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

95–128PDF 2015

CHINA’S RISE: THE STRATEGIC IMPACT OF ITS

ECONOMIC AND MILITARY GROWTH

HEARING

BEFORE THE

SUBCOMMITTEE ON ASIA AND THE PACIFIC

OF THE

COMMITTEE ON FOREIGN AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTEENTH CONGRESS

FIRST SESSION

JUNE 17, 2015

Serial No. 114–72

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 

MATT SALMON, Arizona 

DARRELL E. ISSA, California 

TOM MARINO, Pennsylvania 

JEFF DUNCAN, South Carolina 

MO BROOKS, Alabama 

PAUL COOK, California 

RANDY K. WEBER SR., Texas 

SCOTT PERRY, Pennsylvania 

RON DESANTIS, Florida 

MARK MEADOWS, North Carolina 

TED S. YOHO, Florida 

CURT CLAWSON, Florida 

SCOTT DESJARLAIS, Tennessee 

REID J. RIBBLE, Wisconsin 

DAVID A. TROTT, Michigan 

LEE M. ZELDIN, New York 

DANIEL DONOVAN, New York 

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 

BRIAN HIGGINS, New York 

KAREN BASS, California 

WILLIAM KEATING, Massachusetts 

DAVID CICILLINE, Rhode Island 

ALAN GRAYSON, Florida 

AMI BERA, California 

ALAN S. LOWENTHAL, California 

GRACE MENG, New York 

LOIS FRANKEL, Florida 

TULSI GABBARD, Hawaii 

JOAQUIN CASTRO, Texas 

ROBIN L. KELLY, Illinois 

BRENDAN F. BOYLE, Pennsylvania

AMY PORTER, Chief of Staff THOMAS SHEEHY, Staff Director

JASON STEINBAUM, Democratic Staff Director 

SUBCOMMITTEE ON ASIA AND THE PACIFIC

MATT SALMON, Arizona Chairman 

DANA ROHRABACHER, California 

STEVE CHABOT, Ohio 

TOM MARINO, Pennsylvania 

JEFF DUNCAN, South Carolina 

MO BROOKS, Alabama 

SCOTT PERRY, Pennsylvania 

SCOTT DESJARLAIS, Tennessee 

BRAD SHERMAN, California 

AMI BERA, California 

TULSI GABBARD, Hawaii 

ALAN S. LOWENTHAL, California 

GERALD E. CONNOLLY, Virginia 

GRACE MENG, New York 

(III)

C O N T E N T S 

Page

WITNESSES 

Derek M. Scissors, Ph.D., resident scholar, American Enterprise Institute ...... 6

Mr. Han Dongfang, founder and director, China Labour Bulletin ...................... 22

Mr. Jerome A. Cohen, professor and co-director, U.S.-Asia Law Institute, 

New York University School of Law ................................................................... 33

Adam Hersh, Ph.D., senior economist, Roosevelt Institute .................................. 40

Alison Kaufman, Ph.D., senior research scientist, China Studies Division, 

CNA Corporation .................................................................................................. 49

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Derek M. Scissors, Ph.D.: Prepared statement ..................................................... 9

Mr. Han Dongfang: Prepared statement ............................................................... 24

Mr. Jerome A. Cohen: Prepared statement ........................................................... 36

Adam Hersh, Ph.D.: Prepared statement .............................................................. 43

Alison Kaufman, Ph.D.: Prepared statement ........................................................ 52

APPENDIX 

Hearing notice .......................................................................................................... 76

Hearing minutes ...................................................................................................... 77

(1)

CHINA’S RISE: THE STRATEGIC IMPACT OF 

ITS ECONOMIC AND MILITARY GROWTH 

WEDNESDAY, JUNE 17, 2015

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON ASIA AND THE PACIFIC,

COMMITTEE ON FOREIGN AFFAIRS,

Washington, DC. 

The subcommittee met, pursuant to notice, at 1:06 a.m., in room 

2255, Rayburn House Office Building, Hon. Matt Salmon (chairman of the subcommittee) presiding. 

Mr. SALMON. The subcommittee will come to order. Let me start 

by recognizing myself and the ranking member to present our 

opening statements. Without objection, the members of the subcommittee can present brief remarks if they choose to or they can 

submit them for the record. 

And now I am going to yield myself as much time as I may consume to present my opening remarks. 

We can hardly discuss any major foreign policy issue without 

China coming up. Indeed, questions about China are on the top of 

everyone’s minds. How stable is the Communist Party regime? How 

does China’s land reclamation in the South China Sea affect prospects for peace or conflict? How can we deter China from hacking 

into our networks and stealing vital national security and economic 

information? Does China’s activity reflect its growing global ambition or is it driven by domestic concerns for stability and security? 

What are the consequences of a slowdown of the Chinese economic 

machine on the U.S. economy? 

China is at a crossroads. Its quest for development and global influence has come at a high cost of alienating partners and allies 

alike. There are cracks in the foundation, and imbalances remain 

politically, economically, and militarily. China cannot forsake and 

undermine the same international order that has helped incubate 

its rise to prominence. It cannot forget the agreements that it 

should honor or the spirit in which they were made. 

I look forward to discussing these issues as I welcome our distinguished witnesses who traveled from as far as New York and Hong 

Kong to be here today. 

China has become a global economic powerhouse since it opened 

up in 1978. China’s military operation and expenditures, vast manufacturing, as well as regional investment and global infrastructure 

projects reflect this well. But the IMF projects China’s annual GDP 

growth to slow down to about 5.9 percent over the next 6 years. Experts attribute the slowdown to factors such as demographic 

2

changes, the coddling of state-owned enterprises, a weak banking 

system, government corruption, and inadequate adherence to the 

rule of law. 

Major demographic challenges are forcing changes to China’s 

long-term economic planning, including the legacy of its one-child 

policy and increasing wealth gaps. The working class is simultaneously shrinking and demanding higher wages. Large debt loads 

throughout municipalities and provinces across the country mean 

that reckless infrastructure buildup is no longer viable for boosting 

GDP growth. The instruments that China used to finance its rise 

are no longer a reliable option for maintaining its position as a 

great economic power. 

Innovation and access to information are major contributors to 

economic growth, but these drivers have been stifled because of 

China’s desire to control information to protect domestic stability, 

leaving China in a development dilemma. These issues cannot be 

addressed when people cannot express ideas freely and benefit 

from their hard work. China can only throw so much money to try 

to foster intangible skills that contribute to an innovation society. 

Instead, China resorts to stealing other nations’ intellectual property, blatantly disregarding international norms, while stubbornly 

denying any malicious activity in cyberspace. Domestic drivers are 

protecting the governing power of the Chinese Communist Party. 

Continued economic growth and military modernization override its 

desire to curtail or halt such activity. 

China’s cyber activity cannot persist without repercussions. Yet, 

the high payoff for this behavior, and frankly, our inability to devise proper responses, exacerbate the issue. 

Over the past 25 years, China has made great strides in military 

modernization, including a sustained 9.5 percent annual increase 

in military spending over the past decade. While it lacks combat 

experience and power projection capabilities, the People’s Liberation Army attempts to address these shortcomings by conducting 

more noncombat operation overseas, participating in more international exercises, notably with Russia, and enhancing its ability 

to dominate territory in or around its waters. China’s island-building activities contradict decades of international agreements in this 

arena and raise concerns and questions over its supposed peaceful 

rise. 

Under Xi Jinping’s leadership, punishment and detention for the 

exercise of free speech and assembly has been increasing. The government not only strictly controls the Internet and limits people’s 

political and social rights, it also pursues efforts to forcibly assimilate ethnic and religious minorities, such as the Uighurs in 

Xinjiang. Legislation such as the Foreign NGOs Administration 

Law also put at risk our NGOs’ ability to operate in China. 

Promotion of human rights and protection of personal freedoms 

should continue to be an important aspect of our China policy. 

Under Xi Jinping’s leadership, the world has seen a China that is 

both more internally restrictive and more internationally assertive. 

His predecessor, Deng Xiaoping, encouraged a low profile for China 

on the world stage, saying, ‘‘tao guang yang hui.’’ Under Xi Jinping, 

however, China has embraced a higher international profile, changVerDate 0ct 09 2002 13:25 Sep 01, 2015 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 F:\WORK\_AP\061715\95128 SHIRL
3

ing its foreign affairs slogan to ‘‘striving for achievements’’ or ‘‘fen 

fa you wei.’’

I have had the privilege to travel to China more than 40 times, 

and I have had the honor to get to know many thoughtful, inspiring, innovative, and successful Chinese people. If I have learned 

anything from my years of engagement with China, it is that there 

is no one way to characterize a country that is so full of wonder 

and full of contradictions, full of frustration, yet full of potential. 

As the United States prepares for Xi Jinping’s visit on September 

1, I urge our Government to welcome China’s active role in the 

world, but we must also temper China’s impatience and assertiveness with expectations of reciprocity and responsibility. 

I now recognize the ranking member, Brad Sherman, for his remarks. 

Mr. SHERMAN. Thank you, Mr. Chairman. We are, of course, 

holding these hearings an hour early. I got about 11⁄2 hours’ notice 

of that. So let the record show that I was not 2 minutes late to 

these hearings. I was 58 minutes early. 

Mr. SALMON. Right. 

Mr. SHERMAN. And I would hope that members who wish to give 

short opening statements be allowed to do so whenever they are 

able to arrive. 

We have two great issues with China, economic and geopolitical. 

It is my observation that in our country, whenever we are making 

a decision, we tend to make it in lines with the institutional needs 

of the most powerful institution that cares about that policy. So in 

the area of military affairs, we tend to make decisions meeting the 

institutional needs of the Pentagon. In the area of economics, we 

tend to make decisions based upon the institutional needs of Wall 

Street and the corporate sector. 

And with regard to China, this has led to a bizarre schizophrenia 

where we are about to fight China for islets that are useless and 

not ours and make every possible concession on trade, while never 

talking about using trade to tell China they better not take islands 

if we care about the islands, which I am not sure we should. Islets, 

I might add. 

Look at the Pentagon as an institution. Every time since 1898 

when we have faced a uniformed nation-state as an adversary it 

has been a glorious outcome for our military forces, none more glorious than the defeat of the Soviet Union, which basically took 

place by facing them down rather than engaging in kinetic warfare. 

Every time since 1898 that we have faced an asymmetrical opponent, every time we have faced a nonuniformed adversary, it has 

been very painful for our Pentagon and military forces. We have 

not always lost, but since the Philippine insurrection, it has always 

been painful. 

So the Pentagon, if it is going to meet its institutional needs, 

needs to find a worthy adversary. There is only one, and that is 

China. And that is why every decision at the Pentagon is how can 

we ignore the Middle East and reconfigure our forces to pivot toward a confrontation with the People’s Republic of China. Every 

decision as to what research to do, every decision as to how to procure, force configuration, it is all about how can we fight the war—

4

or the face-off, hopefully, not a kinetic war—that will meet our institutional needs. 

China does not have to be the enemy, but it is the only enemy 

that meets the Pentagon’s institutional needs. Keep in mind when 

it comes to these islets, there is no oil, they are worthless. If they 

are standing astride trade routes, those are trade routes in and out 

of Chinese ports. If China controls them, they will have the geopolitical, strategic capacity to blockade their own ports, but they do 

not stand in a position to interfere with U.S. trade with Japan, the 

Philippines, et cetera. 

And there is no oil. If there was any oil, it wouldn’t be our oil. 

And Japan, for example, spends almost nothing of its GDP to defend the islets that don’t have any oil, but if it was oil, it would 

be Japanese oil. 

And China is part of this. They are meeting their institutional 

needs by whipping up nationalism over useless islets. 

When it comes to trade, the trade deal that is before Congress 

now is the most incredible gift to China and the most incredible 

gift to Wall Street. China is not a party, so they have no cost, no 

commitments. They don’t have to pay a penny for this deal. But 

what do they get? 

First, a declaration by the world that the trade agreements of the 

21st century will allow, even encourage currency manipulation, 

which of course is their number one way of taking American jobs. 

Second, the rules of origin provision. Goods can be made, admittedly, 60 percent made in China, but that really means 80 percent 

made in China in reality, finished in Japan, finished in Vietnam, 

and get fast tracked into the American market. So it is 80 percent 

of all the benefits of signing a free trade agreement with the 

United States and zero percent of the cost. 

I would point out that while we run a $300 billion trade deficit 

with China, Germany has a balanced trade relationship with 

China. If we had a balanced trade relationship with China there 

would be a labor shortage in this country. Companies would be desperate to hire more people, they would be raising wages, they 

would be hiring the barely unqualified and then training them. A 

higher percentage of GDP would be going to labor. Wall Street does 

not want that. And this agreement ensures that we will continue 

to have the wage stagnation, or from the other side, labor cost nonincrease that Wall Street would like to see. 

Finally, we have one tactic that we could be using against China 

and probably should, and that is, gather the information—they are 

hacking us all the time—gather the information that proves that 

their top 1,000 cadres are corrupt and expose that information, as 

is appropriate, whether it be those who are the insiders like or 

those who are on the outs, whether it be those who are popular locally, those who are not popular locally, whether it be that we demand concessions, otherwise we will expose, or whether we actually expose in order to undermine the regime’s image that it is 

fighting for the Chinese people. 

Of course, we are reluctant to do that, just as we are reluctant 

to have any of the hundreds of tax cheats in our own country who 

are exposed in multimillion-dollar revelations from banks subject to 

5

our criminal law, but we need to have dossiers on the economic corruption of the top 1,000 Chinese officials. 

And I yield back. 

Mr. SALMON. Thank you. 

Let me just make a comment on the timing of the hearing. There 

really wasn’t anything sinister afloat. They changed the votes to 3 

o’clock today, which would have given us time for a 15-minute 

hearing, which didn’t do justice when we have got somebody that 

came all the way from Hong Kong to meet with us. 

So we apologize for the changes to the people testifying today 

and to members of the committee. We did the best we could today 

with a very difficult situation. 

I recognize Mr. Duncan. 

Mr. DUNCAN. I thank the chairman and apologize. I will have to 

leave, due to the schedule change, at 1:30. 

I think it is prudent that we remind ourselves of Proverbs 22:7, 

which says the borrower is servant to the lender. China’s actions 

in the Spratlys and the South China Sea are inexcusable, and what 

should the U.S. do about it, given that China is such a strong economic power? And what should the U.S. do about that? Definitely 

not unilaterally, but also possibly working with the Philippines 

that are dramatically affected with the incursion in the Spratlys 

that we see. 

China’s posturing is alarming. China is attempting to reshape 

international economics as well as geopolitics. And one thing that 

concerns me that I hope this committee will delve into is China’s, 

for lack of any word, gobbling up mineral rights around the globe, 

especially when it comes to rare earth minerals, which they understand and we fail to recognize enough that they are vital to the 

technical systems of today, such as your iPhone, your iPad, and all 

the technology that really drives our economy. 

So these are some things that I hope we delve into, and I appreciate the chairman for having this hearing. And I yield back. 

Mr. SALMON. Thank you. 

Mr. DesJarlais, did you have any opening comments? 

Mr. Perry. 

Mr. PERRY. Sure. Thank you, Mr. Chairman. 

The U.S.-China relationship is entering a new phase. Beijing has 

become more confident, global, and assertive. In a relationship that 

has unique cooperative and competitive elements, no one, none will 

stress a relationship more than those concerning the South China 

Sea. American efforts to protect our interests against this newly 

aggressive China have been, in my opinion, ineffective. In official 

public statements, the Obama administration takes no position on 

the disputed formal territorial claims and then calls for peaceful 

resolution of disputes. 

American objectives for the South China Sea must be a part of 

a larger strategy toward China that welcomes a greater Chinese 

economic and diplomatic role. It can’t just be rhetoric and talk 

about a pivot without any action. We must set clear boundaries on 

Chinese expansion of its territory by coercion or conquest, and on 

its ability to deny the United States full freedom of action in the 

Western Pacific. 

And with that, Mr. Chairman, I yield back. 

6

Mr. SALMON. Thank you. 

Now we get to the panel. Pursuant to Committee Rule 7, the 

members of the subcommittee will be permitted to submit written 

statements to be included in the official hearing record. Without 

objection, the hearing record will remain open for 7 days to allow 

statements, questions, and extraneous materials for the record subject to length limitation in the rules. 

Okay. We are honored today to have the distinguished panel before the subcommittee. Dr. Derek Scissors is a resident scholar at 

the American Enterprise Institute where he focuses on Asian economic issues. One of Dr. Scissors’ areas of specialty is the economy 

of China and Chinese-U.S. economic relations. 

Dr. Alison Kaufman is a senior research scientist at the CNA 

Corporation’s China Strategic Issues Group. One of her areas of expertise is U.S. security cooperation in the region. 

Thank you for being here. 

Jerome Cohen is currently a professor of law at New York University School of Law as well as the co-director of the U.S.-Asia 

Law Institute. Mr. Cohen has practiced law and lived in China for 

decades, since before the country opened up to the world. 

Mr. Dongfang Han is currently the executive director of the 

China Labour Bulletin. Mr. Han helped to form China’s first independent trade union in 1989, and in the aftermath of the crackdown following the Tiananmen Square protests, he was arrested 

and detained for nearly 2 years. He has led a long career as a voice 

for reform and rights in China. 

I really enjoyed my meeting in Hong Kong with you, and I am 

so excited about you being here today. 

Adam Hersh is a senior economist at the Roosevelt Institute and 

a visiting fellow at Columbia University’s Institute for Policy Dialogue. Previously he was a senior economist at the Center for 

American Progress. 

And without objection, the record will remain open for 5 business 

days during which members may submit materials for the permanent record. 

And you all understand the lighting system. You have 5 minutes 

to speak. I don’t do a heavy gavel. If you have a few seconds over, 

no problem. But the light turns amber when you have got about 

a minute left. Just be cognizant of that. When it turns red, it is 

like my wife tells me when I am speaking, it is time for this. 

So I appreciate you being here today. We are extremely happy 

to have you here. I am going to start on the left side of the dais 

with—my left, your right—Dr. Scissors. 

STATEMENT OF DEREK M. SCISSORS, PH.D., RESIDENT 

SCHOLAR, AMERICAN ENTERPRISE INSTITUTE 

Mr. SCISSORS. Thank you, Mr. Chairman, and thank you to the 

committee for inviting me here. 

I am going to start by saying that the chairman’s remarks about 

the great variety in China apply to U.S. studies of China as well. 

There are other research communities represented here who have 

very different perspectives for very good reasons. 

From my perspective—and I title my written testimony not ‘‘China’s Rise’’ but ‘‘China’s Stall’’—so the econperspective on China is 

7

quite different than perhaps the national security or the human 

rights perspective. 

To summarize it, the China stall is not unavoidable, but the 

problem is more than a decade old at this point. The government 

is going to report whatever it wants, the Chinese Government can 

report whatever economic statistics it likes, but by the end of this 

decade it will be unmistakable that China is no longer growing economically, unless significant market reforms are resumed. 

That is the theme of my presentation. It has a lot of implications, 

which hopefully we will get to in the rest of the hearing. 

Let me give some qualifiers. I am not saying China is about to 

collapse. That is a different argument. I think it is unjustified. China’s economic situation of high debt and aging population—and you 

see a picture up on the board—inadequate local innovation, that is 

not a collapse situation. That is a stagnation situation. So people 

talking about collapse are saying different things than I am saying 

here. 

I do think, rather, that China can avoid this, can have another 

generation of rapid growth, which would be very impressive on the 

top of the one it has already had, but it has to go back to what 

got it there in the first place, which is—should I yield my time to 

Congressman Rohrabacher? 

Mr. SALMON. Go ahead. 

Mr. SCISSORS. Okay. It has to go back to what got it there in the 

first place, which is individual property rights and competitive 

markets. 

And my third caveat would be is I don’t really care about GDP. 

I certainly don’t care about Chinese GDP. The Chinese Government 

doesn’t tell the truth about their GDP growth. I don’t think GDP 

is a very good measure. What matters, especially in mixed command-market economies, is how well you are delivering the goods 

to households. So what I care about when I am saying China is 

stagnating, I am not talking about what they are going to report 

in 2020. I am talking about household and personal income growth. 

Okay. So how am I saying this? The problems go back to 2003. 

In that year the then new government under Hu Jintao pushes 

aside market reform in favor of public investment, directed and financed by the state, largely routed through state-owned enterprises. 2003 to 2008, China’s economy is getting bigger and it is 

getting less healthy. The equivalent of my wife’s comment is: At 

190 pounds, you were fine, you didn’t get stronger when you added 

the extra 20 pounds. She says that, I don’t know, once in a while, 

this morning, yesterday, you name it. That is what was going on 

in China 2003 to 2008. 

You didn’t see that when the numbers were soaring, but when 

the financial crisis hit, China’s vulnerability was much higher. 

They were much more vulnerable to a drop in excess demand, they 

were much more leveraged. They actually got structurally weaker 

in those 5 years even though they got bigger. 

Then they had a horrible crisis response, which is to order their 

banks, because they control the banks, to lend to everyone, without 

discrimination, when no one could make money. So you would 

think that the United States would be the champion of debt problems. The financial crisis starts here. We had private sector debt 

8

problems. We brought a lot of the private sector debt into the public sector. China’s debt problems since 2008 are much worse than 

ours, not even close. And I could give you some numbers, but I 

want to get to my implications of this. 

So what is the forecast for China’s growth? When you have high 

debt and you have overspent, you don’t have a return on capital. 

You have already wasted a ton of money, you have to use a lot of 

your money to pay back debt, that is not going to drive growth. 

Aging, public health problems, labor, which has been a big contributor to Chinese growth, is not going to drive growth. Environmental destruction, which means the land, which was the original 

driver of Chinese growth in the late 1970s and early 1980s, not 

going to drive growth. 

Innovation, which both the chairman and the ranking member, 

several members have talked about, it is a very rough transition 

to go from copying and stealing other people’s technology to developing your own, and what China needs to push growth higher is 

to develop its own technology, but that can’t be ordered the way espionage programs can be ordered. So that is not a clear source of 

growth either. In fact, I think it is much more likely we are going 

to be dealing with China stealing U.S. technology and information 

than we are China driving innovation. 

Sources of growth are pretty easy. China is going to stagnate. 

And the way to get away from that is reform, which they have 

talked about, but it requires fewer restrictions on labor mobility so 

people can go where the jobs are. That makes the Ministry of Public Security very uncomfortable. My colleague may discuss this. I 

don’t mean to put any words in his mouth. 

They need a competitive financial system instead of one run by 

the state. They need a smaller state sector so that the private sector can actually compete in more industries. They need private 

rural land rights. The state owns all rural land. Individuals can’t 

own rural land. 

So this is a very tall order, and they have a long, long way to 

go. And I have to be cynical here. I don’t believe governments do 

things until they actually do them. IOUs don’t cut it. So right now 

China is on a path to stagnation, not a path to reform. 

I don’t really have time for implications. There are a lot. I will 

say that the economic impact on the U.S. is not very large. We can 

talk more about that. I think there are some important strategic 

issues. I am not qualified to talk about some of them. One of them 

I am. Ranking Member Sherman said correctly: We should be 

spending more resources gathering information. I wrote a paper 

about this a couple of years ago. We can have differences over what 

information we want to gather. But we have a China that could 

stall. We were caught off guard when the Soviet Union’s economy 

didn’t work. We shouldn’t have that happen again. 

Thank you. 

[The prepared statement of Mr. Scissors follows:]

9


95128a-1.eps
10


95128a-2.eps
11


95128a-3.eps
12


95128a-4.eps
13


95128a-5.eps
14


95128a-6.eps
15


95128a-7.eps
16


95128a-8.eps
17


95128a-9.eps
18


95128a-10.eps
19


95128a-11.eps
20


95128a-12.eps
21


95128a-13.eps
22

Mr. SALMON. Thank you. 

Mr. Han. 

STATEMENT OF MR. HAN DONGFANG, FOUNDER AND 

DIRECTOR, CHINA LABOUR BULLETIN 

Mr. HAN. Thank you, Mr. Chair. Likewise, I enjoyed our conversation in Hong Kong. I am here as a democracy activist based 

in Hong Kong for more than 20 years and fighting for better labor 

rights protection and democracy in China. 

I want to share with you what is behind the South China Sea 

conflict. What is changing, what is possible in China’s society. Ten 

years ago, the China Labour Bulletin decided to go for a collective 

bargaining system in workplaces, and we fight for that instead of 

political freedom of association to take what the Chinese Government doesn’t want to give. 

So during the 10 years, the first 5 years we did seminars and 

writing articles to promote this idea, but in the last 5 years we got 

involved into 70 strike cases, we are able to make each of the 70 

cases into a certain level of collective bargaining. And that proves 

something, that when we made that decision people were doubting, 

without freedom of association, whether you can do collective bargaining under a communist regime. We did so. 

So 10 years after, I have to say very proudly collective bargaining 

in workplaces in China is being accepted by different people in this 

country, including the government and official trade union and 

labor NGOs, and most importantly, the workers who are on strike. 

From wildcat strike without a clear agenda, without a clear strategy, they turn into very a clear strategy on their collective bargaining. So that makes labor relations much less confrontational 

than before. 

So that means if collective bargaining can happen under a communist regime, and the labor issue and labor movement even can 

be operated at some level in China, that was the most sensitive 

issue in the communist regime, if that can happen, I think there 

are many other things that can happen. If the government can 

allow these things to happen, many other things can happen. So I 

just want to share with you about that, and there are possibilities. 

And the second point I want to share is that China is a highly 

interest-oriented country. So you have a military, you have a Public 

Security Bureau, you have the state security, and you have workers, you have employers. And this country is highly operated with 

a market economy. So how can we deal with a highly self-interested society and politics as well? And that is one of the reasons, 

I have to say, why the labor movement became possible under the 

communist regime. 

And the other point I want to make is social media with the new 

technology. This is no longer as a tool. Social media is no longer 

as a tool. It is a way of living for hundreds of millions of Chinese 

people. That means controlling information for anyone, including 

the government and security, it is not possible. And hundreds of 

millions of Chinese people are receiving and sending out information, sharing information, sharing their desperation, their experiences with others over the Internet either with people they know 

or they don’t know. 

23

So the new reality, the social media, really, really provided a 

huge opportunity and space for civil society to grow, and that is 

what I believe the future democracy and China’s change will be 

based on. So therefore I would like to recommend to people who are 

working on the China-U.S. relationship, I would like to see as a democracy activist, I would like to see the U.S.-China relation have 

less hostility and more trust, and I really would like to see to build 

a strategic partnership, even in the South China Sea. Why not? It 

is possible. 

And second, I would like to see the U.S. devote more resources 

to help China develop the civil society movement, which is already 

growing, for example, the labor movement development. It will benefit both the U.S. workers and Chinese workers to have both sides 

higher income. 

So therefore I want to emphasize that the CCP, Chinese Government, is already changing into a new reality, and I believe China 

doesn’t need to repeat what happened in Eastern Europe countries 

and the former Soviet Union. It can change the country for the better. So I would like to say that the civil society movement, it is 

very vulnerable and fragile, if anything happens between the U.S. 

and China military-wise, and that will be a disaster for the civil 

society to develop. 

Thank you, Mr. Chair. 

[The prepared statement of Mr. Han follows:]

24


95128d-1.eps
25


95128d-2.eps
26


95128d-3.eps
27


95128d-4.eps
28


95128d-5.eps
29


95128d-6.eps
30


95128d-7.eps
31


95128d-8.eps
32


95128d-9.eps
33

Mr. SALMON. Thank you. 

Mr. Cohen. 

STATEMENT OF MR. JEROME A. COHEN, PROFESSOR AND CO–

DIRECTOR, U.S.–ASIA LAW INSTITUTE, NEW YORK UNIVERSITY SCHOOL OF LAW 

Mr. COHEN. I want to congratulate the chairman and members 

of the committee for opening statements that were eloquent, comprehensive, and stimulating, and I think I have learned a lot just 

from listening to my two colleagues. 

My own remarks will focus first on the domestic scene, and secondly on China’s foreign policy, which is our most immediate problem. 

On the domestic scene, I think between the chairman’s statement 

and what we have heard here, I don’t have to recite a whole chain 

of challenges, but it helps to remember them because I am neither 

on the side of the collapsists who think China is on the verge of 

demise or those who think China is going to dominate the world. 

I think actually, because its vulnerabilities are accumulating and 

beginning to outweigh its assets, that China may have peaked in 

terms of the world’s fear of China and respect for it. 

It doesn’t mean, however, that this government is going to disappear. When we remember the example of North Korea, even they 

are able to hang on indefinitely. So we shouldn’t underestimate the 

viability of this government, but we have to think about what it is 

likely to do. 

The sad thing from the point of view of China’s leaders is these 

people represent a Communist Party that after 65 years of ups and 

downs really has to be credited with making huge economic and social progress. On the other hand, the speed of that progress has led 

to many of their problems. They are victims of their own success, 

and they have not devised a system that is adequate for dealing 

with these questions, whether you call it democratic or democratic 

dictatorship or whatever. And these leaders are afraid. They are 

like cats on a hot tin roof. Despite their many accomplishments, 

they fear overthrow. And June 4, 1989, in which Mr. Han took 

part, was a too vivid reminder for them. 

So they engage in repression, and the repression has gotten 

worse in the last 3 years under Mr. Xi Jinping. He will appear here 

in September, a very attractive character, able person. But the fact 

is we have to understand the repressive policies in which he is engaged. I have many friends in prison in China. I have many who 

are exiles who cannot go back to China. These are often the cream 

of Chinese society. They are the best future of China. 

Repression cannot go on forever. If we look at the example of Taiwan, when I first went to Taiwan in 1961, Chiang Kai-shek’s son 

was head of the secret police. He was a killer. By the mid-1980s, 

when he was in charge of the government he had inherited from 

his father, he was beginning to be a modernizer. He saw you can’t 

go on using repression. You have to begin to develop social, economic, political, and legal institutions that can process the grievances that accumulate inevitably with progress. And he started off 

what now has become the vibrant democracy in Taiwan. 

34

And that is something I wish Mr. Xi Jinping and his colleagues 

could expend more energy on. But their natural turn is repression. 

And we are going to see this perhaps for 8 more years if he can 

remain in office, despite his anticorruption campaign’s implications, 

et cetera. I think somebody has to assert the time has come for domestic reform of a serious nature. 

But let me talk about the international situation. You know, it 

is easy to exaggerate, with the current concern over China’s policy 

toward the South China Sea, how terrible their foreign policy may 

be, et cetera, but we really need to keep an overview. And I think 

China and the U.S. are ready to continue cooperation on many subjects, particularly environment, climate problems, et cetera. I think 

with the coming Strategic and Economic Dialogue we will see continuing efforts to compromise on many of the controversial issues 

that plague us. 

China has entered the WTO in largely a constructive way, and 

although it hasn’t completed complying with all its obligations, I 

think that is a good example of China as a full participant in the 

world process. On the other hand, as was mentioned, the so-called 

foreign NGO law that is being prepared is going to wreak havoc 

with China’s foreign relations. It is going to cover much more than 

NGOs. Every university is covered. Their definition of NGO is very, 

very broad. 

And the institution in China that is going to administer this is 

the Ministry of Public Security, the police, not the Ministry of Civil 

Affairs that used to be responsible for these problems exclusively. 

And that may be the best hope for seeing revisions of the law before it is passed, because other Chinese institutions are very jealous of the authority of the police organizations in China. And we 

should note, the budget for the police organizations in China exceeds, every year now, the budget for the national military. That 

is a pretty sobering reflection of the repression that is going on. 

But the most important questions are serious ones that plague 

us today. It used to be the East China Sea with Japan, but it is 

noteworthy we don’t hear much about that now, and there is a lesson in that, because we could see the same result if we play our 

cards right with the South China Sea. 

It seems to me the South China Sea issue has to lead to what 

to me as a international law professor and lawyer is very obvious. 

Different countries have different views about the rights and 

wrongs of the international law issues involved about the specs of 

Earth and the Spratlys and Paracels, et cetera. The obvious answer, as it is in the East China Sea between Japan and China, is 

turn to international law. Turn not only to assertions that we are 

right and there is no dispute we are right because we are right, 

that is just nonsense. International law also presents institutions 

for resolving these questions. 

We don’t have that when we look at cyber attacks, we have no 

rules yet for that, and we have no institutions for applying those 

rules. But we do have that with the Law of the Sea. That is what 

UNCLOS is. And I hope that you will try to use your influence 

with the Senate to make a final successful effort for the U.S. finally 

to accede to UNCLOS, because right now we are denied the opportunity to do what the Philippines has done. 

35

I admire enormously what the Philippines has done. They had 

the guts to bring China to an arbitration under the Law of the Sea 

institutions, and China is legally committed to take part and certainly to observe whatever decision comes out of these impartial experts who are arbitrating the Philippine dispute with China. 

Early next year we will at least have a decision whether this tribunal has jurisdiction over the case, and I think it will probably 

find it does have and it will go on to answer some of the questions 

that currently plague us. Do you want to know what an island is 

compared to a reef, compared to a rock? These questions may well 

be answered through the Philippine arbitration. Is the nine-dash 

line a bunch of hooey, as many of us think it is? Well, we can look 

to the Philippine arbitration perhaps to answer that. This is just 

an example of what international law institutions can do if they 

are invoked. 

The sad thing is the Philippines stands by itself right now. Japan 

may be saying: We will hold your coat and we hope you win. That 

is certainly Vietnam’s view. And we have others. Taiwan, of course, 

is excluded from formal participation, but they too should be taking 

initiative. This is the time for using international institutions and 

imagination. 

There are so many ways available, in the light of international 

law precedents, for solving these problems. You can decide to do an 

inventory of all these features and decide which are reefs, which 

are rocks, which are islands entitled to a full panoply of Law of the 

Sea benefits, Continental Shelf, exclusive economic zone, and all 

that. We can have diplomats decide we will divide up, we will 

share jurisdiction, we will share resources in some ways. 

But the diplomats are in a stalemate. We have heard the use of 

stalemate to describe the domestic situation in China, stalling. 

Well, we have a stalled political situation internationally, and the 

United States and Japan and Taiwan, as well as the Philippines, 

and even Vietnam, which behind the scenes sides with the Philippines, have to use the existing institutions, and I hope that your 

committee will use its influence to make more of the opportunities 

that exist. 

So that is the burden of what I have to say. 

[The prepared statement of Mr. Cohen follows:]

36


95128c-1.eps
37


95128c-2.eps
38


95128c-3.eps
39


95128c-4.eps
40

Mr. SALMON. Thank you very much. 

Dr. Hersh. 

STATEMENT OF ADAM HERSH, PH.D., SENIOR ECONOMIST, 

ROOSEVELT INSTITUTE 

Mr. HERSH. Thank you, Chairman Salmon, Ranking Member 

Sherman, thank you for inviting me to testify today. 

China’s rising geoeconomic and geopolitical significance and what 

it means for the United States could not be a more timely or important topic, particularly as our Nation considers how to proceed with 

the Trans-Pacific Partnership trade agreement. 

Let me begin with a point of agreement on this issue. The rules 

for how our economy works, who gets to write those rules, this is 

of fundamental importance to the United States’ economic future. 

The divisions we saw in last week’s historic TPA/TAA vote here in 

the House reveal how much the rules matter to people. Some point 

to this outcome as a sign of a broken Congress, but I submit this 

was Congress doing its work. 

Rather, what is broken is the relationship between Congress and 

the executive branch, particularly the USTR, and how divided constitutional authorities to make international agreements work in 

practice in our Government. When the rules matter this much, we 

should take the time to get them right, rather than trying to bulldoze through Congress whatever rules USTR and the corporate lobbyists that negotiate these agreements with them, supposedly on 

our behalf. 

What we know about this agreement is that it has less to do with 

freeing trade, creating jobs, raising wages, or rebalancing geopolitics than it does with rewriting the global economic rules to 

favor corporations, CEOs, and shareholders at the expense of almost everybody else. Unless Congress acts to change this balance 

of power with the executive, we should expect more of the same 

confrontational politics and uncertainty over policy when what we 

really need is to reach agreements that meet our national imperatives through cooperation and inclusion. 

I will make two points today. My first point is that the most fundamental thing for national security is a strong national economy, 

and TPP would weaken our economic base, leave us more unequal 

overall, and reinforce the global race to the bottom in social and environmental standards, commercial standards, and taxation. My 

second point is that TPP fails the geostrategic rationale for checking China’s rise on many fronts. 

On my first point, estimates of TPP’s economic impact say it 

would raise U.S. GDP by $88 billion by the year 2025. This amount 

is less than the statistical rounding error when we calculate GDP 

for the United States. If each of you chose a pet infrastructure 

project in your district and decided to fund that, it would have a 

bigger economic impact over the next year than TPP will have 10 

years from now. 

TPP’s big changes are not to lower traditional barriers between 

countries, but to change how the economic rules work within countries. I detail this in more detail in my written testimony, but I will 

highlight the investor-state dispute settlement as one of the major 

issues of the agreement. 

41

Here I will note that progressives like Senator Elizabeth Warren 

and my boss, Nobel Prize-winning economist Joseph Stiglitz, are 

aligned with scholars from the Cato Institute and editors from The 

Economist magazine in agreeing that ISDS goes too far in empowering global corporations against the sovereignty of the public to 

regulate in its interest. What ISDS does is provide an implicit subsidy for foreign investors to move their investments offshore and 

makes it more difficult for our partners to raise the standards that 

we say we care much about. 

My second major point is that TPP fails the geostrategic rationale for keeping China in check. This is a 20th century cold war containment strategy aimed at a 21st century problem where the 

United States is no longer the center of the world economy. For 

this to work, it would need to do two things. It would need to truly 

set high standards and it would need to largely exclude China from 

the benefits of this trade bloc. This would let TPP countries get a 

bigger share of the supposedly higher standard trade and investment happening in the region and entice China to raise itself toward TPP standards, but it does neither of these. 

On the first test, TPP makes no meaningful advances over the 

status quo of recent trade agreements. It leaves in place the same 

woefully toothless mechanism to enforce standards on labor rights, 

environmental protections, and accountability for state-owned enterprises. And TPP foregoes the opportunity to discipline currency 

manipulation for trade advantage, which is a pervasive practice, 

not just in China but across the Asia region. 

On the second test, TPP cannot feasibly exclude China from the 

benefits of the agreement. China is already more integrated with 

TPP countries than the United States. Its total trade with nonNAFTA TPP members is nearly double that what the United 

States has with the same group of countries. What this means is 

that either by investing directly in or trading Chinese-produced 

content through TPP countries, deeper and growing integration 

with China will mean that Chinese producers can enjoy access to 

TPP’s market access without reciprocating the same market opening to U.S. businesses and workers. In fact, the Chinese officials I 

talk to are about as enthusiastic for TPP as any business lobbyist 

here in Washington. 

China’s transformation under authoritarian capitalism, its ongoing nonmarket economic structure, its expanding geopolitical influence, these all pose real challenges for the United States and for 

the future of open societies around the world. But TPP does not 

provide answers to these challenges. 

Finally, our own unforced errors in foreign economic relations are 

much for damaging the U.S. reputation in the region than your 

vote on TPA and slowing down the process for negotiating TPP. 

Here, I am looking at things like Congress’ failure to enact internationally negotiated IMF reforms and to this administration’s diplomatic debacle in trying to strong-arm our allies into boycotting 

China’s Asian Infrastructure Investment Bank. When this is how 

we treat our friends, it is no wonder the United States has a reputation problem in the world. 

42

This strategic choice cost us an opportunity to write the economic 

rules with China. Instead, it left us isolated from the international 

community and left China to write the rules on its own. 

These problems do not end with TPP. A multitude of other agreements are underway with the same basic template, from a mega 

regional agreement with the European Union, to the trade in services agreement, to bilateral investment treaties with China itself. 

These will determine whether we grow with broadly shared prosperity or continue down our economic path that produces high and 

rising inequality and low economic opportunity. 

Strengthening international relations is essential for ongoing 

U.S. leadership in the world. So is getting these rules right. No 

American should relish a failure to build deeper and more open relations with our partners, nor should we retreat from trying. But 

getting to a deal that serves more than the narrow interests of 

powerful multinational corporations requires that Americans be 

willing to walk away from the TPP agreement that we have on the 

table now. 

Thank you. 

[The prepared statement of Mr. Hersh follows:]

43


95128e-1.eps
44


95128e-2.eps
45


95128e-3.eps
46


95128e-4.eps
47


95128e-5.eps
48


95128e-6.eps
49

Mr. SALMON. Thank you. 

Dr. Kaufman. 

STATEMENT OF ALISON KAUFMAN, PH.D., SENIOR RESEARCH 

SCIENTIST, CHINA STUDIES DIVISION, CNA CORPORATION 

Ms. KAUFMAN. Thank you very much for having me here today. 

I am going to give the usual caveat that the views I express are 

my own, not those necessarily of CNA, the United States Navy, the 

Department of Defense, or in fact anyone but myself. So I state 

that for the record. 

In my testimony today I have been asked to talk about Chinese 

security affairs, and the first point I want to make is that actually, 

in the Chinese view, everything we are talking about today is part 

of security affairs. Xi Jinping has been very clear about that, but 

it is actually quite a longstanding trend in Chinese views, that internal security, external security, economics, diplomacy, law, military, all of it is part of what they consider to be their security problem. 

And so when Chinese decisionmakers think about securing their 

nation, they are also thinking about how to balance all of those 

things with one another. So I would assume that when Chinese decisionmakers sit down they actually say: Here are all these problems we have, how are we going to make these work together to 

strengthen China and make it more powerful? 

That said, I have been asked today to talk more on the military 

side of things and more traditional view of security. So today I am 

going to raise three questions. First, what are some of the security 

issues that Chinese leaders appear to be worrying about the most 

right now? Second, what are they doing about them? And third, 

what does this mean for the United States? 

So first, what are Chinese leaders worried about? They draw 

their worries from the past, the present, and the future. All countries do this. The Chinese are especially concerned with the past 

in many ways for shaping their view of what the future may hold. 

Based on the past, they worry that China’s sovereignty, its territory, its international stature and reputation, its self-determination, and its internal stability are always, constantly, under threat. 

It is a very deep existential anxiety. There is also a longstanding 

view that Western powers, in particular the United States, have 

vested interests in China maintaining a degree of insecurity. So 

this is a starting point, I think, for many aspects of U.S.-China relations. 

Based on the present, they look around them, and they worry 

that China’s global interests are now expanding faster than their 

own ability to secure those interests. China’s economic growth, especially, increasingly depends on the ability to protect overseas investments and workers—we heard a little bit about that today—to 

secure sea lanes that carry its energy and trade, and to manage 

transnational crisis and national disaster. 

Then, looking to the future—and here we are lucky that China’s 

Government and affiliated organizations have very recently published fairly authoritative texts outlining what sorts of problems 

they think the future holds, not just for them but for the world—

they see a world in which crisis that could escalate to conflict or 

50

war lurks everywhere, in which security issues are very, very complex and transnational and will often require cooperation and coordination, both within the Chinese establishment and also with 

foreign countries, and in which their ability to win at informationbased warfare is going to require advanced capabilities in the maritime, cyber, and space domains. 

So what are they doing about these security concerns in the military domain? Obviously, you are very familiar, I think, with the 

military modernization program that has been going on for many 

years. The annual DOD report to Congress, I think, summarizes 

that very, very well. 

In addition to that, the Chinese People’s Liberation Army, the 

PLA, has a very, very long task list. Again, they published it recently. I would not want to have that long a task list. Of course 

they are supposed to be very good at warfighting and, of course, solidify any reunification with Taiwan. They are also supposed to 

take on crisis management, international security corporation, internal security, humanitarian assistance, disaster relief, rights and 

interest protection, which is both a new and an old language, support for national economic development, and a whole host of other 

things. 

This is a very long list that they have to undertake, and Xi 

Jinping clearly does not think the PLA is ready to take this on. So 

in addition to the longstanding military modernization program, Xi 

also has announced dozens of areas of institutional reform within 

the Chinese military. Among others, it is a very long list, but 

among others this includes improving joint operations doctrine and 

capabilities, rebalancing the force structure more toward maritime, 

air force, and second artillery—their strategic nuclear force—building up defense R&D, improving their human capital, which has 

been a longstanding concern, and also improving the PLA’s internal 

discipline and reaffirming its party loyalty. 

These are all tasks that Xi has set before them in 2013, and in 

the intervening couple of years, and I think going forward for the 

next several, we are going to see a lot of changes coming out of the 

institutional aspects of the Chinese military. 

We have also, obviously, seen the reorganization of China’s civilian maritime law enforcement organizations—we have been hearing a lot about that—their white hulls, using nonmilitary vessels 

to conduct law enforcement operations, and also the establishment 

of a top-level national security commission or committee with Xi 

Jinping at the head whose exact mandate is still rather unclear to 

us. 

China has also been undertaking these moves to secure what it 

calls its maritime rights and interests, particularly in the South 

China Sea. I am not going to belabor that because I think everyone 

is very familiar with those points. But one point to make there is 

that those moves, of course, make neighboring countries very unhappy. And partly in response, they are also investing now in their 

white hull capabilities, their civilian coast guards, things like that, 

and in some cases their military capabilities, and they are also enhancing their military partnerships across the region and beyond, 

including with the U.S. 

51

So what does this mean for the United States? Well, I think a 

key challenge for the U.S., for the United States Government, for 

policymakers is figuring out how to manage these insecurities within the U.S.-China relationship. That doesn’t necessarily mean conceding to or accommodating these insecurities, but it means encouraging China’s productive cooperation and a greater sense of security in areas where those concerns are convergent with U.S. interests, and dissuading China from feeling more secure in areas 

where these concerns and interests may diverge from those of the 

United States. 

Obviously, in areas such as counterpiracy, peacekeeping, noncombatant evacuations, avoiding accidental crises, all of these problems that go along with China’s expanding global economic footprint, there are a lot of areas in which it may make sense to support a more secure China. A China that is more invested in burden 

sharing on things like counterpiracy, peacekeeping, and so on, may 

be more aware of the cost of losing those opportunities. A China 

that feels included in international efforts, including international 

legal institutions, as some of the other people here have been talking about, may be less suspicious of international partners, more 

willing to speak with them within those venues, and also less likely 

to strike out on its own. 

That said, obviously, the way that China is currently going about 

dealing with many of its other security concerns is not compatible 

with U.S. policy and interests, and China’s leadership has framed 

a lot of those issues in terms that would make it very hard now 

for them to easily walk back. This language of rights and interests 

is very powerful in China. It is hard for them to step back from 

it now that they have employed it. 

Here, I think the U.S. path needs to be to show China that, in 

fact, China’s own security interests, all the interests we talked 

about here at the table, are actually at cross-purposes, that China 

can’t secure some of those interests through its current approach 

without seriously compromising some of the others. So China can’t 

simultaneously maintain stable economic relations with its neighbors or with other countries in the world while aggressively pursuing its territorial claims. 

China can’t expect international law to work for it sometimes 

and not accept its jurisdiction at other times. And China can’t expect other countries to simply accept that PLA modernization is not 

a threat without engaging in much greater and more credible 

transparency about the PLA’s capabilities and intentions. 

The costs of these self-contradicting behaviors should be high, 

and they should be a focal point, in my opinion, for U.S. discussions 

with China and U.S. cooperation with other countries in the region. 

I believe that the U.S. should be prepared to use all instruments 

of national power in tandem, economic, diplomatic, military, other 

instruments, to persuade China of what these costs might be. 

Thank you. 

[The prepared statement of Ms. Kaufman follows:]

52


95128b-1.eps
53


95128b-2.eps
54


95128b-3.eps
55


95128b-4.eps
56


95128b-5.eps
57


95128b-6.eps
58


95128b-7.eps
59


95128b-8.eps
60


95128b-9.eps
61


95128b-10.eps
62


95128b-11.eps
63

Mr. SALMON. Thank you. 

Given the fact that one of the reasons we moved the hearing 

today was because they called a 2 o’clock mandatory conference for 

Republicans, and with my colleagues on the Republican side, I 

want to give them an opportunity to ask questions before they have 

to leave, so I am going to start with them. 

Mr. DesJarlais, you were here first, so go ahead. 

Mr. DESJARLAIS. Thank you, Mr. Chairman. 

And I thank the panel for your insightful testimony. It was very 

helpful and very informative. 

Dr. Kaufman, you were kind of wrapping up your testimony regarding the Spratlys and the concerns of Malaysia, Vietnam, Taiwan, Philippines, and others with what they may see as aggression. What would be the consequences for the United States and 

the region if China were to establish de facto control over the 

South China Sea? 

Ms. KAUFMAN. You always start with the hard questions. 

I think the challenge for the U.S. is that other countries in the 

region are watching to see, of course, what the U.S. will do, regardless of the nature of the U.S.’ formal commitment. I mean, in the 

case of the Philippines, the U.S. has a treaty alliance. I am not an 

expert on the terms of those, but there is not necessarily an expectation that the U.S. would be involved in an actual conflict. But I 

think that everyone is waiting to see if the U.S. will back up what 

it has said is unacceptable in terms of international law and in 

terms of U.S. policy and partnerships. 

And so I tend to think that if the U.S. did nothing, I mean, if 

China establishes these long-term plans and the U.S. continues to 

pursue relationships in all of these other domains, that countries 

in the region will say: Well, you must not really mean it. 

I think that everyone understands the very, very difficult military position that the U.S. is in, and people I have talked to in the 

region are, I think, clear about the fact that this is a very difficult 

dilemma. I don’t think anyone thinks that the U.S. is dying to come 

in and take care of this problem. So I think they recognize that. 

But I think that a failure to react on other fronts to instill any kind 

of pain for doing these things that we said are unacceptable would 

be a problem for us. 

Mr. DESJARLAIS. Thank you. 

And I was going to ask a few more questions along that line, but, 

Dr. Hersh, I heard your comments on TPP. I wanted to get maybe 

a different perspective. 

Dr. Scissors, do you have an opinion in regards to the Trans-Pacific Partnership trade deal that is currently being negotiated, 

whether it has potential to considerably increase U.S. economic engagement in the region? And would you specifically view this potential deal as an opportunity to promote democratic values in the 

region? 

And, Mr. Han, I will switch to you to answer that after Dr. Scissors’ comments. 

Mr. SCISSORS. Well, I seem to be constrained more than my fellow panelists because I haven’t seen the document, so I don’t know 

what is in it and I don’t whether I like it. A lot of the critics of 

TPP apparently don’t care what is in it. 

64

I would love TPP to be a strong free trade agreement. I am an 

absolute free trader. That is what I want. I don’t know what is in 

it. It is very hard to talk about gains. The studies that are done 

on TPP make very anodyne, weak, I don’t mean weak like wrong, 

I mean just they have to be very cautious in their assumptions is 

not very helpful. 

I think that if TPP is a strong agreement, which is uncertain, it 

is a very powerful template for U.S. economic expansion going forward because it will be used as a basis for the TTIP and other 

agreements. So just looking at the gains from TPP as just the start 

for the U.S. economy, again, this is if it is a good agreement, I 

think what we can say as a secondary matter, because I am interested in the economics more than I am in U.S. leadership, is that 

if we don’t move forward with TPP we are reduced to the status 

of mercenaries in Asia. 

What East Asia cares about is economic development. This is the 

major initiative on the table. We have a number of Asian countries 

who are already parties. There are others who want to join. If it 

is no good, we have also blown our economic leadership. If we don’t 

pass it, we have blown our economic leadership. And that leaves 

us as the people you call when there is a firefight, not the people 

who come to bring prosperity. 

So I can’t endorse TPP because I am not allowed to read it yet, 

but I can endorse the fact that we need a major economic initiative 

in the region very badly, and I am very hopeful that TPP is that 

initiative. 

Mr. DESJARLAIS. Thank you. 

Mr. Han, you can take the reminder of the time. 

Mr. HAN. The TPP depends on what is that aiming to. If it is 

pure economical, I don’t have much opinion on that. But if it is 

about excluding China, there may be another impact or another intention, that will make me doubt whether, one, you can make 

China as a better international player, economically and politically; 

second, the Chinese workers and Chinese people will get benefit 

from this TPP, which my colleague mentioned that it may make 

Chinese workers’ rights better. 

And that reminds me of CSR, corporate social responsibility, 

which has been around for many years. That is much closer to enterprises, and that enterprise is self-policing, but it becomes something else. It never really benefits Chinese workers. 

Now, as I said earlier, that workers in China are already taking 

their fate in their own hands, and Chinese civil society development also is very fast developing. And Chinese people are trying 

to take everything into our hands and that Chinese Government 

has to listen to more and more. If TPP is for the purpose of isolating or targetting China, excluding China, then I don’t see much 

benefit Chinese people will have. 

Thank you. 

Mr. DESJARLAIS. Thank you. Yield back. 

Mr. SALMON. Thank you. 

Mr. Sherman. 

Mr. SHERMAN. Thank you. I do want to chime in on the economic 

analysis of TPP and TPA. 

65

First, I mean, economists have kind of blinders on. First they 

look at how TPP will change the status quo. What they don’t look 

at is its number one affect, which is to lock in those portions of the 

status quo that it locks in. 

So if TPP said nothing but there is no change and the United 

States is locked into the trade policy that has governed us over the 

last 30 or 40 disastrous years, that would be a huge agreement. If 

it said nothing but from now on America will never effectively complain about currency manipulation, that is huge. 

Now, we have never done it. I mean, we talk about it a little bit 

or chatter. So the biggest effect of TPP is to lock in a rejection of 

worrying about focusing and responding to currency manipulation 

or going the Warren Buffett route of saying, if you want to export 

to the United States, well, whenever there is an export from the 

United States, we give the exporter a chit, and if you want to bring 

something in, you need to buy one of those chits. 

So if the agreement did nothing more than lock us into all the 

bad decisions we have made, it would be bad enough. The other 

thing the economists don’t look at is the rules of origin because, as 

Dr. Scissors points out, he is not allowed to read the agreement. 

If you go to the basement, you will see, and I can’t reveal exactly 

what the numbers are here, that goods that are 60 percent made 

in China, admittedly, which means actually 70, 80, 85 percent 

made in China, get into the country duty free. 

So all the economic analysis is based on what is going to be produced in Japan, what is going to be produced in Vietnam. There 

is no analysis of what is going to be produced in China and finished in Japan or Vietnam, or slap a ‘‘Made in Vietnam’’ sticker on 

it. So I would be very surprised if it increased our GDP at all. 

The next point I want to make is what the Chinese Government 

lacks is any ideological support for its existence, any source of a 

mandate from heaven. We survived the Great Depression, as did 

every other traditional democracy, because even with bad results, 

we had a system people agreed to. 

Now, the divine right of kings works pretty well. People believe 

it. Democracy has stood the test of time where it has got its root 

in. Islamic theocracy seems to be able to survive U.S. sanctions 

more or less. And the Communist religion, when you are truly the 

vanguard of the proletariat, was sufficient to allow Stalin and 

Lenin to survive even when there were very bad times for the people of the Soviet Union. 

In contrast, this government is not the vanguard of the proletariat. It may be many things, but they are not that. So as long 

as they deliver tremendous economic growth, what is not to like? 

But if they face anything like we faced in the 1930s, they have got 

to retreat to what they are already retreating to, which is nationalism, xenophobia, and you better support us, otherwise China will 

lose the islets. And there is oil under those islets. And you better 

believe that because you better believe that you ought to keep us 

in power. 

Mr. Cohen, you mentioned the Philippines is taking China to the 

international tribunal, and the Chinese are more or less accepting 

that process? 

Mr. COHEN. They are thumbing their nose at it. 

66

Mr. SHERMAN. Okay. I am glad I asked the question. 

Also, Mr. Cohen, describe for me how corrupt are the top 2,000 

people in the Chinese Government, and when they are corrupt, 

what do they put their money into? Is it Swiss chateaus, is it Rolex 

watches? Because if you want to undermine any government anywhere in the world, it is not enough to say they are corrupt. People 

love the details. The Kardashians, every detail. But at least they 

are not corrupt. At least they are not governmental. So lifestyles 

of the rich, famous, and corrupt, what would we see if we could 

make the TV show? 

Mr. COHEN. Well, shall I answer that question, Mr. Chairman? 

Mr. SALMON. Yes. In fact, it is your opportunity to answer. You 

answer however you feel. 

Mr. COHEN. I want to first comment on the first point you made, 

Mr. Sherman, of course, as you know so well, this concern about 

the TPP and economic relations generally with China involves politics every bit of the way. I have three quick observations on that. 

One is we have to recognize our failure to open the IMF, the 

World Bank, the Asian Development Bank to greater Chinese participation to reflect the new Chinese achievement. 

Second, on the TPP, process is as important as substance, and 

as far as I know, this is a nontransparent process. And I am a citizen, I believe in human rights, and I really am concerned about 

my inability to know what the TPP really contains. And I realize 

there are problems in negotiating with 11 other countries if you 

don’t keep things secret, but how do you expect public support for 

any agreement where the public is being uninformed? 

And this is a bad precedent for other governments. Taiwan is in 

a stalemate now in its cross-strait relations with the mainland because of the fact the people in Taiwan have risen up in the Sunflower Movement, as it was called, against the failure——

Mr. SHERMAN. Mr. Cohen, we do have limited time. If you could 

focus on the question I asked about corruption. 

Mr. COHEN. Well, that was not the only one. 

Mr. SHERMAN. It is the only one I asked you to answer, but go 

ahead. 

Mr. COHEN. In any event, on corruption, what we now know after 

almost 3 years of an intense campaign by the leadership of Mr. Xi 

Jinping is that there is far more corruption in China than the outer 

world had realized. And this represents a crisis for them because 

if he continues to pursue the so-called tigers, like Mr. Zhou 

Yongkang, who was just dispatched to life imprisonment, and he 

goes beyond his own enemies like Zhou Yongkang to, in an objective fashion, pursue other leaders in China, this can lead to the destruction of the party. 

On the other hand, if he doesn’t pursue these people, it is going 

to lose public support. And leaders before him, and he also has 

agreed, failure to pursue corruption is a life-or-death question for 

the party. They may get through the next 8 years of his term, but 

it is not going to go far beyond that. 

So I think you put your finger on a critical issue, and the problem is for us what to do. Right now China is asking us to find and 

return to China people the Government of China is pursuing as 

being corrupt elements. And the U.S., not having an extradition 

67

treaty with China because we can’t send people back to a legal system we don’t trust, doesn’t know what to do. We were going to have 

the head of the Chinese anticorruption campaign visit Washington 

at this time, but because of inability to make an agreement on how 

we are going to handle their demands to send back as many as 150 

leading people, he is not coming. 

The other problem is, what is corruption? Much of what passes 

for corruption in the eyes of the Chinese people may not be direct 

bribery, but it is the use of Guanxi, relationships. If I am the son 

of a leading member of the Communist Party, everybody knows 

that when I try to make a deal, and it offers so many opportunities. 

And they have gone into every kind of business. It isn’t just they 

spend the money on luxury things. They are making hundreds of 

millions of dollars. 

And one problem is what can you do about family networks—Xi 

Jinping himself has this problem in his own family. He has got 

people who have made lots of money by using their access to the 

top. So this is a huge problem for China. It may be a life-or-death 

struggle. 

Mr. SHERMAN. Thank you. 

We are debating whether to withdraw from the Middle East all 

military force right now on the floor, so I am going to have to go 

to the floor. I yield back. 

Mr. SALMON. Thank you, Mr. Chairman. 

I am going to yield to Mr. Perry. 

Mr. PERRY. Thank you, Mr. Chairman. 

And as my good friend from Sherman Oaks is leaving the room, 

I must say that I found it curious that the statement that China, 

as being the vanguard of the proletariat, would be concerned in 

times of peril in keeping their power and they would say to their 

citizens, ‘‘Well, you must be with us because there is oil under 

those islands,’’ it seems to me, in my lifetime, they said, ‘‘You must 

be with us or you end up in jail.’’ And that is what works, and that 

is what will work in the future if there are times of peril. 

But that having been said, I came here thinking that we would 

talk about aircraft carriers and increased economic activity such 

that the West and the United States in particular would find it 

problematic and itself behind. 

But looking at some of the statistics here, you look at GDP, and, 

Dr. Scissors, with all due respect, at least some of these numbers, 

from 10.4 in 2010 to 7.4 in 2014, and looking at in the next 6 years 

down to 5.9, looking at birthrates from 5.8 per woman in 1964 to 

1.6 in 2012, and then looking at the labor force shrinking by onefifth over the next 50 years, I thought maybe we would discuss like 

we believe in—well, a lot of us, there are a lot that don’t—but there 

are a lot of us that believe in capitalism in the United States and 

that this is free democracy and free trade and capitalism has done 

well for the West and our system is the best and it has lasted and 

endured the longest of the longest of modern governments because 

of that, and we have always kind of eschewed Communism as a 

moribund program that simply can’t work over the long haul. 

And with those statistics and with the concern in America today 

of a rising China and so on and so forth, I would actually like to 

ask you, Dr. Scissors and Mr. Cohen, in particular, what you think, 

68

like how long do we have to wait? If we believe that what we have 

is right and what they have is wrong and cannot endure, are we 

close to the end? Is the end 50 years away? Ten years? When will 

it collapse under its own weight? When will it pull the Soviet 

Union and unexpectedly, as you said, we won’t be ready? Is there 

something on the horizon that some people see and some people 

don’t? 

Mr. SCISSORS. As I said in my opening remarks, I know the timing of the hearing messed a few things up, I am a stagnation guy, 

not a collapse guy. The mixed economy that China has doesn’t lend 

itself to acute economic crises. Some of my colleagues are experts 

on politics. I am not. But some of the statistics you cited, for people 

who believe in GDP, first of all, I think the party is exaggerating 

their GDP growth, but even then, it is on a straight line down, the 

growth. Aging, debt, all of it says stagnation. 

And we have seen that countries can stay stuck for a long time 

without instability. None of them are middle-income countries run 

by the Communist Party. North Korea is just poor. It is kind of 

more remarkable that they have had not very much instability 

there. 

But I think in terms of the challenge to the United States, the 

challenge to competitive market capitalism when we practice it 

properly, that challenge is already going away. The Chinese model 

is already fading. I was sitting in front of the Congress in 2009 

when people were panicked that China was going to take over the 

world, and I think that panic has receded considerably and it is 

going to continue to recede. 

So I don’t know enough about Chinese politics to say, ‘‘Hey, I 

think the economic stagnation is going to breed a collapse.’’ It is 

possible. Ranking Member Sherman just said, my colleagues have 

said, the party has survived on delivering the goods economically 

and they are not going to be able to unless they change course. 

But what I can say is, to echo Professor Cohen, I think China 

has peaked economically. And the economic challenge to the United 

States is not going to go away, China is not suddenly going to become small, but the fear that we have had of China overtaking us, 

eclipsing the way we do things, that in my view is already gone, 

and if it isn’t already gone, it will be gone for almost everyone in 

a few years. 

Mr. PERRY. Dr. Cohen, quickly. 

And if I get time, Dr. Hersh, I would like to hear your comments 

as well. 

Mr. HERSH. We began engaging China post-1989 Tiananmen 

massacre with the idea that commerce would lead to political 

changes of a more evolutionary basis, and that happened here in 

Washington. We had our own version of the Long March to get 

China permanent normal trade relations and then to get China 

into the WTO. China has certainly integrated itself into the global 

trade and investment system over this time, but I don’t think we 

have seen the political changes that we thought would flow from 

these economic changes and more integration with the ideas and 

technologies of the outside world. 

Has this created pressures for political change? Maybe, but not 

necessarily in the ways that we had expected. Those who are sucVerDate 0ct 09 2002 13:25 Sep 01, 2015 Jkt 000000 PO 00000 Frm 00072 Fmt 6633 Sfmt 6633 F:\WORK\_AP\061715\95128 SHIRL
69

cessful in the new China, in China, Inc. are greatly supportive of 

the way that the government has prosecuted its policymaking and 

secured its position and power. But this growth and transformation 

has also unleashed the most rapid increase in inequality almost 

that the world has ever experienced, and this is creating real risk 

for social and political instability that I don’t think we have good 

forecasts for how those might disrupt China’s political system. 

There is clearly quite a bit of economic gain to be had from economic integration with China, as well as other partners in the region, but who benefits from that, how the gains are to be distributed depends entirely on the kinds of rules that we set in these 

international agreements. 

Mr. COHEN. I could answer just a little bit. 

Mr. SALMON. Time from the gentleman has expired. We probably 

need to get to the next questioner, Mr. Rohrabacher. 

Mr. ROHRABACHER. Yes, thank you. 

Well, I have sat through these sessions where people are predicting that if we do certain things economically for China that 

that would result in the type of political reform then and reform 

toward making a country less antagonistic and more benevolent 

than they would be otherwise. 

We have now had about 20 years to see if that theory works, and 

I think that it has been a resounding failure, all the things that 

were promised us if we just bolster the economic situation of China 

by permitting a trade agreement, which obviously has enriched and 

empowered that China. Do they have free labor unions now? No. 

Do they have opposition parties? No. Does China today have fewer 

territorial claims and is less provocative toward their neighbors? 

No. I just heard all of these predictions, and they turned out to be 

not true. 

Now, I know that Mr. Cohen has suggested that you have to give 

the Chinese Communist Party credit, at least look at what they 

have done. No. No. The fact is that the Chinese people could well 

have been living better today had we not had a Communist Chinese dictatorship over them and bolstered it a number of years ago. 

I think they didn’t have the same kind of dictatorship in other 

countries that had Chinese-type of backgrounds, and those people 

prospered and yet have freedom at the same time, or at least a 

greater degree of freedom than you have in the mainland of China. 

So let me suggest that when we are talking about the TPP, we 

hear some of the same rhetoric about the TPP, how it is going to 

bring this prosperity and better trained jobs, and I think that all 

the farmers in America thought that we would be feeding China, 

and now China is a massive food exporter to the United States and 

putting some of our people out of work. 

And by the way, when you talk about the TPP, at least with 

most-favored-nation status, we pretty well knew what exactly that 

meant. People keep using phrases like ‘‘free trade’’ with the TPP. 

How do we know it is free trade? We don’t even know if it is free 

trade at all. Even with MFN or WTO it wasn’t free trade with 

China. With China, we ended up with, of course, letting them in 

most-favored-nation status and into the WTO. 

We basically have a clique that is able to manipulate the trade 

now and has enriched the clique. But as Mr. Han was suggesting, 

70

there are a lot of people left out of the clique and they don’t have 

any economic rights at all. 

So I would just like to leave it with this. And maybe, we have 

got about 11⁄2 minutes now, if you have to bet on which change, 

what is going to happen? This fellow over here is a stagnation guy 

instead of a collapse guy. What about the rest of you? Are you collapse guys or stagnation guys? And I would just like to hear that 

simple answer from all of you here, Mr. Han first, then Mr. Cohen, 

and right on down. Are you a collapse guy or a stagnation guy? Are 

they going to collapse and then the democrats are going to take 

over and have a democratic free society or is it going to stagnate? 

Mr. HAN. I would like to say it is a process. It is not a flip of 

the hand thing. It is a process. As I said earlier in my talk, workers 

without freedom of association, we are getting rights to collective 

bargaining. And now collective bargaining, this idea, is being accepted more and more. 

Mr. ROHRABACHER. I agree with you that it is a process, and that 

means that a process, as we determine what will happen and what 

the process will be, we will determine whether or not a Communist, 

strong Communist Party that threatens the rest of the world still 

continues in power. We will determine it, because it is a process, 

that we will impact as we impacted it with MFN and WTO in a 

way that strengthened the hand of the despots. 

Mr. Cohen, are you a stagnation guy or a collapse guy? 

Mr. COHEN. Right now I think the Chinese Government is 

threatened with Brezhnev kind of administration of the economy 

that ultimately led to collapse in the Soviet Union, but we 

shouldn’t underestimate the imagination and dynamism of the Chinese leaders in meeting some of these international economic problems. The AIIB and related institutions are an example of their 

giving an imaginative response that put the U.S. Government back 

on its heels with surprise. 

So I think I agree with Mr. Han that the current situation is a 

struggle, it is up for grabs. And I think I agree with you, Mr. Rohrabacher, about what we do can have a profound influence. 

But I do want to point out, apropos of what you said earlier, that 

the Chiang Kai-shek regime in Taiwan was as harsh a military dictatorship as we see now on the mainland. The Park Chung-hee administration in South Korea was similar. I opposed both of them 

very actively. But the fact is, as an objective observer, I have to say 

that for a certain period, as a government gets going, dictatorship 

seems to enable economic progress, but that very economic progress 

leads to the kind of ferment that we are beginning to witness in 

China. And what the outcome of that ferment will be is really in 

part up to us, mostly up to the Chinese people. 

Mr. ROHRABACHER. And the difference, of course, is those two 

dictatorships did not pose an ever-enlarging threat to their neighbors and to the peace of the world. Chiang Kai-shek didn’t threaten, I don’t think, he didn’t threaten anybody, and after he got to 

Taiwan—well, we could go into that—and neither did South Korea. 

China poses a huge threat. The building of these islands and 

then making greater declarations of ownership of territorial rights, 

if there is anything that is a threat to the peace of the world, and 

our administration hasn’t said anything about that. By the way, 

71

Putin occupies a given small, tiny area of Ukraine because it is 

made up of pro-Russian people and he has gone there protecting 

those pro-Russian people. Shouldn’t have done it, but you hear this 

is a monstrous invasion. China makes claims of 100 times more 

territory than that, that would cut Japan and Korea off from their 

trading routes, and you don’t hear anybody complaining about that. 

Better go on to the last time. Collapse or are we going to stagnation? 

Mr. HERSH. I don’t know if I would go to stagnation, but definitely a slowdown. The organic forces in China’s economy that have 

led to such rapid growth to this point, those are not going to continue, although China will continue to grow at a healthy pace. 

Where China’s economy is already coequal in size to the United 

States, that means it is going to continue to pull away from——

Mr. ROHRABACHER. Unless, of course, we are so stupid that we 

keep bolstering this same dictatorial government that threatens 

the word. 

Dr. Kaufman. 

Ms. KAUFMAN. I think that historically we have not seen very 

many successful democratic transitions that haven’t taken place either as a result of leadership decisions or war. I think that many 

people in China were paying a lot of attention to what happened 

in 2011, and I don’t think that they find the outcome of the Arab 

Spring very appealing. I think that a lot of people are pretty unhappy with certain aspects of the CCP, but I don’t think that many 

people see very many viable alternatives. 

Mr. ROHRABACHER. Okay. One last thought, Mr. Chairman. That 

is, we had a turning point in the history of the world, and there 

were two of them in close proximity. One was the collapse of the 

Soviet Union. I am proud to have been part of Ronald Reagan’s 

team in the White House for 71⁄2 years with him, served as special 

assistant, and did everything we could to bring down the Soviet 

Union. And it came down in a peaceful way without having direct 

fights between Soviet troops and American troops. What a great accomplishment that was. 

We could have had the same type of accomplishment in China, 

but Reagan was no longer President. Herbert Walker Bush was 

President. And at Tiananmen Square, it is my belief, Mr. Chairman, had Ronald Reagan been President, he would have picked up 

the phone, as his intelligence officer said, they are about to unleash 

the army on Tiananmen Square, and Reagan would have said: If 

you want unleash the army on Tiananmen Square, no more open 

markets, no more investment, no more credits, all the deals are off. 

And they wouldn’t have put the army in and we would have a 

democratic China today that wasn’t threatening the peace of the 

world. 

Yes, it is a process, and we need to play our part. 

Thank you very much. 

Mr. SALMON. Thank you. 

Save myself for last. 

I, as a young man, did a mission for the Mormon Church in Taiwan and spent 2 years there, during the time when Chiang Chingkuo, Chiang Kai-shek’s son, was the President, and there was no 

freedom of speech, there was no right to assemble, and there was 

72

really no freedom of the press per se. And so I lived that up close 

and personal. I was there in 1979 when Jimmy Carter severed diplomatic ties with Taiwan, normalized relations with China. And at 

that time we clearly advocated a one-China policy, and we have 

done that ever since. 

Things have changed now. Taiwan is not anymore an autocratic, 

authoritarian regime. It is now a thriving democracy. And a lot of 

the policies that we have toward Taiwan right now seem to be kind 

of outdated. 

And I am just wondering, I know, Mr. Cohen, you have been a 

strong advocate, as I have in the past, on the one-China policy, but 

we have seen how the one-China policy really works with Hong 

Kong, where they said it was going to be one China, two systems, 

and that is a joke. It is a real joke, because they don’t even have 

the ability to choose their own Chief Executive. That is delivered 

to them from Beijing. You get to pick, but you get to pick from the 

candidates that we choose. There is no universal suffrage, not really, not in Hong Kong. 

And the people on Taiwan, they have watched that. And as they 

think about a peaceful reunification one day and they see how 

Hong Kong is treated, they are thinking, ‘‘Not on your life, we don’t 

want to go under those kind of circumstances, we have a thriving 

democracy that works.’’

And then I see how Taiwan tries to do a magnanimous gesture 

during the Ebola outbreak and they offer their support to the 

World Health Organization, and what happens? Politics, lousy, stupid politics. 

Same thing with their ability to be able to join the all-hands-ondeck call for fighting terrorism globally. They can’t participate in 

Interpol. In fact, I dropped a bill just recently and it was marked 

up in the full committee on Foreign Affairs that says that they 

should have observer status in Interpol. Why not? I mean, it is ludicrous. 

Some of the walking on egg shells that we do to try to appease 

China on this one-China policy thing seems to be really 

unsustainable, and I am wondering, is it time for us to look at 

maybe tweaking that a little bit. 

Mr. Cohen, what are your thoughts? 

Mr. COHEN. The time is coming, because next year, as you know, 

President Ma steps down. No matter who replaces him, and it is 

likely to be the DPP candidate, this is going to create a new kind 

of difficulty in cross-strait relations. We have had a pretty good 

ride the last 7 years because Ma has made so many agreements 

without prejudicing the security of Taiwan. But he has reached the 

limit, and the people of Taiwan, as you know, are expressing they 

want to have more say in Taiwan’s future. 

Mr. SALMON. Tired of it. 

Mr. COHEN. China may be getting more nationalistic and less patient. So I am afraid you are going to have to give this more attention over the next few years, because there is going to be a return 

of tension over Taiwan that may make the South China Sea look 

like less of a threat in comparison. 

Mr. SALMON. Well, Mr. Cohen, I remember vividly when Lee 

Teng-hui was being sworn in as the first freely elected President 

73

of Taiwan, Beijing responded by lobbing missiles into the Taiwan 

Strait. Now, while we had a policy of strategic ambiguity, which 

was the policy we have kind of articulated for decades, President 

Clinton kind of erased some of that ambiguity by sending the Nimitz down the Taiwan Strait to give a little bit of clarity. And what 

happened was we deescalated the tensions in the region. 

But I am just not sure right now that this administration is even 

up to that, of giving any kind of clarity on what exactly we are 

going to do to uphold the Taiwan Relations Act. 

Dr. Scissors, do you have a comment? 

Mr. SCISSORS. This is a very quick, and it is intentionally cheeky, 

but it is also real. If you finish the TPP and you let Taiwan join 

before China, you have done something to change your recognition 

of the two countries. 

Mr. SALMON. Right. And honestly, Dr. Scissors, there is a lot of 

dialogue. We did a delegation over to China, Taiwan, Japan just a 

couple of years ago, and then we did another meeting about 3 

months ago with Ed Royce, and the topic of Taiwan coming in the 

second round of TPP came up. There was support across the board, 

from both Republicans and Democrats. I think if you polled Members across the board in the Congress, you would find far more support for Taiwan coming into the TPP ahead of mainland China. I 

think you would find that support very robust. 

Mr. SCISSORS. Right. 

Mr. SALMON. Some of these international bodies, I think, really 

need to have the input that Taiwan has, and we could probably do 

that without jeopardizing our sacred one-China policy. But is there 

a way for us to maybe tweak that a little bit? 

Mr. COHEN. I have been urging Taiwan to do more on its own. 

For example, Taiwan, as you know, occupies the biggest island in 

the Spratlys. I think, since President Ma is an expert in public 

international law and is about to retire from office, he ought to lead 

an effort to come up with imaginative proposals beyond the general 

language he has already given us on May 25 that would encourage 

a settlement of these issues. We need imagination. 

Taiwan should make its way back by becoming a host to the 

other contending nations and turning Itu Aba of a conference center, a negotiation, a workshop dialogue center that will promote, I 

think, the kinds of solutions that people aren’t putting forth now. 

People are just talking about strengthening their militaries. And 

while that is useful and necessary, we have got to do a lot more. 

We have to have more imaginative solutions. 

And here is a way for Taiwan to help, just the way they managed 

to make a fisheries agreement with Japan in the East China See. 

Imaginative, vigorous diplomacy on Taiwan’s part, in addition to 

our support, I think would be very important. 

Mr. SALMON. Thank you, Mr. Cohen. 

Mr. Han, we had a great meeting with several of the business 

leaders, as well as some of the, I think, Hong Kong greats. We met 

with Martin Lee, we met with Anson Chan when I was there. And 

it was coincidental because I was there for the 1997 handover ceremony and I met with Martin Lee back then, so it kind of felt like 

deja vu a little bit, or as a great baseball player once said, deja vu 

all over again. 

74

But do you think that the opportunity for suffrage, universal suffrage in Hong Kong, will come to fruition in your lifetime? 

Mr. HAN. Not only Hong Kong, but China as well, I believe so. 

But the real opportunity and the hope is the changing of mainland 

China. Hong Kong cannot get full democracy without China becoming democracy. That is not possible. So I count on China. 

And I agree with Mr. Rohrabacher, who said China did not answer to the international community for nearly anything. And 

China, to my understanding about this government, they will not 

answer positively to military responses. But one thing I am sure 

I already see that myself experiencing this: Chinese Government is 

already answering to its own people, although it is not full. For example, they arrest lawyers, they arrest journalists, but they are answering to hundreds of millions of workers’ demands to the right 

to collective bargaining, and the next one will be naturally, slowly 

develop into freedom of association, a union, maybe not purely freedom of association, but with a solely collective bargaining-oriented 

trade union. 

So if Chinese Government can answer and will answer to 100 

million of Chinese workers, I do believe, even if they don’t answer 

to the U.S. military, but they will have to become more and more 

democratic. 

Mr. SALMON. Well, I thank you. This has been a very invigorating conversation. I appreciate all the patience on the part of 

the witnesses today for the time changes. I apologize for doing that 

to you, but we just thought it was so important to get this done, 

especially because Mr. Han is not here all the time. So we wanted 

to make sure that we got it done today, so it necessitated us moving the time. So thank you very much and thank you so much for 

your patience. 

This committee is adjourned. 

[Whereupon, at 2:47 p.m., the subcommittee was adjourned.] 

(75)

A P P E N D I X 

MATERIAL SUBMITTED FOR THE RECORD

76

f


95128n.eps
77

Æ


95128m.eps