Taiwan, what he told us. And our Committee will be, I 

guess, contacting you and the Administration as well on that issue 

of the transit stop. 

Mr. ZOELLICK. Well, and I don’t know if you heard when I talked 

to Mr. Rohrabacher, one of my colleagues talked to President Chen 

yesterday. 

Chairman HYDE. Thank you, Ambassador Watson. Mr. Tancredo. 

Mr. TANCREDO. Thank you. Mr. Secretary, I do want to pursue 

this a little farther with regard to what happened with President 

Chen. And yes, I do understand that Mrs. Bush and other Members and somebody from the State Department talked to him. I 

46

mean, that was in Latin America; that was as a result of everybody 

being there in the same place for the inauguration of the new 

President. 

The Congress of the United States explicitly authorized the 

President of Taiwan and any other high-ranking official to visit the 

United States in Public Law 10346. We have subsequently passed 

resolutions in this Congress that supported that position. 

Could you not have explained to the Chinese that snubbing the 

President, well, snubbing President Chen in the way we did—and 

certainly it was, first of all, taking so much time to actually answer 

their request for permission to transit, then saying that it had to 

be in either Alaska or Hawaii. And according to news reports, and 

that is all we took it from, that in fact he would not have been allowed to even leave the plane. 

I just wonder, as I say, couldn’t we have explained to the Chinese 

how the Congress would react to the situation, in that we have 

passed law here, passed legislation that specifically allows for them 

to do this? 

And with regard to the five points that President Chen made in 

his inaugural speech, and then eventually scrapping the Unification Council. Wasn’t that because those five points were predicated 

upon China never using force or the threat of force against Taiwan? And then, of course, China passed the anti-secession law, 

which did exactly that. It said that it would use force. 

So there was a reason why that happened, and the way it happened. And it still seems to me that it causes enormous problems, 

and certainly again puts us into a position with China that is not 

all that clear. And that lack of clarity about our position, vis-a-vis 

Taiwan, is more dangerous, it seems to me, than anything else. 

And when we state that any other situation than the one we are 

in especially, where it is kind of ambiguous. And when we state our 

position via law about a President’s ability to visit, how can that 

not be referred to as a reason for allowing it? 

Mr. ZOELLICK. First, Mr. Tancredo, I think it is an important 

point. We don’t feel we have a need to explain anything to China 

on this point, and I am not sure you really want us to feel that we 

have to explain to China. We make our own decisions on this. 

Mr. TANCREDO. Well, it certainly seemed like it. 

Mr. ZOELLICK. It is a separate, as a related point, and I think 

this may be what you are driving at. We certainly emphasize what 

Taiwan has accomplished as a democracy, as an economy, how the 

interest really should be to try to create a better relationship on 

both sides of the straits, including China’s obligation to Taiwan to 

try to have dialogues not only with the opposition party, but also 

with the governing party. 

So it is a distinction, but it is an important one. We don’t want 

to be in a position where we have to explain how we deal with Taiwan’s transits or people or economic contacts to China. We do that 

on our own, within the framework. 

But we certainly do encourage China to recognize that this 

should be something that is in everybody’s interest to try to develop a positive relationship with. And for economic reasons, as 

well as for their own culture and societies. 

47

On the five points, it is my understanding when President Chen 

made these points in 2000, in his inauguration speech, they said 

provided China doesn’t use force to attack. Now, that may be a 

summary of it, but China hasn’t used force to attack. You were correct about the anti-secession law, and I think that anti-secession 

law was something we and many other parties criticized. The Europeans criticized it, and that is one of the reasons why they didn’t 

lift the arms embargo. It was not a wise step on their part. 

I would also caution, at least from what we understand from the 

Taiwanese, they do not feel that they have abolished the Unification Council. They used another term for it. Because at least what 

President Chen has said to us is that his word is good, and that 

the things that he committed to the United States he has followed 

up on. 

And pardon me if you will, but in the business that I am in, it 

is very important, if people do give their word, whatever their 

basis, that they keep it. 

And so what I think you see here, and what is going on, is an 

effort to kind of erode sort of at the edge, and sand it off. And 

frankly, I think it is a good thing for U.S. diplomacy to hold people 

to their terms and word. 

And in part, this actually goes to the clarity, Mr. Tancredo. One 

of the things that I have encouraged the Taiwanese to appreciate 

and recognize, you have a global system that, if anything, the regular interstate relations are becoming less important than some of 

the private sector opportunities. 

There is a golden opportunity here for Taiwan to engage in the 

global system. But if it keeps trying to revisit the question that the 

United States made in the late 1970s about a One-China Policy, I 

think it is going to keep hitting into a wall. 

And so there are areas where one can say all right, a question 

about the World Health Organization, where they can’t join the 

World Health Organization because you have to be a state, by the 

rules, to do that, which is different than the WTO. But we pushed 

for observer status, because we said something like Avian Influenza, there is a need to cooperate on these issues. And we pressed 

China to accept and work with that. 

So there is a rich agenda here to integrate China into the global 

system, to help it get the respect that it is due. Did I say China? 

I mean Taiwan. 

But what one also has to be careful about is that when some political figures who have their own competitive politics—just like we 

have in this country—decide they want to either change their word, 

or go back from something, or push the edge of an envelope that 

could lead to conflict, well then, yes, our Government will respond. 

But it will respond in a way that explains its business, treats people with respect, as you have encouraged. 

But again, it is a transient, Mr. Tancredo. It is coming to a Costa 

Rican inauguration. I think the very nature of the dialogue that 

you had suggests that maybe they had some other points in their 

purpose in mind. 

And so we need to be able to work with Taiwan to give it the 

opportunity, but also recognize we are not going to change that 30-

year-old system. 

48

Mr. TANCREDO. Well, I appreciate your response. We will look 

more carefully at exactly the wording of the statement of President 

Chen’s statement. 

But I do think again, going back to the issue of ambiguity, when 

we welcomed the KMT leader here in Washington, DC, just a few 

months before, we then snub the President of Taiwan, it does send 

a mixed message. Or maybe it sends a very specific message that 

we want to interfere with the domestic politics in Taiwan. 

Nonetheless, it does seem to me to be inappropriate. 

Mr. ZOELLICK. Mr. Tancredo, just to answer that, if the KMT 

leader becomes the President of his country, he will be in the same 

category. It is actually the exact opposite. 

In other words, when people aren’t government officials, we can 

talk and we work with them. But when they are the President of 

the country, under the One-China Policy, it is in a different set of 

category. 

So we try to have contacts with a lot of other lower-level officials 

in Taiwan. And as I said, we can have them on the economic side. 

So I guess what I hope is, I hope we wouldn’t discourage the contacts we have with the Taiwanese when they come. 

Mr. TANCREDO. No, I just wish they would be uniform, actually. 

Thank you, Mr. Secretary. 

Chairman HYDE. Thank you. And you might want to review the 

text of what you just said, Mr. Zoellick, on the use of the word 

‘‘country.’’ Mr. Delahunt. 

Mr. DELAHUNT. Thank you, Mr. Secretary. There was something 

that Mr. Rohrabacher, and I think Mr. Smith, mentioned in terms 

of religion. And it provoked a thought in my own mind. 

Am I correct that President Bush attended a church service during the course of his visit to China? 

Mr. ZOELLICK. He did, as his father did before him. And I was 

with him in 1989. 

Mr. DELAHUNT. Now, I respect the fact that you have a very difficult job, and consistency is difficult to attain sometimes. But I 

presume that there recently has been a row, if you will, about the 

appointment of two Catholic bishops that were not approved by the 

Vatican. 

The church that the President attended, was that a state church 

or an independent church? 

Mr. ZOELLICK. Since I wasn’t on this trip, I am afraid I just don’t 

know. I am told it was one of the official churches. 

Mr. DELAHUNT. It is one of the official churches. I would daresay 

that—and neither Mr. Smith nor Mr. Rohrabacher are present. Oh, 

Mr. Smith is here. I am glad he is here. 

But I am sure that it would be difficult for some to accept the 

fact that the President of the United States attended a church 

service that was conducted in a church that was officially registered with the Chinese Government, and presumably would operate within certain boundaries and parameters. I just make that as 

an observation. 

And in terms of messages and clarity, particularly for many in 

this Congress, many in this country, freedom of religion has a larger, more full meaning than attending a church service, Christian 

49

presumably, church service in China, in a venue that was sanctioned by the Chinese Government. It is just an observation. 

I was going to ask you, but you weren’t there, What was the 

President’s impressions of that experience? 

Mr. ZOELLICK. Obviously before you came in, Mr. Delahunt, I emphasized the President’s own emphasis to the Chinese on the visit 

before and the visit now about the importance of religious freedom, 

religious conscience, including pressing on beyond official churches 

the role of having house services, and having to have people to 

have their own private education. 

So I suppose it is a question of, in a visit, is it good to show the 

Chinese people that the President of the United States respects religion, practices religion, attends a church? And I have no reason 

to doubt the religious commitment of the people in that church. 

On the question of the Vatican which you referred to, you may 

be interested in knowing that this is a point where we pressed the 

Chinese. 

Mr. DELAHUNT. Well, I am glad to hear that, Mr. Secretary. But 

I do wonder if—and I say this respectfully—if the President’s attendance at an official church in China sends, at best, a mixed 

message about freedom of religion, and may be interpreted by 

many in China as a commitment that is susceptible to manipulation. And again, I say that respectfully. 

Back in 2001, what was the amount of American debt that was 

owned, possessed by the Chinese? 

Mr. ZOELLICK. I don’t know the precise number, but we could get 

it for you. 

Mr. DELAHUNT. I saw something recently that said $60 billion. 

Mr. ZOELLICK. 60? 

Mr. DELAHUNT. 60, six-zero, in 2001 or 2002. And it is my understanding today——

Mr. ZOELLICK. It could be a difference, Mr. Delahunt, between 

U.S. Government and total debt. That may be the U.S. Government 

debt figure. Because I think the current—— Mr. DELAHUNT. That is what I mean, the Government. You 

know, American Treasury notes, Treasury instruments, that about 

4 years ago there was around $60 billion. And that currently it is 

heading toward $300 billion. 

Mr. ZOELLICK. I think $220 billion is the number, I think. 

Mr. DELAHUNT. 220? Well, there has been a dramatic increase in 

terms of American Treasury instruments being held by the Chinese 

Bank. It gives pause, I think, to many that this provides, or could 

provide, potentially, leverage by the Chinese, since we have such 

a need to borrow, that this will continue. The numbers will grow, 

and at some point in time it will translate into political leverage 

for the Chinese in its bilateral relationship with the United States. 

Do you care to comment? 

Mr. ZOELLICK. Well, first I will correct it. As of January it was 

$262 billion. 

Mr. DELAHUNT. Then I was close. 

Mr. ZOELLICK. And it is really a mutual inter-dependence, Mr. 

Delahunt. In other words, just run through some of these ideas. 

Mr. DELAHUNT. I understand that, I really do. But I tell you, I 

would have the Chinese debt in my hands if I were sitting down 

50

discussing issues such as Chinese help or assistance in dealing 

with North Korea, for example. I understand the mutual relationship; they need our market, et cetera. 

Mr. ZOELLICK. It is not just the market, Mr. Delahunt. 

Chairman HYDE. The time of the gentleman has expired. 

Mr. ZOELLICK. It is if they sold those or other U.S. securities, instead of the idea that they could somehow sort of weaken the dollar, number one, it would devalue the rest of what they are holding. 

But secondly, the whole argument about the currency flexibility 

is it would change the value of the dollar in the rim and be, and 

then all of a sudden they wouldn’t be able to export in the same 

way that they have. 

But it goes to the core point, which is that we emphasize this is 

where there is an imbalance in the relationship, and why, frankly, 

on our side, with sort of savings and consumption, on their side in 

savings and consumption, there needs to be an adjustment. It is 

primarily done through currency adjustments, and one reason why 

we have emphasized the need to have greater flexibility in terms 

of their overall exchange rate. 

So it is probably a phenomenon of how we both have run our respective sort of economic situations, and how they engage. And it 

is an issue that at least is recognized by the Chinese, by President 

Hu’s statements, by the other statements that the senatorial delegation had. 

And the question is really now, Mr. Delahunt, kind of the pace 

of change. And it is a little bit of the three bears here. You don’t 

want it too fast, you don’t want it too slow, but you want to have 

that direction change from what it has been. 

Chairman HYDE. Mr. McCotter. 

Mr. MCCOTTER. Thank you, Mr. Chairman. Thank you for your 

service to our country, Mr. Secretary. 

It seems to me that much of our China policy is based upon the 

hope that constructive engagement through trade will lead to a democratization of that country over time. I am not quite so sure that 

will happen. 

My understanding is that the Communist Party rules supreme in 

China; that they are more important than the government, and certainly more important than the people. Within the Communist system it is the Party, which is why back in the old days we used to 

deal with Brezhnev and Gorbachev as General Secretaries of the 

Party. 

Does it not seem difficult to believe, then, that if prosperity and 

stability come to China, we would expect them, as the vanguard of 

the proletariat that help lead to the establishment of prosperity 

and stability, to unilaterally determine that their time is over, and 

that they will become democrats? Because that is a direct risk to 

the power, the prestige, and the position that they have accumulated over time to the exploitation of the Chinese people. 

Are we not in some way engaging in a historical determinism of 

our own, that over time eventually the richer people get, the more 

they wish to become democrats? And I am not quite certain that 

the historical record would bear that out. Because, as I recall, there 

was a large surge in the German economy after the Weimar RepubVerDate Mar 21 2002 19:06 Nov 28, 2006 Jkt 000000 PO 00000 Frm 00054 Fmt 6633 Sfmt 6633 F:\WORK\FULL\051006\27477.000 DOUG PsN: DOUG
51

lic became Nazi, but I don’t remember them ever deciding that they 

were going to voluntarily become democratic. 

I have two questions. Do we have a long-term strategic policy to 

foster and facilitate the transformation of China into a democracy? 

And secondly, if we are trading with Communist China on the 

hopes that they will become democratic and see the abolition of the 

Communist Party’s rule, does that necessarily mean that we can 

say our policy in China is anti-Communist? And if our policy is 

China is not anti-Communist, when did the United States cease to 

be anti-Communist? 

Mr. ZOELLICK. First, Congressman, some of the comments here 

have suggested that we could determine whether China decided to 

have an economic development and growth policy integrated in the 

world economy or not. 

We certainly could have influenced that over the past 25 years. 

But an important point to recognize is—— Mr. MCCOTTER. If I can save you time, because I know you are 

in a hurry, is no, but we can control what we do in terms of facilitating it or not. 

Mr. ZOELLICK. That is correct. And that really goes to the second 

point that I was going to make, which is that over the course of 

some 25 years we have chosen a course of trying to integrate them 

into the system 

It is precisely why, Congressman, I believed it was important to 

emphasize we have to say, ‘‘Integration to what purpose?’’—which 

was the notion of their responsibility in the system that has benefitted them. And that is exactly the venture we are engaged in with 

them, whether it is Iran or North Korea or Sudan or others, to try 

to get more positive behavior. 

But what I also mentioned is that even though we are interested 

in China’s behavior in the international system, we are also interested in the internal situation in China. And I think there are two 

points in emphasizing this. 

Not only because we believe it is the right thing to do, but because we think it is in their interest. And I emphasized at various 

points today and on other occasions why their own internal turmoil 

will be better suited by having a rule of law, not rule by law. While 

some of the things we talked about in terms of religious freedom, 

there is clearly a searching of people in this society for something 

deeper than the economic side. Try to give some chance for people 

to respond to that. 

And similarly, they have started things like village elections. But 

you are exactly right, Congressman, that at the top of this is still 

the Communist Party structure. And the Communist Party is a 

one-party rule. 

You will find discussions in China about how they should evolve 

that over time. But right now, in part because of some of the things 

I mentioned about their own concern for internal turmoil, I 

wouldn’t expect that they are going to open that up in the near future. 

So what it really goes to is a fundamental question. You have 

raised it. Do you sort of keep your hands off China and say, ‘‘1.3 

billion people, we won’t deal with them, we won’t deal with them 

economically’’? You know, set aside the foreign policy interest? Or 

52

do you try to use the power of America, which is quite significant— 25% to 30% of the world’s GDP, our military power, economic 

power—to try to structure change? And that is exactly what this 

is about. 

And you know, I think people can legitimately raise questions 

about whether we will succeed. I can’t forecast it. 

I will say this, though, when you asked about historical determinism. I used a story when I began about when I lived in Hong 

Kong in 1980, and there was only one democracy in East Asia. And 

people in China, in Hong Kong told me East Asia doesn’t work for 

democracy; it is a foreign concept here. By the way, they used to 

say this about Confucianism and economic development, too, that 

Confucianism wouldn’t allow economic development. 

And I made the point then, and I have been borne out true, to 

say I look all across East Asia, and I see the emergence of democracies. So I do not believe that democracy is foreign to a culture. 

Now, there is a question here of whether this party system will 

adapt, and I don’t think any of us can assure you one way or another, Congressman. So it is a question of, What is the best way 

to try to influence it? 

Mr. MCCOTTER. Mr. Chairman, if I can just really quickly do 

this. 

Chairman HYDE. Mr. McCotter, you have 15 seconds. 

Mr. MCCOTTER. So then we do not know if our policy of constructive engagement in China is anti-Communist, based on what you 

have said. And I find that in many ways, they seem to know their 

interests better than we know our own. 

Mr. ZOELLICK. Well, first off, our policy is constructive engagement. It is a responsible stakeholder policy. Secondly, of course we 

are anti-Communist. 

Mr. MCCOTTER. Then that would be the end goal of this policy 

that we have with China. 

Mr. ZOELLICK. The end goal of the policy, Congressman? 

Mr. MCCOTTER. The end goal of the current policy with China 

would then be to see the elimination of the Communist Party as 

the totalitarian rulers of China. 

Mr. ZOELLICK. Of course we want to try to move China toward 

democracy and non-totalitarian rule. There is no question. 

Mr. MCCOTTER. It is a difference between what we want and 

what our purpose is. 

Mr. ZOELLICK. Pardon? 

Mr. MCCOTTER. I have hopes and I have purpose. They are two 

distinct things. Is the purpose of the policy at present to see, over 

time, the end of the Communist Party as the totalitarian rulers of 

China? 

Mr. ZOELLICK. The purpose of our policy around the world is to 

try to establish democracy, and freedom, and liberty, and religious 

freedom. 

Mr. MCCOTTER. So that is a yes. 

Chairman HYDE. The time of the gentleman has expired. 

Mr. ZOELLICK. I don’t know how I can answer it more clearly 

than that. 

Chairman HYDE. I want to be very careful here. We had committed to the Secretary that he could leave at 12:15. It is past that. 

53

We have three very distinguished Members that have not asked a 

question. And I want to ask the Secretary if he could entertain 

questions on a briefer time frame, on a full time frame, or no time 

frame. And this is your discretion, sir. 

Mr. ZOELLICK. Thank you, Mr. Chairman. I know these people 

have waited. I have got a big group of people that is actually waiting for me, but if we could do this quickly. 

Chairman HYDE. At the risk of presumption, maybe if I could say 

if we could take 21⁄2 minutes for each, and then perhaps he could 

answer in writing, if one wants to do it that way. 

Mr. ZOELLICK. Or I will try to be short. 

Chairman HYDE. Sure. And I am sorry, the order I have is Mr. 

Royce, and then Ms. Ros-Lehtinen, and then Mr. Barrett. Mr. 

Royce. 

Mr. ROYCE. Thank you, Mr. Chairman. Mr. Secretary, I would 

like to follow up on a point you made in your presentation that 

China was hesitant to interfere in the matter of other states. 

And I would like to make a distinction, which I think you would 

agree to, that the reluctance at the UN level, Security Council 

level, as we have seen in Sudan, Iran, and other countries, that has 

been different than Beijing’s increasingly active diplomacy in commercial activity where it is interfering on the ground in Africa. We 

know that China is increasingly active in Sudan, increasingly active in acquiring oil blocs in Africa, competing with American companies, often using tactics there that we disagree with. 

And frankly, I hear we were out-maneuvered on the ground in 

Nigeria, for example, by China. And Robert Mugabe’s equipment to 

help repress his people, the source for that is China. 

So maybe China professes non-interference, but in no way is it 

not engaged in the developing world. 

And I would like to get back to my original question, which is 

how do you assess China’s role in the developing world, whether 

it is negative or positive? And are China’s policies in the developing 

world, including our hemisphere, a point of discussion? 

I would also just like to know, since the President met with 

North Korean defectors and Japanese abductees’ family members, 

what the Administration is going to do as a result to press Beijing 

to meet its international obligations not to forcibly repatriate North 

Korean refugees hiding within its borders. 

The last question I had was about the printing presses in North 

Korea. I understand that recent reports have implicated China as 

well through the Bank of Delta, Asia, and Macau. And I wanted 

to know if there was truth behind those accusations about Chinese 

involvement there. And if so, how serious this is for you, in terms 

of the counterfeiting that has been going on for 25 years now 

through North Korea, and then into Macau. 

And thank you, Mr. Secretary. 

Mr. ZOELLICK. I apologize in advance, Mr. Royce, if I am very 

brief on these. We can follow up. I know you have done so much 

for Africa, and I understand your concern for it. 

On the African point, I had mentioned during the course of the 

morning that I think China’s involvement has been heavily economic, for the reasons you said. But the foreign ministry has tried 

to develop and establish other ties. 

54

I think there is actually an opportunity to urge the Chinese to 

recognize that some of those links could be done more constructively in terms of transparency and investment. some of them could 

backfire on them, if they are not careful. And so I think there can 

be a greater chance for commonality of policies, recognizing that 

there is still going to be some differences, particularly on some of 

the core democracy notions. 

I think our presence, as in whether it be Southeast Asia or Africa, the critical thing is not only how they act, but how we act. And 

here again, I want to compliment you for the work with AGOA so 

we can have a good economic presence. 

You then mentioned the North Korean, I think, refugee issue. It 

is one that the President particularly raised with President Hu, in 

the personal case and the expectations that we have in terms of following their international obligations in terms of dealing with refugees. And you saw the reaction we have taken under domestic, the 

law that you helped pass in recent times. 

And then there was a third. 

Mr. ROYCE. The last one was the counterfeit of North Korea 

through Macau. 

Mr. ZOELLICK. I don’t know of the particulars that you may be 

referring to, but China has been very sensitive to this. Because— and this is one of the benefits of them coming into the international system—they don’t want to have their financial institutions, particularly as they try to bring some of them to market, 

under any cloud. 

And so actually, as the Treasury Department emphasizes safety 

and soundness, but now it is safety, soundness, and security. 

So I think this has actually been an area where, as we have 

raised these with the Chinese or any concerns about it with tracing 

North Korean funds and others, I think the response has been 

rather positive, in part for the self-interest. But if there are some 

particular items, either we or the Treasury can follow up with you, 

Mr. Royce. 

Mr. ROYCE. I would like to, because they are still washing money 

through Macau. I appreciate that very much. Thank you for all 

your good work, Secretary Zoellick. 

Chairman HYDE. Ms. Ros-Lehtinen. 

Ms. ROS-LEHTINEN. Thank you so much, Mr. Chairman. Thank 

you, Mr. Secretary, for allowing us this extra minute and a half. 

I really appreciate the fact that you are willing to meet with us, 

always. 

Many Members of our Committee have already asked what steps 

the Administration is taking to normalize diplomatic relations with 

Taiwan, to further trade relations with our eighth-largest trading 

partner, through a Free Trade Agreement, and to convince China 

to arrive at peaceful coexistence with Taiwan as friendly neighbors. 

I would like to reiterate those sentiments and encourage our Administration to help the Taiwanese people in their plight to further 

the ideals of freedom and democracy, ideals that are common ideals 

between our two peoples. 

Because of this mutual relationship, our struggle remains to 

work together for a more democratic and safe world. The United 

States has always emphasized that the dispute between Taiwan 

55

and China needs to be resolved peacefully. However, as we have 

seen, China is modernizing its military with the aim of threatening 

or attacking Taiwan, and preventing the United States from coming to Taiwan’s assistance. 

So as we fight for the principles of democracy to be recognized 

throughout the world, we must stand by Taiwan as it seeks to 

strengthen its young democratic structure, to expand its economy 

in order to become fully recognized by its Asian neighbors, and to 

be fully integrated by the international community. 

And it was an honor for my city, Miami, to host President Chen 

during a stop, a few months ago. It was very encouraging to see 

so many Members of Congress participating from DC into Miami 

to congratulate President Chen for what he has been doing. It is 

a shame that we were not able to do so again. 

But we look forward to continuing this dialogue with you, Mr. 

Secretary. And as many Members have said, thank you for your 

service. We thank you so much. 

Mr. ZOELLICK. Thank you, Congresswoman. 

Ms. ROS-LEHTINEN. Thank you, Mr. Chairman. 

Chairman HYDE. Thank you, Ms. Ros-Lehtinen. Mr. Barrett. 

Mr. BARRETT. Thank you, Mr. Secretary. In the interest of time, 

I want to just pose a couple of questions to you, and if you would 

have your staff get back to me in writing, Mr. Secretary, I would 

be greatly appreciative. 

The first: My Senator in South Carolina, Senator Graham, and 

rightfully so I think, has been very concerned about the floating 

currency policy with China. If you can bring me up to date on exactly where we are with that subject. Are we continuing to apply 

the right pressure? Is China relinquishing some of that ability 

where it actually floats? Just kind of bring us up to date on that 

issue. 

And the other issue is, of course, the one question that is on the 

mind of all of my constituents is energy. I think we are closer to 

$75 a barrel than we are $70 ever again, in the long term anyway. 

And as China competes with the supply and the demand, alliances 

with certain countries—i.e., Iran—are very concerning to me. If you 

can kind of give us a brief of what you think the extra pressure 

on the supply will be in the near and far future, and the possibility 

of alliances with China and certain other countries that may not 

be friendly to the West, the implications into the future that could 

cost the United States. 

Mr. ZOELLICK. I will be pleased to do that, Mr. Barrett. And in 

addition, I will just say that we will also share with you some 

points I made about the fact that I think that on the energy issue, 

that China and the United States actually have some common interests we need to encourage. 

We are both in a situation, we are big consumers. We need to 

support non-oil and gas development. And in the most recent 10-

year program, China is going to try to move about 20% of its market for renewables. So whether it is nuclear, clean coal technology, 

or others, we need to diversify oil and gas supplies so we are not 

dependent on certain choke points. 

Strategic petroleum reserves, which we use and they are starting 

to develop, demand on the efficiency side, China is not as efficient 

56

in terms of use. It is understandable, it is a developing country, but 

they are moving in that direction. 

And then these critical choke points in some of these areas, 

which really go in a way to the point you and Mr. Lantos are making in different ways, is that they have an interest in not having 

the major energy-producing areas of the world inflamed with dangerous nuclear proliferation. 

Chairman HYDE. Thank you very much, Mr. Secretary, and we 

appreciate your testimony. 

The Committee is adjourned. 

[Whereupon, at 12:30 p.m., the Committee hearing was adjourned.] 

(57)

A P P E N D I X 

MATERIAL SUBMITTED FOR THE HEARING RECORD

PREPARED STATEMENT OF THE HONORABLE DAN BURTON, A REPRESENTATIVE IN CON- GRESS FROM THE STATE OF INDIANA, AND CHAIRMAN, SUBCOMMITTEE ON THE

WESTERN HEMISPHERE

Mr. Chairman, thank you for holding this important and timely hearing on China, 

its resurgence, and what—if anything—the U.S. should do counter China’s rise to 

power. While it has been the policy of the United States since the collapse of the 

Soviet Union to strengthen the economy of China in order to balance and maintain 

regional stability, I believe it is time to reexamine our policies, to ensure our continued investment in China is the right thing to do. 

The People’s Republic of China (PRC) has come a long way from the days of Mao 

Zedong and Deng Xiaoping and now, with the help and encouragement of the 

United States in the form of foreign direct investment and trade, instead of relying 

on the policies of isolationism and protectionism, China has opened up its economy 

and its culture, bringing prosperity and increased quality of life for many of its 1.3 

billion people. We had hoped that by helping to facilitate economic growth in the 

PRC, China would in turn emerge as a stable economic and strategic partner, but 

recent trends indicate that, despite the opening of its markets, the Chinese Communist Party still retains a tight grip on every facet of China. It is in this context 

that we need to reexamine—and perhaps change—our policies toward the PRC, 

should it continue to pursue what seem to be highly destabilizing policies. 

Trade is one area of concern. Many experts have asserted that China has artificially undervalued its currency—by as much as 40 percent—in order to favor Chinese exports. As a result, it is expected that the U.S. will be running a trade deficit 

with Beijing as high as $250 billion by the year’s end. Additionally, there have been 

widespread accusations that China engages in ‘‘dumping’’—the practice of selling its 

goods on the international market at below cost—and that it exploits its own workers for economic gain. If this is true, it is our responsibility to ensure that we take 

the PRC to task for unfair trading practices. 

Equally concerning, China is also engaged in a slow but steady erosion of the fundamental freedoms of its citizens, and even American citizens working in China. Despite its repeated claims of having improved human rights, the PRC actively arrests 

and sometimes even executes political dissidents who speak out against the regime. 

It silences, in a variety of ways, reporters who write articles critical of the regime, 

and as we all know, the PRC engages in censoring the internet from picking up 

terms it doesn’t want its people to learn about, like ‘‘democracy,’’ ‘‘Taiwan,’’ or any 

historical facts about the Tiananmen Square massacre in 1989. Much to the dismay 

of the Congress, the PRC has successfully coerced U.S-owned internet companies 

like Google and Yahoo doing business in China to abide by its policy of censorship. 

By far and away, however, it is the PRC’s massive military buildup that is the 

most worrisome of China’s increasingly destabilizing activities. Over the course of 

the past decade, China has embarked on a rapid military buildup, moving from a 

defensive force to a more robust and aggressive one, utilizing complex weapons systems—many of which have been imported from foreign countries including the 

United States—with a much broader scope. While the PRC insists that dual-use 

technologies are used strictly for civilian purposes, many experts in the U.S. believe 

that indeed the PRC exploits these technologies for military purposes as well. 

China is actively trying to strengthen the People’s Liberation Army (PLA) Navy 

by arming it with aircraft carriers and fighter planes for those carriers, a clear signal that the PLA plans to travel beyond its usual periphery; and China has even 

been experimenting with military exercises in space, even as they condemn the 

United States for employing similar tactics. 

58

This massive buildup of the PLA leaves little doubt remaining as to the PRC’s 

intentions with regard to Taiwan, and indeed, we are left to wonder what else it 

is planning, given the large-scale escalation of its military. 

All of these deeply troubling developments in China, coupled with a lack of cooperation from the PRC on the issues of Iran and North Korea, and its creeping 

influence into Latin American affairs, have deeply hampered U.S.-Sino relations. 

This was painfully obvious to all when PRC Premier Hu Jintao came to the United 

States and, instead of meeting the President first, he chose to sit down with Bill 

Gates to discuss the issue of piracy and intellectual property. More resulted from 

that initial meeting than came from Hu’s meeting with President Bush, which signals that relations are likely to get worse before they get better. 

I believe the United States played a pivotal role in empowering China, and I regret that it now appears as though China is biting the very hand which feeds it. 

Clearly, our initial belief that China would prove a loyal partner and responsible 

stakeholder in international affairs was incorrect, and it seems more likely now that 

we have created another adversary and robust rival instead of an ally. 

If China wishes to see continued cooperation with the United States, it will take 

serious steps toward reforming its trade practices as well as human rights, and 

work to cooperate with the U.S. on military and diplomatic issues especially with 

regard to Taiwan. In the meantime, the U.S. should proceed with caution on all 

PRC-related matters. 

WHITHER CHINA: FROM MEMBERSHIP TO RESPONSIBILITY? 

Robert B. Zoellick, Deputy Secretary of State 

Remarks to National Committee on U.S.-China Relations 

New York City 

September 21, 2005

As Prepared for Delivery

Earlier this year, I had the pleasure of making the acquaintance of Mr. Zheng 

Bijian, Chair of the China Reform Forum, who over some decades has been a counselor to China’s leaders. We have spent many hours in Beijing and Washington discussing China’s course of development and Sino-American relations. It has been my 

good fortune to get to know such a thoughtful man who has helped influence, 

through the Central Party School, the outlook of many officials during a time of tremendous change for China. 

This month, in anticipation of President Hu’s visit to the United States, Mr. 

Zheng published the lead article in Foreign Affairs, ‘‘China’s ‘Peaceful Rise’ to Great 

Power Status.’’ This evening, I would like to give you a sense of the current dialogue 

between the United States and China by sharing my perspective. 

Some 27 years ago, Chinese leaders took a hard look at their country and didn’t 

like what they saw. China was just emerging from the Cultural Revolution. It was 

desperately poor, deliberately isolated from the world economy, and opposed to nearly every international institution. Under Deng Xiaoping, as Mr. Zheng explains, China’s leaders reversed course and decided ‘‘to embrace globalization rather than detach themselves from it.’’

Seven U.S. presidents of both parties recognized this strategic shift and worked 

to integrate China as a full member of the international system. Since 1978, the 

United States has also encouraged China’s economic development through market 

reforms. 

Our policy has succeeded remarkably well: the dragon emerged and joined the 

world. Today, from the United Nations to the World Trade Organization, from 

agreements on ozone depletion to pacts on nuclear weapons, China is a player at 

the table. 

And China has experienced exceptional economic growth. Whether in commodities, clothing, computers, or capital markets, China’s presence is felt every day. 

China is big, it is growing, and it will influence the world in the years ahead. 

For the United States and the world, the essential question is—how will China 

use its influence? 

To answer that question, it is time to take our policy beyond opening doors to China’s membership into the international system: We need to urge China to become 

a responsible stakeholder in that system. 

China has a responsibility to strengthen the international system that has enabled its success. In doing so, China could achieve the objective identified by Mr. 

Zheng: ‘‘to transcend the traditional ways for great powers to emerge.’’

59

As Secretary Rice has stated, the United States welcomes a confident, peaceful, 

and prosperous China, one that appreciates that its growth and development depends on constructive connections with the rest of the world. Indeed, we hope to intensify work with a China that not only adjusts to the international rules developed 

over the last century, but also joins us and others to address the challenges of the 

new century. 

From China’s perspective, it would seem that its national interest would be much 

better served by working with us to shape the future international system. 

If it isn’t clear why the United States should suggest a cooperative relationship 

with China, consider the alternatives. Picture the wide range of global challenges 

we face in the years ahead—terrorism and extremists exploiting Islam, the proliferation of weapons of mass destruction, poverty, disease—and ask whether it 

would be easier or harder to handle those problems if the United States and China 

were cooperating or at odds. 

For fifty years, our policy was to fence in the Soviet Union while its own internal 

contradictions undermined it. For thirty years, our policy has been to draw out the 

People’s Republic of China. As a result, the China of today is simply not the Soviet 

Union of the late 1940s:

• It does not seek to spread radical, anti-American ideologies.

• While not yet democratic, it does not see itself in a twilight conflict against 

democracy around the globe.

• While at times mercantilist, it does not see itself in a death struggle with capitalism.

• And most importantly, China does not believe that its future depends on overturning the fundamental order of the international system. In fact, quite the 

reverse: Chinese leaders have decided that their success depends on being 

networked with the modern world.

If the Cold War analogy does not apply, neither does the distant balance-of-power 

politics of 19th Century Europe. The global economy of the 21st Century is a tightly 

woven fabric. We are too interconnected to try to hold China at arm’s length, hoping 

to promote other powers in Asia at its expense. Nor would the other powers hold 

China at bay, initiating and terminating ties based on an old model of drawing-room 

diplomacy. The United States seeks constructive relations with all countries that do 

not threaten peace and security. 

So if the templates of the past do not fit, how should we view China at the dawn 

of the 21st Century? 

On both sides, there is a gulf in perceptions. The overwhelming priority of China’s 

senior officials is to develop and modernize a China that still faces enormous internal challenges. While proud of their accomplishments, China’s leaders recognize 

their country’s perceived weaknesses, its rural poverty, and the challenges of political and social change. Two-thirds of China’s population—nearly 900 million people—are in poor rural areas, living mostly as subsistence farmers, and 200 million 

Chinese live on less than a dollar a day. In China, economic growth is seen as an 

internal imperative, not as a challenge to the United States. 

Therefore, China clearly needs a benign international environment for its work 

at home. Of course, the Chinese expect to be treated with respect and will want to 

have their views and interests recognized. But China does not want a conflict with 

the United States. 

Nevertheless, many Americans worry that the Chinese dragon will prove to be a 

fire-breather. There is a cauldron of anxiety about China. 

The U.S. business community, which in the 1990s saw China as a land of opportunity, now has a more mixed assessment. Smaller companies worry about Chinese 

competition, rampant piracy, counterfeiting, and currency manipulation. Even larger 

U.S. businesses—once the backbone of support for economic engagement—are concerned that mercantilist Chinese policies will try to direct controlled markets instead of opening competitive markets. American workers wonder if they can compete. 

China needs to recognize how its actions are perceived by others. China’s involvement with troublesome states indicates at best a blindness to consequences and at 

worst something more ominous. China’s actions—combined with a lack of transparency—can create risks. Uncertainties about how China will use its power will 

lead the United States—and others as well—to hedge relations with China. Many 

countries hope China will pursue a ‘‘Peaceful Rise,’’ but none will bet their future 

on it. 

For example, China’s rapid military modernization and increases in capabilities 

raise questions about the purposes of this buildup and China’s lack of transparency. 

60

The recent report by the U.S. Department of Defense on China’s military posture 

was not confrontational, although China’s reaction to it was. The U.S. report described facts, including what we know about China’s military, and discussed alternative scenarios. If China wants to lessen anxieties, it should openly explain its defense spending, intentions, doctrine, and military exercises. 

Views about China are also shaped by its growing economic footprint. China has 

gained much from its membership in an open, rules-based international economic 

system, and the U.S. market is particularly important for China’s development 

strategy. Many gain from this trade, including millions of U.S. farmers and workers 

who produce the commodities, components, and capital goods that China is so voraciously consuming. 

But no other country—certainly not those of the European Union or Japan—

would accept a $162 billion bilateral trade deficit, contributing to a $665 billion 

global current account deficit. China—and others that sell to China—cannot take its 

access to the U.S. market for granted. Protectionist pressures are growing. 

China has been more open than many developing countries, but there are increasing signs of mercantilism, with policies that seek to direct markets rather than 

opening them. The United States will not be able to sustain an open international 

economic system—or domestic U.S. support for such a system—without greater cooperation from China, as a stakeholder that shares responsibility on international 

economic issues. 

For example, a responsible major global player shouldn’t tolerate rampant theft 

of intellectual property and counterfeiting, both of which strike at the heart of 

America’s knowledge economy. China’s pledges—including a statement just last 

week by President Hu in New York—to crack down on the criminals who ply this 

trade are welcome, but the results are not yet evident. China needs to fully live up 

to its commitments to markets where America has a strong competitive advantage, 

such as in services, agriculture, and certain manufactured goods. And while China’s 

exchange rate policy offered stability in the past, times have changed. China may 

have a global current account surplus this year of nearly $150 billion, among the 

highest in the world. This suggests that China’s recent policy adjustments are an 

initial step, but much more remains to be done to permit markets to adjust to imbalances. China also shares a strong interest with the United States in negotiating 

a successful WTO Doha agreement that opens markets and expands global growth. 

China’s economic growth is driving its thirst for energy. In response, China is acting as if it can somehow ‘‘lock up’’ energy supplies around the world. This is not 

a sensible path to achieving energy security. Moreover, a mercantilist strategy leads 

to partnerships with regimes that hurt China’s reputation and lead others to question its intentions. In contrast, market strategies can lessen volatility, instability, 

and hoarding. China should work with the United States and others to develop diverse sources of energy, including through clean coal technology, nuclear, renewables, hydrogen, and biofuels. Our new Asia Pacific Partnership on Clean Development and Climate—as well as the bilateral dialogue conducted by the U.S. Department of Energy and China’s National Development and Reform Commission—offer 

practical mechanisms for this cooperation. We should also encourage the opening of 

oil and gas production in more places around the world. We can work on energy conservation and efficiency, including through standards for the many appliances made 

in China. Through the IEA we can strengthen the building and management of strategic reserves. We also have a common interest in secure transport routes and security in producing countries. 

All nations conduct diplomacy to promote their national interests. Responsible 

stakeholders go further: They recognize that the international system sustains their 

peaceful prosperity, so they work to sustain that system. In its foreign policy, China 

has many opportunities to be a responsible stakeholder. 

The most pressing opportunity is North Korea. Since hosting the Six-Party Talks 

at their inception in 2003, China has played a constructive role. This week we 

achieved a Joint Statement of Principles, with an agreement on the goal of 

‘‘verifiable denuclearization of the Korean peninsula in a peaceful manner.’’ But the 

hard work of implementation lies ahead, and China should share our interest in effective and comprehensive compliance. 

Moreover, the North Korea problem is about more than just the spread of dangerous weapons. Without broad economic and political reform, North Korea poses 

a threat to itself and others. It is time to move beyond the half century-old armistice 

on the Korean peninsula to a true peace, with regional security and development. 

A Korean peninsula without nuclear weapons opens the door to this future. Some 

30 years ago America ended its war in Viet Nam. Today Viet Nam looks to the 

United States to help integrate it into the world market economic system so Viet 

61

Nam can improve the lives of its people. By contrast, North Korea, with a 50 yearold cold armistice, just falls further behind. 

Beijing also has a strong interest in working with us to halt the proliferation of 

weapons of mass destruction and missiles that can deliver them. The proliferation 

of danger will undermine the benign security environment and healthy international 

economy that China needs for its development. 

China’s actions on Iran’s nuclear program will reveal the seriousness of China’s 

commitment to non-proliferation. And while we welcome China’s efforts to police its 

own behavior through new export controls on sensitive technology, we still need to 

see tough legal punishments for violators. 

China and the United States can do more together in the global fight against terrorism. Chinese citizens have been victims of terror attacks in Pakistan and Afghanistan. China can help destroy the supply lines of global terrorism. We have made 

a good start by working together at the UN and searching for terrorist money in 

Chinese banks, but can expand our cooperation further. 

China pledged $150 million in assistance to Afghanistan, and $25 million to Iraq. 

These pledges were welcome, and we look forward to their full implementation. 

China would build stronger ties with both through follow-on pledges. Other countries are assisting the new Iraqi government with major debt forgiveness, focusing 

attention on the $7 billion in Iraqi debt still held by Chinese state companies. 

On my early morning runs in Khartoum, I saw Chinese doing tai chi exercises. 

I suspect they were in Sudan for the oil business. But China should take more than 

oil from Sudan—it should take some responsibility for resolving Sudan’s human crisis. It could work with the United States, the UN, and others to support the African 

Union’s peacekeeping mission, to provide humanitarian relief to Darfur, and to promote a solution to Sudan’s conflicts. 

In Asia, China is already playing a larger role. The United States respects China’s 

interests in the region, and recognizes the useful role of multilateral diplomacy in 

Asia. But concerns will grow if China seeks to maneuver toward a predominance 

of power. Instead, we should work together with ASEAN, Japan, Australia, and others for regional security and prosperity through the ASEAN Regional Forum and 

the Asia Pacific Economic Cooperation forum. 

China’s choices about Taiwan will send an important message, too. We have made 

clear that our ‘‘one China’’ policy remains based on the three communique ́s and the 

Taiwan Relations Act. It is important for China to resolve its differences with Taiwan peacefully. 

The United States, Japan, and China will need to cooperate effectively together 

on both regional and global challenges. Given China’s terrible losses in World War 

II, I appreciate the sensitivity of historical issues with Japan. But as I have told 

my Chinese colleagues, I have observed some sizeable gaps in China’s telling of history, too. When I visited the ‘‘918’’ museum at the site of the 1931 ‘‘Manchurian Incident,’’ I noted that the chronological account jumped from 1941 to the Soviet offensive against Japan in August 1945, overlooking the United States involvement in 

the Pacific from 1941 to 1945! Perhaps we could start to ease some misapprehensions by opening a three-way dialogue among historians. 

Clearly, there are many common interests and opportunities for cooperation. But 

some say America’s commitment to democracy will preclude long-term cooperation 

with China. Let me suggest why this need not be so. 

Freedom lies at the heart of what America is . . . as a nation, we stand for what 

President Bush calls the non-negotiable demands of human dignity. As I have seen 

over the 25 years since I lived in Hong Kong, Asians have also pressed for more 

freedom and built many more democracies. Indeed, President Hu and Premier Wen 

are talking about the importance of China strengthening the rule of law and developing democratic institutions. 

We do not urge the cause of freedom to weaken China. To the contrary, President 

Bush has stressed that the terrible experience of 9/11 has driven home that in the 

absence of freedom, unhealthy societies will breed deadly cancers. In his Second Inaugural, President Bush recognized that democratic institutions must reflect the 

values and culture of diverse societies. As he said, ‘‘Our goal . . . is to help others 

find their own voice, attain their own freedom, and make their own way.’’

Being born ethnically Chinese does not predispose people against democracy—just 

look at Taiwan’s vibrant politics. Japan and South Korea have successfully blended 

a Confucian heritage with modern democratic principles. 

Closed politics cannot be a permanent feature of Chinese society. It is simply not 

sustainable—as economic growth continues, better-off Chinese will want a greater 

say in their future, and pressure builds for political reform:

• China has one umbrella labor union, but waves of strikes.

62

• A party that came to power as a movement of peasants now confronts violent 

rural protests, especially against corruption.

• A government with massive police powers cannot control spreading crime.

Some in China believe they can secure the Communist Party’s monopoly on power 

through emphasizing economic growth and heightened nationalism. This is risky 

and mistaken. 

China needs a peaceful political transition to make its government responsible 

and accountable to its people. Village and grassroots elections are a start. They 

might be expanded—perhaps to counties and provinces—as a next step. China needs 

to reform its judiciary. It should open government processes to the involvement of 

civil society and stop harassing journalists who point out problems. China should 

also expand religious freedom and make real the guarantees of rights that exist on 

paper—but not in practice. 

Ladies and Gentlemen: How we deal with China’s rising power is a central question in American foreign policy. 

In China and the United States, Mr. Zheng’s idea of a ‘‘peaceful rise’’ will spur 

vibrant debate. The world will look to the evidence of actions. 

Tonight I have suggested that the U.S. response should be to help foster constructive action by transforming our thirty-year policy of integration: We now need to encourage China to become a responsible stakeholder in the international system. As 

a responsible stakeholder, China would be more than just a member—it would work 

with us to sustain the international system that has enabled its success. 

Cooperation as stakeholders will not mean the absence of differences—we will 

have disputes that we need to manage. But that management can take place within 

a larger framework where the parties recognize a shared interest in sustaining political, economic, and security systems that provide common benefits. 

To achieve this transformation of the Sino-American relationship, this Administration—and those that follow it—will need to build the foundation of support at 

home. That’s particularly why I wanted to join you tonight. You hear the voices that 

perceive China solely through the lens of fear. But America succeeds when we look 

to the future as an opportunity, not when we fear what the future might bring. To 

succeed now, we will need all of you to press both the Chinese and your fellow citizens. 

When President Nixon visited Beijing in 1972, our relationship with China was 

defined by what we were both against. Now we have the opportunity to define our 

relationship by what are both for. 

We have many common interests with China. But relationships built only on a 

coincidence of interests have shallow roots. Relationships built on shared interests 

and shared values are deep and lasting. We can cooperate with the emerging China 

of today, even as we work for the democratic China of tomorrow.

Released on September 21, 2005

WRITTEN RESPONSES FROM THE HONORABLE ROBERT B. ZOELLICK, DEPUTY SECRETARY OF STATE, U.S. DEPARTMENT OF STATE, TO QUESTIONS SUBMITTED FOR THE

RECORD BY THE HONORABLE HENRY J. HYDE, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF ILLINOIS, AND CHAIRMAN, COMMITTEE ON INTERNATIONAL RELATIONS

Question: 

What progress is the Administration making in winning Beijing’s support for an 

affirmative vote in the Security Council to impose economic sanctions on Iran due 

to Teheran’s continued nuclear brinksmanship? 

Response: 

The U.S. has urged China to work closely with us and other members of the UN 

Security Council to halt Iran’s nuclear weapons program. China has stated publicly 

that it shares the view that Iran should not obtain a nuclear weapons capability. 

China voted to adopt the IAEA Board of Governors’ February 4 resolution which reported Iran to the UN Security Council. It joined the other permanent members of 

the Security Council on March 29 in adopting the Presidential Statement calling 

upon Iran to suspend its enrichment-related activities and fully cooperate with the 

IAEA. China currently stands with the rest of the UN Security Council plus Germany in supporting a package with incentives for Iran to abandon its uranium enrichment program and possible sanctions if it fails to comply. We continue to urge 

China, as well as other members of the international community, to use their influence to persuade Iran to change course. 

63

Question: 

There were a number of protocol gaffes at the recent, very brief summit meeting 

held at the White House for visiting Chinese President Hu. Given the priority placed 

in Chinese culture on protocol, have these gaffes adversely affected Sino-American relations? Are the Chinese still suspicious that the use of the wrong name to announce 

their country’s national anthem was done on purpose? 

Response: 

The U.S. expressed regret for the protocol glitches, including the mistake made 

in announcing the PRC national anthem. The Chinese accepted our explanation that 

these were honest mistakes and have told us that they view President Hu’s visit 

as an overall success, including the several hours of discussions Presidents Bush 

and Hu held following the South Lawn welcoming ceremony. 

Question: 

A number of commentators considered the April 20th White House meeting to be 

merely a photo opportunity, with no concrete agreements between the two Presidents 

on the trade deficit or the Iran and North Korean nuclear issues. Was that the case? 

Were insufficient preparations made, or were expectations too high? 

Response: 

The April 20 White House meetings were an opportunity for Presidents Bush and 

Hu to engage in substantive discussions on economic and security matters of critical 

importance to the bilateral relationship and global peace and prosperity. 

During his visit, President Hu acknowledged the problems associated with the 

trade deficit and related economic imbalances. He committed to a long-term structural reform program to help move China from an over-dependence on exports to 

an economy increasingly driven by domestic consumption. This is of enormous importance in ensuring that China corrects its global trade imbalances and acts as a 

sustainable engine of growth for the global economy. 

Specifically, this structural reform program includes action to boost domestic demand, undertake pension reform to reduce precautionary savings, expand market 

access, and increase imports. Each of these steps will help to create new opportunities and level the playing field for Americans, as well as further expand trade between the United States and China. President Hu also reiterated his commitment 

to advance the reform of China’s exchange rate regime, the fifth critical element of 

China’s structural reform program and a point emphasized by President Bush in his 

meetings. 

President Hu pledged to strengthen the protection of intellectual property rights 

(IPR), echoing the commitment made by Vice Premier Wu Yi at the Joint Commission on Commerce and Trade (JCCT), which concluded in the immediate run-up to 

the Presidential visit. In support of this pledge, the Chinese government took action 

to close or stop 14 factories from producing illegal optical disks and issued notices 

that both required the pre-loading of legal operating system software on all computers produced or imported into China and specified that government agencies use 

only legitimate software. At the JCCT, China agreed to move swiftly to reopen its 

market to U.S. beef and to make adjustments to allow for increased market access 

for telecommunications service providers, computer software, and medical devices. 

On North Korea, the two Presidents reaffirmed their shared strategic goal of 

denuclearizing North Korea. President Hu pledged continuing Chinese action to get 

Pyongyang back to the Six Party Talks and live up to its September 19, 2005 commitment to abandon its nuclear weapons programs. The two leaders also agreed on 

a common strategic assessment of the situation in Iran and urged Iran to comply 

with its international obligations vis-a`-vis its nuclear programs, as stipulated in a 

March 29 UNSC Presidential Statement. The latter was unanimously supported by 

China and the other permanent members of the Security Council. China has since 

publicly endorsed the package of incentives/disincentives put forward by the five 

permanent members of the Security Council and Germany (P5+1), and we are exploring with China next steps that should be taken, including further action at the 

UNSC, if Iran continues to defy its international obligations. 

Question: 

Why wasn’t progress made in the meeting with the Chinese President regarding the 

enormous—$202 billion—and ballooning annual trade deficit with China? Is the Administration waiting for Congress to take the lead on this? 

Response: 

Addressing our trade and economic concerns with China, including the bilateral 

trade deficit, is a priority for President Bush and the Administration. During his 

64

visit to the United States, President Hu acknowledged China’s trade and economic 

imbalances and pledged to level the playing field for American workers, businesses 

and farmers. He committed to a long-term structural reform program to help move 

China from an over-dependence on exports to an economy increasingly driven by 

consumer demand. This is of enormous importance in ensuring that China corrects 

its global trade imbalances and acts as an engine of growth for the global economy. 

Specifically, this program includes action to boost domestic demand, undertake 

pension reform to reduce precautionary savings, expand market access, and increase 

imports. Each of these steps will help to create new opportunities for Americans and 

further expand U.S. exports to China, which have already grown an average of 20% 

per year since China joined the WTO in 2001. President Hu also reiterated his commitment to advance the reform of China’s exchange rate regime, the fifth critical 

element of China’s structural reform program and a point emphasized by President 

Bush in his meetings. 

In addition, we made measurable progress on key bilateral trade issues at the 

Joint Commission on Commerce and Trade (JCCT) meetings in the immediate runup to President Hu’s visit. At the JCCT, China agreed to move swiftly to reopen 

its market to exports of U.S. beef, strengthen intellectual property rights (IPR) protection, and begin formal negotiations by the end of 2007 to join the WTO Government Procurement Agreement. In the area of IPR protection, the Chinese took concrete action to close or stop 14 factories from producing illegal optical disks, and 

issued notices that both required the pre-loading of legal operating system software 

on all computers produced or imported into China and specified that government 

agencies use only legitimate software. China also agreed to make adjustments to 

allow for increased market access for telecommunications service providers, computer software, and medical devices, and Chinese buying delegations completed contracts in April for the export of more than $16 billion of U.S. goods and services 

to China. 

Certainly more has to be done to ensure American exporters, workers, farmers 

and service providers have the same access to Chinese markets as China has to our 

markets. We will continue to press for follow-through on these and other commitments as well as additional steps to promote greater equity in the trade relationship. We intend to work in coordination with Congress to achieve results that will 

contribute to continued U.S. economic prosperity. 

Question: 

Economists estimate that American companies have lost $3 billion annually due 

to Intellectual Property Rights (IPR) violations in China, and that this has cost 

America at least one hundred thousand jobs. We understand that Disney Corporation, for example, has faced additional IPR infringements in southern China following the opening of its new Disneyland Park in Hong Kong last year. What 

progress has been made in addressing (IPR) violations? 

Response: 

The Department of State is actively engaged with Beijing at the highest levels to 

promote and protect American innovation, creativity, and competitiveness in China. 

I and other senior State Department officials have pressed Beijing to substantially 

reduce piracy and counterfeiting and improve intellectual property rights protection 

and enforcement—coordinating our messages with those of our colleagues in other 

agencies. In addition, through our International Intellectual Property Rights Enforcement Office in Washington, our Embassy in Beijing and our consulates 

throughout China, the State Department itself has advocated effectively and consistently on behalf of American businesses and entrepreneurs whose intellectual property rights have been violated. The U.S. Ambassador to China hosts an annual 

Roundtable that puts the critical concerns of American firms directly before senior 

Chinese government officials and promotes practical solutions. Our Consulate in 

Shenyang has worked successfully to ensure that government offices in Liaoning 

province use legal software, and our Consul General in Guangzhou, in southern 

China, has led business delegations to meet with local officials across Guangdong 

province—resulting in first-time raids and crackdowns in a number of jurisdictions. 

We are also working through the State Department’s International Visitor Programs 

to train Chinese IPR officials and company representatives on the importance of IPR 

protection and successful strategies and models to improve enforcement. 

Our engagement has contributed to a number of encouraging developments. During April’s meeting of the Joint Commission on Commerce and Trade (JCCT), Beijing reaffirmed its commitment to reduce piracy rates and announced a new requirement that all personal computers manufactured or imported into China be pre-installed with legal operating software. This has already resulted in Chinese purVerDate Mar 21 2002 19:06 Nov 28, 2006 Jkt 000000 PO 00000 Frm 00068 Fmt 6601 Sfmt 6621 F:\WORK\FULL\051006\27477.000 DOUG PsN: DOUG
65

chases of U.S. software, including an agreement by Lenovo, China’s top computer 

maker, to purchase more than $1.2bn of Microsoft products over the next year. In 

addition, the proportion of PCs sold in China containing legal copies of Microsoft 

Windows doubled in the first quarter 2006 as compared to the fourth quarter of 

2005. 

Vice Minister Wu Yi also pledged during the JCCT to impose criminal penalties 

against producers of pirated optical discs. And Beijing has agreed to take steps to 

facilitate the transfer of IPR cases from the administrative justice system to the 

criminal justice system. 

While pleased to note the progress that has been made, we share your view that 

there remains a long way to go. These positive pledges must be followed up with 

concrete results. The State Department will continue to use all available avenues 

to ensure that Beijing meets all its JCCT commitments and obligations under the 

WTO. We will work together—with Congress, with other agencies, and with likeminded countries—to make that shared goal a reality. 

Question: 

Many economists believe that China obtains an unfair trade advantage due to the 

undervaluing of its currency by as much as forty percent. Senators Schumer and 

Graham report that this has cost the United States three million manufacturing jobs 

over the past five years. What do you think of their proposal for a 27.5 percent acrossthe-board tariff hike on Chinese imports if Beijing does not address this issue? 

Response: 

We believe our bilateral and multilateral efforts aimed at convincing China to 

move more rapidly toward its recently enunciated goals of a more balanced economy 

and a more market-oriented approach with regard to trade and currency remains 

the appropriate strategy. 

The Treasury Department has led intensive discussions with the Chinese, at both 

the senior policy level and at the technical and operational levels, to encourage the 

PRC to move quickly to an exchange rate that reflects market forces. President 

Bush raised this issue with President Hu at their April 20 meeting in Washington. 

President Hu pledged at that time to move ahead with reforms to China’s exchange 

rate system. I have called on China to become a ‘‘responsible stakeholder’’ in the 

international trading and financial system that has brought prosperity to so many. 

China has taken some steps to open its economy and to permit its currency to better 

reflect market forces, but needs to do more. The administration will continue to engage China on this issue and we expect to see further progress. 

In our discussions, we have been clear in laying out the consequences of a failure 

to introduce a more flexible, market-based exchange rate. For China these include 

continued limits on the effectiveness of monetary policy, boom/bust cycles of growth, 

and continued weakness of the financial system that leads to a buildup of bad loans. 

It will also dampen prospects for increased flexibility in other Asian currencies, 

which would lead to weaker international adjustment mechanisms more generally. 

The consequences for the world economy and the United States would include making the adjustment of global imbalances more difficult and undermining support for 

open trade, which could reduce future growth. 

We have engaged multilaterally—in the G7, the IMF, the OECD, and the Asian 

Development Bank—to mobilize international support, and these groups have also 

called on China to adopt greater exchange rate flexibility. The most recent G7 statement of April 21 stated that in emerging Asia, particularly China, greater flexibility 

in exchange rates is critical, as are strengthening domestic demand, reducing reliance on export-led growth strategies, and moving forward with reforms to strengthen financial sectors. 

Question: 

American small business investors, a disproportionate number of whom are ethnic 

Chinese like David Ji of California, meet insurmountable obstacles in doing business 

in China. These investors find that Chinese firms make use of local police and judicial authorities to threaten them and criminalize what are basically commercial disputes. Without the rule of law, how can these smaller firms do business in China? 

Is the State Department making all necessary efforts to gain liberty for our ethnic 

Chinese citizens like David Ji, who has been held for eighteen months against his 

will, had his passport seized, and yet has had no formal charges brought against 

him? 

66

Response: 

The State Department has followed Mr. David Ji’s case, and other similar cases, 

closely and is doing everything possible to ensure equitable and humanitarian treatment for American investors in China. 

I want to assure you that assisting small- and medium-sized firms to do business 

overseas and American businesspeople who find themselves mired in disputes is a 

key component of the Administration’s policy, and the State Department takes this 

responsibility seriously. We work closely with the Foreign Commercial Service to 

help U.S. firms better understand and operate in what can be a difficult and opaque 

business environment in China. When any U.S. citizen encounters problems abroad, 

in China or elsewhere, our Embassies and Consulates, working with the Consular 

Affairs Bureau, the Commerce Department and others, expend considerable effort 

to protect them. 

On May 29, 2005, Mr. Ji was arrested after having been under investigative detention for the previous six months on charges of financial instrument fraud. Seeing 

Mr. Ji’s case resolved expeditiously is a priority of the U.S. Mission in China. Embassy and Consulate officials have continuously provided assistance to Mr. Ji and 

have raised his case with Chinese officials. In April, prior to Mr. Ji’s formal arrest, 

the Charge ́ d’affaires raised the case with the Chinese Ministry of Foreign Affairs 

and asked that Mr. Ji be allowed to travel immediately. U.S. consular officers in 

Chengdu and Shanghai have visited Mr. Ji regularly since his detention, most recently on May 16. 

How China handles Mr. Ji’s case will be an important indication of its commitment to address our concerns about its legal system and adherence to the rule of 

law, as well as its commitment to open markets, and economic fairness. 

We will continue to raise with China the U.S. Government’s concern for Mr. Ji’s 

well-being and our expectation that he and other U.S. investors in China be treated 

in an equitable and humane manner. 

Question: 

There has been growing rivalry, and even increased animosity, in the past year between the two main powers in East Asia: China and Japan. Rival claims over a 

chain of islands and natural gas fields in the East China Sea have nearly led to 

a military confrontation, most recently when a Chinese military vessel reportedly 

pointed a gun at a Japanese surveillance plane last fall. How close are we to open 

conflict between the two Asian giants? What is Washington doing to defuse the situation? 

Response: 

We do not believe that relations between China and Japan are nearing open conflict, but we are concerned about frictions between the two countries and have urged 

them to open channels for dialogue on outstanding issues. Certainly in our view, 

China and Japan should focus on areas of mutual interest, such as energy security, 

safeguarding international trade and investment flows, and combating infectious 

disease and environmental degradation. 

Question: 

The leaders of the two greatest powers in Asia—Japan and China—have not held 

a summit meeting since 2001. They have not met due to Chinese objections to Prime 

Minister Koizumi’s continued visits to the Yasukuni Shrine in Tokyo, which pays 

homage to convicted war criminals as well as to other veterans. How can key regional 

issues be addressed when the two regional leaders are not even talking to each other? 

Does the Administration have anything to say to our own World War II veterans who 

may be offended by these visits by the Japanese Prime Minister to a shrine honoring 

Tojo, who gave the orders to attack Pearl Harbor? 

Response: 

Friction between the countries of Northeast Asia does not serve their interests, 

the interests of the United States, or those of the rest of the international community. We encourage Japan, China, and South Korea to resolve historical and other 

disputes among them amicably, and to focus their energies on addressing matters 

of common concern, such as threats to regional peace and security, potentially unstable energy markets, infectious disease and environmental degradation, and obstacles to international trade and investment flows. I would note that, despite tensions, 

Japan and China have continued to coordinate with each other, and with the U.S., 

Russia, and South Korea, as participants in the Six-Party Talks on North Korea. 

I have urged that the countries look at starting a ‘‘track two’’ dialogue of historians 

to examine the issues in an constructive light. 

67

We deeply honor the courage and sacrifices of our veterans who fought at Pearl 

Harbor and elsewhere during the Second World War. Actions taken by the authorities at Yasukuni Shrine in no way change the fact that the Government of Japan 

has acknowledged, in the Treaty of San Francisco and elsewhere, the validity of the 

Tokyo War Crimes Tribunal. 

Question: 

Beijing last year successfully worked behind the scenes with the Africa Group to 

deny Tokyo its cherished foreign policy objective of a permanent UN Security Council 

seat. How can the U.S. counter Chinese maneuvering in the United Nations to ensure 

that our ally and second largest donor to the UN system is granted the seat that it 

deserves? 

Response: 

Last year, highly divisive proposals for Security Council expansion were tabled by 

the African Union and the G–4 (Japan, Germany, India, and Brazil). These proposals would have expanded the Security Council to 26 or 25 members, respectively, 

including the addition of 6 new permanent members. China strongly opposed both 

measures. The U.S. also opposed these proposals because we believed such a sizeable increase in the Council would undermine its effectiveness. 

Nevertheless, the U.S. continues to strongly support Japan’s permanent membership in the UN Security Council, and we continue to work with Japan on a way 

to achieve that goal. To be successful, Japan will need to work with all Member 

States, including China, to achieve the widespread support needed. We will back 

these efforts. 

Expansion of the Security Council requires an amendment of the UN Charter; 

Charter amendments require the approval of two thirds of the UN Member States 

and subsequent ratification by two thirds of the legislatures of UN Member States, 

including all the permanent members of the Security Council. 

Question: 

Some in Beijing suspect that the warming ties between Washington and New 

Delhi, including the proposed nuclear deal, are a means of encircling China, just as 

the United States encircled and contained the Soviet Union during the Cold War. 

Is this the case? If not, why not? 

Response: 

As I said in my September 2005 speech, it would be a mistake to apply either 

the Cold War analogy or balance-of-power politics to U.S. relations with China. 

China, unlike the Soviet Union, does not seek to disrupt or undermine the international system. Rather, it has been assiduously integrating itself into this system 

for most of the past three decades. Similarly, we and others in this system, including both China and India, face too many common global challenges in this tightly 

inter-connected 21st Century—from terrorism and proliferation of weapons of mass 

destruction to energy security and infectious diseases—to profit from the zero-sum 

geopolitical balancing games of 19th Century Europe. Our foreign policy now seeks 

constructive relations with all countries that do not threaten peace and security. 

With specific regard to the U.S.-India Civil Nuclear Cooperation Initiative, it is 

designed to promote closer strategic relations with India, advance energy security, 

and enhance international nonproliferation efforts. 

The Initiative is not designed to promote India as a counterweight to China or 

encourage India’s nuclear weapons program. India has a clear strategic interest in 

maintaining good relations with China, as does the United States. The United 

States encourages good Sino-Indian relations as important to the continued stability 

and prosperity of Asia and the world. Likewise, we believe strong U.S.-China and 

U.S.-India relations help advance our common interests in promoting regional stability and prosperity. 

Question: 

Beijing has received a great deal of credit for hosting the Six-Party Talks, designed 

to bring an end to Pyongyang’s nuclear development. At the same time, however, 

China sustains the Pyongyang regime, maintaining a life-line of unmonitored energy, 

food and other shipments which allows the North Koreans to thumb their noses at 

the international community. Why can’t we engage Beijing to use some of this leverage to end North Korea’s nuclear adventurism? 

Response: 

China has played a valuable role in hosting and actively participating in the SixParty Talks, which we view as the best forum for achieving a nuclear weapons-free 

68

Korean Peninsula. We have encouraged China to use its unique ties to North Korea 

to persuade that country to halt its weapons development process, abandon its nuclear programs, and fully implement the September 19 Joint Statement. Ultimately, 

however, the resumption of the Six-Party Talks and the end to North Korea’s weapons program are choices only Pyongyang can make. The United States remains 

ready to return to the table at any time, without preconditions, to continue discussions on implementing the Joint Statement. 

Question: 

President Bush met on North Korea Freedom Day last month with a group of 

North Korean defectors and Japanese abductees’ family members. The President said 

he was particularly moved by hearing the refugee stories. What is the Administration 

doing, as a result, to press Beijing to meet its international obligations not to forcibly 

repatriate North Korean refugees hiding within its borders? 

Response: 

The Administration has been deeply engaged in discussions with the Chinese 

about their obligations to evaluate the claims of all asylum seekers, including North 

Koreans, for protection. The United States has urged China to adhere to its international obligations as a party to the 1951 Refugee Convention and its 1967 Protocol, including by: 1) not expelling or refouling North Koreans protected under 

those treaties, and 2) undertaking to co-operate with UNHCR in the exercise of its 

functions. We have also requested that China not repatriate North Koreans to the 

DPRK before allowing the UNHCR access to them. 

We have urged China to improve the situation of North Koreans. China should 

consider granting legal status to North Korean spouses of Chinese citizens and their 

children; urge North Korea to refrain from punishing returnees; and expedite the 

departure of North Korean asylum seekers currently waiting in diplomatic facilities 

for resettlement in third countries. 

President Bush raised our concerns over the treatment of North Koreans in China 

with President Hu Jintao during their meeting on April 20 in Washington. We will 

continue to use every appropriate opportunity in both Beijing and Washington to 

press China to meet its international obligations. 

Question: 

Seoul seems much closer to Beijing these days in its own approach to North Korea 

at the Six-Party Talks and in seeking to address the history issue from the Second 

World War. Will we soon be asking ourselves the question: Who lost Korea? 

Response: 

The U.S. and the Republic of Korea (ROK) continue to enjoy a very close relationship, with candid and in-depth exchanges on a wide range of issues taking place 

daily. This partnership reflects the strong bonds that exist between our two countries, as evidenced by our extensive cultural and economic ties: there are 1.5 million 

Korean-Americans in the U.S. and 700,000 Korean visitors to the U.S. each year, 

including 51,000 students—the third largest national group. Korea is our seventh 

largest trading partner and U.S. firms have invested some $27 billion in the Korean 

economy. Our relationship is also based on the shared values of democracy, free 

markets and the rule of law. We are in the process of updating our security alliance 

to reflect new global and regional realities; this alliance continues to serve as a critical anchor of the U.S. security posture in East Asia. 

Washington and Seoul also are cooperating closely to address the challenge posed 

by North Korea. The U.S. and the ROK have a shared vision of our fundamental 

objectives for the DPRK, even though we sometimes differ on the path to take in 

achieving them. Via the Six-Party process, the U.S. is working closely with Seoul, 

as well as Tokyo, Beijing, and Moscow, toward the common end of convincing North 

Korea to get out of the nuclear business and end its self-imposed isolation from the 

rest of the world. Together with ROK and our other partners, we negotiated the 

September 19 Joint Statement of Principles that laid out a roadmap for the DPRK 

to denuclearize and integrate into the international community. The U.S. and the 

ROK continue to view the Six-Party Talks as the best means for achieving a peaceful and lasting solution to the North Korean nuclear issue. 

Tensions in Northeast Asia over history do not serve the interests of our allies, 

the United States, or other countries in the region. We have consistently urged the 

countries involved to bridge their differences amicably so that they can turn their 

full attention to addressing the common concerns they face with us in the region, 

including North Korea, energy security, infectious disease, environmental degradation, and healthy trade and investment flows. 

69

Question: 

What is the current situation with regard to the movement in the European Union 

to lift its arms embargo against China? Do we accept this action, delayed by the passage last year in Beijing of the anti-secession law, will take place soon? 

Response: 

The European Union continues to state publicly that it intends to lift its China 

arms embargo at an appropriate time. However, after discussions with European 

Union member nations, we do not believe that the EU will move to lift the embargo 

during the next year. We remain in regular contact with EU counterparts on this 

issue, for example through a Strategic Dialogue on East Asia initiated in May 2005. 

In the Strategic Dialogue and through other diplomatic channels we have made 

clear to the Europeans our concerns about the strategic impact of possible European 

arms sales to China, as well as our belief that the underlying reason their embargo 

was put in place—China’s human rights violations—remains valid today. The most 

recent session of this Strategic Dialogue took place on June 14 in Brussels. 

Question: 

There are those who fear that our engagement with Beijing on such critical issues 

as the War on Terror and the Iran and North Korean nuclear issues has been undertaken at the expense of Taiwan’s interests. Could you please verify that the ‘‘Six Assurances’’ given to Taiwan by the Reagan Administration still serve as a cornerstone 

of U.S. Asian policy? 

Response: 

There is no change in U.S. policy, including regarding the Six Assurances. The 

United States remains firmly committed to our one China policy, the three joint 

communique ́s, and our responsibilities under the Taiwan Relations Act. We do not 

support Taiwan independence; we oppose unilateral changes by either side to the 

status quo in the Taiwan Strait. We have long maintained that cross-Strait differences are matters to be resolved peacefully in a manner acceptable to the people 

on both sides of the Taiwan Strait. We support the expansion of cross-Strait ties, 

and urge Beijing to extend its outreach efforts to Taiwan’s elected leaders. 

Question: 

Beijing now has the world’s third largest defense budget with an estimated fifteen 

percent budget increase this year alone. Since much of Beijing’s military hardware 

is directed against Taiwan, what does this signify for the balance of power in the 

Taiwan Strait? 

Response: 

The U.S. Government is closely monitoring the modernization of China’s armed 

forces, and has raised repeatedly our concern that a military build-up across the 

Taiwan Strait is not conducive to dialogue toward a peaceful resolution of differences between the two sides. 

As China develops new military capabilities, Taiwan is in turn taking actions to 

offset these changes. We urge Taiwan to implement plans to bolster its defensive 

capabilities. We believe a strategy in Taiwan that focuses on hardening defenses, 

enhancing readiness, and increasing overall defense spending is conducive to stability in the Taiwan Strait and we are prepared to provide assistance as appropriate 

under the Taiwan Relations Act. More broadly, we continue to encourage Beijing to 

increase transparency on its military doctrine, strategy, capability and spending, to 

avoid raising the concern of its neighbors. 

Question: 

Two years ago, Congress enacted Public Law 108–235 ‘‘To address the participation of Taiwan in the World Health Organization.’’ This law mandates that ‘‘the Secretary of State shall submit a report to the Congress, in unclassified form, describing 

the United States plan to endorse and obtain observer status for Taiwan at the annual week-long summit of the World Health Assembly (WHA) held by the World 

Health Organization in May of each year in Geneva, Switzerland.’’ The Congress recently received the legislatively required report which gave a general outline of our 

approach. Do we intend to meet with representatives of Taiwan to have a dialogue 

on a more specific strategy before the annual Assembly convenes later this month in 

Geneva? 

Response: 

Our position is clear and unchanged: we support Taiwan’s meaningful participation in the work of the World Health Organization (WHO), including observer status 

70

at the World Health Assembly. In the run-up to last month’s World Health Assembly, we had extensive dialogue with Taiwan representatives on Taiwan’s participation in the WHO, consistent with the unofficial nature of our relations. 

Question: 

Does the decision to offer President Chen of Taiwan only a refueling stop in Alaska 

during his transit of the United States, which Taipei reportedly rejected, reflect growing Administration impatience with the Taiwan President following the National 

Unification Council debate of few months ago? Is the Administration sending a signal to Taipei and to Beijing? Are you prepared for a Congressional reaction to this 

snub? 

Response: 

The specifics of transits by Taiwan leaders will always vary depending on a range 

of factors. The Bush Administration’s foremost concern is the advancement of the 

American people’s interests in the preservation of peace, stability, and prosperity in 

the region. Requests for transits by Taiwan leaders through the United States are 

reviewed per long-standing policy based on the safety, comfort, convenience, and 

dignity of the traveler. 

In keeping with this policy, the United States approved transits through the 

United States in May for Taiwan President Chen Shui-bian. We respect President 

Chen’s choice to decline our offer in favor of alternate routes through other countries, and we are pleased those other governments joined us in demonstrating support for the people of Taiwan. 

Question: 

One unrealized fear during the Cold War was the possible emergence of a BeijingMoscow communist alliance against the United States. Russia and China, however, 

are now joining together, in the United Nations, in arms sales, and in military training exercises, to counter a unipolar world not to their liking. Is the old Cold War 

nightmare of a Beijing-Moscow axis directed against Washington now being realized? 

Response: 

While Russia and China occasionally speak of their relationship as a ‘‘strategic 

partnership,’’ it would be misleading to characterize it as ‘‘a Beijing-Moscow axis’’ or to view it through the prism of the Cold War. The U.S. welcomes stable relations 

between Moscow and Beijing; the alternative is far worse. Part of their cooperation 

is natural. They are large countries that share a long, common border, which they 

have finally demarcated peacefully. Both seek stability in the broader region. Their 

bilateral trade is expanding (though from a low base—China’s trade with Russia in 

2005 was still only one-tenth its trade with the U.S.) and both maintain important 

connections with the West. 

Commentators in Russia and China have made no secret of the fact that they 

would prefer to see a multipolar world, but this does not mean that Moscow and 

Beijing have joined in an anti-American axis. Their foreign policies are not identical 

nor do they have symmetrical strategic objectives. 

Not all of Russia’s and China’s interests are coincident. Russia is a net energy 

exporter, while China is an increasingly voracious energy consumer that seeks to 

push down global prices. Russia pursues its regional interests, e.g., with the countries of Central Asia, separately from China, both bilaterally and through multilateral fora (e.g., the Eurasian Economic Community and the Central Security Treaty 

Organization). China does the same in East Asia. There is very little coordination. 

In fact, on commercial and economic matters, they are often in competition. 

Russia and China are looking to bolster the Shanghai Cooperation Organization 

(SCO), which just marked its fifth anniversary and includes Uzbekistan, Tajikistan, 

Kazakhstan, and Kyrgyzstan. However, the SCO is still articulating its role, and 

Moscow and Beijing typically prefer to exercise influence with countries bilaterally. 

Both Russian and China have centralized, authoritarian governments but, as Secretary Rice has emphasized, Russia today bears little resemblance to the Soviet 

Union. Nor, after nearly three decades of capitalist-led economic growth, does China 

resemble the country that Mao so ruinously led. And despite nationalist rhetoric, 

both countries have more of an interest in maintaining stable relations with the 

West than they do in challenging the United States. This is particularly true of 

China, whose spectacular economic growth has depended on a benign international 

security environment, foreign investment, and the openness of the U.S. and other 

Western markets. 

Russia and China pursue their interests in a variety of international settings and 

through their status as permanent members of the U.N. Security Council. We have 

encouraged both countries to play responsible roles internationally. 

71

Question: 

Is there any hope, given the international outrage over Darfur, that Beijing can be persuaded to put aside its $3 billion investment in Sudan’s oil and gas industry and 

join the international community in imposing sanctions on the genocidal Khartoum 

regime? 

Response: 

As you note, China has substantial economic investments in Sudan, primarily in 

the oil sector, and has generally followed its practice of not applying conditionality 

when trading, investing or providing assistance in a country. 

In recent months, however, we have seen China play a somewhat more constructive role on Sudan, particularly at the United Nations. On May 16, China backed 

a unanimous UN Security Council resolution supporting in principle the transfer of 

peacekeeping operations in Darfur from the African Union to the UN. China has 

contributed personnel to peacekeeping operations in southern Sudan and has said 

that it would consider assisting the UN mission in Darfur as well. Despite its view 

that sanctions do not work and should not be applied, China, as Chair of the UNSC, 

refrained from blocking a UNSCR 1672 resolution on April 25 imposing sanctions 

on four individuals accused of involvement in atrocities. This marked the first time 

that targeted sanctions, including a travel ban and asset freeze, have been employed 

since the UNSC authorized such measures in March 2005. On April 11, China 

backed a unanimous UN Security Council Statement on Darfur. 

We will continue to engage with China at the UN and in other multilateral and 

bilateral fora to urge China to recognize that its long-term goal of energy security 

cannot be guaranteed through a policy of unconditional engagement with questionable regimes. China’s recent actions demonstrate that Beijing can be persuaded to 

use its considerable influence with the government of Sudan to promote peace and 

stability throughout the country. 

Question: 

Deputy Secretary Zoellick, were you trying to send a particular diplomatic signal 

when you had your picture taken hugging a panda cub during your visit to China 

in January? 

Response: 

My visit to the Chengdu Panda Breeding Research Center was one stop on an 

itinerary that included high-level meetings at the U.S. Pacific Command in Honolulu and with top leaders in Tokyo and Beijing. While in Chengdu, I also had the 

opportunity to discuss with the governor of Sichuan province the development challenges in China’s interior hinterland. 

The decision to tour the breeding research center and take a photo with the panda 

cub reflect my long-time interest in wildlife and conservation issues. They also 

served as an effective use of public diplomacy to highlight one of many interests 

shared by the United States and China (e.g., environmental stewardship) and to 

symbolize the constructive relationship our two countries should aim to build as responsible stakeholders in the international system. 

Question: 

Does the lack of progress on a whole array of diplomatic fronts—lack of support 

from Beijing for UN economic sanctions against Iran and Sudan and its failure to 

end unmonitored assistance to a defiant North Korea—mean that the United States 

must hedge its relations with China? 

Response: 

We encourage Beijing to interact with Iran, North Korea and Sudan in a manner 

consistent with the role China should play as a responsible stakeholder in the international system. I believe our diplomatic engagement with China on the three countries you mention has yielded progress. In each case China has adopted somewhat 

different approaches. But at the same time its interests—especially as they relate 

to global peace and security—overlap to a considerable degree with our own. 

On North Korea, China has played an important and constructive role in hosting 

the Six-Party Talks and helped broker the September 19 Joint Statement of Principles. We have urged China to be more forceful in using its leverage with 

Pyongyang to get North Korea back to the table and meet its obligations. 

On Iran, China shares our assessment that Tehran must come into compliance 

with its international obligations vis-a`-vis its nuclear weapons program. China and 

the other permanent members of the UN Security Council unanimously agreed to 

a March 29 Presidential Statement calling on Iran to suspend all enrichment-related activity, fully cooperate with the Agency’s investigations, and return to negoVerDate Mar 21 2002 19:06 Nov 28, 2006 Jkt 000000 PO 00000 Frm 00075 Fmt 6601 Sfmt 6621 F:\WORK\FULL\051006\27477.000 DOUG PsN: DOUG
72

tiations. This followed an IAEA Board of Governors decision in February—which 

China supported—to report Iran to the UN Security Council for defying its international commitments on the nuclear weapons issue. China has publicly endorsed 

the package of incentives/disincentives put forward by the five permanent members 

of the Security Council and Germany (P5+1), and we are exploring with China next 

steps that should be taken, including further action in the UN Security Council, if 

Iran ignores the calls of the international community as outlined in the Presidential 

Statement. 

On Sudan, our diplomatic efforts have also met with some success. On May 16, 

China backed a unanimous UN Security Council resolution supporting, in principle, 

the transfer of peacekeeping operations in Darfur from the African Union to the UN. 

As Chair of the UNSC in April, China, despite its longstanding opposition to sanctions, refrained from blocking a UNSCR 1672 resolution imposing sanctions on four 

individuals accused of involvement in atrocities. This marked the first time that targeted sanctions, including a travel ban and asset freeze, have been employed since 

the UNSC authorized such measures in March 2005. China has contributed personnel to peacekeeping operations in southern Sudan and has said that it would 

consider assisting a UN mission in Darfur. 

Question: 

Does the lack of progress on a whole array of diplomatic fronts—lack of support 

from Beijing for UN economic sanctions against Iran and Sudan and its failure to 

end unmonitored assistance to a defiant North Korea—mean that the United States 

must hedge its relations with China? 

Response: 

Beijing’s support for regimes in Iran, North Korea and Sudan is clearly at variance with the role China should play as a responsible stakeholder in the international system. Nevertheless, I believe that there has been progress in our diplomatic engagement with China in the three countries that you mention. China has 

different approaches, certainly, but at the same time its interests—especially as 

they relate to global peace and security—do overlap in many instances with those 

of the United States. 

On North Korea, China has played an important and constructive role in hosting 

the Six-Party Talks and helped broker the September 19 Joint Statement of Principles by which Pyongyang agreed to give up its nuclear weapons program. We have 

urged China to be more forceful in using its leverage with Pyongyang to get North 

Korea back to the table and to live up to its obligations. 

On Iran, China shares our assessment that Iran must come into compliance with 

its international obligations vis-a`-vis its nuclear weapons program. China and the 

other permanent members of the UN Security Council unanimously agreed to a 

March 29 Presidential Statement calling on Iran to suspend all enrichment-related 

activity, fully cooperate with the Agency’s investigations, and return to negotiations. 

This followed an IAEA Board of Governors decision in February—which China supported—to report Iran to the UN Security Council for defying its international commitments on the nuclear weapons issue. China has publicly endorsed the package 

of incentives/disincentives put forward by the five permanent members of the Security Council and Germany (P5+1), and we are exploring with China next steps that 

should be taken, including further action in the UN Security Council, if Iran ignores 

the calls of the international community as outlined in the Presidential Statement. 

On Sudan, our diplomatic efforts have also met with some success. On May 16, 

China backed a unanimous UN Security Council resolution supporting, in principle, 

the transfer of peacekeeping operations in Darfur from the African Union to the UN. 

As Chair of the UNSC in April, China, despite its opposition to sanctions in principle, refrained from blocking a UNSCR 1672 resolution imposing sanctions on four 

individuals accused of involvement in atrocities. This marked the first time that targeted sanctions, including a travel ban and asset freeze, have been employed since 

the UNSC authorized such measures in March 2005. China has contributed personnel to peacekeeping operations in southern Sudan and has said that it would 

consider assisting a UN mission in Darfur. 

73

WRITTEN RESPONSES FROM THE HONORABLE ROBERT B. ZOELLICK, DEPUTY SEC- RETARY OF STATE, U.S. DEPARTMENT OF STATE, TO QUESTIONS SUBMITTED FOR THE

RECORD BY THE HONORABLE DAN BURTON, A REPRESENTATIVE IN CONGRESS FROM

THE STATE OF INDIANA, AND CHAIRMAN, SUBCOMMITTEE ON THE WESTERN HEMI- SPHERE

Question: 

Why wasn’t progress made in the meeting with the Chinese President regarding the enormous—$202 billion—and ballooning annual trade deficit with China? Is the Administration waiting for Congress to take the lead on this? 

Response: 

Addressing our trade and economic concerns with China, including the bilateral 

trade deficit, is a priority for President Bush and the Administration. During his 

visit to the United States, President Hu acknowledged China’s trade and economic 

imbalances and pledged to level the playing field for American workers, businesses 

and farmers. He committed to a long-term structural reform program to help move 

China from an over-dependence on exports to an economy increasingly driven by 

consumer demand. This is of enormous importance in ensuring that China corrects 

its global trade imbalances and acts as an engine of growth for the global economy. 

Specifically, this program includes action to boost domestic demand, undertake 

pension reform to reduce precautionary savings, expand market access, and increase 

imports. Each of these steps will help to create new opportunities for Americans and 

further expand U.S. exports to China, which have already grown an average of 20% 

per year since China joined the WTO in 2001. President Hu also reiterated his commitment to advance the reform of China’s exchange rate regime, the fifth critical 

element of China’s structural reform program and a point emphasized by President 

Bush in his meetings. 

In addition, we made measurable progress on key bilateral trade issues at the 

Joint Commission on Commerce and Trade (JCCT) meetings in the immediate runup to President Hu’s visit. At the JCCT, China agreed to move swiftly to reopen 

its market to exports of U.S. beef, strengthen intellectual property rights (IPR) protection, and begin formal negotiations by the end of 2007 to join the WTO Government Procurement Agreement. In the area of IPR protection, the Chinese took concrete action to close or stop 14 factories from producing illegal optical disks, and 

issued notices that both required the pre-loading of legal operating system software 

on all computers produced or imported into China and specified that government 

agencies use only legitimate software. China also agreed to make adjustments to 

allow for increased market access for telecommunications service providers, computer software, and medical devices, and Chinese buying delegations completed contracts in April for the export of more than $16 billion of U.S. goods and services 

to China. 

Certainly more has to be done to ensure American exporters, workers, farmers 

and service providers have the same access to Chinese markets as China has to our 

markets. We will continue to press for follow-through on these and other commitments as well as additional steps to promote greater equity in the trade relationship. We intend to work in coordination with Congress to achieve results that will 

contribute to continued U.S. economic prosperity. 

Question: 

Many economists believe that China obtains an unfair trade advantage due to the 

undervaluing of its currency by as much as forty percent. Senators Schumer and 

Graham report that this has cost the United States three million manufacturing jobs 

over the past five years. What do you think of their proposal for a 27.5 percent acrossthe-board tariff hike on Chinese imports if Beijing does not address this issue? 

Response: 

We believe our bilateral and multilateral efforts aimed at convincing China to 

move more rapidly toward its recently enunciated goals of a more balanced economy 

and a more market-oriented approach with regard to trade and currency remains 

the appropriate strategy. 

The Treasury Department has led intensive discussions with the Chinese, at both 

the senior policy level and at the technical and operational levels, to encourage the 

PRC to move quickly to an exchange rate that reflects market forces. President 

Bush raised this issue with President Hu at their April 20 meeting in Washington. 

President Hu pledged at that time to move ahead with reforms to China’s exchange 

rate system. I have called on China to become a ‘‘responsible stakeholder’’ in the 

international trading and financial system that has brought prosperity to so many. 

China has taken steps to open its economy and, in this case, to permit its currency 

74

to better reflect market forces, but needs to do more. The administration will continue to engage China on this issue and we expect to see further progress. 

In our discussions, we have been clear in laying out the consequences of a failure 

to introduce a more flexible, market-based exchange rate. For China these include 

continued limits on the effectiveness of macroeconomic policy, boom/bust cycles of 

growth, and continued weakness of the financial system that leads to a buildup of 

bad loans. It will also dampen prospects for increased flexibility in other Asian currencies, which would lead to weaker international adjustment mechanisms more 

generally. The consequences for the world economy and the United States would include making the adjustment of global imbalances more difficult and undermining 

support for open trade, which could reduce future growth. 

We have engaged multilaterally—in the G7, the IMF, the OECD, and the Asian 

Development Bank—to mobilize international support, and these groups have also 

called on China to adopt greater exchange rate flexibility. The most recent G7 statement of April 21 stated that in emerging Asia, particularly China, greater flexibility 

in exchange rates is critical, as are strengthening domestic demand, reducing reliance on export-led growth strategies, and moving forward with reforms to strengthen financial sectors. 

Question: 

Some in Beijing suspect that the warming ties between Washington and New 

Delhi, including the proposed nuclear deal, are a means of encircling China, just as 

the United States encircled and contained the Soviet Union during the Cold War. 

Is this the case? If not, why not? 

Response: 

As I said in my September 2005 speech, it would be a mistake to apply either 

the Cold War analogy or balance-of-power politics to U.S. relations with China. 

China, unlike the Soviet Union, does not seek to disrupt or undermine the international system. Rather, it has been assiduously integrating itself into this system 

for most of the past three decades. Similarly, we and the other major stakeholders 

in this system, including both China and India, face too many common global challenges in this tightly inter-connected 21st Century—from terrorism and proliferation 

of weapons of mass destruction to energy security and infectious diseases—to profit 

from the zero-sum geopolitical balancing games of 19th Century Europe. Our foreign 

policy now seeks constructive relations with all countries that do not threaten peace 

and security. 

With specific regard to the U.S.-India Civil Nuclear Cooperation Initiative, it is 

designed to promote closer strategic relations with India, advance energy security, 

and enhance international nonproliferation efforts. 

The Initiative is not designed to promote India as a counterweight to China or 

encourage India’s nuclear weapons program. India has a clear strategic interest in 

maintaining good relations with China, as does the United States. The United 

States encourages good Sino-Indian relations as important to the continued stability 

and prosperity of Asia and the world. Likewise, we believe strong U.S.-China and 

U.S.-India relations help advance our common interests in promoting regional stability and prosperity. 

Question: 

Beijing has received a great deal of credit for hosting the Six-Party Talks, designed 

to bring an end to Pyongyang’s nuclear development. At the same time, however, 

China sustains the Pyongyang regime, maintaining a life-line of unmonitored energy, 

food and other shipments which allows the North Koreans to thumb their noses at 

the international community. Why can’t we engage Beijing to use some of this leverage to end North Korea’s nuclear adventurism? 

Response: 

China has played a valuable role in hosting and actively participating in the SixParty Talks, which we view as the best forum for achieving a nuclear weapons-free 

Korean Peninsula. We have encouraged China to use its unique ties to North Korea 

to persuade that country to halt its weapons development process, abandon its nuclear programs and fully implement the September 19 Joint Statement. Ultimately, 

however, the resumption of the Six-Party Talks and the end to North Korea’s weapons program are choices only Pyongyang can make. The United States remains 

ready to return to the table at any time, without preconditions, to continue discussions on implementing the Joint Statement. 

75

Question: 

What is the current situation with regard to the movement in the European Union 

to lift its arms embargo against China? Do we accept this action, delayed by the passage last year in Beijing of the anti-secession law, will take place soon? 

Response: 

The European Union continues to state publicly that it intends to lift its China 

arms embargo at an appropriate time. However, after discussions with European 

Union member nations, we do not believe that the EU will move to lift the embargo 

during the next year. We remain in regular contact with EU counterparts on this 

issue, for example through a Strategic Dialogue on East Asia initiated in May 2005. 

In the Strategic Dialogue and through other diplomatic channels we have made 

clear to the Europeans our concerns about the strategic impact of possible European 

arms sales to China, as well as our belief that the underlying reason their embargo 

was put in place—China’s human rights violations—remains valid today. The most 

recent session of this Strategic Dialogue took place on June 14 in Brussels. 

Question: 

There are those who fear that our engagement with Beijing on such critical issues 

as the War on Terror and the Iran and North Korean nuclear issues has been undertaken at the expense of Taiwan’s interests. Could you please verify that the ‘‘Six Assurances’’ given to Taiwan by the Reagan Administration still serve as a cornerstone 

of U.S. Asian policy? 

Response: 

There is no change in U.S. policy, including regarding the Six Assurances. The 

United States remains firmly committed to our one China policy, the three joint 

communique ́s, and our responsibilities under the Taiwan Relations Act. We do not 

support Taiwan independence; we oppose unilateral changes by either side to the 

status quo in the Taiwan Strait. We have long maintained that cross-Strait differences are matters to be resolved peacefully in a manner acceptable to the people 

on both sides of the Taiwan Strait. We support the expansion of cross-Strait ties, 

and urge Beijing to extend its outreach efforts to Taiwan’s elected leaders. 

Question: 

Does the decision to offer President Chen of Taiwan only a refueling stop in Alaska 

during his transit of the United States, which Taipei reportedly rejected, reflect growing Administration impatience with the Taiwan President following the National 

Unification Council debate of few months ago? Is the Administration sending a signal to Taipei and to Beijing? Are you prepared for a Congressional reaction to this 

snub? 

Response: 

The specifics of transits by Taiwan leaders will always vary depending on a range 

of factors. The Bush Administration’s foremost concern is the advancement of the 

American people’s interests in the preservation of peace, stability, and prosperity in 

the region. Requests for transits by Taiwan leaders through the United States are 

reviewed per long-standing policy based on the safety, comfort, convenience, and 

dignity of the traveler. 

In keeping with this policy, the United States approved transits through the 

United States in May for Taiwan President Chen Shui-bian. We respect President 

Chen’s choice to decline our offer in favor of alternate routes through other countries, and we are pleased those other governments joined us in demonstrating support for the people of Taiwan. 

Question: 

We hear a lot from the Administration about Taiwan needing to exercise restraint. 

What is the Administration doing to press China to take a responsible approach to 

Taiwan? Direct dialogue with Taiwan’s duly elected leaders? If Beijing won’t, 

shouldn’t we have direct dialogue with Taiwan’s leaders? 

Response: 

The U.S. has long encouraged the development of relations between Beijing and 

Taipei. Cross-Strait stability is enhanced by over $70 billion annually in bilateral 

trade, as well as extensive people-to-people ties. The recent announcement that both 

sides have agreed to allow a large increase in cross-Strait passenger and cargo 

flights will further strengthen mutually beneficial ties. We welcomed the PRC’s invitations to Taiwan’s opposition politicians to visit the Mainland, but also believe, as 

76

we have repeatedly told Beijing, that China needs to engage Taiwan’s elected leaders in dialogue to make progress toward easing tensions. 

The Taiwan Relations Act has served America and Taiwan well for the past quarter century, allowing us to maintain and develop our unofficial relations with the 

people of Taiwan through the American Institute in Taiwan and its Taiwan counterpart. We are able to communicate well and effectively with the people of Taiwan 

and their leaders and have made tremendous progress in expanding our economic 

and other relations with Taiwan. 

Question: 

One unrealized fear during the Cold War was the possible emergence of a BeijingMoscow communist alliance against the United States. Russia and China, however, 

are now joining together, in the United Nations, in arms sales, and in military training exercises, to counter a unipolar world not to their liking. Is the old Cold War 

nightmare of a Beijing-Moscow axis directed against Washington now being realized? 

Response: 

While Russia and China occasionally speak of their relationship as a ‘‘strategic 

partnership,’’ it would be misleading to characterize it as ‘‘a Beijing-Moscow axis’’

or to view it through the prism of the Cold War. The U.S. welcomes stable relations 

between Moscow and Beijing; the alternative is far worse. Part of their cooperation 

is natural. They are large countries that share a long, common border, which they 

have finally demarcated peacefully. Both seek stability in the broader region. Their 

bilateral trade is expanding (though from a low base—China’s trade with Russia in 

2005 was still only one-tenth its trade with the U.S.) and both maintain important 

connections with the West. 

Commentators in Russia and China have made no secret of the fact that they 

would prefer to see a multipolar world, but this does not mean that Moscow and 

Beijing have joined in an anti-American axis. Their foreign policies are not identical 

nor do they have symmetrical strategic objectives. 

Not all of Russia’s and China’s interests are coincident. Russia is a net energy 

exporter, while China is an increasingly voracious energy consumer that seeks to 

push down global prices. Russia pursues its regional interests, e.g., with the countries of Central Asia, separately from China, both bilaterally and through multilateral fora (e.g., the Eurasian Economic Community and the Central Security Treaty 

Organization). China does the same in East Asia. There is very little coordination. 

In fact, on commercial and economic matters, they are often in competition. 

Russia and China are looking to bolster the Shanghai Cooperation Organization 

(SCO), which just marked its fifth anniversary and includes Uzbekistan, Tajikistan, 

Kazakhstan, and Kyrgyzstan. However, the SCO is still articulating its role, and 

Moscow and Beijing typically prefer to exercise influence with countries bilaterally. 

Both Russian and China have centralized, authoritarian governments but, as Secretary Rice has emphasized, Russia today bears little resemblance to the Soviet 

Union. Nor, after nearly three decades of capitalist-led economic growth, does China 

resemble the country that Mao so ruinously led. And despite nationalist rhetoric, 

both countries have more of an interest in maintaining stable relations with the 

West than they do in challenging the United States. This is particularly true of 

China, whose spectacular economic growth has depended on a benign international 

security environment, foreign investment, and the openness of the U.S. and other 

Western markets. 

Russia and China pursue their interests in a variety of international settings and 

through their status as permanent members of the U.N. Security Council. We have 

encouraged both countries to play responsible roles internationally.

Æ