U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Publishing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

24–444PDF 2017

CHECKING CHINA’S MARITIME PUSH

HEARING

BEFORE THE

SUBCOMMITTEE ON ASIA AND THE PACIFIC

OF THE

COMMITTEE ON FOREIGN AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED FIFTEENTH CONGRESS

FIRST SESSION

FEBRUARY 28, 2017

Serial No. 115–6

Printed for the use of the Committee on Foreign Affairs

(

Available via the World Wide Web: http://www.foreignaffairs.house.gov/ or

http://www.gpo.gov/fdsys/

(II)

COMMITTEE ON FOREIGN AFFAIRS 

EDWARD R. ROYCE, California, Chairman 

CHRISTOPHER H. SMITH, New Jersey 

ILEANA ROS-LEHTINEN, Florida 

DANA ROHRABACHER, California 

STEVE CHABOT, Ohio 

JOE WILSON, South Carolina 

MICHAEL T. MCCAUL, Texas 

TED POE, Texas 

DARRELL E. ISSA, California 

TOM MARINO, Pennsylvania 

JEFF DUNCAN, South Carolina 

MO BROOKS, Alabama 

PAUL COOK, California 

SCOTT PERRY, Pennsylvania 

RON DESANTIS, Florida 

MARK MEADOWS, North Carolina 

TED S. YOHO, Florida 

ADAM KINZINGER, Illinois 

LEE M. ZELDIN, New York 

DANIEL M. DONOVAN, JR., New York 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

ANN WAGNER, Missouri 

BRIAN J. MAST, Florida 

FRANCIS ROONEY, Florida 

BRIAN K. FITZPATRICK, Pennsylvania 

THOMAS A. GARRETT, JR., Virginia 

ELIOT L. ENGEL, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

ALBIO SIRES, New Jersey 

GERALD E. CONNOLLY, Virginia 

THEODORE E. DEUTCH, Florida 

KAREN BASS, California 

WILLIAM R. KEATING, Massachusetts 

DAVID N. CICILLINE, Rhode Island 

AMI BERA, California 

LOIS FRANKEL, Florida 

TULSI GABBARD, Hawaii 

JOAQUIN CASTRO, Texas 

ROBIN L. KELLY, Illinois 

BRENDAN F. BOYLE, Pennsylvania 

DINA TITUS, Nevada 

NORMA J. TORRES, California 

BRADLEY SCOTT SCHNEIDER, Illinois 

THOMAS R. SUOZZI, New York 

ADRIANO ESPAILLAT, New York 

TED LIEU, California

AMY PORTER, Chief of Staff THOMAS SHEEHY, Staff Director

JASON STEINBAUM, Democratic Staff Director 

SUBCOMMITTEE ON ASIA AND THE PACIFIC

TED S. YOHO, Florida, Chairman 

DANA ROHRABACHER, California 

STEVE CHABOT, Ohio 

TOM MARINO, Pennsylvania 

MO BROOKS, Alabama 

SCOTT PERRY, Pennsylvania 

ADAM KINZINGER, Illinois 

ANN WAGNER, Missouri 

BRAD SHERMAN, California 

AMI BERA, California 

DINA TITUS, Nevada 

GERALD E. CONNOLLY, Virginia 

THEODORE E. DEUTCH, Florida 

TULSI GABBARD, Hawaii 

(III)

C O N T E N T S 

Page

WITNESSES 

Mr. Dean Cheng, senior research fellow, Asian Studies Center, The Heritage 

Foundation ............................................................................................................ 8

Michael Auslin, Ph.D., resident scholar, director of Japan studies, American 

Enterprise Institute ............................................................................................. 17

Michael D. Swaine, Ph.D., senior fellow, Asia Program, Carnegie Endowment 

for International Peace ........................................................................................ 28

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

The Honorable Ted S. Yoho, a Representative in Congress from the State 

of Florida, and chairman, Subcommittee on Asia and the Pacific: Prepared 

statement .............................................................................................................. 3

Mr. Dean Cheng: Prepared statement ................................................................... 10

Michael Auslin, Ph.D.: Prepared statement .......................................................... 19

Michael D. Swaine, Ph.D.: Prepared statement .................................................... 30

APPENDIX 

Hearing notice .......................................................................................................... 56

Hearing minutes ...................................................................................................... 57

Written responses from the witnesses to questions submitted for the record 

by the Honorable Ann Wagner, a Representative in Congress from the 

State of Missouri .................................................................................................. 58

(1)

CHECKING CHINA’S MARITIME PUSH 

TUESDAY, FEBRUARY 28, 2017

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON ASIA AND THE PACIFIC,

COMMITTEE ON FOREIGN AFFAIRS,

Washington, DC. 

The subcommittee met, pursuant to notice, at 2:30 p.m., in room 

2172, Rayburn House Office Building, Hon. Ted Yoho (chairman of 

the subcommittee) presiding. 

Mr. YOHO. We are going to call this meeting to order. This will 

be the first committee hearing of the Asia and the Pacific Subcommittee, and it is an honor to be the chairman. 

I welcome you guys here, and thank you for being part of this 

committee and allowing me to be at the helm of it. 

Good afternoon and welcome to the first meeting of the Subcommittee on Asia and the Pacific of the 115th Congress. The subcommittee will come to order. Members present will be permitted 

to submit written statements to be included in the official hearing. 

Without objection, the hearing record will remain open for 5 calendar days to allow statements, questions, extraneous material for 

the record subject to length limitations in the rules. 

The People’s Republic of China’s aggressive and provocative behavior in the maritime territorial disputes represents a threat to 

vital U.S. interests as severe as those from Russia, Iran, North 

Korea, and terrorism from the Middle East, according to the Heritage Foundation’s 2017 index for U.S. military strength. Since 2013, 

China has rapidly advanced its maritime capabilities, employed 

them to transform the South China Sea with artificial islands, 

place Japan under increasing pressure in the East China Sea, and 

attempt to restrict freedom of navigation in its near waters. Unbelievably, China has suffered little, if any, cost for this maritime 

push. 

In the South China Sea, China has built over 3,200 acres of land 

over disputed features in the Spratly Islands, complete with military-capable airstrips, ports, radars, anti-aircraft weapons, and, 

confirmed just last week, surface-to-air missile silos. 

China also continues to press Japanese vessels around the 

Senkaku Islands in the East China Sea. Uncommitted to existing 

global norms, China continually undermines attempts at a unified 

response of these activities from ASEAN and has attempted to use 

its economic influence to buy off other claimants. 

The United States and our allies and partners recognize that our 

military presence in the Western Pacific has been a force for staVerDate 0ct 09 2002 11:28 Apr 06, 2017 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 F:\WORK\_AP\022817\24444 SHIRL
2

bility and for good across decades, but so far, we haven’t acted with 

nearly the level of resolve that China has in its aggressive pursuit 

of its arbitrary claims. 

For example, officials from the last administration proclaimed 

the importance of freedom of navigation far and wide in response 

to China’s effort to restrict it. But this fundamental right, and the 

international law which protects it, was only hesitantly enforced 

with four Freedom of Navigation operations, none of which challenged China’s tacit assertion that its artificial islands are entitled 

to territorial seas. 

For nearly a decade, we have said much and done little. While 

the South and East China Seas may seem distant, we have important national interests at stake. The disputed areas are key global 

economic and trade arteries. Nearly 30 percent of the world’s maritime trade moves through the area. Domination of these routes 

might allow a regional power to use disruption as leverage. 

The security of these areas is also essential for the energy security of key U.S. defense allies and partners. Most of the energy supplied to South Korea, Japan, and Taiwan comes through the South 

China Sea. Energy insecurity among our friends in the region could 

have serious implications for our ability to handle potential contingencies arising from North Korea and elsewhere. 

Perhaps most importantly, the lack of U.S. resolve hasn’t just allowed China to change the status quo on the ground but contributes to worries among our allies and partners that the United 

States lacks sufficient commitment to the region and feeds the narrative that China has been successful in degrading U.S. influence 

and global norms. The perceived potency of our military and diplomatic power is very much at risk. The South and East China Seas 

are strategic keys to East Asia, and acquiescence to restrictions on 

U.S. Forces’ freedom of operations there will undermine the U.S. 

security guarantee and degrade both regional and world stability. 

We need a new strategy, and the entrance of a new administration represents a good opportunity to form and implement better 

policies to represent or reassert U.S. strengths in these critical 

areas. It may be time to consider an assertive plan. As we have 

seen, endlessly backing away from conflicts carries its own risks. 

China has taken advantage of U.S. acquiescence to revise the status quo, advancing its strategic interests in ways that raise the 

risk of conflict. Timidity hasn’t de-escalated these maritime disputes; it has only raised the stakes. 

Today, we will hear suggestions from our expert panel for defining U.S. goals and addressing China’s maritime push as well as 

policy options to operationalize more effective U.S. engagement on 

this important issue. 

At this moment, without objection, the witnesses’ written statements will be entered into the hearing record. 

I now turn to our ranking member, Mr. Sherman, for any remarks he may have. 

[The prepared statement of Mr. Yoho follows:]

3


24444d-1.eps
4


24444d-2.eps
5

Mr. SHERMAN. Chairman Yoho, thanks for those remarks. Welcome to your new role. I look forward to working with you. And you 

will find, as you already know, that I am hawkish on our trade relationship with China and dovish on the so-called islands, more 

reefs than anything else. 

China is waging—every day—an attack on American working 

families by refusing to accept our exports and by demanding coproduction agreements when they will take a few of our exports, 

demanding that we transfer factories and technology as a price for 

having some limited access to their markets. That is devastating 

State after State in America. And, instead, we are focused on these 

islands. 

Why? Well, because the most powerful economic decision maker 

in America is Wall Street, and they want us to ignore the devastation of America’s working families. And the most important decisionmaker in the area of our military and national security is the 

Pentagon and others who want to see a 10-percent increase in our 

defense budget, and they know that China is the only worthy adversary to the might of the American military. 

So I do think it is important that we look at our bilateral relations with China, and the aggression of China in the South China 

Sea, the East China Sea, is an irritant and maritime disputes and 

our support for a free, international maritime regime is important. 

If it was more important, we might join UNCLOS and actually 

be part of the international order when it comes to maritime disputes. Instead, we focus all of our attention on China’s refusal to 

adhere to international law on these disputes. 

There are 20 maritime disputes that do not involve China, and 

not a single one of them has been the subject or even a partial subject of any hearing of this subcommittee, any subcommittee, or the 

full committee of Foreign Affairs. Why? Because none of those disputes justify a massive increase in the American military budget, 

and none of those disputes distract us sufficiently from the war 

that China is waging against American working families. 

Now, we are told that these ports—these islands pose this great 

threat to international trade because $5 trillion of trade goes close 

to these islands or reefs. Yet, almost all of that trade is going in 

and out of Chinese ports, and if China controlled these reefs, they 

could blockade their own ports, and what threat, witnesses, does 

that pose to American national security? 

Now a few—some of that trade—are oil tankers coming from 

Saudi Arabia to Japan, and in a worst-case scenario—and I do 

note—that if China somehow dominated wrongfully and tried to 

interdict in this area, those tankers would have to change their 

course, thus increasing the cost of gasoline in Japan by at least 1⁄10

of 1 cent per gallon. That is the worst that could happen to international trade. If they could blockade their own ports, they could 

force some trade to go a little—on a slightly different route. And 

that is a level of aggression that I don’t think any of us would tolerate. 

So we have—let me see. 

Finally, we have got to look at burden sharing. Japan demands 

that we risk lives to defend these uninhabited islands and that we 

spend billions—and apparently need to shut down a quarter or a 

6

third of our State Department to be able to afford to do it—to defend these islands. They spend less than 1 percent of their GDP on 

defense. We have to defend their islands. There is no oil there, but 

if there is any oil there, it is Japan’s oil or South Korea’s oil; it is 

not our oil. But, also, what happens to our mutual defense treaty 

when America was attacked on 9/11? Our European forces—partners at least put troops in harm’s way. Some of them are spending 

2 percent of their GDP on defense. Japan said, ‘‘Well, we have got 

this constitution. So we won’t help you, and we won’t amend our 

constitution either to help you.’’ So Americans died by the thousands, a country with a mutual defense treaty with the United 

States binding them to help defend us, basically ignored. I think 

there was a ship in the Indian Ocean that had a Japanese flag on 

it. 

So we are told that the Pentagon needs more money to defend 

islands that Japan is unwilling to tax itself to defend, a country 

that responded rather insufficiently when America was attacked. 

And we are told: Don’t pay attention to China’s attack on American working families; pay only attention to whether they are adding a little dirt to a reef in the South China Sea. 

I yield back. 

Mr. YOHO. I appreciate my colleague’s comments there. And, yes, 

there are a lot of other conflicts or areas that are a concern out 

there. But when we start seeing military equipment going in their 

land strips and things like that, I think it causes more concern in 

this issue. And I look forward to the dialogue. 

And at this point, I would like to yield a minute to my colleague 

Mr. Rohrabacher from California. 

Mr. ROHRABACHER. And congratulations, Mr. Chairman——

Mr. YOHO. Thank you. 

Mr. ROHRABACHER [continuing]. On being Mr. Chairman. 

Let’s just note that President Abe in Japan has been doing his 

best to end the type of relationship that you have just described. 

President Abe and the people of Japan are honorable people, and 

they are courageous people when they have to defend their interests. We have been doing that, and we have insisted upon that 

since the end of the Second World War. 

President Abe is moving forward now and trying to move 

through his Parliament an end to the restrictions that were placed 

on Japan by their constitution after the Second World War. 

I think that President—and we should applaud that. I don’t 

know if—certainly, the last administration did not applaud it, and 

I would hope that President Trump would, indeed, look at what 

Abe is trying to do to become an equal partner rather than a junior 

partner who is being taken care of. So we should applaud that. 

And, second of all, in terms of what is going on with the Chinese, 

if we turn our back and just say, ‘‘That doesn’t affect us,’’ what we 

are talking about is an arrogant disruption of international rightsof-way both in the air and on the sea that will do nothing but embolden this rotten dictatorship in Beijing from moving forward with 

even more aggressive moves elsewhere. 

Mr. YOHO. Thank you. 

Now we will turn to Mr. Bera, Dr. Bera, from California. 

7

Mr. BERA. Thank you. I want to add my congratulations to 

Chairman Yoho. 

Mr. YOHO. Thank you. 

Mr. BERA. And welcome back to the ranking member. 

I think this is a timely topic for us to start this session of Congress off and this subcommittee off. I was in Japan last week, had 

a chance to meet with the Prime Minister, Prime Minister Abe, and 

some of his team, and I think it is very important for us to reassure our allies in the region that we will uphold our commitments. 

I mean, we can talk about the South China Sea. We can talk about 

the East China Sea. And more acutely what is happening in North 

Korea is an existential threat to Japan and our allies in the Republic of Korea. So this is very much a timely topic. 

And I would agree with my colleague from California, Mr. Rohrabacher, that Prime Minister Abe is trying to step up some of Japan’s defensive capabilities, and they are working within the confines of their constitution to take on some more of the burden. 

But, again, it was a bipartisan group meeting with our Japanese 

counterparts. We did send a strong message that we are ready to 

stand with our allies in the region in a collaborative way. 

With that, I will yield back. 

Mr. YOHO. Thank you. And I appreciate your comments. 

And the thing that I am excited about is so much trade goes 

through here. This region is so important to so many people around 

the world that it is having these discussions in the open that we 

can help maybe draft policies that would direct our State Department, our administration, and build alliances stronger in that area 

and focus on economies, trade, and national security that affects all 

of us. And so I look forward to those debates. 

As typical for meetings, we will have 5 minutes of questioning. 

You will each have an opening statement of 5 minutes that will be 

submitted into the record. And then each member will go back and 

forth for 5 minutes of questioning. 

And so, with that, I would like to introduce our panel. 

Mr. Dean Cheng, senior research fellow at the Heritage Foundation’s Asia Studies Center. Thank you. You have been here before, 

and we appreciate you coming back. 

Dr. Michael Auslin, resident scholar and director of Japan studies at the American Enterprise Institute. And, again, we thank you 

for your contributions. 

And Dr. Michael Swaine, senior fellow with the Carnegie Endowment for International Peace, Asia Program. 

And I have read all of your opening statements and several 

things from you, Dr. Swaine, and I look forward to an informative 

hearing. 

So, with that, Mr. Cheng, if you would start your opening statement. Thank you. 

Mr. CHENG. Chairman Yoho. 

Mr. YOHO. And make sure everybody turns their mike on when 

you speak. 

8

STATEMENT OF MR. DEAN CHENG, SENIOR RESEARCH FELLOW, ASIAN STUDIES CENTER, THE HERITAGE FOUNDATION 

Mr. CHENG. Chairman Yoho, Ranking Member Sherman, and 

members of the committee, thank you very much for the opportunity to testify before you this afternoon at the first meeting of the 

Asia and the Pacific Subcommittee. My name is Dean Cheng. I am 

the senior research fellow for Chinese political and security affairs 

at the Heritage Foundation, but my comments today reflect solely 

my own opinion and do not reflect the views necessarily of the Heritage Foundation. 

As has been very clear to anyone who has been watching the 

news, China is heavily engaged in the South China Sea region as 

the PRC has been asserting claims over an extensive expanse of 

the South China Sea based on a combination of claims of historic 

rights and a so-called nine-dash line that was laid down in 1947 

under the previous Government of the Republic of China. 

The Permanent Court of Arbitration at the Hague, however, 

found that neither of those arguments was, in fact, a basis for 

legitimating China’s very expansive claims, including its artificial 

island construction in the Spratlys. 

It is worth, I think, considering a bit about why China is so interested in the South China Sea. And I would suggest that there 

are several factors involved that are driving China’s insistence on 

pushing in the region, even when it antagonizes its neighbors. And 

these broadly fall into the categories of resources, strategic depth, 

and national reputation, as well as the potential capacity for the 

Chinese concept of deterrence, which it is important to note, for the 

Chinese incorporates the idea of coercion. If you all have read Bernard Brodie, Thomas Schelling, and Herman Kahn, the American 

concept of deterrence is solely focused on dissuasion, but for the 

Chinese, it incorporates coercion. 

When we talk about resources in the South China Sea, we tend 

to assume that it is about oil. The funny thing is that, although 

there have been a number of studies about potential hydrocarbon 

reserves in the South China Sea, the actual amount of hydrocarbon 

discovered by various test walls has, in fact, been extremely limited. It hasn’t yet panned out. 

The main resource, currently, that is actually of particular interest to the Chinese but also to neighboring states is that of food. 

The South China Sea includes some of the richest fishing grounds 

in the world. And while some of those rich fishing grounds are actually now being pushed toward collapse due to overfishing, it 

nonetheless remains a key source of relatively free protein. As 

China moves up the socioeconomic scale, its people are demanding 

more protein. So, if you are going to try to meet those demands, 

you can import meat, which is going to be very expensive, or you 

can try to catch more of it basically off the hooks, so to speak. 

The second aspect here is strategic depth. And here, the Chinese 

have a distinct need to control the East Asia littoral, not just the 

South China Sea but the waters up through the entire first island 

chain, as a defensive measure because China’s center of gravity, its 

economic center of gravity, is now on the coast. If you think about 

Shenzhen, Shanghai, Pudong, Tianjin, these are all port cities, and 

this is what China has invested billions and billions of dollars over 

9

the last 30 years in terms of building up its economic infrastructure. 

The South China Sea, however, is especially important given the 

militarization of Hainan Island, which contains, among other 

things, China’s newest and largest space sport, a facility for ballistic missile submarines, a carrier berth, submarine pens, and 

multiple military airfields, including the one that the U.S. EP-3 

had to crash land on after the collision in 2001. 

One of the American trump cards is our submarines, our nuclear 

attack submarines. They are extremely quiet. China has openly 

discussed the creation of sonar surveillance arrays in the bottom of 

the South China Sea. Those arrays need to come up at some point 

in order to collect the data, to allow the data to be analyzed and 

exported. And I would suggest that some of these islands may 

serve that particular function. 

In addition, for this Chinese Communist Party, legitimacy rests 

upon core interests. And among the core interests that were defined by the senior counselor Cui Tiankai in his meetings with then 

Secretary of State Clinton is maintaining territorial integrity and 

State sovereignty, which is especially important in the wake of the 

so-called century of humiliation that China suffered when China 

was faced with the potential of dismemberment. 

So the South China Sea, like Taiwan, like Xinjiang, like Tibet, 

is increasingly associated by the Chinese leadership as, basically, 

if we lose this, where will it end? Where will it stop? 

It is no surprise, then, that the U.S. has been accused of fomenting the entire South China Sea problem from the—by such senior 

leaders of General Fang Fenghui in his joint press conference with 

then Chairman of the Joint Chiefs Dempsey and Madam Fu Ying 

of the National People’s Congress. 

So, within this focus, within this broad context, then, China is 

driven by a number of considerations here to push for extending its 

sovereignty over what normally would be considered international 

common spaces. And this is likely to become even more urgent as 

China’s leadership faces the 19th Party Congress this fall, where 

Xi Jinping is going to wind up with an entirely new leadership 

cadre. 

In order to counter China, I think some of the things that we 

should be considering and which I hope the committee will consider 

future hearings are the issues of maintaining a presence in the region, emphasizing the legality of the Permanent Court of Arbitration’s findings, and employing economic as well as more traditional 

political and diplomatic means to pressure China. 

Thank you very much. 

[The prepared statement of Mr. Cheng follows:]

10


24444a-1.eps
11


24444a-2.eps
12


24444a-3.eps
13


24444a-4.eps
14


24444a-5.eps
15


24444a-6.eps
16


24444a-7.eps
17

Mr. YOHO. Thank you, and I appreciate your testimony. And 

those are the things we want to gain out of this. You know, we will 

come back to some of your comments that I have questions on. 

Dr. Auslin, if you would go ahead. 

STATEMENT OF MICHAEL AUSLIN, PH.D., RESIDENT SCHOLAR, 

DIRECTOR OF JAPAN STUDIES, AMERICAN ENTERPRISE INSTITUTE 

Mr. AUSLIN. Mr. Chairman, Ranking Member Sherman, members of the committee, I am honored to speak before you today on 

the issue of U.S. maritime strategy in Asia. With a new administration, it is a particularly timely moment to do so. I believe it is 

also time to adopt a larger geostrategic picture of the entire AsiaPacific region. Seeing the South China Sea, the East China Sea, 

and the Yellow Sea as one integrated strategic space or what we 

might refer to as the Asiatic Mediterranean. 

The United States maintains several enduring interests in maritime East Asia. First, since the close of World War II, we have 

sought to prevent the emergence of a hostile hegemon that could 

dominate our partners or eventually threaten the U.S. mainland. 

U.S. forward-based military forces along Asia’s first island chain 

have served to deter full-scale war in Asia for more than six decades. 

Second, the U.S. maintains an interest in preserving our network 

of allies and partners in the region. American alliances remain a 

fundamental source of our strength in the world. 

Third, the U.S. retains an interest in defending the free flow of trade and commerce through Asia’s waterways. Annually, $5.3 trillion of trade passes through the South China Sea. U.S. trade accounts for $1.2 trillion of this total. 

There are numerous threats to U.S. interests or potential threats 

to U.S. interests that may emerge in the future. From a domestic 

political perspective, Beijing views its maritime claims in the South 

and East China Seas as what it calls ‘‘blue national soil.’’ Foreign 

claims to the Spratly and Paracel Islands are an infringement, in 

Beijing’s view, on its sovereign territory, and Chinese leaders have 

hardened their public positions on the South China Sea over time. 

China’s nine-dash line encompasses 90 percent of the South 

China Sea. While Beijing remains vague about its claims to the waters and airspace within the line, it considers the area to be historically Chinese waters. To both defend its maritime claims and protect its southeastern flank, Beijing has spent the past three decades building its military power projection capabilities out to dispersed island chain and beyond, developing anti-access/area denial 

technology and naval forces to challenge the U.S. military in its 

near seas. 

Over the past two decades, Chinese ships have harassed, shadowed, and interfered with the activities of U.S. naval assets operating in its near seas. While in the East China Sea, the PRC continues to challenge Japan’s administration of the Senkakus by frequently sailing flotillas of fishing boats, coast guard ships, and 

maritime militias in and around the Senkakus territorial waters. 

By slowly changing the situation on the ground or on the water, 

China hopes to transform the Asiatic Mediterranean into a Chinese 

18

lake. Chinese control of the South China Sea at the exclusion of the 

U.S. is obviously not a fait accompli, but we must act to implement 

a counter coercion strategy if we hope to maintain assured access 

to Asia’s littorals. 

Let me mention a few policy recommendations. First, we should 

demonstrate diplomatic leadership. Washington’s network of allies 

and partners throughout the Asia Pacific remains the backbone of 

our engagement in the region. The first order of business for the 

Trump administration is to continue energetic diplomacy throughout the region, to assure allied capitals, and signal to the China 

that we remain committed. 

Later this year, I hope to see the administration send high-level 

attendees to the June Shangri-La dialogue, the August ASEAN regional forum, and the November East Asia and APEC summits. 

Diplomatic jaw-jaw alone, however, is insufficient. We must also 

strengthen economic ties with our liberal allies in the region. While 

the current administration has declared the Trans-Pacific Partnership dead, it has remained open to the possibility of bilateral freetrade agreements. If it pursues this path, then the best place for 

President Trump to start would be with Japan. 

In addition, we must engage in more multilateral security cooperation. It is incumbent on the U.S. to attempt to better train 

and equip the forces of Southeast Asian nations as well as our allies and partners to resist coercion and intimidation by the Chinese 

Navy and raise the cost of Beijing’s salami-slicing strategy in the 

East Asia Seas. 

I believe the U.S. must continue to raise foreign military financing levels in Southeast Asia. In 2015, Congress authorized a $28 

million East Asia-Pacific foreign military financing fund that could 

be disbursed to various Southeast Asian nations as needed. This 

pot of money should be renewed annually. The U.S. should also encourage regional players to engage in these cooperative security efforts including our allies in Japan, Australia, and South Korea. 

And, finally, we should reinforce these efforts with U.S. hard 

power. We should increase the tempo of our Freedom of Navigation 

operations in the region, not as a provocation but as a signal that 

we will defend our rights in accordance with international law. 

We must be more willing to use coercive diplomacy to raise the 

costs on China and against its actions against our allies or our interests. 

The goal, in conclusion, is not to back the Chinese into a corner 

or goad them into further aggression but, rather, just the opposite. 

They must understand that unprovoked and belligerent acts will 

merit a rejoinder; otherwise, they will get the wrong message and 

continue testing the U.S. Government and our allies. 

Thank you. 

[The prepared statement of Mr. Auslin follows:]

19


24444b-1.eps
20


24444b-2.eps
21


24444b-3.eps
22


24444b-4.eps
23


24444b-5.eps
24


24444b-6.eps
25


24444b-7.eps
26


24444b-8.eps
27


24444b-9.eps
28

Mr. YOHO. Thank you for your statement. 

And, Dr. Swaine, look forward to hearing yours. 

STATEMENT OF MICHAEL D. SWAINE, PH.D., SENIOR FELLOW, 

ASIA PROGRAM, CARNEGIE ENDOWMENT FOR INTERNATIONAL PEACE 

Mr. SWAINE. Thank you very much, Mr. Chairman, members. It 

is a pleasure to be here today. 

Let me speak, first, about the situation in the maritime areas, 

as I see it. Since roughly 2007, 2008, China has clearly taken a 

more assertive and active stance toward its longstanding territorial 

claims in the South and East China Seas, both bordering its long 

maritime coast. In truth, the historical dynamic at work in the disputed maritime areas has long involved an interactive tit-for-tat rivalry among the claimants made possible by the absence of any 

clear and commonly accepted code of conduct and driven by deepseated suspicions and strongly felt nationalist impulses on all 

sides. 

In recent years, however, Beijing has certainly gone beyond such 

proportional tit-for-tat interaction to apparent attempts to establish 

itself as the dominant claimant in the Spratly Islands, which are 

the southern islands in the South China Sea, arguably to deter perceived provocations by others and to establish a strong position in 

future negotiations, correcting what had been a very weak position 

in that area. 

In the case of the East China Sea dispute with Japan, Beijing 

has also departed from its past tit-for-tat stance in an attempt to 

establish itself in recent years as an equal claimant to Tokyo over 

disputed islands, thereby supposedly correcting years of what it regards as Japanese dominance. 

While not taking any formal position in support of any claimant’s 

sovereignty, Washington has clearly focused the vast majority of its 

concern and its actions since roughly 2010 on Beijing while backing 

its allies. The obvious danger presented by this situation is that increasing numbers of U.S. allies and Chinese air and naval assets 

operating in close proximity to one another or perceived provocations of various sorts, including further military deployments 

onto land features, could produce escalating crises and conflict. 

This danger is reinforced by the failure of China, and to a lesser 

extent other disputants, to clarify their claim regarding various waters. Contrary to widespread claims in the media and elsewhere, 

Beijing has yet to define exactly what the so-called South China 

Sea nine-dash line denotes regarding the waters within it. The resulting uncertainty stimulates worst-casing about motives and behavior, thus leading to further escalation. 

So what is to be done in this situation? First, I think there needs 

to be a recognition that a continuous, unilateral U.S. military escalation in presence and activities in an effort to retain a clearcut 

level of military predominance over China will have, at best, a limited short-term dampening effect on the worsening security competition and would more likely make the situation much worse. 

The forces of nationalism, the public visibility of actions taken, 

the close proximity of the disputed areas to mainland China and 

Beijing’s continued economic and military growth and distrust of 

29

U.S. make a confrontation more, not less, likely under such circumstances. 

Moreover, barring an unlikely near total collapse of the Chinese 

economy and/or a major surge in the overall U.S. GDP, Washington 

will not possess the capacity to greatly exceed the kind of military 

and economic capabilities that China will be able to bring to bear 

in its nearby maritime areas over the coming years. 

We are looking at the emergence of a de facto unstable balance 

of power in the Western Pacific under present conditions. 

Second, in place of an open-ended escalation, a stable, enduring 

modus vivendi among all relevant parties is needed. This should 

center on agreements to exercise mutual restraint in asserting local 

sovereign or special rights as well as an effective peaceful process 

for handling incidents. Such an understanding ideally should consist of several elements. The first is a far greater emphasis on diplomacy than we have seen thus far to establish an interim set of 

understandings among the claimants and between Beijing and 

Washington regarding levels and types of militarization and nonuse of force. The United States and China must take the lead in 

this effort based on a common recognition of the need to remove 

the maritime issue as a driver of their deepening strategic competition. 

A second element should include a staged diplomatic process for 

clarifying the jurisdictional disputes involving both sovereignty 

issues and nonsovereignty rights over resource extraction such as 

fishing. Washington must do more to facilitate this effort and not 

leave it simply to Beijing and the other disputants to determine. 

During this process, Beijing would need to clarify the meaning of 

the nine-dash line, and all claimants would specify their claim to 

land or underwater features and corresponding waters as well as 

so-called historical rights ideally as they relate to relevant legal 

definitions under UNCLOS. 

Third, on the basis of such clarification of claims and jurisdictions, all parties in the South China Sea and East China Sea disputes must reach an agreement on those areas subject to joint resource development and a procedure for implementing such development. 

Finally, on the basis of the previous actions, the claimants must 

eventually negotiate elements of a binding code of conduct for limiting levels of militarization and handling future incidents over the 

long term. Obviously, many obstacles would confront any efforts to 

greatly reduce disputes over maritime territory claims. And American leverage is extremely limited in this area because of its failure 

to ratify UNCLOS. How can Washington seriously press China and 

others to abide by UNCLOS rulings and establish a code of conduct 

when it refuses to subject itself to such scrutiny? These obstacles 

are not insurmountable however, especially if they are placed within a larger effort to create an overall regional balance of power, and 

they must be surmounted since the likely alternative is a steady 

escalation toward more crises. 

Thank you. 

[The prepared statement of Mr. Swaine follows:]

30


24444c-1.eps
31


24444c-2.eps
32


24444c-3.eps
33


24444c-4.eps
34


24444c-5.eps
35


24444c-6.eps
36


24444c-7.eps
37

Mr. YOHO. Thank you. And I appreciate everybody’s comments. 

And that is what we are here for, you know, let’s define the region. 

Let’s define what the norms are. 

Dr. Auslin, you were talking about China pressing its national 

sovereignty in the out islands against international norms. Our historical agreements with countries like Japan, the Philippines, Taiwan, South Korea, if we look at the advent of those when they 

came out, it was peaceful in nature, non-aggressive, and non-encroaching on other nations whereas what we are seeing with the 

Government of China has expanded its reach. We see the militarization of the islands that have come out of nowhere, the castles 

in the sand. And I think your description of the lake of China 

versus the South and East China Sea is very descriptive in the 

mentality coming from the Chinese Government. 

When we see the—not just offensive weapons on there—or the 

defensive but the offensive weapons, I think it is time that we come 

to the table and get clarification on this so that we can make policies and get people in agreement on that. 

After becoming party chairman in the late 2012, President Xi announced his so-called Chinese dream, which he said would lead to 

the great rejuvenation of the Chinese nation. How important do 

you think China’s maritime claim in the South and East China 

Seas are to achieving President Xi’s Chinese dream? That is question number one. 

What is Beijing’s ultimate goal in the South and East China 

Seas, and how far do you believe China is willing to go to defend 

these claims? And I am going to open it up to all three of you, but 

Dr. Auslin, if you will start on that. 

Mr. AUSLIN. Thank you, Mr. Chairman. 

I think that, in terms of the ultimate goal that Xi Jinping has, 

it is—which is not surprising for any national leader—it is to have 

the ability to do what he decides he wants to do in the future, 

meaning, to reduce any restrictions on either his own capabilities, 

which is a domestic issue, or against those, such as the United 

States, who may pose an obstacle, or potentially international 

norms that conflict with those interests. 

One thing I don’t think we have fully appreciated here in the 

States is the degree to which China considers the new territories 

that it has built and reclaimed in the South China Sea as sovereign 

territory and how that will change Chinese doctrine, military doctrine, defense doctrine should they feel that those territories are at 

risk. After all, they point out to us that those are—there are post 

offices and schools on the islands, not just airstrips and defensive 

installations. 

I think, secondly, to wind up in terms of your question as to how 

important this is, it is—I would not say it is the single most important driver of China’s perception of its own position and role in the 

region, but it is part of a much larger perception that China has 

of regaining a position of dominance that it once had, of being recognized as, if not the hegemon, as the dominant player, and, therefore, with the ability to have its own perceptions of what its interests are and the norms that surround those respected by its neighbors. 

38

This is where the other nations and Asia push back. It is where 

the United States has hesitated to step in to uphold the global 

norms that go on to issues that include free trade and fair trade. 

So that is where I would actually link Ranking Member Sherman’s 

opening statement with our discussion on security. It is a question 

of liberal norms and behavior globally. 

Thank you. 

Mr. YOHO. All right. Let me interject in here. 

Dr. Swaine, you were saying, as you stated, it will be harder in 

the future for us to have more of a presence there. You know, if 

you look at our economic situation and our military strength, that 

is why I find it is imperative that we have an agreement now and 

understanding that we can build from in the future. What are your 

thoughts on the direction that we should go and knowing our current state of affairs in America? 

Mr. SWAINE. Oh, that is an important caveat. 

Mr. YOHO. We will just deal with the Asia-Pacific area right now. 

Mr. SWAINE. Yes. I mean, in some respects I think we are moving 

in the wrong direction on a lot of fronts. 

Mr. YOHO. Agreed. 

Mr. SWAINE. I am not a big fan of the revoking of TPP. I think 

it can be modified, and it is something that signifies American’s 

presence in the area. But I do believe that it is incumbent on the 

United States to think long term on this issue and think hard 

about what our relative capabilities in that field, in that area, because they are changing. And the ability of the United States to be 

able to predominate in the Western Pacific is going to go away. 

And so how do you deal with that effectively? Well, you can argue 

that you want to double down and just spend more on defense, and 

you will maintain that gap. I don’t think that is going to be feasible, particularly if the United States is not a strong economic 

player in the region as well. 

So the best procedure is to move toward some type of balance of 

power in the region. And that means gaining understandings with, 

first of all, allies, the United States with Japan, with South Korea, 

and with the Philippines, about what is needed in the region in the 

long term. And, secondly, reassuring them that balance of power 

does not mean accommodation. Balance of power does not mean retreat from the region. Balance of power does not mean a weak U.S. 

The U.S. acts on the basis of its strength and influence to try to 

do that. 

And I have laid out a whole series of moves that I think are necessary in a report that I wrote last year on this question. 

Mr. YOHO. I saw that. And I appreciate that because that is what 

this is all about. You know, we can’t do it. It is not sustainable for 

us to do it alone. We have to come to agreements in that area so 

that we can forge strong alliances and have a common understanding because if we allow the precedent of China moving on, 

does that allow any other nation to do the same thing? 

Mr. SWAINE. Right. 

Mr. YOHO. And that is what I fear. We need to come together on 

an agreement. 

I am out of time, and I am going to turn this over to the ranking 

member for his 5 minutes. 

39

Mr. SHERMAN. Thank you. I want to make it clear: I regard this 

aggressiveness by China as important. I am just not so sure it is 

as important as the administration has said as ISIS or Crimea. 

American weakness is hurting us, and American weakness is 

demonstrated by our weakness on trade, and our response is, well, 

let’s get tough on the islands. Yes, China may be stealing some fish 

from Japan, but China’s refusal to accept American imports, China’s demand for coproduction agreements, where we have to transfer technology as a price for access to their markets, this has devastated Michigan and Wisconsin and Ohio and western Pennsylvania, millions of American families, and we show weakness every 

day that we do not impose tariffs on Chinese goods coming into our 

country. 

And the best way to preserve our weakness is to say: Look over 

here. There are some islands. There are some fish. 

What we haven’t discussed much here is how China and its government can use nationalism to expand power. It works here; it 

works there. Now, the Chinese Government has a problem in that 

there is no theoretical answer for the question, why does that government rule? Democracy is a good theoretical basis. Theocracy 

works reasonably well for the government of Tehran, and even the 

divine right of kings has justified why people are in control. But 

the rulers in Beijing are not the vanguard of the proletariat. 

Their only answer for the question why they rule is the exaggerated nationalism, and we play right into that hand. We may have 

to because they may get so aggressive that we have to respond. But 

we play right into their hands when we confront them in the South 

China Sea. 

Dr. Auslin, you talk about coercive diplomacy. Do you have anything in mind other than yelling loud? Give me—spend 10 seconds 

and just tell me what is—one example of coercive diplomacy. 

Mr. AUSLIN [continuing]. Including disinviting China from maritime exercises we can invite them to like RIMPAC, curtailing military exchanges, considering whether or not to continue high-level 

diplomatic dialogue. 

Mr. SHERMAN. Some of that just makes the South China Sea far 

more dangerous. They play games; we respond. And I don’t want 

to start a war there by accident. I notice, of course, you didn’t say 

tariffs as part of that. 

You say that $1.2 trillion of U.S. trade passes through the South 

China Sea. Can you name the number one port that that trade 

goes to that isn’t Chinese? Is any significant portion of that $1.2 

trillion not U.S. trade with China? 

Mr. AUSLIN. All the leading ports are Chinese. 

Mr. SHERMAN. All the leading ports are Chinese. So, once again, 

these strategic islands would allow China to close off trade with 

the United States through Chinese ports. 

Dr. Swaine, Japan has this constitutional provision. Does that 

prevent them from spending 1.5 percent of their GDP or even 2 

percent of their GDP on defense? Does that prevent them from defending what they say is their own territory? 

Mr. SWAINE. Well, by law, they have restrictions on the amount 

that they pay as a percentage of their GDP——

40

Mr. SHERMAN. That is by law. That is not their constitution. We 

have a law that we spend only so much for defense, but we change 

that every year. 

Mr. SWAINE. They could spend more. 

Mr. SHERMAN. And they could spend more. They could, and they 

choose not to because they would rather we defend them——

Mr. SWAINE. Well, if I may, it is a little bit more complicated 

than that. 

Mr. SHERMAN. I am sure it is. And if I was given more than 5 

minutes, we would explore those complications. And, again, we respect the Japanese people, but their willingness to tax themselves 

to defend what they claim is their sovereign territory faces certain 

political limits, and we are told that we have got to increase our 

defense budget by 10 percent and that these islands are an important part of that. 

And 9/11 happened 16 years ago. Has there been any effort in 

Japan to say we have to amend our constitution so that we can 

send forces to Afghanistan? 

Dr. Auslin, name the leading Japanese politician who has called 

for the deployment of Japanese troops to Afghanistan? 

Mr. AUSLIN. Combat troops, none, but they sent reconstruction 

troops to Afghanistan. And they had an 8-year refueling mission——

Mr. SHERMAN. Okay. But they haven’t put their people in harm’s 

way? 

Mr. AUSLIN. They are precluded by the constitution——

Mr. SHERMAN. And not a single Japanese politician has stood up 

and said: ‘‘America has defended us for the better part of a century. 

America was attacked on 9/11. It is time for us to change our constitution for the purpose of helping America.’’ No Japanese politician has said that? 

Mr. AUSLIN. Congressman, they respond to their constituents as 

you do. 

Mr. SHERMAN. Exactly. And their constituents want my constituents to pay for the defense of their islands, and their constituents 

don’t want to pay in blood or treasure for the defense of America, 

which is happening in Afghanistan right now. 

Again, these islands are important. We shouldn’t let China walk 

all over us, but the other view I am glad to have represented here. 

And I think we have a balanced hearing because I am sure that 

there will be others who will present the other side. 

I yield back. 

Mr. ROHRABACHER [presiding]. Well, thank you. 

And I would yield to myself while the chairman is out. Look at 

that. I have got it in my hands finally. 

Mr. SHERMAN. Wait a minute. You have got one on your—you 

are controlling the whole world. 

Mr. ROHRABACHER. That is it. There you go. 

I have some very strong agreements with Mr. Sherman on some 

of the trade issues that he has brought up today, and I also have 

some very strong disagreements with him as to the scope and 

depth of how we approach China today, a threatening China to the 

world peace. 

41

Certainly, China—I led the floor fight when I came here with 

Chris Cox against Most Favored Nation status with China. At that 

time, we made the argument that those people were telling us that 

the more fluent and the more trade—the more fluent China with 

more trade in the United States meant a liberalization of China, 

that we would eventually have a more democratic government. 

That has proven to be absolutely wrong. And I call it the ‘‘hug a 

Nazi, make a liberal’’ theory. And it is no more, liberal and politically, than it was two decades or three decades. In fact, there is 

some evidence that, at that time, because of Tiananmen Square, 

they actually had more freedom than they have today in terms of 

political freedom in China. 

So let us note that the idea that we have permitted a monstrously oppressive regime that brutalizes their own people, that 

we have enabled them to put the rules of trade together that has 

resulted in a massive transfer of wealth that has then been kept 

in the control of the clique that runs China—and as you said, Mr. 

Sherman, this is not a clique that is now directed by beliefs of some 

philosophy like they are the proletariat, as they were during the 

Communist days. This is just a self-serving, vicious, fascist-state 

clique that runs China, and that threatens the world when that 

type of clique becomes a massive military power and dominates a 

region of the world. That is when it becomes a threat beyond trade. 

And that is what is happening today. 

That massive wealth is being used to build up their military capabilities, and what we have seen is an arrogance of decisionmaking in Beijing, and I would say, again, there are no opposition 

parties there. There are no people—there is no reason for them to 

worry about public opinion. This is just a power play by arrogant 

oppressors, as we have seen in many throughout history. You have 

a vicious dictatorship in a country that becomes a military power. 

They always end up aggressing upon their neighbors. 

So, with that, that means we have a threat to deal with, especially when all the signs are there, which in the South China Sea 

is not a—if I can just note here, the South China Sea is closer, the 

Spratly Islands and these other islands here, maybe not the 

Paracels, but the islands—the Paracel Islands—are closer to the 

other countries in the South China Sea, meaning the Philippines 

and even Indonesia and certainly Vietnam, are much closer to 

those countries than they are to China. There was no island there 

before. We are talking about reefs that were under water at high 

water. 

Now, I was lucky, after the CIA for decades prevented me—I 

should say for a decade, not decades—for a decade prevented me 

from flying over the Spratly Islands. And about 15 years ago, I 

managed to fly—get another plane from another—anywhere where 

I got it, to fly me over the Spratly Islands. And there they were 

building the islands. And so all of this time for the last 15 years, 

we know that they have been building those islands, and we have 

let it happen. We have not confronted it, which they have seen as 

a sign of weakness. 

And what maybe we could have done, maybe start building islands of our own. We could have maybe financed the Filipinos to 

go there and build their own islands right next door, see what they 

42

would have thought about that. But most importantly. And we are 

trying to come to this formula, and I have only got a couple of minutes for you to reply, but let me just note: I think the most important thing in making sure that we have peace and stability in that 

part of the world is not to ignore everything but the trade with 

China, but make sure that we work with the Japanese. The Japanese are the only ones who are strong enough to counterbalance 

this. 

And let me note that if the United States had had a country foolish enough for decades to say, ‘‘Let us take care of all of your defense,’’ the American people wouldn’t be in favor of using their 

money when the other country would let them cover their defense. 

It is time for us not to cover the defense of Japan but treat the Japanese as equal partners and allies and help President Abe, who is 

committed to being a force to counteract this what I consider to be 

evil coming out of Beijing. 

Now, I have overspoke my time, but I will give all you witnesses 

15 seconds to say ‘‘you are out of your mind’’ or ‘‘I really like what 

you had to say.’’

Mr. CHENG. I would note, sir, that what is essential is a comprehensive approach toward dealing with China. We cannot succeed in dealing with China simply via trade or simply via military 

or simply via diplomatic issues. Comprehensive includes what you 

have noted, which is working with our allies, but it also means 

thinking about all of the instruments available to the United 

States, including access to our markets, as Representative Sherman has suggested, including financial markets as well as things 

like supply chains and things like that where many—much of that 

trade is going to China. That is not finished products necessarily, 

but it is often key spare parts. 

Mr. ROHRABACHER. Very good. 

Mr. AUSLIN. Representative, just very briefly, I think we do start 

with our allies and partners. Japan spends $50 billion on its military per year. It is purchasing advanced weaponry, such as the F35, and it does take the lead in protecting its own islands in the 

Senkakus. The United States Navy has done none of that. What 

they have asked for is a guarantee that, should war break out with 

China, that we would honor our alliance commitment to them. But 

the Japanese Coast Guard and Navy are always the first responders constantly to China. 

Mr. SWAINE. You are out of your mind. No. 

Mr. ROHRABACHER. Great. 

Mr. SWAINE. I mean, I just fundamentally disagree with many, 

many of your assumptions, Congressman. 

Mr. ROHRABACHER. Okay. 

Mr. SWAINE. I mean, I think looking at the Chinese system as 

simply a question of Communist dictators bent on overtaking the 

world is a very inaccurate way of understanding them. Yes, it is 

a one-party dictatorship. Yes, they restrict a lot of political freedoms within their regime. They are not, however, ruling over a 

population that is dying to overthrow them. They have a lot of people in China who are very supportive of what the PRC regime has 

done over the last 30 to 40 years, and I am sure you are aware of 

that. It has raised their standards of living up very, very high. 

43

No, they don’t have political rights in a variety of ways that we 

would like them to have, but they are not going to become like an 

American liberal democracy. They are going to have some version 

of some kind of stronger state because of the size of the country 

and because of the history of the country and the fear that they 

have had of instability and collapse within that regime. 

Now, you can argue that a democratic China would be much better for us and much better for them, but give me a good sense 

about how you get there without creating chaos, and I would be 

very willing to hear because nobody has thought of how to do this. 

So what you have, then, is an effort on the part of the Chinese 

Government to expand their growth as great as they can, and they 

do it for the people as well as for themselves, and to establish a 

military that is going to reduce what they regard as their 

vulnerabilities. 

The United States has dominated the Western Pacific right up 

to China’s 12-mile limit for the last 70 years. That is changing. The 

question is, how do you address that problem without provoking a 

conflict with the Chinese? 

They are not like Iraq. They are not like Granada. They are not 

like Panama. They have nuclear weapons and a big military. 

Mr. ROHRABACHER. All right. Thank you. 

And we do have fundamental disagreements, but neither one of 

us are out of our mind. So we will have a good discussion on that. 

Thank you. 

And Mr. Becerra. 

Mr. BERA. Mr. Bera. Mr. Becerra is back in California. 

Mr. ROHRABACHER. No, we just met with him this afternoon. 

Mr. BERA. You know, I think this is a very important and interesting dialogue. I would agree with you, Dr. Auslin, that as we look 

at Asia and the Pacific, and certainly East Asia, in the latter half 

of the 20th century, post World War II, post the Korean conflict, 

the U.S. presence really did have a remarkable effect in creating 

a stable democracy in Japan, creating a stable democracy in the 

Republic of Korea, you know, helping create thriving economies. 

And that was a good thing. 

And I do think it is important for us to reassure our allies in the 

region that we are not withdrawing from the region. I think it is 

also a good thing as Prime Minister Abe and the Japanese Government looks at stepping up some of its own defensive capabilities, 

understanding some of the threats. 

And one of those threats, clearly, are tensions in the South China 

Sea. And I would agree with my colleague, Mr. Rohrabacher, that 

we should have responded sooner, but we are where we are. And 

part of the challenge of not responding sooner is there is—if you 

look at some of the Chinese strategy is they will provoke, see what 

kind of response that they get. If they don’t get a response, well, 

then they will push a little bit further and see what kind of response. And at this juncture, it becomes a much more complicated 

issue, much more so in the South China Sea than in the East 

China Sea. 

None of us has an interest in creating a kinetic conflict. And 

there is always a danger of an accidental kinetic conflict, which 

whether that is a Chinese vessel with a Japanese vessel or a FiliVerDate 0ct 09 2002 11:28 Apr 06, 2017 Jkt 000000 PO 00000 Frm 00047 Fmt 6633 Sfmt 6633 F:\WORK\_AP\022817\24444 SHIRL
44

pino vessel or an American vessel. And that is the danger. So we 

do have to think about strategies to start reducing those tensions. 

I do think, you know, the other big piece of it, whether you supported TPP or were opposed to TPP, these are the fastest growing 

markets in the world. There clearly is a benefit to American companies to be able to compete and sell in these markets. You know, 

we sell a lot of American products in Japan. We sell a lot of American products in Korea. And as the other southeast Asian markets 

and Chinese markets open up, we want to be able to compete and 

sell our products there. That is good for American workers. We 

want to make sure we do it in a fair way. 

If I start to think about the next steps—and maybe I will give 

each of you a chance to talk about that—with this desire to avoid 

a kinetic conflict, that wouldn’t be in China’s interests, either. 

What would be one or two next steps to start reducing those tensions, and using some of our soft power to reduce and deescalate 

the region? 

Maybe, Mr. Cheng, if you want to start. 

Mr. CHENG. Thank you very much, Representative. 

Several thoughts do come to mind. First, I think it is very important to note that the Chinese leadership does have to worry about 

public opinion. They are not subject to election, of course, but when 

we watch how quickly they suppress and limit the internet and the 

free flow of information, it is very clear, that is something that 

worries them. 

And that is something that we should continue to champion at 

a political level, internet freedom; at a governance level, in terms 

of not walking away from things like ICANN; and at a technical 

level, in terms of promoting the ability to flow information around, 

over, and through the Great Firewall of China. 

The other thing here is to consider the extent to which China’s 

activities in places like the South China Sea land reclamation are, 

nonetheless, dependent on Chinese companies, which, in turn, are 

dependent upon imports. The spare parts required for the mechanical act of reclamation often is sourced not in China, ironically 

enough, but in Europe or the United States. And a diplomatic effort 

on the part of the U.S. to bring in Japan and our allies, to basically 

constrain Chinese behavior, or else suffer the consequences to their 

supply chains, is, I think, one that is worth considering. 

Mr. BERA. Dr. Auslin. 

Mr. AUSLIN. Congressman, I think you are right, that we are 

where we are, meaning we are in a different situation today than 

we were 8 years ago, or 16 years ago. There are certain things we 

cannot do today. There are other things that we can. 

I would say, first, we do need to consider how to best build the 

capacity of our partners, high-end partners such as Japan as well 

as lower-end partners, those that are struggling to just protect 

their own waterways. 

Second, I think enhancing the U.S. presence, ensuring that we 

maintain a robust, U.S. presence, which is both air and ground and 

naval in the region, that there is co-training, there are exercises, 

there are port visits and the like, is not inherently predominance, 

but it does maintain stability and it sends messages of reassurance. 

45

At best, what I think we want—not at best, what I think we 

want to do is complicate China’s perception of what it is able to do 

uncontested in these areas, and nudge it toward a more cooperative 

posture. And I think you do that by creating a community of interests. 

Mr. BERA. Dr. Swaine. 

Mr. SWAINE. Well, I mean, there are several different aspects to 

what needs to be done. One of them is domestic. The United States 

needs to, as I said before, think very carefully about what the longrange future of the United States is in the Western Pacific, in 

terms of its capabilities, its influence, how likely is it able to match 

specific types of resources with specific types of objectives. 

And I don’t think that dialogue or that discussion has occurred. 

Nobody thinks really long term about U.S. capabilities and tries to 

understand a range of outcomes that may occur and what you 

would do to try and minimize the less likely, or the less favorable 

ones and maximize the more favorable ones. That is the first thing. 

The second thing I think we have to do is we have to have a discussion with our allies about them improving their relations in various ways with the Chinese. There is very little discussion by the 

United States in interacting with China and ASEAN to do with 

their disputes in the South China Sea. After all, the disputes are 

about them; it is about their relationships. And we need to be more 

effective diplomatically and not be reducing the State Department, 

cutting back on the State Department’s capability, in order to engage with allies and with others in the region on how they are 

going to develop a real code of conduct. 

The Chinese have committed themselves to this. They are supposed to have a framework for a code of conduct by the middle of 

this year. The United States barely says a thing about it. It needs 

to base itself on the 2002 declaration that ASEAN and China 

reached, and then use that as a basis for moving forward for a code 

of conduct that will cover a lot of these areas. 

Mr. BERA. Thank you. 

Mr. YOHO [presiding]. Thank you. I am going to afford Mr. Sherman 30 seconds. 

Mr. SHERMAN. One comment is that we might be stronger diplomatically if we were part of UNCLOS. We don’t subscribe to the 

international standards for maritime disputes, but we demand 

China do so. 

But I want to pick up on what Mr. Cheng said. They do need to 

manipulate their domestic public opinion. They will especially need 

to do that if economic conditions change, and they can no longer, 

you know, provide 5 or 10 percent economic growth. And if there 

is a recession in China, the best, or the most likely way for them 

to try to retain power is to go eyeball to eyeball with us and wrap 

themselves in nationalism. 

I yield back. 

Mr. YOHO. Thank you. At this time, we will go to Mr. Perry from 

Pennsylvania. 

Mr. PERRY. Thanks, Mr. Chairman. 

I know this goes back a ways. It is probably longer than most 

people care to think about, and maybe it is not even relevant to today’s conversation. But I would think, for historical purposes, it is 

46

important that we remind ourselves in a way how we got here. And 

I am one of the people that believes that a United States diplomat 

named John Service in the fall of Chiang Kai-Shek as opposed to 

Mao and our State Department and our meddling on behalf of communists have helped create the problem that we now find ourselves 

within. And I just think it is important to think about those things, 

because I see parallels to today with some other places we are engaged and other things we are doing. 

That having been said, I turn to Mr. Cheng. Our new Secretary 

of State Tillerson warned of a more confrontational South China 

Sea policy, but he also said that the island building had to stop, 

and that access to those islands would not be allowed. 

The President has recognized the one China policy, as we all 

know. The last administration expressed a floor for China, including the militarization of the South China Sea; but as far as I can 

tell, that was never backed up, never backed up with any action. 

So the question is, so if we are going to maintain, if we are going 

to maintain that there is a floor for China, what specific conditions 

should we articulate to China regarding that; and when China invariably breaks the floor, or floors, what should our actions be? 

Mr. CHENG. Congressman, I think that, to begin with, we should 

be treating our allies and our friends at least as well as we treat 

China. So I think that the incorporation of China into things like 

RIMPAC, when forces from, for example, the Republic of China/

Taiwan are excluded sends, I think, a very distinct message to Beijing, especially when they show up not only with the forces that are 

supposed to show up, but also spy ships which were uninvited. 

And yet, we are apparently going to invite them yet again. They 

showed up in 2014 with a spy ship as well as their forces. They 

showed up in 2016. And now, apparently, we are going to invite 

them again in 2018. That isn’t even a floor; that is not a net; that 

is an open doorway. 

I think that, with regards to confrontation, again, there are economic aspects that can be undertaken. The companies that are 

doing this reclamation should be given a fairly simple choice. You 

can work for China and make millions, or you can work the global 

market that the U.S., Europe, and Japan can influence, and that 

is billions of dollars. I think many of these companies may well, at 

least, impose pressure on their own system to rethink some of their 

policies. 

And then with regards to our allies, again, I think that many of 

them are still militarily less capable. They want to cooperate with 

the United States. We are representing the gold standard. That 

doesn’t mean we shouldn’t be engaging diplomatically. It doesn’t 

mean we shouldn’t be engaging in other aspects. But these are 

things that also do send a political signal as well, whether it is 

sales of more advanced weapons, or whether it is cooperating in—

inviting our friends and allies to cooperate in multinational military exercises. 

Mr. PERRY. So that seems pretty proactive, I mean, not inviting 

the Chinese. Maybe we continue to invite them, but we also invite 

our allies is what you are saying. But I would say that there also 

should be an immediate prohibition of them bringing the spy ship, 

if you want to call it that. Right? That seems pretty axiomatic as 

47

well as making the contractors make a choice. Right? That seems 

pretty obvious as well. But those are kind of prospective, right? We 

could make that decision right now. 

But anticipating that China will always step one foot closer, 

what is in our arsenal of diplomatic—and maybe ‘‘arsenal’’ is not 

the right term, right, but what is in our grab bag of options, something that will be meaningful to China when it is either imposed 

upon them or taken away from them, et cetera? 

Mr. CHENG. Congressman, I think that, again, access to our markets is something that China wants as much as we want access to 

theirs. Financial markets in particular. We, in an odd way, represent sort of the underwriters limited seal of approval when a Chinese IPO occurs. 

And the inability to access our stock markets, our financial networks, is something that should be undertaken very carefully, because that is a very, very serious step, but it does send a very serious message to Beijing. If you want to still benefit from that global 

transfer of funds that undergirds your economy, then you need to 

play by the rules, the rules that you have already signed up to play 

by. 

Mr. PERRY. Always a privilege, Mr. Cheng. 

Thank you, Mr. Chairman. 

Mr. YOHO. Thank you. And now we will go to Ms. Titus from Nevada. 

Ms. TITUS. Thank you, Mr. Chairman. 

Perhaps we shouldn’t have been so anxious to send Bao Bao back 

if we are facing these kind of diplomatic problems. 

All of you have mentioned that we need to increase our engagement in the South China Sea, and all of you have mentioned we 

need to do this through diplomacy, not just with China, but with 

our other allies there. You pointed that out, Mr. Cheng. 

Dr. Auslin said, I think your quote was energetic diplomacy 

through ASEAN, or attending some of these other summits. 

And then Dr. Swaine, you noted the only effective way to create 

a more stable environment in the maritime areas near China is for 

the U.S. to lead a serious diplomatic dialogue with Beijing and others in the area. You kind of trumped my question there in passing 

in your earlier answer, but I would like to hear all of you say, how 

in the world are we going to be able to increase diplomacy, not just 

with China, but the other areas, when we have no clear message 

coming out of the White House? We have so many vacancies at top 

levels in the State Department, and we have what we anticipate 

a budget from this new President where they are just cutting as 

much as they can from the State Department. 

How are we not creating a power vacuum there? How are we 

going to deal with this situation? Maybe, Dr. Swaine, you could 

start. 

Mr. SWAINE. Well, you are preaching to the choir on this. I think 

what is—we don’t know yet, right, exactly what the Trump administration intends to do by way of cutting back in order to pay for 

a $54 billion increase in defense spending. It is claiming that it is 

going to have offsets to be able to do this without having to raise 

taxes or increase the deficit. I don’t know what that means. 

48

Ms. TITUS. We do know he wants other people to step up and do 

their share, so that is kind of a hint what is coming. 

Mr. SWAINE. Right. So gutting agencies, EPA and the State Department. And to me, it is just incredibly foolish if that is what is 

going to happen, because the State Department, more than any 

other agency, needs to have more funding. It has been operating 

on a shoestring for way too long. To put them at a lesser level of 

spending is going to make the ability of the United States to really 

be effective in places like the Far East, where it really counts, 

much, much less. 

So I don’t, in any way, sanction or endorse the kind of direction 

where the administration is going today. I think there has to be a 

clear, strategic assessment about what our long-term future is in 

the Western Pacific and how we bring to bear our most important 

assets—diplomatic, military, economic—to achieve those gains. 

Much of U.S. policy has to do with process. Engagement is a 

process, as if it is something we can do or not do. We have no alternative to engaging with the Chinese. The Chinese are so big and 

so influential and the rest of the world is so committed to dealing 

with them that efforts by us to try and cut back on that would be 

totally self-destructive. 

So we have to get smart about how we are going to be more engaged on this in a very changing dynamic for power relations, particularly in the Western Pacific. That is the only real area where 

the United States and China, in my view, can have serious problems. It is not over larger questions globally; it is primarily in the 

Western Pacific. And if we don’t get that right, things are going to 

affect many other areas. So I agree that we need to have greater 

capabilities on the diplomatic side and on the economic side. 

Ms. TITUS. We have seen, visiting some new democracies, where 

China has moved in there very eagerly to build infrastructure. And 

if you start cutting back at the State Department, cutting back the 

small budget that is foreign aid, this can have repercussions beyond the South China Sea. 

Mr. Cheng, or Dr. Auslin? 

Mr. AUSLIN. Congresswoman, just on your last point, I agree. We 

don’t do infrastructure. We do capacity building. So if you want 

judges or police, you come to us. You want a road, you want a 

school, a power plant, you go to China or Japan. We should be 

doing infrastructure. 

We have spent decades, however—to get to your earlier point—

we have spent decades stripping our capability of spreading a 

democratic message about our values and our society and our culture. USIA, U.S. Information Agency, was disestablished years ago 

and rolled into the State Department. The current cuts may be extreme, but they are part of a long trend under both Democratic and 

Republican administrations to make it harder for our diplomats to 

get our message out. We do need to turn that around. I believe in 

it, but it is only part of a solution. 

And as much as we need to engage with China, we have to be 

realistic. A country that wants to cooperate or be cooperative will 

do so without our blandishments. We have to understand the limitations of that even as we pursue it, because it sends a message 

to others who want to emulate our ways. Thank you. 

49

Ms. TITUS. I guess I am out of time. I am sorry. Thank you. 

Mr. YOHO. Thank you. 

We will go to Ms. Gabbard from the great State of Hawaii. 

Ms. GABBARD. Thank you, Mr. Chairman. 

Thank you, gentlemen, for being here and sharing your insights 

and thoughts. 

No one has really talked about North Korea yet, and how the 

various courses of action that are being suggested here will impact 

the very direct threat that we face from North Korea, and the reality that any resolution to North Korea’s situation will require the 

engagement and cooperation of China in that. 

So I would love to just hear each of your thoughts on specifically 

how you suggest your suggested course of action will impact the 

threat we face from North Korea. Start with Dr. Cheng. 

Mr. CHENG. Representative, frankly, I don’t see any solution to 

North Korea, because the North Korean regime has associated 

itself with retaining its nuclear capability, and China has repeatedly demonstrated for pretty much the last 30 years it has no intention of solving the North Korean problem, particularly for the 

United States. 

And the reality is that North Korea’s nuclear weapons aren’t 

aimed at China; they are aimed at Japan, South Korea, and the 

United States, which, from the Chinese perspective, is not a great 

solution, but not necessarily a particularly troubling one. 

I will note, however, that the one time that anything was done 

that truly caught the North Korean regime’s attention was when 

we should the down Banco Delta Asia by using the financial networks to force the Chinese, again, to make that choice, the millions 

of dollars that they gain from working with North Korea or the billions in dollars in financial flows that would otherwise occur. Unfortunately, after less than a year, we decided that those sanctions 

were too dangerous to continue and sustain against North Korea. 

Ms. GABBARD. Thank you. 

Mr. AUSLIN. Congresswoman, thank you. I would agree with my 

colleague. I would say, however, I would modify it slightly to say 

there are no good solutions to North Korea. There are lots of bad 

solutions to North Korea. And I agree entirely that we have to give 

up the fiction that China wants, in any way, to solve North Korea, 

certainly for our own purposes. 

I would say, however, that given the increasing erratic nature of 

the Kim Jong-un regime, the assassination of his half-brother, who 

was protected by China just a few weeks ago in Malaysia, as well 

as the assassination in 2014 or 2013, of Jang Song-Thaek, who was 

Kim Jong-un’s uncle, but, more importantly, China’s main agent in 

North Korea, means that Beijing is as worried about their influence as we are worried about our lack of. And there may be opportunities out of pure self-interest, which is a fine thing, for the two 

of us to figure out ways of pressuring that regime, or at least talking more creatively about how to contain it. 

At some point, by the way, we are going to have to decide when 

we declare it a nuclear power. It is a nuclear power. I understand 

that we do not want to shred the nonproliferation regime, but we 

are going to have to wake up to reality one day. Thank you. 

Ms. GABBARD. Thank you. 

50

Mr. SWAINE. Well, I agree with what Dean and Michael have 

said already, that this is not a problem with a solution. I mean, 

it is really trying to maximize, or optimize, a bad situation. Unfortunately, what drives this situation the most is the behavior of 

North Korea, which no country outside of North Korea, has real 

control over, including the Chinese. 

I believe that the Chinese have moved in their position toward 

a greater degree of cooperation and support in dealing with North 

Korea. They certainly wouldn’t fully endorse everything that the 

United States might want to see toward North Korea for a legitimate national security interest of their own, as well as other interests, which may not be as, from our perspective, as legitimate; but 

I do think that we have choices here. 

We have a very—the policy thus far has not worked. So we need 

to think about a new way of addressing this issue. We can’t simply 

regard the Chinese as being the panacea, that they are going to 

solve it, because they are not going to solve it. So we have to think 

about how we can work with the Chinese, the South Koreans, and 

the Japanese to deal with it. 

We have two different paths that we can go. One of them is toward a greater degree of unified sanctions against North Korea, in 

the hope that the regime will collapse or give up its nuclear weapons. I think that is very unlikely. I think they are committed to 

these weapons, and they are not likely to give them up. And they 

are going to continue to move toward a deliverable ICBM capability 

with a nuclear warhead. And when they get close to that capability, the question is, what do we do about that? 

And, in my view, the only thing that one can do is you have to 

make a choice between being—well, you can combine both. You can 

be extremely clear about the consequences of any use or threat of 

use of a nuclear weapon by North Korea, that it will involve the 

destruction of North Korea, and that this applies to threats to 

South Korea and to Japan, our allies for whom we have a nuclear 

umbrella. 

And at the same time, however, I think we have to consider 

whether or not it is possible to develop a diplomatic strategy in 

which you address each of the concerns that the North Koreans 

have said that they have on their security front. Many people say 

this is all useless, because the North Koreans will ignore all this 

and continue to take advantage of it. But you can make the argument that the United States and the other powers have not fully 

tried to implement what you call an omnibus approach to North 

Korea, that would give them over a period of time in response to 

certain actions that they would take a certain level of benefits for 

them, economic and diplomatic. 

And if they turn those things down, and you offered them all in 

good faith and the Chinese sign onto that, then the basis for the 

Chinese to continue to not cooperate in dealing with North Korea 

will be reduced, in my view. 

Ms. GABBARD. Thank you. Thank you, gentlemen. 

There are clearly no easy answers to the situation, but, Dr. 

Swaine, I would argue that the time to ask that question what will 

we do is now. And understand that as we look at these other 

issues, whether it be the South China Sea or other issues within 

51

the region, we can’t operate in a silo with any of them, because of 

the ripple effects that will occur as we look at the various threats 

that exist there. 

Thank you. 

Mr. YOHO. Thank you. And they have called votes. We have got 

101⁄2 minutes. 

I am going to turn this over to Mr. Connolly from Virginia. 

Mr. CONNOLLY. Thank you, Mr. Chairman. 

And I would urge—welcome our panelists—if we can all be concise, I would appreciate it, because we have to go vote. 

What my concern is, at the very start of the new administration, 

we have seen, or we are seeing policies that contradict each other 

with respect to this region and China. So we rattle the cage with 

a call to the President of Taiwan. We announce a budget that is 

going to add $54 billion in defense spending and the purpose of 

which is for ship building, military aircraft, and establishing ‘‘a 

more robust presence in key international waterways and checkpoints,’’ like the South China Sea, while saying we are going to 

fund that, but cutting back on the State Department and AID specifically. 

Now, I was just in Sri Lanka. The Chinese, as you said, Dr. 

Auslin, are building everything. You know, ports, airports, roads, 

bridges, high-rises, sports stadiums, hospitals, they are building it. 

But we are financing democratization. We are providing real, indepth assistance, both through IRI and NDI to help, frankly, democratize institutions in Sri Lanka, and it is working. But that is 

funded through the AID program. 

Now, if we retrench in our foreign assistance and diplomatic posture in places like the Philippines, Vietnam, Burma, Sri Lanka, 

doesn’t that create a vacuum for the Chinese? And before you answer, so that is one vacuum I am worried about, and one set of contradictions. 

The other is, in the first week, we rip up TPP. And what is happening as we speak, Beijing has summoned a region-wide convocation to talk about a new trade agreement that has zero provisions 

on labor, on human rights, and on the environment. And I don’t 

know, I am a simple soul, but that seems like we just contradicted 

ourselves and, frankly, handed an enormous victory to the Chinese 

that will be very long-lasting. 

Your comments? 

Mr. CHENG. Representative, I believe that TPP was negotiated by 

the previous administration that indicated that it was not going to 

bring it forward to Congress. It was not going to present it for a 

vote at all. And in counting noses over who would have voted, I am 

not sure how many members of the previous administration’s party 

could be relied upon to vote for TPP. 

Mr. CONNOLLY. Irrelevant point, Mr. Cheng. I am making a different point. And by the way, I happen to be one of those people 

who would have and did. 

However, what I am making—and if you don’t want to answer 

it, then I will move to Dr. Auslin and Dr. Swaine. The question is, 

are we not handing an enormous victory, irrespective of what 

Obama’s administration was prepared to do or not do—they were 

prepared to bring it to a vote, but time kind of ran out. But did 

52

we just hand the Chinese an enormous victory, and isn’t the witness of that what is happening as we speak in Beijing? 

Thirty percent of all of the world’s economic activity is going to 

be covered by the agreement they are now forging, and I might 

add, U.S. allies, like Australia and New Zealand—maybe Australia 

isn’t an ally anymore after the tongue-lashing they got from the 

new President. 

Dr. Auslin, did you want to comment? 

Mr. AUSLIN. Congressman, I would prefer to see the administration go back to TPP. However, if all we can get are bilaterals, then 

I think we should all push as strongly as possible to get bilaterals, 

starting with Japan. 

Your point about the AID vacuum, I think, is important. It is an 

important part of our strategy. I would prefer to see that part of 

the budget increased as well. But we have to do a lot better at the 

messaging that we send out. We have not been very good under either Democratic or Republican administrations in the State Department sending out those messages. 

Mr. CONNOLLY. Thank you. 

Dr. Swaine, real quickly, because we are running out of time. 

Mr. SWAINE. I basically agree with that, but I think the United 

States does really have to have a much better job, do a much better 

job of presenting what the economic costs and benefits are and 

what the advantages the United States gets from multilateral 

trade agreements, but it is just not in the position of doing that. 

Mr. CONNOLLY. I just have never seen the United States quite 

so blatantly, in the matter of 1 month, contradict itself so profoundly with respect to something so important, namely, our relations with China. So on the one hand, we want to deter them and 

we are going to build up military forces to do that; and on the 

other, we are going to unilaterally disarm on trade and foreign aid 

and diplomacy, because we are going to defund it. 

I yield back. Thank you, Mr. Chairman. 

Mr. YOHO. Thank you, gentlemen, for being here. Just kind of 

one last comment, because, again, what I hope to get out of this 

is to get enough information that we can help direct some of the 

foreign policies. 

I read an article, and I got chastised for this because I brought 

it up in this committee. They were talking about how China, as you 

brought up, Dr. Auslin, how they go in and they build infrastructure, and we focus on other things. I think it is a misstep of ours. 

We should go in and build strong infrastructures and develop 

strong trading partners, and in that process we will bring people 

to our side and meet the goals that we have as far as human rights 

and things like that. And I think we should focus on that. 

I want to point out to Dr. Swaine, and I know you are well aware 

of this. Robert Gates’ book Duty, there was a section in there 

where they were talking about military sales to Taiwan. And a couple years ago, the Chinese negotiator raised holy Cain, because of 

the military sales. And our negotiator says, why are you making 

a big fuss over this? We have done this for many years, since 1979. 

He goes, yes, you did, but we were weak then; we are strong now. 

I think we are seeing that presence. So I think it is imperative that 

53

we come to an agreement of what we can do and can’t do and forge 

those strong relationships. 

I am going to turn this over to the ranking member, and let him 

finish, and we have to go vote. 

Mr. SHERMAN. China will become more nationalistic as it needs 

to satisfy its own population, and even more nationalistic if they 

face economic reversals. TPP enshrined the idea that currency manipulation isn’t a problem. And its rules of origin provision gave 

China a chance to have free access to the U.S. market on goods 

that were to be purportedly only 50 percent made in China, but, 

as an old accountant, I know that would be 80 or 90 percent. So 

90 percent of the advantages of a free trade agreement. But at 

least they would have a made in Vietnam label put on. 

We do not have—we will not put tariffs on China, because Wall Street won’t let us. We will, instead, spend $50 billion extra on our 

military, because the Pentagon will want that; and we will meet 

the domestic needs of the institutions that are most powerful in our 

society. Wall Street will be happy. The Pentagon will be happy. 

Beijing will fan nationalism. And Ohio and Western Pennsylvania 

will suffer. 

I yield back. 

Mr. YOHO. Thank you for your comments. 

Gentlemen, thank you for being here with your great information 

as you have helped us cipher through some things, and I look forward to dealing with you more. We have to go vote now. This meeting is adjourned, and thank you. 

[Whereupon, at 3:57 p.m., the subcommittee was adjourned.] 

(55)

A P P E N D I X 

MATERIAL SUBMITTED FOR THE RECORD

56

f


24444n.eps
57

f


24444m.eps
58


24444e-1.eps
59

Æ


24444e-2.eps