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38–370 2008

[H.A.S.C. No. 110–61]

CHINA: RECENT SECURITY

DEVELOPMENTS

COMMITTEE ON ARMED SERVICES

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

HEARING HELD

JUNE 13, 2007

(II)

HOUSE COMMITTEE ON ARMED SERVICES

ONE HUNDRED TENTH CONGRESS

IKE SKELTON, Missouri

JOHN SPRATT, South Carolina

SOLOMON P. ORTIZ, Texas

GENE TAYLOR, Mississippi

NEIL ABERCROMBIE, Hawaii

MARTY MEEHAN, Massachusetts

SILVESTRE REYES, Texas

VIC SNYDER, Arkansas

ADAM SMITH, Washington

LORETTA SANCHEZ, California

MIKE MCINTYRE, North Carolina

ELLEN O. TAUSCHER, California

ROBERT A. BRADY, Pennsylvania

ROBERT ANDREWS, New Jersey

SUSAN A. DAVIS, California

RICK LARSEN, Washington

JIM COOPER, Tennessee

JIM MARSHALL, Georgia

MADELEINE Z. BORDALLO, Guam

MARK UDALL, Colorado

DAN BOREN, Oklahoma

BRAD ELLSWORTH, Indiana

NANCY BOYDA, Kansas

PATRICK J. MURPHY, Pennsylvania

HANK JOHNSON, Georgia

CAROL SHEA-PORTER, New Hampshire

JOE COURTNEY, Connecticut

DAVID LOEBSACK, Iowa

KIRSTEN GILLIBRAND, New York

JOE SESTAK, Pennsylvania

GABRIELLE GIFFORDS, Arizona

ELIJAH E. CUMMINGS, Maryland

KENDRICK B. MEEK, Florida

KATHY CASTOR, Florida

DUNCAN HUNTER, California

JIM SAXTON, New Jersey

JOHN M. MCHUGH, New York

TERRY EVERETT, Alabama

ROSCOE G. BARTLETT, Maryland

HOWARD P. ‘‘BUCK’’ MCKEON, California

MAC THORNBERRY, Texas

WALTER B. JONES, North Carolina

ROBIN HAYES, North Carolina

JO ANN DAVIS, Virginia

W. TODD AKIN, Missouri

J. RANDY FORBES, Virginia

JEFF MILLER, Florida

JOE WILSON, South Carolina

FRANK A. LOBIONDO, New Jersey

TOM COLE, Oklahoma

ROB BISHOP, Utah

MICHAEL TURNER, Ohio

JOHN KLINE, Minnesota

CANDICE S. MILLER, Michigan

PHIL GINGREY, Georgia

MIKE ROGERS, Alabama

TRENT FRANKS, Arizona

BILL SHUSTER, Pennsylvania

THELMA DRAKE, Virginia

CATHY MCMORRIS RODGERS, Washington

K. MICHAEL CONAWAY, Texas

GEOFF DAVIS, Kentucky

BRIAN P. BILBRAY, California

ERIN C. CONATON, Staff Director

JULIE UNMACHT, Professional Staff Member

AILEEN ALEXANDER, Professional Staff Member

MARGEE MECKSTROTH, Staff Assistant

(III)

C O N T E N T S

CHRONOLOGICAL LIST OF HEARINGS

2007

Page

HEARING:

Wednesday, June 13, 2007, China: Recent Security Developments .................... 1

APPENDIX:

Wednesday, June 13, 2007 ...................................................................................... 37

WEDNESDAY, JUNE 13, 2007

CHINA: RECENT SECURITY DEVELOPMENTS

STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Hunter, Hon. Duncan, a Representative from California, Ranking Member,

Committee on Armed Services ............................................................................ 2

Skelton, Hon. Ike, a Representative from Missouri, Chairman, Committee

on Armed Services ................................................................................................ 1

WITNESSES

Lawless, Hon. Richard P., Deputy Under Secretary of Defense for Asian

and Pacific Security Affairs, Department of Defense ........................................ 4

APPENDIX

PREPARED STATEMENTS:

Hunter, Hon. Duncan ....................................................................................... 41

Lawless, Hon. Richard P. ................................................................................. 48

DOCUMENTS SUBMITTED FOR THE RECORD:

[There were no Documents submitted.]

QUESTIONS AND ANSWERS SUBMITTED FOR THE RECORD:

Mr. Forbes ......................................................................................................... 59

(1)

CHINA: RECENT SECURITY DEVELOPMENTS

HOUSE OF REPRESENTATIVES, COMMITTEE ON ARMED SERVICES, Washington, DC, Wednesday, June 13, 2007.

The committee met, pursuant to call, at 10:08 a.m., in room

2118, Rayburn House Office Building, Hon. Ike Skelton (chairman

of the committee) presiding.

OPENING STATEMENT OF HON. IKE SKELTON, A REPRESENTATIVE FROM MISSOURI, CHAIRMAN, COMMITTEE ON ARMED

SERVICES

The CHAIRMAN. Our hearing will come to order. Before I welcome

our witnesses—we are very appreciative, of course, to have them—

I wish to inform our members I was keenly disappointed that the

testimony was not furnished to us 48 hours, per our custom and

per our rule. It was furnished to us last night at 7:30. And I am

told the hangup was at Office of Management and Budget (OMB).

And I think it went well past our witnesses that this happened.

I will make an inquiry as to why that happened, and, frankly,

it is of deep concern, because those of us on the committee take a

great interest in looking at the testimony ahead of time. And we

will make proper inquiry, and I don’t want that to happen again.

So welcome, Mr. Lawless, Major General Breedlove. We thank

you for being here today to testify on recent security developments

involving China. We look forward to your testimony. It is a very,

very important subject. It has been for some time the critical significance of development in that country to our national security.

While our military resources are heavily focused in Iraq, China’s

influence has grown in Asia, as well as beyond.

To address this reality, we must proactively and effectively engage with China on multiple fronts. There are positive steps in the

last year, but progress still has to be achieved.

I am encouraged by the recent agreement between our country

and China for a defense hotline to handle security emergencies. I

am also encouraged by recent efforts by Secretary Gates, Pacific

Command (PACOM) Commander Admiral Keating, and former

Commander Bill Fallon to pursue more robust U.S-to-China military contacts. That is a major step in the right direction. Such contacts increase our understanding of China’s strategic intentions

and capabilities, and can hopefully avoid miscalculations between

the two sides. And I share the views of Secretary Gates and the

admirals on this.

I am also glad to see Secretary Gates calling on China to increase its security cooperation with the U.S. in areas of common interest, ranging from counterterrorism and non-proliferation to enVerDate 22-MAR-2001 08:26 Nov 13, 2008 Jkt 038370 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 C:\DOCS\110-61\164000.000 HAS2 PsN: HAS2
2

ergy security. There are unique opportunities for progress on these

issues. This year the preparations are accelerating for the 2008

Summer Olympics in Beijing, and both sides want to ensure there

is necessary security for that event. In addition, China’s leading

the Working Group on the Denuclearization of North Korea, and

could potentially play a constructive role with the Iranian nuclear

situation.

Moreover, China’s approach to Taiwan has recently been constructive but, given Taiwan’s upcoming elections, this will remain

a significant challenge. This year’s Department of Defense (DOD)

report on China’s military power notes a modest improvement in

China’s transparency in regards to defense policy and spending.

This is positive. Yet China is still not adequately revealing its full

defense spending, military, and modernization efforts, or strategic

intentions.

China’s official defense budget for 2007 is about $45 billion. However, the real budget is between $85 to $125 billion, continuing a

trend of double-digit increases. China also conducted a successful

antisatellite missile test back in January, leaving dangerous debris

in orbit for years. China continues its missile buildup across from

Taiwan, and its power projection capabilities are steadily increasing.

I continue to believe that China’s not necessarily destined to be

a threat to the United States. There are trends and ambiguities

that concern us, and hearings like today’s should help us understand where China is in terms of investing in advanced military

technology and advancing their military doctrine as well as tactics.

There are also Chinese limitations to acknowledge, and those

should be addressed today as well. We must also recognize that

China’s choices may well be shaped by our own actions.

So, gentlemen, I am interested in hearing your assessment of

most significant recent security developments involving China.

However, before we begin our testimony, I turn to my friend, my

colleague from California, Duncan Hunter, for any statement he

may wish to make.

STATEMENT OF HON. DUNCAN HUNTER, A REPRESENTATIVE

FROM CALIFORNIA, RANKING MEMBER, COMMITTEE ON

ARMED SERVICES

Mr. HUNTER. Thank you, Mr. Chairman, and let me join with

you in welcoming our witnesses.

You know, today as we look at China’s military capacity, the

pace and the scope of its military modernization and China’s nearand longer-term strategic aspirations in the region and around the

world, the Pentagon’s 2006 Quadrennial Defense Review report

noted that China is at a strategic crossroads with the, quote,

‘‘Greatest potential to compete militarily with the United States.’’

So while much of our attention right now is focused on the

warfighting theaters in Iraq and Afghanistan, I want to congratulate you, Mr. Chairman, for looking over the horizon, because clearly China is over the horizon; that is, it is in a period of expansion

and achieving new military capabilities, and we must be on top of

this situation in terms of understanding where China is going miliVerDate 22-MAR-2001 08:26 Nov 13, 2008 Jkt 038370 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 C:\DOCS\110-61\164000.000 HAS2 PsN: HAS2
3

tarily and assuring that we maintain American security interests

while this expansion is underway and well into the future.

You know, two events happened, Mr. Chairman, that I think we

are all aware of, that I thought were particularly important for the

American people to understand. One was the emergence of that

SHANG-class submarine. I believe it was October 26th of last year

about 80 miles east of Okinawa where the submarine emerged,

SHANG-class submarine emerged near the Kitty Hawk. Now, it

didn’t represent an immediate threat to the United States. There

were several reasons, as I understand, and without going into classified detail with respect to why it was able to be fairly close without being observed or located by the American naval forces, but I

thought it was important for the American people to focus on that

SHANG-class submarine emerging near the Kitty Hawk, because it

showed the American people what China is purchasing and building with American trade dollars.

As we move several hundreds of billions of dollars more to them

each year than they move to us, they are clearly using some of that

money, some of that American cash, to buy military equipment.

They have purchased the SOVREMMENNY-class missile destroyers from the Russians, which were designed to kill American aircraft carriers. They now have a tactical fighter production program.

They are building and fielding between 750 and 1,000 short-range

ballistic missiles each year. And so China is moving to, in my estimation, step into the superpower shoes that have been vacated by

the Soviet Union with respect to military power.

Now, the other event that I thought was a remarkable event, and

one which heralded a new era of military competition between

China and the United States, was the shootdown of a satellite in

January by China. Presumably nobody practices shooting down

their own satellites. So while the practice shot was indeed at an

aging weather satellite that China owned, this heralded, in my estimation, a new competition in space, whether we want it or not,

between the United States and China. Now, because a large portion of America’s industrial base is now moving to China, including

part of the industrial base that we rely on for security, for the

American security apparatus, I think this is a particularly crucial

hearing to hold.

So Mr. Chairman, I would ask that my written statement be accepted into the record, if you might, and I share your concern that

the United States focus appropriately on the emergence of China’s

modern military capability.

And I know that our witnesses will speak to that capability, and

I look forward to the hearing. Thank you for holding this hearing,

Mr. Chairman. Very important, while we are concentrated on Iraq

and Afghanistan, to look over the horizon. And this hearing fits

that requirement. Thank you.

The CHAIRMAN. Thank you so much, Mr. Hunter.

[The prepared statement of Mr. Hunter can be found in the Appendix on page 41.]

The CHAIRMAN. We welcome our witnesses. Secretary Lawless, a

special thanks to you for your service, and we wish you well in the

days ahead, sir. And General Breedlove, it is good for you to be

with us, and we look forward to your testimony.

4

Secretary Lawless.

STATEMENT OF HON. RICHARD P. LAWLESS, DEPUTY UNDER

SECRETARY OF DEFENSE FOR ASIAN AND PACIFIC SECURITY AFFAIRS, DEPARTMENT OF DEFENSE

Secretary LAWLESS. Yes, Mr. Chairman. I think before I begin

my oral statement I would like to take note of and apologize for

the tardy arrival of the written testimony. We will look into it and

make sure it doesn’t happen again, and get back with your staff

and explain what we discovered as to why it would have arrived

so late.

Mr. Chairman, I would like to thank you for the opportunity to

appear today before this committee and speak about recent security

developments related to the People’s Republic of China. This is a

very timely hearing, the substance of which holds great significance

to U.S. defense and security policy.

Last month the Department of Defense submitted its annual report on the Military Power of the People’s Republic of China to

Congress. Although this report is tasked to the Department of Defense and signed out to you and the other Members of Congress by

the Secretary of Defense, it is a product of intensive interagency coordination. Our report, therefore, reflects views and concerns held

broadly across the United States Government over China’s rapidly

expanding military capabilities.

This year’s report comes against the backdrop of an overall U.S.-

China relationship that continues to improve from the low point of

the April 2001 EP–3 incident. The President has stated his satisfaction that the United States and China have developed a good

constructive relationship. The U.S. policy encourages China to conduct itself as a responsible international stakeholder by participating in multilateral organizations, upholding international law, and

supporting economic integration and global stability. China benefits substantially from the existing international system, and we

encourage it to take on a greater share of responsibility for the

health and success of that system.

We continue to see some positive examples of cooperation, most

notably in the Six-Party Talks, Ambassador Negroponte’s Senior

Dialogue, and the Strategic Economic Dialogue led by Secretary

Paulson. We have also seen improvements in the military-to-military relationship, where we are moving forward with an expanded

set of exchanges among senior defense officials, naval ship visits,

military academy exchanges, and other interactions among midgrade and junior officers.

We are also making progress, we believe, in cooperation to address transnational and non-traditional security challenges, including humanitarian assistance and disaster relief. We have received

positive signals that the People’s Liberation Army (PLA) is now

ready to move forward on the defense telephone link, as earlier

mentioned, which we first proposed in 2004. We believe these exchanges and mechanisms have the potential to improve mutual understanding, reduce miscalculation, and contribute over time to the

demystification of the two parties involved.

In conducting our defense interactions, consistent with section

1201 of the National Defense Authorization Act for Fiscal Year

5

2000, we do nothing in our contacts that could knowingly enhance

the military capabilities of the China PLA. Some have argued that

these limitations, the congressionally imposed limitations, should

be changed or revised. We do not believe that is the case. There

are many areas in which we can expand our exchanges with China

that will not require, would not require revisions of the existing

statute. Our approach to these defense interactions is not only a

matter of law, it makes for sound defense policy on the part of the

United States.

So overall, while we have seen some progress in China’s willingness to cooperate on international issues of concern, we do have

questions over China’s commitment to these developments. There

remains more for China to do to curtail proliferation. We remain

concerned with China’s efforts to limit United States presence and

influence through the development of exclusionary regional forum

and frameworks that stand against the trend of greater regional cooperation in Asia. China’s use of its influence in the Shanghai Cooperation Organization, the SCO, to call for a U.S. withdrawal from

regional bases, runs counter to our efforts on the war on terrorism.

In the bilateral military relationship, we are troubled by what

appears to be an unwillingness to reciprocate the openness and

transparency we have shown to visiting People’s Republic of China

(PRC)–PLA representatives. And while we are encouraged by President Hu’s stated interests in opening a dialogue with us on nuclear

strategy, policy, and doctrine, we are concerned by an apparent reluctance on the part of the PRC Government to discuss transparently these important issues. And we have been unable to

schedule a date for this dialogue.

Both the United States and China approach this relationship realistically. Both sides are aware of the potential for conflict, particularly in the Taiwan Strait. And as we move forward, we remain

mindful of the uncertainty inherent in China’s future. That future,

to a large extent, will be determined by choices that the Chinese

leaders make. These choices span a range of issues, not the least

of which, we would suggest, is China’s growing military power.

In the Department of Defense, it is our responsibility to monitor

the development of that power. It is our job to maintain deterrence

of conflict. At present, China’s ability to sustain power at a distance remains limited. However, as the 2006 Quadrennial Defense

Review (QDR) report notes, looking into the future, quote, ‘‘China

has the greatest potential to compete militarily with the United

States and field disruptive military technologies that could, over

time, offset traditional U.S. military advantages.’’

Our report, this year’s China Military Power Report, attempts to

present the analysis in a factual, descriptive, and analytical way.

It discusses the strides that China has made, as well as the weaknesses we have identified in its military. It seeks to assess China’s

future military potential without exaggerating that potential. As

our report shows, the Chinese PLA is pursuing an ambitious, comprehensive, and long-term military modernization program, emphasizing preparations to fight and win short-duration, high-intensity

conflicts along its periphery.

The near-term focus for the PLA appears to be on preparing for

military contingencies in the Taiwan Strait. Long-term trends,

6

however, suggest that Beijing is generating capabilities to employ

military force for other regional contingencies, such as conflict over

resources or territory. China’s officially disclosed defense budget

has steadily increased over the past 15 years. In March, China announced that its defense budget for 2007 would increase some 17.8

percent over the previous year, to approximately $45 billion. However, we and others believe that significant expenditures related to

China’s military are not included in that official budget. Our best

estimate is China’s actual 2007 defense expenditures could fall in

the range of $85 billion to $125 billion. While there may be differences in estimative models inside and outside the Department of

Defense, the near universal conclusion is that the official PRC military budget significantly underreports China’s military expenditures. This discrepancy between the official budget and what China

actually spends is emblematic of our fundamental concerns over a

lack of transparency in China’s military and security affairs.

The issue is often raised by PRC scholars and foreign experts of

Chinese security affairs who are inclined to explain the PRC’s sensitivities over budget transparency; that it is for China to decide

the appropriate level of disclosure and discourse on this separate

issue—on this sensitive issue. While that may well be the case, in

the absence of adequate explanation for the capabilities which are

growing dramatically, both in pace and in scope, we, the Department of Defense, and more broadly the United States Government,

are put in a position of having to assume the most dangerous intent a capability offers.

With that context, I would like to summarize briefly some of the

specific and notable developments in this year’s report. We see in

China at least 10 varieties of ballistic missiles either deployed or

in development. Ongoing deployments include over 900 short-range

ballistic missiles in garrison opposite Taiwan. The PLA is establishing new missile bases outfitted with conventional theater-range

missiles that could support a variety of contingencies across China’s periphery. China has made substantial progress in fielding the

road-mobile solid-propellant DF–31 intercontinental range ballistic

missile (ICBM) with the deployed missile force. We expect that

China will make considerable progress in fielding the longer-range

version of this missile, the DF–31A, beginning this year.

China continues to upgrade and qualitatively modernize older

versions of its ICBM-class missiles, and it continues to modernize

its sea-based deterrent with the JL–2 submarine-launched ballistic

missile for deployment aboard a new class of ballistic submarines,

the Type–094. These changes are important. They will bring greater range, mobility, accuracy, and survivability to China’s strategic

forces, capable of striking many areas of the world, including the

continental United States.

China is building and testing second-generation nuclear-powered

submarines. In addition to the JIN-class ship, submersible, ballistic, nuclear submarine (SSBN), the PLA Navy is also performing

sea trials on a new nuclear attack submarine, the Type–093 or

SHANG-class. China accepted delivery last year of the first of two

of an eight-hull purchase—excuse me, I am sorry, I correct it—the

final two of an eight-hull purchase of Russian KILO-class diesel

electric submarines, bringing the total number of KILOs in the

7

Chinese inventory to 12. China is investing in new surface combatants to improve the PLA Navy’s capacity for anti-surface and antiair warfare.

We also see continuing interest on the part of the PLA Navy in

developing an indigenous aircraft carrier capability. Modern aircraft, such as the Russian Su–27s and the Su–30’s, and China’s

own F–10 fighter make up a growing percentage of that Air Force.

Increasingly sophisticated armaments and development of aerial

refueling capability have improved China’s offensive air capabilities. China is improving also its precision strike capability, with at

least two land-attack attack cruise missile programs underway,

and the acquisition of advanced anti-ship cruise missiles, including

the Russian-made SS–N–22/SUNBURN, SOVREMMENNYS, and

the SS–N–27B/SIZZLER for its newest KILO-class submarines, as

provided by Russia.

The PLA is making significant strides in cyber warfare, moving

from solely defending PRC networks from attack to offensive operations against adversary networks. Finally, we are seeing China’s

emergence as a growing international space power. It is investing

heavily in a broad range of military and dual-use space programs,

including reconnaissance, navigation and timing, and communications satellites, as well as its manned space program. At the same

time, as we witnessed last January, China is developing the ability

to deny others access to space through a robust and multi-dimensional counterspace program, featuring direct ascent anti-satellite

weapons, ground-based lasers and satellite communication jamming systems.

Many of these developments are relevant to a Taiwan contingency. In this context, we continue to see China’s military advances

as tilting the military balance in the Mainland’s favor. However,

some of these developments pose long-term concerns well beyond

the Taiwan Strait. These concerns are not just those of the United

States. Many aspects of China’s military programs lead other nations, both within East Asia and globally, to question China’s intentions and to adjust their own behavior.

The United States, as Secretary Gates observed in his recent

presentation in Singapore, is a Pacific power. Our interests and

network of alliances and friendships constitute a vital interest that

we will defend. But the Asia-Pacific region is not a zero-sum game.

A China that is a responsible stakeholder in the international system and an engine of economic growth is an enormously positive

prospect. China’s continued development and integration into the

international system as a responsible stakeholder has long been,

and remains, a central tenet of our China policy and a core U.S.

interest. In that context, we have submitted this year to you, in

May, our annual China Military Power Report. Thank you, sir.

The CHAIRMAN. Mr. Secretary, thank you very much.

[The prepared statement of Secretary Lawless can be found in

the Appendix on page 48.]

The CHAIRMAN. As I understand it, General Breedlove, you do

not have a statement. Am I correct?

General BREEDLOVE. That is correct, Mr. Chairman. I will join

the Secretary’s statement.

8

The CHAIRMAN. Thank you. And you will be available for questions?

General BREEDLOVE. Yes, sir.

The CHAIRMAN. Okay. Thank you very much.

Let me ask just one question before I call on my colleagues. You

made reference, Mr. Secretary, to the military-to-military, and as

I understand it there have been some military-to-military war college-level exchanges. Would an increase in that or full attendance

at respective war colleges be of benefit to our country? Should we

pursue that more fully?

Secretary LAWLESS. Sir, this has probably been one of the most

successful areas of exchanging communication. The answer to your

question is ‘‘yes.’’ In every case that offer has been on the table,

and in every case what we have attempted to do is make absolutely

sure that it wasn’t a one-way street, and that any advantage that

accrues to the People’s Republic of China also accrues to us.

In other words, we would like to have not only normally transparency, but we need to have reciprocity. So one of the issues has

been getting opportunities to attend their teaching institutions,

military teaching institutions, as we have offered them access to

ours.

The CHAIRMAN. Is there a major problem within our military, as

well as within our student body, to speak their language?

Secretary LAWLESS. I do not believe there is. We have some very

specific information on that, on language capabilities, to offer to

you. Heretofore, there has not been a problem. The people attending our institutions generally come reasonably well prepared in the

English language, and I think we take great care to make sure that

the folks that we put into their institutions have some level of

Mandarin, including discussions beforehand.

The CHAIRMAN. Thank you very much. Mr. Jones.

Mr. JONES. Mr. Chairman, thank you.

Mr. Secretary, I want to pick up on the line of what Ranking

Member Hunter was—over here, sir.

Secretary LAWLESS. I am sorry.

Mr. JONES. I am to the left, but on most issues I am to the right.

But anyway, the trade deficit with China seems to be that we are

every month and every year more and more in a hole as it relates

to the trade deficit.

From your comments, and I tried to listen very carefully, it does

appear that China is taking advantage of our economic woes and

our trade policies of sending more jobs overseas and more dollars

overseas. With the report you gave, it sounded like to me that the

Chinese are obviously putting major bucks into investing in their

military equipment needs.

At what point would you say—do we have 4, 5 years; do we have

10 years; do we have less?—that China is going to be where they

are equal to this country as it relates to their ability with their

Navy and Air Force?

Secretary LAWLESS. I think first of all, the one overarching concern that we have is that this is not the same type, qualitatively

or quantitatively, at this point of challenge that we faced with the

former Soviet Union. China, as a consequence of its economic

growth, is developing a very broad, very successful, very advanced

9

defense industrial base. That industrial base allows them to do

many things at the same time. It not only provides a cash flow, but

it provides a capability that is multitiered, and allows them to undertake several programs at the same time.

So a concern that exists here is that as China continues to grow

economically, it will not only have more resources to allocate to the

purchase of equipment, the underlying industrial base will consequently become much more sophisticated and be capable of generating the quality of product that is required for military modernization.

Additionally, as the trade imbalance continues and the Chinese

foreign exchange reserves continue to build, they have more cash

to spend with the direct purchase of sophisticated systems and

technology. The acquisitions from Russia represent multibillion-dollar purchases year after year. And these are very important that

we track.

Coming back, finally, to your question to us, as to when we think

we will be challenged, I believe that in some areas we already

sense that that challenge is already in front of us, particularly in

some of the capabilities we have seen to develop.

The other issue is that we think China has done a very good job

of assessing where it can develop asymmetric capabilities. In other

words, this is not a head-to-head situation. China is not necessarily

interested in the ability to stand toe to toe and go into a major conflict with the United States. That said, they can obviously see that

we have security commitments that require us to be in certain locations and have certain sustained capabilities. Against that requirement that we have to defend our interests and the interests of our

allies and partners, they are very capable of judging where asymmetric opportunities exist, and concentrating themselves on asymmetric opportunities. I think this year’s China Military Power Report addresses that issue. And it is an issue that we will continue

to follow in the coming years.

Mr. JONES. Mr. Chairman, just one other point, if I have time.

Has my time expired?

The CHAIRMAN. No, you are good.

Mr. JONES. I think you are the expert, and this is where many

people, including myself—and I represent the Third District, Camp

Lejeune, Seymour Johnson Air Force Base—that the Chinese are

not going to be confronting us probably militarily, but if they continue to grow and expand their military power, then they can dominate Asia, Southeast Asia.

The suggestion I want to fully understand is that at some point

do you believe that this country is going to have to make a decision

that this is of such importance that we not show military weakness, that we are going to have to really ramp up the investments?

And the reason I mention that is because we had Secretary Wynne

before this committee a few weeks ago, and I forgot the general

that was there with him, but talking about the fact that they are

having to reprioritize some of their programs and move some up,

move some around; and because of this budget situation and this

policing the world, that we really are not giving the full commitment that maybe this country needs to give, to say that we cannot

continue to allow China to continue to grow and expand. And we

10

would be put at a disadvantage that we might not be able to catch

up.

Do you see—would you recommend to the Congress that sometime, sooner rather than later, that we need to understand that we

cannot continue to fall back and become weaker in the eyes of the

Chinese?

Secretary LAWLESS. I think that my response would have really

two components to it. The first is I think we have done a really

good job of tracking and predicting where they are headed capability-wise. The broader those capabilities grow, and the more sophisticated those capabilities become vis-a-vis the systems we have already deployed, the challenge for predicting intent and the use of

those capabilities becomes exponentially more difficult. You just

simply have a more difficult time predicting how a given capability

is going to be used, or, for that matter, why that capability was

deemed essential by the Chinese leadership to spend money on and

bring it into their inventory. This goes to the issue of transparency.

I think if we had a better dialogue with them, a true dialogue

of depth, coming back again to my remarks on the strategic nuclear

dialogue, where we have several times proposed to them this is an

essential area of discussion, and really gotten quite an uneven response, if we had the quality of dialogue that we are seeking with

them we might be able to constrain and put some of those issues

of intent to bed. Not being able to, we must plan and prepare for

the worst.

I think our services, reference the comments that you just referred to, are making an attempt to anticipate the net result of the

capabilities the Chinese are attempting to put in place. But I think

it is an area of intense concern, and we are giving it due attention

from the highest levels of the Department of Defense and the interagency discussion.

I want to make one more point. In my oral testimony I mentioned the fact that the China Military Power Report had been coordinated across many elements of the United States Government,

particularly the intelligence services and other policymaking elements of the government. There is a process now underway to assess, not just within the Department of Defense, but much more

broadly within the entire executive branch, where we stand with

China on these security issues.

So this is something that not just the Department of Defense is

seized with, but all elements of the government, including the

White House. And so we are giving it sufficient attention, and I believe the U.S. Government as a whole is abreast of the problem and

attempting to make decisions based on our assessment of where

this is headed.

Mr. JONES. Thank you, Mr. Chairman.

The CHAIRMAN. Before I call on Dr. Snyder, let me ask you regarding your comments of asymmetric preparation that China is

making. You said there are special forces. Could you give us a

short, short version of what they are doing?

Secretary LAWLESS. Yes. I think that both of you gentlemen have

mentioned, others have mentioned the January direct ascent antisatellite (ASAT) test. Space and counterspace is obviously an area

in which China perceives the ability to establish itself with an

11

asymmetric capability. And it does so for the simple reason that it

is obvious that we are very dependent on our space-based resources, communications, intelligence resources that we have in

space.

Again, I think that China correctly perceives that this is an area

where asymmetric capabilities will give it the ability to disrupt and

delay and frustrate our abilities to operate. It is a major issue for

us, and one that is getting a lot of attention.

The CHAIRMAN. Dr. Snyder.

Dr. SNYDER. Thank you, Mr. Chairman. Gentlemen, thank you

for being here.

Mr. Secretary, I had several questions. First, with regard to the

direction that China seems to be going both economically and militarily, they clearly are a competitor of ours, economically, that is

not going to go away. Is that a fair statement?

Secretary LAWLESS. Certainly not going to go away, yes.

Dr. SNYDER. They have hundreds of millions of people that are

still in poverty, that are very envious of what is going on in their

coasts. And so somehow I think if we as a Congress think that we

can present to the American people we have a simple plan to take

us back to the bygone days when China was a weakened Third

World country, those days are gone and past. And in my lifetime

I think we will see the Chinese economy pass ours in terms of gross

domestic product.

So the second part of the question I wanted to ask you, you have

a very impressive career and background. I suspect you do this as

an exercise. If you put yourself at the position of working in the

civilian side of the Chinese military, are they doing anything that

you would not recommend to the Chinese leadership that they do?

That they would be doing?

Secretary LAWLESS. That is a good question. To the extent that

we understand what it is that they are doing——

Dr. SNYDER. Right.

Secretary LAWLESS [continuing]. I think that they are doing an

incredible amount of things right. And I think that comes back to

my earlier comment about the sophistication of the strategies and

the scope of the modernization and transformation that is taking

place. All too often I think we focus too much on raw capabilities,

be it an anti-satellite ballistic missile, be it anti-access systems,

when in fact we should be focusing much more broadly. We have

a situation that is now in probably its tenth year of comprehensive

transformation of the entire national security and military structure. That means doctrine, that means manpower levies——

Dr. SNYDER. Which, as an experienced CIA and military person,

you have known for some time that they have needed desperately

to do in terms of their modernization.

Secretary LAWLESS. That is right. But once the reckoning was

made, what we are seeing is a very sophisticated wholesale transformation of their military.

Dr. SNYDER. Right.

I want to ask one very specific question. I quickly read your

statement here which we received this morning, and it seems to be

a very thoughtful and balanced discussion. I appreciate the depth

of thought in it. What role does the—I think it is called the U.S.

12

China and Economic Review—Security and Economic Review Commission play? Are you familiar with that body——

Secretary LAWLESS. We are.

Dr. SNYDER [continuing]. That the Congress set up? I have always been very skeptical. I don’t think we have gotten a presentation from them that would reflect the kind of thoughtfulness that

you have presented this morning. Do they help shape policy for the

Administration?

Secretary LAWLESS. Sir, I don’t believe they shape policy as much

as they perhaps inform it. We have had a pretty robust relationship with this particular body over the past several years. I have

testified in front of it. In fact, I believe this Friday one of my China

team chiefs will be testifying on the energy issue. As you know,

their mandate is much broader than just pure security and defense

issues. But I have actually been quite impressed by the quality of

the questions that are put to us and the quality of the published

material that they issue under the imprimatur, I believe, of Congress. And that material is actually pretty widely read, including

by our Chinese friends.

So our interaction with that particular group has been quite positive, and we find them quite incisive in the questions they ask us.

They task us a lot.

Dr. SNYDER. You have had a different experience than I have. I

want to ask about the Internet. You talked about the need for more

transparency in their military. Two aspects of the Internet. First

of all, they are abysmally not transparent with regard to their own

population in terms of the great restrictions on the Internet. How

do you see that going ahead in the future? How can a country modernize, as you pointed out, quite dramatically in a lot of different

ways, how can they do that and have such repressive policies with

respect to access, to things internationally?

And the second component I don’t think you mentioned in your

written statement. You mentioned asymmetric attacks. You are an

Internet guy. Where do you see the Chinese capability with regard

to cyber attacks or potential?

Secretary LAWLESS. Thank you. Turning to the last question

first, because I think it is relevant to both pieces of what you have

asked about, whatever their internal Internet control practices may

be, they have developed a very sophisticated, broadly based capability to degrade and attack and degrade our computer systems and

our Internet systems. I mean the fact that computer access warfare

and the things that that allows you—disruptive things that that allows you to do to an opponent are well appreciated by the Chinese.

And they spend a lot of time figuring out how to disrupt our networks, how to both penetrate networks in terms of gleaning or

gaining information that is protected, as well as computer network

attack programs which would allow them to shut down critical systems at times of contingency. So first of all, the capability is there.

They are growing it. They see it as a major component of their

asymmetric warfare capability.

Coming to the first question you asked, I believe that while it

may not be possible for them to totally control Internet activity in

China, it seems to me they are doing a very good job. And we have

not really seen that that capability to control the Internet within

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China has really resulted in any net loss of capability. If anything,

their determination to familiarize themselves and dominate to

some degree the Internet capabilities not only of China and the region, but the world, provide them with a growing and very impressive capability that we are very mindful of and are spending a lot

of time watching.

General BREEDLOVE. Sir, I would just add, without being redundant, that the Secretary mentioned that they are very keen on

their asymmetric ability to address our military power. And this is

one of those areas that they talk about, specifically in their white

papers and others, when they talk about warfare in an environment of informatization. That is a word hard for me to pronounce,

but obviously it means something to them. And so I would see this

as a key area where they would look to see our vulnerability, since

we are so netcentric in our warfare. And it is a concern to us.

The CHAIRMAN. Mr. Hunter.

Mr. HUNTER. Thank you, Mr. Chairman. And again thank you

for holding the hearing. And gentlemen, excuse me for having to

step out during a part of your opening statement.

But it is fairly clear that China is transforming their military,

Mr. Secretary, as you have just stated. In your opinion, what

should we be doing with our own military capability to adapt to a

transformed Chinese military?

Secretary LAWLESS. I think that our ability to plan and adjust

ourselves to that evolving capability in the first instance results or

leads us back to good intelligence. I am concerned that perhaps we

don’t have the quality and the breadth of intelligence focused on

this issue that we perhaps have had in the past. It certainly

doesn’t meet the standards of what we were able to apply to the

Soviet Union as it emerged.

And I think that additionally we need, I think, to adopt a much

more comprehensive approach within the Department of Defense

concerning our management of this particular issue. Again, this is

a dynamic problem. It is a problem in which—it is an issue where

we continue to be surprised from time to time with regard to the

speed with which a given system is deployed. And therefore, I

think there is a real incumbent burden on us to be very fast on our

feet and be able to adjust to the capabilities that we see that are

being fielded.

Mr. HUNTER. Let me get to some specific systems here. You have

a lot of short-range ballistic missiles being produced, an inventory

of between, as I understand, 750 and 1,000 in place. A lot of them

are across from the Taiwan Straits. Do you see any changes we

need to make or any emphasis we need to make with respect to

missile defense as a result of China’s emerging missile program?

Secretary LAWLESS. I think that is an ongoing calculation. In

fact, I specifically mentioned, I believe, that we can count no fewer

than ten systems either deployed or under development. The emphasis there is on the word at least. I think that these are challenges that are being presented to our ballistic missile programs.

I think some of those challenges were addressed by the director of

that program in some recent testimony and interaction with Congress. It is an issue that I defer to our Missile Defense Agency to

address.

14

But suffice to say on the policy side of the equation, we are doing

a lot of discussion within the region with our partners and allies

about the threat that those missiles pose. And I would suggest that

this year’s Military Power Report discusses not only the threat visa-vis Taiwan and how we believe that is changing the status quo

and is creating a new dynamic there, we also address the growing

capabilities of the regional—that is, the medium-range ballistic

missile (MRBM) and the intermediate-range ballistic missile

(IRBM) deployments that are being made, a subject of course that

is addressed in much greater detail in the classified annex to the

report.

Mr. HUNTER. Let me ask you just one last question, Mr. Chairman. You know, China is cheating on trade right now. They are devaluing their currency by some 40 percent. That has been the subject of legislation by myself and Mr. Ryan and a number of members, in fact 178 members of the House last year. They are buying

ships and planes and military equipment with American trade dollars. And a large portion of the American defense industrial base

is moving to China. Do you see a problem there?

Secretary LAWLESS. Sir, I think we see a huge issue here. Again,

some comments that were perhaps made while you were out of the

room, the underlying defense industrial capacity that China is

building gives it terrific surge capability. When you are able to

build a particular combatant not in one shipyard, but in four or

five, and you are capable of undertaking—again, sophisticated industrial base—many programs, parallel programs at the same

time, you have great flexibility to surge that capacity. And I think

that is an issue that we are all deeply concerned with. And this

comes to the heart of the economic modernization of China.

Mr. HUNTER. And I think that the ability of the Chinese to translate this massive commercial industrial capability, especially the

ship construction capability of China, to translate that into a warship construction capability with respect to surface vessels and submarines would very much threaten our ability to maintain a Naval

dominance in the region simply in terms of platforms that they can

produce, and with the new sophistication that attends many of

their programs. I think you see the American shipbuilding programs being quickly outstripped by China simply by translating or

transferring their domestic capabilities into a military production

capability. Do you agree with that?

Secretary LAWLESS. I do. As a matter of fact, we were just in the

Far East last week. One of the interesting commentaries that was

then being discussed was the fact that Japan and the Republic of

Korea, which lead the world in shipbuilding capacity and capability, are now readjusting their projections, believing that instead of

China being a full head-to-head competitor, top-ranked competitor

vis-a`-vis those two shipbuilding powers, instead of it being 15 years

out it is more like to 5 to 6 years out. So you have the ability of

China to introduce and, frankly, deploy capabilities on the commercial side of the equation, shipbuilding being a perfect example,

which even their competitors had heretofore underestimated or

misestimated. So I think that goes to the heart of your question.

Mr. HUNTER. Okay. And just to close, Mr. Chairman, I think it

is incumbent upon us to ensure that China stops cheating on trade.

15

This 40 percent devaluation is dealing a death blow to large portions of our industrial base, and motivating many corporations and

many businesses to move their production to China. And in the

end, the United States may end up seeing massive pieces of the

U.S. industrial base turn to making equipment that is used against

us in some type of a conflict in the future.

I think it is important for us, as Armed Services members, to in

this case really concentrate and really focus on this problem of this

transfer of the U.S. industrial base to mainland China. Thank you,

Mr. Chairman.

The CHAIRMAN. Thank you. Ms. Davis.

Mrs. DAVIS OF CALIFORNIA. Thank you, Mr. Chairman. Secretary,

nice to have you here. Thank you, General, as well.

I want to take perhaps the flip side of that discussion and just

bring your attention to the article in Atlantic Monthly. I don’t know

if you saw that.

Secretary LAWLESS. I did. The James Fallows article?

Mrs. DAVIS OF CALIFORNIA. The ‘‘Superiority Complex.’’ actually,

this one is by Keir Lieber and Daryl Press.

Secretary LAWLESS. Oh, I am sorry. Okay.

Mrs. DAVIS OF CALIFORNIA. Perhaps that is different. It’s called

‘‘Superiority Complex,’’ and it discusses why America’s growing nuclear capabilities may make war with China more likely. According

to the authors, a future conflict over Taiwan could become the

starting point of a nuclear war between China and the U.S. And

it goes on to discuss the nuclear imbalance and a number of the

steps that the U.S. has taken of late. Perhaps if you haven’t read

it, then I don’t want to ask you to fairly respond to it. But it suggests that some of the imbalance would play out across the globe

as well. And I wondered if you have any insights into China’s view

of this new reality.

Secretary LAWLESS. Well, that is an interesting comment in that,

as I mentioned briefly, we have had on the table an offer at the

highest levels, this is a Presidential discussion, this is a Secretary—that Secretary Rumsfeld had when he was in China in October of 2005. We have consistently told the People’s Republic of

China that we think it is appropriate that we begin a dialogue on

nuclear strategies and better understand why they are doing what

they are doing. Because what is really happening here is, while the

United States capabilities are remaining essentially constant, we

have a significant improvement in China’s ability to target the

United States or to target us regionally, but specifically the continental United States.

This opens a whole range of issues for us. And so what we have

said to them is we really need to sit down and talk about that. The

welcome mat is out, the invitation has been made, and here we are

two-plus years later since we began this dialogue, waiting for them

to answer the mail. We are going to continue to press at every level

for this dialogue to begin for the very reasons that you state. I

think such a dialogue is critical. This is not an arms control regime

that we are attempting to put in place, it is a discussion. Because

we need to understand why they are doing what they are doing,

which creates an inherently more or greater instability, we believe,

16

in the nuclear relationship between the United States and the People’s Republic of China. So again, it is a dialogue.

Mrs. DAVIS OF CALIFORNIA. Do you acknowledge, though, and accept the fact that perhaps there are steps that we are taking as

well that would make them more nervous on this front?

Secretary LAWLESS. If that is true, they need to tell us that. The

absence of a dialogue cripples any discussion and knocks it over to

a track two or track three exchange; for example, the types of exchanges that you are talking about in Atlantic Monthly. We would

rather have that discussion behind closed doors, face to face with

the people that are most concerned, in this case the military strategic planners and the military leadership of China. To date, they

have not taken us up on that invitation. If they would, I think both

countries would be far better off.

Mrs. DAVIS OF CALIFORNIA. General, did you want to comment?

General BREEDLOVE. I would say this is another example of what

the Secretary talked about earlier, a place where opaqueness

doesn’t help. We watched the Chinese developing their road-mobile

ICBMs. We watched them continue to upgrade their static ICBMs.

Now we see them in a sea-launch ballistic missile program. So we

see indications of intent and other things, but we continue to try

to engage, as the Secretary has said, in dialogue at a very high

level, and our offers go unanswered.

Mrs. DAVIS OF CALIFORNIA. I certainly appreciate that. I think

what is important sometimes is when articles like this are out in

the public’s face, it is important in some ways to acknowledge that

those issues are out there. It is a fairly, I guess, intense article in

that regard, and I was interested in giving you that opportunity to

respond. And I appreciate that.

Thank you, Mr. Chairman. I wanted to turn, and I think my time

is about up, but perhaps someone else may speak about the interests of Members of Congress, certainly, sending a letter to the Chinese Government regarding the concerns and atrocities in Darfur.

And perhaps you will be able to speak about that as well, and what

in fact we are doing to try and mitigate that situation as well, in

cooperation with them. Thank you very much.

The CHAIRMAN. Thank the gentlelady. The gentleman from

North Carolina, Mr. Hayes.

Mr. HAYES. Thank you, Mr. Chairman, and thank you very much

for your interest in and knowledge of the China situation. And

thank the witnesses for being here today.

Two questions in particular. General Breedlove, first a tactical

question, and then I would like to come back to you, Secretary

Lawless, for a trade follow-up.

In your testimony there is a lot of discussion about the capabilities of the Chinese Air Force, particularly combined with the

Flanker and the Sukhoi and their own production. How would you

assess our response or our own development, given stealth, given

other capabilities? Do we need to maybe think a little bit more—

again looking at your testimony as a whole—toward missile defense

as a protection against China just in a general sense?

General BREEDLOVE. Sir, I will try to track two answers in what

you have asked.

Mr. HAYES. I don’t see much air-to-air coming.

17

General BREEDLOVE. Yes, sir. Clearly, we share the concern that

Mr. Jones talked about earlier, about the ambitious programs to

develop these capabilities such as the aircraft and others. And another indicator along those lines is you can have the more sophisticated weaponry, but we need to be watching their training, because

they have to train to get the capabilities. And, unfortunately, now

we do begin to see more sophisticated training in their capabilities,

which might lend some intent to the more ambitious and the better

equipment that they are buying.

As far as missile capability, sir, I would have to defer to what

the Secretary said earlier. I am a little ill-prepared to answer and

would defer to our missile defense folks as far as that tack goes.

Mr. HAYES. The $45 billion significant increase in the Chinese

defense budget, based on your comments you just made, would you

say that a lot of that is going into more intensive, more extensive

training, particularly for pilots and other members of their military?

General BREEDLOVE. Sir, I can’t comment on the amount of

money that is being spent on training, but what we do see is more

sophisticated training, trying to train in a joined environment, trying to address the kind of skills to share information and to be

more netcentric and combined in their arms approach; and those

are clearly indications of a more sophisticated approach to training,

as opposed to a very disparate army, navy, air force-type training

which has been their past.

Mr. HAYES. Thank you.

Secretary Lawless, Congressman Hunter referred to trade issues,

and the Berry Amendment for some 42 years has been a trade defense mechanism. Looking forward, obviously, the Chinese are a

tremendous customer of us and other folks in the West. By the

same token, we are a much larger customer of them. Do you see

this balance tipping and at what point?

You talk about the ship-building industry—it went from 15 years

to 5—the dynamic changes if we allow our industrial defense

base—and you referred to the importance of theirs—to deteriorate

to the point where it generates jobs and dollars so that we can compete financially with them. If you can comment on that and also

on how important it is again to maintain the equity in the trade

agreements, which has not been the case so far.

Secretary LAWLESS. I think what I would like to do is answer

that by coming back to the issue of the industrial base. And it is

true that many of our exports to China comprise—although while

there are some components of agricultural products or non-finished

products, a huge portion of what we sell to China is, of course, in

very high-quality, finished goods. Airliners, for example, or commercial aircraft.

China has made a decision to develop a competitive aircraft industry. Airbus, in a recent agreement with them in return for their

agreement to buy some of the Airbus aircraft, has agreed to establish a full production facility in Tianjin, I believe; and that is supposed to be up cranking out A320-level aircraft within three or four

years.

Obviously, there is going to be a transfer of technology and a

transfer of that knowledge base to China as a direct consequence

18

of that decision by Airbus to invest that facility in China and operate that facility in China. So I am concerned that China, in taking

a very long look and a very long perspective on everything that is

being done, has decided that it will acquire every single piece of advanced manufacturing and the full range and compete with us

across the full range of all products, no matter how sophisticated.

Mr. HAYES. Quick question—thank you—if I may, Mr. Chairman.

Just speak very briefly about China’s competitiveness in the petroleum market and how that affects us in Nigeria and other

places.

Secretary LAWLESS. I think, in the first instance, it is broader

than just petroleum. It is the entire energy market and China’s requirement and its ability to look down the road and recognize how

incredibly dependent China will become—is becoming already—on

imported energy and on imported raw materials.

This isn’t just about oil. It is about uranium to fuel all of the reactors that they are going to build for commercial power. It is

about access to raw materials, be it coking coal, be it iron ore.

Mr. HAYES. Thank you very much. I don’t want to impose on the

chairman’s kind nature here.

The CHAIRMAN. Mr. Larsen.

Mr. LARSEN. Secretary Lawless, General Breedlove, thank you

for coming to help us out this morning.

First off, I would like to ask, Mr. Secretary, if you can make

some folks available for us maybe next month before we go into recess. A few of us are heading to China later August; and if we are

able to get the benefit of some of your expertise from some of your

staff before we headed over there, we would very much appreciate

that on a variety of issues.

I won’t put you on the spot to answer now but certainly want to

look forward to that.

It is interesting, that point you made earlier about. I think you

said that the need for the Department of Defense—a more comprehensive approach to the management of issues related to China.

Secretary Paulson has been assigned the strategic economic dialogue. Secretary Negroponte for the State Department is coordinating the diplomatic side of things; and I have always been a little

bit struck by DOD’s approach to China, which sometimes is not in

contradiction but is different than even within DOD, getting different messages as well about China. So I would encourage you to

follow up on if that was just an idea thinking out loud about the

DOD taking a more comprehensive approach and sort of sorting out

the policy.

The reason I ask and I want to—this is a prelude. Because there

are some questions that come up about missile defense and whether or not we need to be concerned about China and missile defense,

and it is interesting. Because Secretary Gates at the Shangri-La

conference, in an answer to a question about China missile defense

and Japan and missile defense and Moscow and Russia, was asked

whether we have considered a similar offer of cooperation of missile

defense to the Chinese. He said, ‘‘I haven’t thought about it. I think

if the Chinese had expressed an interest in it, we would take it seriously.’’

19

That is on line—on page two of four of the transcript from the

Shangri-La conference.

And, again, I don’t know if he was thinking out loud or not. But

if we are—you know, if we are headed that way or we are open to

that, it runs counter to some of the questions that we have been

asked here about missile defense in China. So it would be nice for

everyone to get on the same page on that issue.

I think that as well trying to understand what you all think the

appropriate balance between—in this relationship, especially the

military relationship, would be important for us; and I would like

to have your opinion if you think China is all about us, that is,

China does things because of what the U.S. does and we seem to

be—we seem to take an approach here that if China is investing

in X, Y or Z then we necessarily need to invest in X, Y or Z, and

this will get to China’s intentions.

Do you think the PLA is more concerned about the U.S. any

more than they are with their own presence in the Asia Pacific region? Do they get up in the morning and say what is the U.S. doing

and how do we counteract that? Or are they looking more regionally and then, as a result, we need to then have a policy that responds more to how they see their region vis-a-vis how we see the

region.

I know it is a complex question, but it seems to be very at the

crux of how we approach China on a military-to-military, defenseto-defense relationship.

Secretary LAWLESS. I think I understand the nature of the question.

You asked, is China all about us? I think China is all about

China. And that means that China is all about what it has to do

in a whole range of relationships: its relationship with Japan, its

future relationship with the Korean Peninsula, its relationship

with southeast Asia, the Strait of Malacca. These are issues which

China is dealing with and spending a lot of time thinking about.

We have security commitments in the region. We have many bilateral commitments, be it with Australia, be it with the Philippines, treaty relationships. And we have partnerships. We have

strategic a framework agreement that has been put in place, recently, with Singapore.

I think what we have to do is figure out where China is coming

from and how they are going at each of these individual relationships, because each of these partners turns to us and says what are

we going to do about this or how are we going to adjust ourselves

to compensate for this situation that has evolved.

One of the issues that I forgot to mention earlier, which really

underlines what we had to do——

Mr. LARSEN. If I could, it seems in my mind it makes the case

then for reacting appropriately and not overreacting and engaging

China on any number of these issues.

Secretary LAWLESS. Yes, sir. That is correct.

The CHAIRMAN. Thank the gentleman.

Mr. Randy Forbes.

Mr. FORBES. Mr. Chairman, thank you for your willingness to

hold this hearing; and, gentlemen, thank you for being here today.

I only have five minutes. I have a couple of comments and want

20

to give you a few questions to give us an answer back for the

record in one answer today.

First of all, we know that China has a huge checkbook that they

have shown a willingness to use in the United States to affect our

policies, and they have been very effective in this.

I was glad to hear you and agree with you when you talked

about them developing asymmetric opportunities. Many of the witnesses we have had over the last several years have ignored the

asymmetrical direction they are going. Also, your comments about

they are being competitive with us in several areas.

The one I disagree with you, though, is our ability in tracking

and predicting where their capabilities are going. Over the years,

as we have read reports from DOD and we have had testimony, we

have underestimated their capabilities and their ultimate goals

time and again. We missed them on subs; we missed them on carriers; we missed them on blue-water navy. When we look at negotiations, we are losing those negotiations in intellectual property

rights, human rights, currency issue, access for our business, trade

deficits. They are the number one espionage problem we have in

the country, according to the Attorney General.

Three questions I would like to throw out for you to respond to

us at some date is this:

Given what we know with our history, what would be the value

to the United States of working with the Chinese to develop an aircraft carrier, as Admiral Keating has previously suggested, which

would clearly extend to PRC’s capabilities beyond just regional affairs?

It baffles me. I hope with you can give us some answers on it.

Second, the attorney general has testified on two occasions before

Congress that China represents the number one espionage threat

against the United States. As you know, Chinese military strategy

strongly emphasizes deception at the strategic, operational, technical levels. How responsive can we really expect the Chinese to be

when we call for transparency with regard to their military modernization?

Third thing is how rapidly and how effectively are they using

modeling and simulation to improve their training and to bring

about jointness in their operations and between their services and

also with their allies?

And then the question if you could answer for me today is this

one: We talked about their cybercapabilities. But to what extent

are the Chinese cyberwarfare units attacking computer systems in

the United States currently?

Secretary LAWLESS. Well, first of all, I commend you on your

overall presentation. There is not much there that I am going to

disagree with, even when you get the response to the questions.

I would suggest, however, that in the response to the questions

you are probably going to have much more clarity on what it was

that Admiral Keating said and did not say.

Mr. FORBES. That is what we are looking for. We only see what

we get in print. We are going to meet with him. That is why I

asked—why it said.

Secretary LAWLESS. Past masters at spinning comments. That is

the Chinese, not Admiral Keating.

21

I think that what we really want to do is we would love to have

that discussion about cyberwarfare. There is a major treatment of

that issue in the classified annex this year. It is probably an area

where we, because of the nature of things that we know and understand with some degree of detail, I would rather defer a discussion

to a classified venue. It is a very important area, and I cannot

stress how diligently we are following this and attempting to understand what the capabilities are and the intent is. But it is a

very important discussion, and we would love to have that with you

in a classified.

Mr. FORBES. We look forward to doing that.

The last thing I would suggest for your review in looking at is

this modeling and simulation aspect of it.

We have seen some very sophisticated programs that they are

coming out with; and, as you know, one of the weaknesses we have

seen with them has been their jointness and their ability to bring

that about. It looks like to us they may be using some sophisticated

modeling simulators the same way we have to try to bring about

that jointness and jointness with allies and hope you can give us

some feedback on that in a written form.

Mr. Chairman, thank you, and I yield back.

The CHAIRMAN. The gentleman from Georgia, Mr. Johnson.

Mr. JOHNSON. Thank you, Mr. Chairman.

It seems certainly that dialogue with China to try to minimize

misunderstandings and misapprehensions, if there might be any,

would be appropriate; and it take two to tango. So it seems like we

have been reaching out and we have not been getting the kind of

feedback or response back that we would—that we would like; and,

meanwhile, the continued investment of China in its military infrastructure continues to escalate.

So the question becomes what does the United States of America

do in response? And it can certainly embark—certainly intelligence

is important in our ability to respond appropriately. But respond

we must.

So I am concerned—in your statement, Secretary Lawless, you

say that, on page three, at present, China’s ability to sustain power

at a distance remains limited. So I am concerned about our—I am

concerned about, you know, helping China acquire aircraft carriers.

I am concerned. I wonder why would that be a topic of discussion?

Why would we think that that would be appropriate to do that?

What kind of strategy are we—I mean, what underlies the strategy

for that proposal? I wonder about that.

And I am also wanting to know from you a little bit more about

the aircraft carriers that China has now. I thought I saw something in the statement and heard you say something, but I can’t

find it. So if you would tell me a little bit about that, I would appreciate it.

Secretary LAWLESS. Obviously, in the one request for a written

response, we will be discussing the aircraft carriers exchange that

Admiral Keating recently had. It was not a proposal by Admiral

Keating to assist them in any regard with relation to aircraft carriers. It was an observation on his part the way we have gone back

and deconstructed it with him. It was an observation on his part

that if that is your intention to build a blue-water navy and to

22

have a carrier battle group and have a carrier as the center of that

battle group, you may be underestimating by a long shot your ability to do that and you are underestimating the complexity required

to field such a capability.

I think it was more of a suggestion that they needed to understand what it is they were taking on and how complicated and costly and what an actual challenge that would be to them. That is my

understanding of the dialogue.

To me, it makes absolutely no sense whatsoever to have a discussion with the Chinese beyond that, except that if they are going to

build such a capability we would like to understand what the intent of it is. Is the intent to project power? Is the intent to——

Mr. JOHNSON. What could be the intent other than to project

power in the long range?

Secretary LAWLESS. There is a number of explanations for that

aircraft carrier being used or being modernized or whatever use

they put to that particular ship that has been the focus of a lot of

attention to the Viog. That was, as I believe, it was a Kuznetsov

class carrier in the Russian navy—excuse me, in the navy of the

former Soviet Union. So it was really the peak of the Soviet

Union’s building program to equip themselves with a true aircraft

carrier. So there is a huge amount of attention focused on that.

I think the Chinese could actually be looking at that ship for purposes of developing the ability to target U.S. aircraft carriers. It is

a very reasonable and logical conclusion as to why they are spending so much time and attention on that vessel as they are.

As a closing comment, let me just say in every recent interaction

that our people have had, senior military leaders and civilian officials, it is very clear that the Chinese intend—it is their intention

over the long term to build a blue-water navy and to have at the

center of that blue-water navy a carrier battle group just as we

have.

So they definitely are moving in that direction, and they have

made it pretty clear to us that is where they are going. We need

to think about that, and we need to think hard about that.

The CHAIRMAN. Thank the gentleman.

Mr. Franks.

Mr. FRANKS. Thank you, Mr. Chairman.

Mr. Chairman, I have a friend here with me this morning. General Philip Breedlove is a precious, beloved friend and also the

former commander of Luke Air Force Base; and he happens to be

pretty unique in another way. I have only been in a full 360-degree

loop in an F–16 one time, and he was at the controls. So there is

a just a lot of respect and admiration for this man. I believe him

to be a true champion of human freedom; and I think as long as

we have generals, officers like him in our Air Force that there is

still a lot of hope for the future for mankind.

So I hope I have put that the right way, but I really wanted to

welcome you, General, to be here, and I can’t even begin to apologize for missing your opening comments and the Secretary’s here

this morning. It was unavoidable, to say the least.

But I, again, welcome both of you here.

I know that we have had a lot of discussion related to China’s

asymmetric capability, especially some of their adventures in ASAT

23

in the space directions. I will tell you, not to involve you in the interesting political machinations of this committee, but we just came

through the process of the DOD authorization bill, and we debated

here in this committee this Space Test Bed, and, unfortunately,

that has been zeroed out for the time being, and I am very concerned about that.

And without involving you in the political machinations any

more than is necessary, given China’s superior numbers and their

military computer technology or technologists, as it were, and people that work on their military computer capability, it seems like

that could be a fairly vulnerable area for us, and that has been

suggested already here.

General, could I ask you to—I know that is a little out of your

lane, but could I ask you to address it first and then the Secretary?

General BREEDLOVE. Well, sir, thank you for your kind remarks.

It was as much fun for me as it was for you, I think, the flying.

Mr. FRANKS. I think it was more fun for you, General.

General BREEDLOVE. Sir, we clearly are a military, as has been

mentioned by several members, that is dependent on joint warfare.

Joint warfare means netcentric warfare sharing information, and I

believe this goes back to the discussion we have had several times

today that the Chinese look for those asymmetric ways to dig into

our capabilities and they have seen and watched. They watched the

Desert Storm. They have watched every war we have done since

that time and how our information capability to target and to see

and perceive our enemy is key our warfighting capability.

I think it is pretty clear to know that they are going to go after

our ability to do that; and, as has been mentioned, we see that as

a unique opportunity for them to attack us asymmetrically.

Mr. FRANKS. Spoken like a general of the Air Force.

Secretary, do you have anything to add to that?

Secretary LAWLESS. Actually, no. I am going to enlist General

Breedlove on the policy side of the equation. That was a very comprehensive response on that.

No, not really.

Mr. FRANKS. This committee a year and a half or two ago was

briefed by the Electromagnetic Pulse (EMP) Commission; and up

until that time, a lot of us, including myself, had relegated the

EMP threat as more like an asteroid hitting the earth. It would be

really bad if it happened, but the chances of it happening are pretty low.

But I have to tell you a lot of us, including myself, became much

more concerned as we looked at the Chinese development of EMP,

especially as it relates to protecting or being—having an offensive

capability and our inability to protect Taiwan against such a weapon if it were deployed. It might be something that would neutralize

our fleet there pretty dramatically.

Do you think that we are—if we can answer it in a non-classified

setting, are we addressing that in a capable way from your position?

And, General, I direct the question to you first again.

General BREEDLOVE. Yes, sir. I would—I am unprepared to address specific EMP. I would just say that maybe we would need to

conduct dialogue with Taiwan as far as their internal efforts first

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and their defense spending and the trend in their defense spending

and then address this specific problem with them in those discussions.

I will defer to the Secretary further on that.

Secretary LAWLESS. I believe, sir—to come back to your question,

I believe that we really would be able to give you a very comprehensive answer in a more secure venue than the one we have

here today, in a classified briefing.

That said, taking note of Taiwan’s vulnerability and indeed anyone that is dependent on an information society as we all are, one

of the things that we have stressed to the folks in Taiwan is their

requirement to harden their infrastructure and the fact that their

infrastructure or the infrastructure of any advanced country is, obviously, very vulnerable to disruption.

So it is part of an ongoing dialogue about defensive measures to

harden and back up their infrastructure because of the threat that

we see growing very significantly to that infrastructure.

Mr. FRANKS. I am sorry. We are out of time.

Mr. Chairman, thank you very much.

The CHAIRMAN. Mr. Courtney.

Mr. COURTNEY. Thank you very much. I want to thank the witnesses for their helpful testimony.

I want to ask a specific question, Secretary Lawless. There were

press reports last October that the Kitty Hawk had a surprise visitor. A Chinese submarine surfaced within firing range, and it

seemed like that would have been a pretty stiff test of the militaryto-military relationship between our two countries in terms of

whether or not there was any follow-up or communication in the

wake of that incident. And I was wondering if you have had any

comments about whether or not we can decipher any intent also

from that incident?

Secretary LAWLESS. A very appropriate observation and question,

I might suggest.

We have been in a process—and, again, we mentioned this in our

report again this year—a process with China, I believe, for over 20

years attempting to have an agreement, an military maritime consultation agreement (MMCA) agreement which really talks about

safety at sea, talks about communications protocols, talks about

how you preempt any conflict at sea or misunderstanding at sea;

and that dialogue and the desire to reach agreement with China,

as we have every other seafaring nation in the world, has been a

very frustrating experience.

The reason it has been a frustrating experience is because, until

very recently, China overlaid that dialogue with a policy issue.

That is the 200-mile exclusive economic zone (EEZ) economic zone

issue and different interpretations as to their rights within their

own EEZ. I will tell you this: We recently reached agreement with

China that we would take the policy component of that out and put

it to the side so that we could actually have a discussion about

MMCA and about these types of issues.

The surfacing of that Song-class submarine in the proximity of

the Kitty Hawk underlined and reinforced our entire 20 years of

discussion with the Chinese as to why we need mechanisms to be

able to deconflict, and that very easily could have developed into

25

an ugly situation for the simple reason that we didn’t have those

procedures in place and still don’t today.

So we have an incremental improvement in the MMCA area that

is mentioned in the annual report, but we are a long way from having the type of dialogue to prevent situations like that at sea.

And one last point, as China reaches out and fields a blue-water

capability and surges those submarines and those other ships out

into areas where they are going to encounter large U.S. battle

groups or whatever, we are going to see that issue repeated time

and time again. So it is essential that China understand the requirement to deconflict and have these understandings in places.

Right now, we don’t have that agreement with them.

Mr. COURTNEY. Any speculation about what was going on there?

Was it somebody sort of hot-dogging or was it just an accidental coincidence?

General BREEDLOVE. I think—I hate to interrupt, but I think

there is one positive to take away from this.

From our incident in 2001 with the EP–3 and the fighter, we saw

what some have characterized as some undisciplined actions by the

pilot which resulted in the loss of a fighter in this instance. While

I am not a naval man, in the air we have certain rules of the road.

In the water, there are also rules of the road. And our naval folks

tell us that the one positive of the incident is that the sub commander surfaced appropriately in accordance with peacetime signals for a peaceful surfacing.

So at least we take away that there was responsible action on

the part of the sub commander, not addressing the military piece

but at least the rules of engagement.

Mr. COURTNEY. Again, I just want to actually quickly follow up

with Congresswoman Davis’ question that she couldn’t ask, which

is about our efforts to try and change China’s policy toward the Sudanese government regarding military transfers and their lack of

response to the terrible genocide happening in Darfur.

Secretary LAWLESS. My comment would be, in the first instance,

of course, this is a State Department issue, but it is hard to ignore

the fact that obviously China places a premium on its relationship

with Sudan and obviously is trying to develop a very, very close relationship in the area of energy. And part and parcel of that is China’s supplying Sudan with weapons.

One of the issues that I think there is some agreement on is they

will attempt to deconflict that weapons program with the Darfur

activities. That said, I am not very sure how much ground we have

gained with the Chinese in making them appreciate the other

issues we have with Sudan, and I think it is a very good example

of China’s determination—or inclination, excuse me, to put energy

as a priority in their national component over the interests of other

issues that we might find important, particularly in the case of

Sudan. It is really the poster child for that whole issue.

The CHAIRMAN. The gentleman from South Carolina, Mr. Wilson.

Mr. WILSON. Thank you, Mr. Chairman; and, General and Mr.

Secretary, thank you very much for being here today.

I am very interested in our relationship with China and how we

are working together to combat terrorism and proliferation of

weapons of mass destruction.

26

On my visits to Beijing, I have actually been impressed to find

out there is a realization we have a common enemy there. That is,

terrorists who want to destroy modern civilization. Could you tell

us what progress has been made, what challenges exist and what

more can be done to work together?

Secretary LAWLESS. I actually think there has been progress in

this area; and I think the progress is manifested by their eagerness

to cooperate on the anti-terrorism frontier, sharing information and

whatever.

I think the sharper interest we have relates to proliferation and

particularly in our dialogue with the Chinese related to nuclear

ballistic missile proliferation and to the extent to which China may

be enabling other countries that would perhaps fall into the category of rogue states to proliferate and build systems that are destabilizing.

So I think while there has been some level of improvement on

the counterterrorism front, there are still other initiatives where

China has been invited to the table but has elected not to show up,

particularly the Proliferation Security Initiative (PSI).

The Proliferation Security Initiative, as you know, is an ad hoc

arrangement whereby the stated purpose of it is to cooperate, to

deny or preempt the ability of people to ship weapons of mass destruction or components or enablers thereof. We would have liked

to see China show up at PSI and participate.

On the other side of the equation, they are involved in the container initiative, and I think there is a pretty robust or decent dialogue with regards to that particular initiative. So it is a mixed

message where there is room for a huge amount of improvement.

General BREEDLOVE. Yes, sir. I wouldn’t want to alter what the

Secretary has said, but I would just like to harken back to something he did mention before.

One of the areas we would like to see some improvement on has

sort of been the international relations piece. As he mentioned, the

Shanghai Corporation Organization did work to block our U.S. basing in Kyrgyzstan; and that was not helpful to our war on the terror. So there are places, as the Secretary has said, where we have

a mixed record; and we would like to address those areas.

Mr. WILSON. I appreciate you pointing that out. Because it would

appear that we should be working together more closely, but specifically Kyrgyzstan needed to be raised.

Additionally, I have had the extraordinary opportunity to visit

North Korea and South Korea with the Six-Party Talks. It always

has struck me that it is in China’s interest of denuclearization of

the Korean Peninsula and the stability of the Korean Peninsula

that they would benefit most, but they also are the superior and

only, virtually, benefactor of the Democratic People’s Republic of

Korea (DPRK).

How effective are they currently in the Six-Party Talks?

Secretary LAWLESS. That is—I think the record is mixed.

By and large, we give the Chinese due credit for enabling the entire process, hosting the entire process, convincing the North Koreans to show up when there is a meeting; and China has delivered

on that aspect of the program, that is, as a host or moderator or

enabler for the overall discussions.

27

I personally believe, having sat through every single Six-Party

session, that China needs to be a little bit more declaratory with

regard to its concerns.

And, in that regard, you are correct that China remains the single most important, the overwhelming supplier, enabler of North

Korea. So, in that regard, one would think that China has leverage

it has not elected to use to date. And I think that is a consensus

position, and I think that is what is our—our goal is that China

becomes more active vis-a-vis North Korea, given the inherent leverage they possess in the issue.

Mr. WILSON. In conclusion, I want to thank you for your efforts;

and I just can’t reiterate enough that it seems like, to me, mutually

beneficial to China, the United States and so on, the entire Korean

Peninsula that there be a real effort to, even without regime

change, to have the countries that work together.

Thank you, Mr. Chairman.

The CHAIRMAN. Thank you.

Mr. Taylor, the gentleman from Mississippi.

Mr. TAYLOR. Thank you, Mr. Chairman.

Mr. Secretary, thank you for being here.

Mr. Secretary, in your remarks, you quote the 2006 QDR that

says, ‘‘China has the greatest potential to compete militarily with

the United States; and field destructive military technologies that

could over time alter traditional U.S. military advantages.’’

Now that is a document that comes from the Bush Administration, a report to Congress. Given that the Bush Administration is

saying this, how would you explain that the President’s remarks

seem to have almost tunnel vision toward Iran and al Qaeda? If

the threat is China, why doesn’t the Bush Administration say why

don’t we have free trade with China instead of focusing on Iran and

al Qaeda?

To the best of my knowledge, al Qaeda doesn’t have an aircraft

feet, doesn’t have a naval fleet, doesn’t have mass armies, doesn’t

have nuclear weapons. The Chinese have all of these things. The

Bush Administration QDR is the one that says they are the threat,

and yet the President seems to be focused over here when this document says maybe we ought to be looking over there.

Secretary LAWLESS. I think the QDR, as presented, did address

the priority of combating international terrorism. The particular

portion of the QDR that we are referring to here discusses the

emergence of strategic competitors, and it doesn’t make any judgment with regard to where China will eventually go. It simply says

that we have identified China, given the industrial base we have

discussed here today and a number of other issues, has the potential—and I think I would underline that piece in the QDR—to field

disruptive technologies. That is a fact. The potential is there.

Similarly, in that same document, we talk about China as a potential peer competitor; and the reason we are doing that is we are

saying that there are a number of choices in front of the Chinese

leadership that they have to make, we only have limited control

over those choices, and that it will happen over a multigenerational process as China continues to develop its capabilities

and its economic power.

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We are acknowledging China as a possible peer competitor. It

certainly is a peer competitor of the United States in many economic fields today, and it will be in the future in more areas, and

eventually it will be a peer competitor in the field of national security and military technology and its capabilities.

I think in the QDR, taken as a whole, puts China in the position

of emerging peer competitor. It makes no judgments as to whether

attending that issue is more important than dealing with al Qaeda

or international terrorism; and, actually, it is quite balanced in

that it says we are not prepared to make a judgment as to where

China may end up on that spectrum of possibilities.

So the QDR as a whole, that language is very carefully chosen

within the context of a nation state peer competitor, as opposed to

international terrorism.

I can’t give you a better answer than that, other than to say I

think the QDR is very balanced.

Mr. TAYLOR. Walk me through something.

I have been in China maybe four hours, but Shanghai looked a

lot more modern than New York. It is my understanding it is a secular society that actually goes out of their way to downgrade pollution. It is a society where they have forced abortions. Strikes me

as something that is the antithesis of a fundamentalist Muslim.

How is it that they have dodged the wrath of al Qaeda?

Secretary LAWLESS. It would be very difficult for me to give you

a definitive answer on that. I don’t believe there is a large Muslim

population with which they have to deal. There is a Muslim population there. They have had their problems in the far west of the

country where there is a Muslim majority. There is actually an organization out there that I believe we have designated that has

been universally designated as a terrorist organization, I believe.

So it isn’t that they have dodged altogether the bullet. I think

that the problems they have internally with regard to terrorism are

very contained geographically and that they have just simply found

a way to manage that threat over the years.

But I don’t think that they are ready to rest on their laurels.

They appear to be very concerned about the threat of terrorism;

and they have got the Olympics coming up, as you know, where

there is a venue there for international terrorism to manifest itself.

So China has a problem. The problem is at least under control,

I believe. But they have a problem.

Mr. TAYLOR. Thank you, Mr. Chair. Thank you, Mr. Secretary.

The CHAIRMAN. Thank you.

Mr. Akin.

Mr. AKIN. Thank you, Mr. Chairman.

A couple of quick questions here.

The first thing is we have had some briefs from the Navy, particularly as it relates to the situation with China and the importance of network-centric warfare and that being the future where

we need to be going with our forces.

Is there any program to develop that that is parallel to the future combat systems, parallel to that in the Army, or is the thinking that maybe some of that software and that communications discipline could be cross-supplied to the Marines or the Navy as well?

General BREEDLOVE. Sir, I will take a stab.

29

I think I understood your question, and let me just quickly rephrase it to make sure I don’t answer it incorrectly. Are you asking

are we taking a look at the progress they are making in netcentric

warfare and applying it to our military?

Mr. AKIN. Yes. And my question was, do you have your own parallel effort going on toward network-centric warfare in the Navy,

or are you waiting to say maybe we can cross-apply it and just take

some of the software or maybe something else?

I guess maybe my question is, what is your action to move us

into more of a network-centric force in the Navy relative to this situation in China?

General BREEDLOVE. Sir, I would give you my assessment. I am

an Air Force officer, so that limits my visibility into the Navy a little bit.

I would tell you that, as an Air Force officer, especially dealing

in the aero warfare piece, the Navy is absolutely net warfare centric, and they are lashed in completely with both Army air defense

and U.S. Air Force netcentric warfare. In fact, the Aegis cruiser is

an incredible example of netcentric warfare and the capability to

control and communicate across nets.

So my exposure to the Navy and netcentric warfare is they are

extremely good; and my appraisal of the Chinese effort, especially

as it pertains to their army, navy, and air force, is they are decades

behind us at this point in netcentric warfare.

If we have an asymmetric advantage, that would be the asymmetric advantage.

Mr. Secretary, any——

Secretary LAWLESS. No. I agree with that comment, but I think

it is important to stress that in every instance where we have a

disadvantage China has done a very good job of assessing exactly

where they stand vis-a-vis the United States and has embarked

upon a very aggressive program of becoming that centric, understanding it, and integrating their forces.

This is a big issue for them. They are spending a lot of time and

money on it. My prediction would be, given the underlying strength

of the telecommunications and the Internet activity and computer

technology in China, they are going to be able to close that perhaps

multi-generational gap very quickly; and that is our concern.

Mr. AKIN. Thank you.

Another aspect of what China’s interest has been in doing is, in

various ways, is to deny us access to certain regions, particularly

around Taiwan, is my understanding; and they have different techniques for doing that. One of them, of course, is asymmetric threats

just in general on computers, I suppose. Another one is the Sunburn missile. Do we have a response to that at this point? Is that

still a significant threat or can we stop those at this point or is that

classified?

Secretary LAWLESS. It is classified, but just let me say one of the

elements of this year’s China military power per the unclassified

version is not just a discussion of Sunburn. It is a discussion of Sizzler as well, which is the submarine-launched anti-ship cruise missile, plus a whole range of land-based and aircraft-based anti-ship

missile.

30

So this is an area in which the Chinese, as you have observed,

are spending a huge amount of effort as part of the area of denial

or access-denial programs.

I think we would be able to treat your question very effectively

in a closed session.

General BREEDLOVE. Sir, just to add a small piece.

In the report, the unclassified report, there are clearly depictions

of not only these missiles but the air defense missiles and all of

these systems overlapping in an area of denial, access denial mode

that reaches clearly to Taiwan; and that is concerning to us as it

is, obviously, to you, sir.

Mr. AKIN. And then I guess the next piece of it is the submarine

component.

I understand—I have to leave that question for another day.

Thank you, Mr. Chairman.

The CHAIRMAN. Thank you very much.

Before I ask Ms. Bordallo, Mr. Secretary, let me ask you in general, regarding the P–3 incident, which I believe was 2001, the

USS Kitty Hawk incident on October 26th, 2006, and the Chinese

successful anti-satellite test January 11 of 2007, can you, in your

understanding and study of China, ascribe any general intent to

send any type of messages to the rest of the world within those

three incidents?

Secretary LAWLESS. If that was the intent, we certainly have not

found a common thread.

I would suggest, rather than carefully calculated intent, what we

saw in each of those three cases was a demonstration of capability.

In each case—not in the EP–3 incident in which an aircraft

rammed our plane by challenging it in what was called the socalled EEG zone of China, but particularly in the other two areas,

the Kitty Hawk incident and the direct ascent anti-satellite missile

test, what you have is a China that is developing very impressive

either anti-access in the case of the submarine or particularly

asymmetric capabilities in the case of the anti-satellite test, developing very impressive capabilities and being willing, if not eager,

to demonstrate those capabilities both to us and to their own people.

There is an issue here also of being confident about their own capabilities, and the level of confidence that the Chinese have in

their growing capabilities is another issue of significant concern to

us.

The CHAIRMAN. Thank you very much.

Ms. Bordallo.

Ms. BORDALLO. Thank you very much, Mr. Chairman. And thank

you, Secretary Lawless. It is good to see you again. And I want to

thank you for your very important role in the transferring of the

Marines from Okinawa to Guam. And to you, General, welcome.

The efforts on the People’s Republic of China to improve its military capabilities, particularly its ability to project force in the Pacific, are of particular concern, naturally, to me and my constituents. As you well know, Guam is located just over 1,000 miles from

the Chinese mainland, and the recent report from the Department

of Defense on China’s military power has attracted a significant

amount of attention back home. I am also the co-chair of the ConVerDate 22-MAR-2001 08:26 Nov 13, 2008 Jkt 038370 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 C:\DOCS\110-61\164000.000 HAS2 PsN: HAS2
31

gressional China Caucus, along with my colleague from Virginia,

Mr. Forbes, so I am very interested in the military capabilities in

China.

So my question to you, Mr. Secretary, is this. As you know, the

military buildup on Guam is moving forward, particularly with the

announcement of Japan’s authorizing of $6 million in funding for

the buildup. The recent DOD report highlights the increased military spending by the Chinese. So to what extent does the increased

Chinese military spending impact the military buildup on Guam?

Secretary LAWLESS. I think that as we have discussed with you

in your office, and as we have discussed in our interactions on

Guam, and with the Governor and his people and the Senate on

Guam, the changes that we are making to Guam is part and parcel

of the process that began in 2002 with global basing and our reassessment of our global basing requirements. The idea of devoting

much more attention to Guam, again, is part of a reposturing that

we believed was necessary in the Western Pacific. It has to do not

only with the relocation of certain capabilities from Okinawa and

a broader distribution of those capabilities that is the Marine force,

it also has to do with some very important buildup, as you know,

of U.S. Air Force and U.S. Naval capabilities on Guam. We believe

that we need to balance our forces a little bit more carefully in the

Pacific.

That is part of the Guam buildup. But we also need—Guam is

United States territory, and it is very appropriate that if we are

going to expand our capabilities in the Western Pacific and demonstrate to our allies, to our partners, and to other interested parties that we are a Pacific power, and we are determined to stay in

Asia, Guam is a very good place for us to do that from. It is U.S.

territory, it is ours, and we are in Asia to stay.

So I would suggest there is both a military aspect to the buildup

on Guam, a very necessary military aspect. There is also a psychological issue with our commitment to Guam and Guam’s role in the

greater U.S. posture in Asia and the Pacific. So we certainly appreciate the fine hospitality and the great relations that we enjoy with

the people of Guam.

Ms. BORDALLO. Thank you very much, Mr. Secretary, and I do

want you to know that we are looking forward to this buildup.

The next question I have is the U.S. Navy recently announced

that the USS Buffalo, a Los Angeles-class fast attack submarine,

will be home ported in Guam. This will replace the other one where

there was an accident. There have also been discussions about utilizing new piers at the Naval Base Guam for maintenance and resupply of aircraft carriers. Are there additional military capabilities

that are being considered for placement on Guam that would provide additional security to counter the increased Chinese military

buildup that you know of?

Secretary LAWLESS. Yes. We are very much aware of the dynamics of the range rings that are in that book and where Guam sits

within those range rings of different Chinese ballistic missile capabilities. Obviously, the buildup on Guam is multifaceted, it is a dynamic and ongoing process, and I think we will continue to assess

what the needs of Guam are in defending our presence there and

defending the people of Guam.

32

So you can be sure that we literally meet once every two weeks

at a steering committee within the Pentagon to decide how the

Guam buildup is moving forward and what we need to do differently. So rest assured that we have this issue in hand and we

are very mindful of the requirements of Guam.

Ms. BORDALLO. And I do have just a second part of that question.

The lack of transparency in China’s accounting for military spending. It seems that the Department of Defense is taking a new tack

in its talks with China and ramped down the rhetoric about transparency in China’s reports. Can you elaborate on the rationale for

the change in tactics?

Secretary LAWLESS. We really don’t see that it is a change—we

don’t see this as a change in tactics. I think that the same themes

that appeared and were consistent with previous reporting, previous China Military Power Reports, are all still there. I think this

is our seventh year in generating a report, or at least our sixth

year in generating a report. Those themes remain pretty constant.

The rhetoric regarding the military budget, frankly speaking, has

become so routine, and we have thumped that drum so much that

we thought that we simply didn’t need to spend that much time in

this report beating on that drum, and that is the only thing that

I can attribute it to.

Ms. BORDALLO. Thank you. Thank you very much, Mr. Secretary.

The CHAIRMAN. Thank you. Mr. Cummings, the gentleman from

Maryland.

Mr. CUMMINGS. Thank you very much, Mr. Chairman. Mr. Lawless, you stated in your testimony that while Beijing has improved

its non-proliferation posture by promulgating export controls and

regulations, strengthening its oversight mechanisms, and committing to respect multilateral arms export control lists, at the same

time China has participated in the ongoing transfer of conventional

weapons to nations such as Iran, Sudan, Burma, Zimbabwe, and

Cuba. Is China fulfilling its obligations under the U.N. Security

Council Resolution 1747, which calls for the restraint in the sale

of heavy arms and missile technology to Iran? And what are your

key concerns?

Secretary LAWLESS. In the implementation dialogue on 1747, I

think that we are satisfied—and again, I have to be careful here,

because I am not speaking on behalf of the State Department, and

this is their lead—I think we are satisfied that they are making a

real intention—they have the intention of following through on

1747 sanctions. The issue is not so much the letter of the law in

China, it is China’s ability and willingness to implement the law

and to constrain or restrain individual companies that in a very

freewheeling way have for a number of years dealt with

proliferators and supplied them with a wide range of components,

materials, and systems, subsystems. And the issue for us is one of

getting the Chinese, let me say, to enforce the laws that they already have on the books with a fairly robust enforcement mechanism, which heretofore has not really existed.

They are doing a much better job than they have done in the

past. They are trying to enforce their own laws in this regard. But

a lot of important things continue to slip through, and we get very

disturbed when important things slip through, because it means

33

that China is the only supplier of a given system or subsystem that

enables a proliferator such as Iran to build a complete system.

So you can understand the frustration. The laws are on the

books. They are making a good faith attempt to put the legislation

down. The issue is their willingness and ability to enforce the laws

they already have. And I am sorry if that is——

Mr. CUMMINGS. No, no.

Secretary LAWLESS [continuing]. A lengthy answer.

Mr. CUMMINGS. That is fine. While Mr. Negroponte testified before the House Committee on Foreign Affairs on May 1, 2007, that

China has a mixed record on efforts to stem the proliferation of

weapons, especially those relating to missile technology, and this is

a follow-up on what you just said, notably China needs to implement effectively its export control regulations and to rein in proliferation activities of its companies.

Mr. Lawless, you also noted in your submitted testimony that

China should do more to curtail proliferation. Has China begun to

improve its export regulations as to deter private entities from engaging in weapons proliferation? And I take it that—does that fall

under the same category that you just stated?

Secretary LAWLESS. Exactly.

Mr. CUMMINGS. In other words, the law is there, and it is just

not adhering to them? And what can we do? I mean are our hands

tied behind our backs on this?

Secretary LAWLESS. No, not at all. In fact, sir, I would suggest

that it is probably not so much an act of commission on their part

as it is an act of omission. When you simply don’t enforce, and either because you don’t have the mechanisms in place to catch a

given shipment—you know who your proliferators typically are, you

know what companies are involved in these activities, because only

certain companies have the ability to ship these products. I think

it is a question of the laws are on the books by and large, it is enforcement, and in particular enforcement at a local level. Their regulatory and enforcement authorities may be in some regards lacking. And so perhaps we are not giving them sufficient credit for the

things they are able to do given their situation. But they have had

enough time now, and these proliferating companies are well

known to them.

And you ask if there is anything we can do. There is something

we can do, and we do it routinely. We list the companies as

proliferators, and basically ban anyone from doing business with

them. In certain cases this has resulted in a very negative reaction

from the Chinese government, because you have no choice but to

sanction a large corporation. That corporation may have a division

over here which it does not control that is proliferating, and we

have no choice but to sanction the entire corporation, which has

happened a number of times. So this is a very sensitive issue between the two governments. But that mechanism does exist if we

choose to use it.

Mr. CUMMINGS. Thank you, Mr. Chairman.

The CHAIRMAN. Thank you. Let me, before I call on Mr. Larsen,

Mr. Secretary, if I may ask you how we, our country is engaging

with China to combat terrorism as well as proliferation of weapons

34

of mass destruction. How are we engaging with them? What are

they doing? What are we doing? If anything?

Secretary LAWLESS. I actually think we are doing a lot. There are

fora and activities which China for one reason or another have

elected not to participate in, which is a disappointment; for example, the Proliferation Security Initiative. There are other mechanisms that have been established by the United Nations—the gentleman has just mentioned United Nations Resolution 1747—in

which we see every indication that China is willing to play a

proactive and aggressive role. We have a number of interactions,

all organized and led—mostly organized and led by the State Department, or in the case of financial issues, led by Treasury. So you

know, there is a very aggressive engagement going on with the

Chinese across several areas. They get it, particularly on the very

high value issues like nuclear materials control. In other areas,

there seems to be a reluctance or an inability to recognize the proliferation potential of a lot of the smaller companies. And so I think

there is a lot of room for improvement, and that is all going to be

an issue of willingness on the part of the Chinese government to

step up and just do it.

So that is sort of where we are with them. A mixed record. Getting better, but significant challenges remain, as Ambassador

Negroponte in a very carefully worded statement has noted.

The CHAIRMAN. Thank you. Mr. Larsen.

Mr. LARSEN. Thank you, Mr. Chairman. Again, Secretary Lawless and General Breedlove. Secretary Lawless, earlier in your testimony you mentioned the defense telephone link (DTL). And your

testimony in particular says U.S. and Chinese officials will meet in

September, 2007 to finalize details of the link. I know there has

been some technical issues, like defining who would actually answer the phone in China. But I wanted to ask what specifically is

left to discuss, to finalize the DTL?

Secretary LAWLESS. I think there is a lot left to finalize it. In

fact, all we really have at this point is the comments by Lt. Gen.

Zhang in Singapore at the Shanghai Forum, on I believe it was the

2nd of June, where he said we have made a decision to accept the

U.S. proposal, or something of that nature. It was somewhat vague.

So the first question that will be before us in the DCTs in September is we would like to hear that across the table formally, if not

before.

Mr. LARSEN. You need to hear that from General Guo or

from——

Secretary LAWLESS. No, I think we need to hear it in a formal

session from General Zhang. And the other thing that has to happen is we have had teams discussing this with them, visiting with

them. I think there needs to be a much more concrete demonstration that they are willing to throw the switch on the telephone.

And the devil is in the details. But we would intend that by the

time we meet in September that this thing be locked up with an

agreement on all the specifics of the defense telephone link. It is

very important to put that in place. We have been waiting for four

years to do it.

Mr. LARSEN. Last—I forget if it was December or January, it was

either late December or early January we were there, and in a conVerDate 22-MAR-2001 08:26 Nov 13, 2008 Jkt 038370 PO 00000 Frm 00038 Fmt 6633 Sfmt 6633 C:\DOCS\110-61\164000.000 HAS2 PsN: HAS2
35

versation with the Minister of Defense Cao we—I actually had the

opportunity to directly ask him for an invitation as an observer to

the next joint China-Russia exercise——

Secretary LAWLESS. Yes.

Mr. LARSEN [continuing]. Which I recall the response being something about the weather. In other words, it just sort of landed and

we moved on. But I was curious about whether or not that is still

something we would like to ask again, if an opportunity arose to

ask again for observer status at a joint China-Russia exercise?

Secretary LAWLESS. If you get observer status could you get us

observer status?

Mr. LARSEN. I may have better luck? Is that it?

Secretary LAWLESS. I am serious, because as you know, we have

requested observer status.

Mr. LARSEN. I know. I know.

Secretary LAWLESS. And we have been told by each party that it

is the fault of the other party not wanting us there. So it is sort

of like a double uninvite to the event.

Mr. LARSEN. Right. Okay. I got it. So I will put that on my to

do list then. Related to that is generally the East Asia Security

Summit and the EAS and whether or not—do we still see that as

something that we want to try to be a part of, or after a couple of

times they have met there doesn’t seem to be much that has come

out of it? Do we see that as all that important, as important as

SCO, as important as any joint exercise between Russia and

China? Where does EAS fit in all this?

Secretary LAWLESS. Well, I think it fits into there is a whole matrix of regional fora, security-related fora that is being addressed.

Mr. LARSEN. The ASEAN (Association of Southeast Asian Nations) Regional Forum (ARF).

Secretary LAWLESS. You have the ARF, and other fora, all of

which we show up at if we are invited to come. The issue for us

has been we want any fora that is created—any forum, excuse me,

that is created to be all-inclusive. China has in the past not been

helpful in this regard, in that it would actually like to promote

venues and fora that are non-inclusive, meaning that the United

States is not part of that presentation. Other parties that are there

very much would like us to be there as well.

Mr. LARSEN. Right.

Secretary LAWLESS. So I think we will continue to seek out every

opportunity in every fora that presents itself to be there, either as

an observer or as a full participant. We want to be involved. And

to the degree that others don’t want us to be involved, we do not

believe that is helpful.

Mr. LARSEN. And a final thing is one quick question, does the Department have any plan or desire or is there a role to cooperate

with China on security matters for the 2008 Olympics in Beijing?

And if so, what specifically would you like that plan to be or is

there a plan?

Secretary LAWLESS. There really is no plan. And that is mainly

attributable to the fact that China has really never requested any

assistance. And in fact, when we have broached the subject, the response has been we got it, we will let you know if we need any

36

help, but we are pretty confident we can handle it, thank you very

much.

Mr. LARSEN. Enjoy the basketball.

Secretary LAWLESS. Yes.

Mr. LARSEN. Just quickly, Mr. Chairman, if you haven’t picked

up Rising Star by Bates Gill, I commend it to your staff as a great

airplane read.

Secretary LAWLESS. Thank you.

Mr. LARSEN. Sure.

The CHAIRMAN. Before I thank you, let me make a reference to

the upcoming 2008 Summer Olympics in Beijing. My judgment is

that all the stops are being pulled for the security for those games.

You have any comment on that whatsoever?

Secretary LAWLESS. No. Not other than to say that we believe

that China is assigning a very prominent role to physical security

and broader security to the games. It appears to be taken on board

by them in all of their planning. At this time they seem very confident that they have a good handle on it. And we will continue to

offer I think across the entire breadth of the United States Government our support and our willingness to help them. But right now

it is an offer that has not been taken by the Chinese. And frankly

speaking, I don’t think they will take it up. I think they are very

confident about what they are able to do.

The CHAIRMAN. Gentlemen, thank you very much. This has been

an excellent hearing, and I received compliments on your testimony

from other members as they were passing. We appreciate it. And

Mr. Secretary, good luck to you in your days ahead. And General,

it is good to see you.

[Whereupon, at 12:18 p.m., the committee was adjourned.]

A P P E N D I X

JUNE 13, 2007

PREPARED STATEMENTS SUBMITTED FOR THE RECORD

JUNE 13, 2007

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QUESTIONS AND ANSWERS SUBMITTED FOR THE

RECORD

JUNE 13, 2007

(59)

QUESTIONS SUBMITTED BY MR. FORBES

Mr. FORBES. In the preface of the Office of Naval Intelligence report on China’s

Naval Modernization, William E. Tarry, director of ONI’s Naval Analysis Directorate wrote, ‘‘By acquiring some of the world’s most impressive naval technologies

from abroad while simultaneously building advanced indigenous submarines, combatants and naval aircraft, China is positioning itself to play a growing role in regional and transregional affairs.’’ What would be the value to the United States of

working with the Chinese to develop an aircraft carrier as ADM Keating has previously suggested, which would clearly extend the PRC’s capabilities beyond just regional affairs?

Secretary LAWLESS and General BREEDLOVE. [The information referred to is classified and retained in the committee files.]

Mr. FORBES. The DoD PRC Power Report states that ‘‘China’s actions in certain

areas increasingly appear inconsistent with its declaratory policies.’’ The Attorney

General has testified on two separate occasions before Congress that China represents the number one espionage threat against the United States. As you know,

Chinese military strategy strongly emphasizes deception at the strategic, operational, and tactical levels. How responsive can we really expect the Chinese to be

when we call for transparency with regard to their military modernization?

Secretary LAWLESS and General BREEDLOVE. [The information referred to is classified and retained in the committee files.]

Mr. FORBES. PLA (People’s Liberation Army) doctrine considers computer network

operations as a force multiplier in the event of a confrontation with the United

States or any other potential adversary. To what extent are Chinese cyberwarfare

units attacking computer systems in the United States?

Secretary LAWLESS and General BREEDLOVE. [The information referred to is classified and retained in the committee files.]

Mr. FORBES. I understand that the PLA has developed training systems using

modeling and simulation technologies, both for individual proficiency and to increase

joint capabilities. To what extent are these training systems being used to train the

PLA and how does this factor into the DoD assessment of the PRC’s military

modernization?

Secretary LAWLESS and General BREEDLOVE. [The information referred to is classified and retained in the committee files.]

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