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58–169 2010

[H.A.S.C. No. 111–114] 

CHINA: RECENT SECURITY 

DEVELOPMENTS 

COMMITTEE ON ARMED SERVICES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

HEARING HELD 

JANUARY 13, 2010 
(II) 

HOUSE COMMITTEE ON ARMED SERVICES 

ONE HUNDRED ELEVENTH CONGRESS

IKE SKELTON, Missouri, Chairman 

JOHN SPRATT, South Carolina 

SOLOMON P. ORTIZ, Texas 

GENE TAYLOR, Mississippi 

NEIL ABERCROMBIE, Hawaii 

SILVESTRE REYES, Texas 

VIC SNYDER, Arkansas 

ADAM SMITH, Washington 

LORETTA SANCHEZ, California 

MIKE MCINTYRE, North Carolina 

ROBERT A. BRADY, Pennsylvania 

ROBERT ANDREWS, New Jersey 

SUSAN A. DAVIS, California 

JAMES R. LANGEVIN, Rhode Island 

RICK LARSEN, Washington 

JIM COOPER, Tennessee 

JIM MARSHALL, Georgia 

MADELEINE Z. BORDALLO, Guam 

BRAD ELLSWORTH, Indiana 

PATRICK J. MURPHY, Pennsylvania 

HANK JOHNSON, Georgia 

CAROL SHEA-PORTER, New Hampshire 

JOE COURTNEY, Connecticut 

DAVID LOEBSACK, Iowa 

JOE SESTAK, Pennsylvania 

GABRIELLE GIFFORDS, Arizona 

NIKI TSONGAS, Massachusetts 

GLENN NYE, Virginia 

CHELLIE PINGREE, Maine 

LARRY KISSELL, North Carolina 

MARTIN HEINRICH, New Mexico 

FRANK M. KRATOVIL, Jr., Maryland 

ERIC J.J. MASSA, New York 

BOBBY BRIGHT, Alabama 

SCOTT MURPHY, New York 

DAN BOREN, Oklahoma 

HOWARD P. ‘‘BUCK’’ MCKEON, California 

ROSCOE G. BARTLETT, Maryland 

MAC THORNBERRY, Texas 

WALTER B. JONES, North Carolina 

W. TODD AKIN, Missouri 

J. RANDY FORBES, Virginia 

JEFF MILLER, Florida 

JOE WILSON, South Carolina 

FRANK A. LOBIONDO, New Jersey 

ROB BISHOP, Utah 

MICHAEL TURNER, Ohio 

JOHN KLINE, Minnesota 

MIKE ROGERS, Alabama 

TRENT FRANKS, Arizona 

BILL SHUSTER, Pennsylvania 

CATHY MCMORRIS RODGERS, Washington 

K. MICHAEL CONAWAY, Texas 

DOUG LAMBORN, Colorado 

ROB WITTMAN, Virginia 

MARY FALLIN, Oklahoma 

DUNCAN HUNTER, California 

JOHN C. FLEMING, Louisiana 

MIKE COFFMAN, Colorado 

THOMAS J. ROONEY, Florida 

TODD RUSSELL PLATTS, Pennsylvania 

ERIN C. CONATON, Staff Director 

JULIE UNMACHT, Professional Staff Member 

AILEEN ALEXANDER, Professional Staff Member 

CATERINA DUTTO, Staff Assistant 
(III) 

C O N T E N T S 

CHRONOLOGICAL LIST OF HEARINGS 

2010 

Page 

HEARING: 

Wednesday, January 13, 2010, China: Recent Security Developments .............. 1 

APPENDIX: 

Wednesday, January 13, 2010 ................................................................................ 35 

WEDNESDAY, JANUARY 13, 2010 

CHINA: RECENT SECURITY DEVELOPMENTS 

STATEMENTS PRESENTED BY MEMBERS OF CONGRESS 

McKeon, Hon. Howard P. ‘‘Buck,’’ 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 

Gregson, Hon. Wallace C., Assistant Secretary of Defense for Asian and 

Pacific Security Affairs, U.S. Department of Defense ....................................... 6 

Shear, David B., Deputy Assistant Secretary for East Asian and Pacific Affairs, U.S. Department of State .......................................................................... 8 

Willard, Adm. Robert F., USN, Commander, U.S. Pacific Command ................. 5 

APPENDIX 

PREPARED STATEMENTS: 

Gregson, Hon. Wallace C. ................................................................................ 58 

Larsen, Hon. Rick, a Representative from Washington, Committee on 

Armed Services ............................................................................................. 44 

McKeon, Hon. Howard P. ‘‘Buck’’ .................................................................... 41 

Shear, David B. ................................................................................................. 74 

Skelton, Hon. Ike .............................................................................................. 39 

Willard, Adm. Robert F. ................................................................................... 46 

DOCUMENTS SUBMITTED FOR THE RECORD: 

[There were no Documents submitted.] 

WITNESS RESPONSES TO QUESTIONS ASKED DURING THE HEARING: 

Mr. Coffman ...................................................................................................... 84 

Mr. Forbes ......................................................................................................... 83 

Mr. Skelton ....................................................................................................... 83 

QUESTIONS SUBMITTED BY MEMBERS POST HEARING: 

Mr. Bishop ......................................................................................................... 88 

Mr. Coffman ...................................................................................................... 88 

Mr. Forbes ......................................................................................................... 87 

Mrs. McMorris Rodgers .................................................................................... 88 

Mr. Ortiz ........................................................................................................... 87 

(1) 

CHINA: RECENT SECURITY DEVELOPMENTS 

HOUSE OF REPRESENTATIVES, COMMITTEE ON ARMED SERVICES, Washington, DC, Wednesday, January 13, 2010. 

The committee met, pursuant to call, at 10:00 a.m., in room 210, 

Capitol Visitor Center, 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. Good morning. Today we have with us Admiral 

Robert Willard, Commander of the United States Pacific Command, 

the Honorable ‘‘Chip’’ Gregson, Assistant Secretary of Defense for 

Asian and Pacific Security Affairs, and David Shear, Deputy Assistant Secretary of State for East Asian and Pacific Affairs. And 

we welcome you gentlemen to the first hearing before this committee. 

We are pleased that you could join us today and testify on recent 

security developments involving the country of China. 

Also I wish to welcome Admiral Willard’s wife, Donna, who is 

seated behind the good Admiral, and we welcome you. If the Admiral missteps a bit, why you just whisper in his ear and help him 

out. Welcome. 

This is a very important and a very timely hearing. It is interesting to note that just this morning, press reports indicate that 

Google is contemplating pulling out of China, which we may discuss a bit in our hearing. 

Now, I have stressed for some time the significance of developments in China to our national security. In recent years, while we 

have been heavily focused on events in the Middle East and South 

Asia, China’s influence has grown in Asia as well as beyond. 

I am pleased that the Obama Administration has prioritized the 

United States-China security relationship and was encouraged by 

the joint statement that resulted from the President’s recent visit 

to China. I welcome the Administration’s efforts to increase U.S.- 

China’s relations and cooperation in areas of common interests 

ranging from counterterrorism and nonproliferation to energy security. 

We must work together with China for the settlement of conflicts 

and reduction of tensions that contribute to global and regional instability including denuclearization of the Korean peninsula, the 

Iranian nuclear issue, and the situation in South Asia. 

I particularly welcome the administration’s support for increasing military-to-military contacts. I have long viewed such contacts 
2 

as essential. It builds trust, it promotes understanding, it prevents 

conflicts and it fosters cooperation. And given my own visits to 

China in recent years, I know how important these relationships 

are. 

Looking back at U.S.-China security cooperation under the previous Administration, there are some positive steps, but there is 

still much progress to be achieved. In the new Administration, we 

will continue to face plenty of challenges, and I remain concerned 

by trends and ambiguities regarding China’s military modernization, including China’s missile buildup across from Taiwan and the 

steady increase of China’s power projection capabilities. 

Moreover, China’s military budget continues a trend of doubledigit increases at a time when China provides more and more of 

the loans that support the American economy. 

China’s transparency on defense issues is still limited, and questions remain regarding China’s strategic intentions. This was highlighted just days ago following China’s concerning missile intercept 

event. 

At the same time the reduction of tensions across Taiwan’s state 

is a positive development, and I hope to see further progress in 

that area, including meaningful action by China to reduce its military presence directly opposite to Taiwan. 

I am also encouraged by China’s recent involvement in the 

counterpiracy operations in the Gulf of Aden. This demonstrates responsible use of Chinese military power in line with its international responsibilities, of which I hope we can see more. 

I continue to believe China is not necessarily destined to be a 

threat to our country, but there are trends and ambiguities that do 

concern us. I continue to believe that the United States must demonstrate our own interests in the Asia-Pacific region including our 

ability to project power effectively there. At the same time we must 

also acknowledge China’s limitations and recognize that China’s 

choices may well be shaped by our own actions. 

So I look forward to hearing from our witnesses about the actions 

that the Department of Defense (DOD) and the Department of 

State (DOS) are undertaking, and I hope they will help us better 

understand recent security developments involving that nation. 

I also look forward to receiving a 2010 Department of Defense 

annual report on this subject which is due to this committee in the 

month of March. 

Before we begin I turn to my friend from California, the Ranking 

Member Buck McKeon. 

[The prepared statement of Mr. Skelton can be found in the Appendix on page 39.] 

STATEMENT OF HON. HOWARD P. ‘‘BUCK’’ MCKEON, A REPRESENTATIVE FROM CALIFORNIA, RANKING MEMBER, COMMITTEE ON ARMED SERVICES 

Mr. MCKEON. Thank you, Mr. Chairman. Thank you for holding 

today’s hearing on recent security developments involving the People’s Republic of China. Today is our first opportunity to examine 

the Administration’s policy toward China and how such a policy is 

aligned with our overall approach to the region. 
3 

This hearing also gives us a form to better understand China’s 

military buildup and activities where they are expanding their 

areas of influence around the globe, all of which have serious implications for the strategic posture of the United States. 

I would also like to welcome our witnesses the Chairman recognized, and thank you all for being here today. I look forward to 

hearing your testimony and our discussion. 

As I review our policy toward China, it is my understanding that 

President Obama’s team may follow an approach of strategic assurance as put forward by Deputy Secretary of State James Steinberg. 

This strategy is based on the belief that China cannot be contained 

and therefore we, America and the international community, must 

accept its rise to power. In return we seek China’s reassurance that 

its stature will not come at the expense or security of other nations. 

For example, strategic assurance may be demonstrated in part 

via China’s cooperation with the United States and other nations 

on matters of shared interest. In particular within the last year, we 

worked together in our handling of the global financial crisis, countering piracy off the east coast of Africa, and isolating North Korea 

for its persistent and aggressive nuclear and missile tests. 

While these are positive steps in our relationship, we cannot ignore the reality that China still falls short in the column of reassurance. Actions speak louder than words. Here are but a few of 

the examples. 

First, on Monday China demonstrated its resolve to expand its 

strategic capabilities with a missile defense test. As of yesterday, 

we heard from the Pentagon that this test was conducted without 

advance notification to the United States. What are China’s intentions for employing a missile intercept system? Once again we are 

left in the dark to question China’s commitment to transparency 

and cooperation. More concerning, this test comes at a time of tension over our arms sales to Taiwan. Is this test intended as an aggressive signal? 

Second, according to the latest U.S.-China Economic and Security 

Commission report, I quote: ‘‘There has been a marked increase in 

cyber intrusions originating in China and targeting U.S. Government and defense-related computer systems, an activity that could 

potentially disrupt U.S. commercial and banking systems, as well 

as compromise sensitive defense and military data.’’ And the Chairman remarked about Google and the problem that they are having 

and where we are moving in that direction. 

Third, in March 2009, a Chinese naval vessel behaved in an aggressive manner toward the United States Naval Ship (USNS) Impeccable. Despite China’s assertion of its rights within its maritime 

exclusive economic zone (EEZ), this incident illustrates its willingness to violate international law and reflects increasing risks of 

China’s expanding military operations in areas where U.S. forces 

routinely operate. 

Independently, these examples are a cause of concern, but more 

so when seen under an umbrella of marked uncertainty surrounding China’s future course in terms of its military and security 

ambitions. 
4 

I would like to now turn to the neighborhood in which China resides. This brings me to the President’s recent trip to Asia. While 

some see the U.S.-China joint statement as a significant accomplishment, from my view we are merely left with a laundry list of 

issues that need to be worked out. Furthermore, I am deeply concerned with the message we sent to our partners in the region. 

From Australia to India, the trip raised questions about who has 

the upper hand in the U.S.-China relationship. At a time when we 

should be focused on reaffirming our commitment to the region, we 

left many doubting the depth and breadth of American power and 

influence. 

For example, in its 2009 Defense White Paper, the Government 

of Australia states, ‘‘We also need to consider the circumstances of 

a more dramatic and, in defense planning terms, sudden deterioration in our strategic outlook. While currently unlikely, a transformation of major power relations in the U.S.-Pacific region would 

have a profound effect on our strategic circumstances. Of particular 

concern would be any diminution of the willingness or capacity of 

the United States to act as a stabilizing force.’’ 

I hope each of you will give concrete examples of what we are 

doing to alleviate these doubts. 

Finally, in just a few weeks the Department of Defense will submit its 2010 Quadrennial Defense Review (QDR) to Congress. 

Shortly afterwards we will receive the Nuclear Posture Review 

(NPR). In the 2006 QDR, the Pentagon noted that China was at 

a strategic crossroads and that it had the greatest potential to compete militarily with the United States. 

In its 2009 Annual Report to Congress on China’s Military 

Power, the Department maintained that the pace and scope of China’s military transformation continued to increase, fueled by the 

acquisition of advanced foreign weapons. Also similar to years past, 

it noted that China continues to develop and field disruptive technologies, including those for anti-access and area denial as well as 

for nuclear, cyber, and space warfare. 

When we receive the QDR, I will be looking closely at any 

changes to the Department’s assessment of China. My fear is that 

we will downgrade the China threat in an attempt to justify last 

year’s and future cuts to key defense programs. If the conclusion 

is the same as it was in 2006, then I expect the President’s budget 

to invest in the necessary capabilities to execute our contingency 

plans in Asia. This is the type of strategic reassurance our allies 

need, and is the key to stability in Asia. 

With respect to the NPR, we must be cognizant that any additional reductions in our strategic capabilities will only invite China 

to seek strategic parity with the United States. 

In closing, today we will hear about the need for candid dialogue 

and improved engagement with China. As you know, we made 

changes to the Pentagon’s Annual Report on China’s Military 

Power in this year’s defense bill to focus on those areas. While I 

believe that coming to the table is vital to avoiding misunderstanding and miscalculation, we must be mindful that it takes two 

to make a relationship work and that our priority focus must always be on protecting America’s national security interest. 
5 

This is truly a timely hearing and we appreciate your appearance 

here this morning. Thank you, Mr. Chairman. 

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

The CHAIRMAN. I thank the gentleman. 

A word to the members. We will be back in our old haunts, the 

committee room, around the first of next month. So it will be much 

more convenient for us, and it is going to look very, very good. I 

am very pleased with what I saw yesterday. 

Each of the witnesses today, as I understand it, have statements 

to make. And we will call on Admiral Willard first. Admiral. 

STATEMENT OF ADM. ROBERT F. WILLARD, USN, 

COMMANDER, U.S. PACIFIC COMMAND 

Admiral WILLARD. Thank you, Chairman Skelton, Representative 

McKeon, and members of this committee. Chairman, thank you 

very much for introducing my wife Donna who joins me today. She 

has been a military spouse for 36 years, in addition to being a mom 

and a grandmother. And she is now very much a joint spouse at 

Pacific Command (PACOM), with oversight of the needs of Army, 

Navy, Air Force, Marine Corps, and Coast Guard families, as well 

as families of our civilian workers within PACOM. I am pleased to 

have her here as well. Thank you, sir. 

I have now been in command of the United States Pacific Command for about three months. And although I may be new to 

PACOM, I have commanded extensively in the Asia-Pacific region. 

Subsequently, during my 36 years of service, I have developed a 

great respect for this part of the world. In that time, I have come 

to believe that now more than ever it is vital to our Nation’s security interests and economic prosperity. 

In previous tours, as now, the emergence of China and its military has been a routine topic of discussion in my interactions with 

regional leaders. Of concern to most, reconciling China’s declared 

desire for a peaceful and stable environment for economic development with a new military capability and capacity that appear designed to challenge international freedoms of action and potentially 

enforce influence over regional nations. 

Reconciliation of these two divergent positions can only occur 

through continuous frank conversations and mutual actions within 

a strong and mature military-to-military relationship, a relationship that does not yet exist between the United States military and 

the People’s Liberation Army (PLA). And until it does, and it is determined that China’s intent is indeed benign, it is critical that we 

maintain the readiness of our forward-deployed forces, continually 

reinforce our commitment to our allies and partners in the region, 

and meet each challenge by the People’s Republic of China (PRC) 

in a professional manner that is consistent with international law. 

It is clearly in both nations’ interest and the Asia-Pacific region’s 

interest to manage these complexities and to develop a relationship 

with China that is constructive in every way. 

At U.S. Pacific Command, our goal is to support this relationship 

by identifying opportunities that allow us to work more closely with 

China while also encouraging her to reconcile strategic intent with 

increasingly sophisticated combat capabilities. Congress can assist 
6 

by maintaining a focus not only on China but on the growing importance of the Asia-Pacific region to our Nation and to our global 

partners. 

Our messages during engagements with Chinese leadership, both 

in Beijing and during their visits to Washington, D.C., must be consistent, resolute, and invoke the Nation’s principles and values. I 

offer my staff’s direct support to you during your travels to the region and invite you to stop in Honolulu and visit U.S. Pacific Command on your way to or from this area of responsibility (AOR). 

Finally, I would like to thank this committee for the strong support you provide to the men and women of our United States military. Despite being involved in two wars, our retention and recruiting rates remain very strong, which is a direct reflection of the 

quality of life initiative supported by you and by the American people. 

On behalf of more than 300,000 men and women of U.S. Pacific 

Command, please accept my sincere appreciation for the work that 

you do for us and for this great Nation. Thank you, and I look forward to answering your questions. 

The CHAIRMAN. Thank you Admiral. 

[The prepared statement of Admiral Willard can be found in the 

Appendix on page 46.] 

The CHAIRMAN. Secretary Gregson. 

STATEMENT OF HON. WALLACE C. GREGSON, ASSISTANT SECRETARY OF DEFENSE FOR ASIAN AND PACIFIC SECURITY 

AFFAIRS, U.S. DEPARTMENT OF DEFENSE 

Secretary GREGSON. Mr. Chairman, members of the committee, 

thank you very much for this opportunity to appear today to discuss recent military and security developments in the People’s Republic of China. I am pleased to be joined by old friends and colleagues, Admiral Willard and Mr. David Shear. 

China’s rapid rise as a regional political and economic power 

with growing global influence has significant implications for the 

Asia-Pacific region, the United States, and the world. These developments occur in a dynamic environment with little historical 

precedent. 

As Secretary Gates said, during the past three decades an enormous swath of Asia has changed almost beyond recognition. Hundreds of millions have emerged from poverty to higher living standards as a result of cooperation, openness, and mutual security. New 

and reemerging centers of power alike are realizing extraordinary 

growth and development. From India to Indonesia, China to Russia, and Australia to Japan, millions have moved from poverty to 

prosperity. China’s rapid development helps drive this extraordinary and dynamic growth. 

In turn, China gains greatly from Asia’s growth. The United 

States welcomes a strong, prosperous, and successful China. As 

President Obama stated, the relationship between the United 

States and China will shape the 21st century, which makes it as 

important as any bilateral relationship in the world. 

But this development occurs as new challenges emerge. Our new 

security issues cover a very wide range. These include economics, 

regional areas of tension, terrorism, proliferation, energy supplies, 
7 

piracy, the effects of climate change and disasters, both manmade 

and natural. Our increasingly interconnected world and common 

demands for resources require cooperation and integrated solutions. 

Since the committee’s last hearing on this topic, we have seen 

several significant developments, some positive, others troubling. 

Many are documented in the Secretary of Defense’s Annual Report 

on the Military Power of the People’s Republic of China. 

On one hand, we have several positive examples of China’s contribution to international peace and stability. We are encouraged 

by China’s support for the United Nations Security Council Resolution (UNSCR) 1874 and its efforts to support the denuclearization 

of the Korean peninsula. 

China is also developing emergency military capabilities that are 

allowing it to contribute cooperatively in the delivery of public 

goods from peacekeeping and counterpiracy to humanitarian assistance and disaster relief. We appreciate the positive experience of 

our two navies working in concert with the international community to combat piracy in the Gulf of Aden, and we are looking forward to building on these experiences. 

But we have concerns about the pace, scope, and lack of transparency in China’s military modernization. The People’s Liberation 

Army is changing from a mass army, designed for protracted wars 

of attrition on its own territory, to one developed for winning shortduration, high-intensity conflicts on its periphery against high-tech 

adversaries. Weapons and material to support this are being procured from both foreign sources and an increasingly capable industrial and technical base. 

Organizational and doctrinal changes are also evident, as are disruptive technologies designed for anti-acess in aerial denial, nuclear space, and cyberspace arenas. 

Modernization and expansion of military capabilities across the 

Taiwan Strait continues, with the addition of more missiles, enhanced air, surface, and undersea capabilities. Over the past several years, China developed and articulated roles and missions for 

the PLA that go beyond immediate territorial interest. 

We will continue to use military engagement with the PRC to 

demonstrate U.S. commitment to the Asia-Pacific region and act as 

a partner in addressing common security challenges. We will maintain and enhance our presence and alliances in Asia and clearly 

demonstrate U.S. resolve. Our interests lie, as they have for the 

decades of Asia’s rise, in constructive engagement with China, combined with a strong network of alliances and partnerships throughout the region. 

Thank you and I appreciate the opportunity to be here, and I 

look forward to your questions. 

The CHAIRMAN. Thank you Mr. Secretary. 

[The prepared statement of Secretary Gregson can be found in 

the Appendix on page 58.] 

The CHAIRMAN. Secretary Shear. 
8 

STATEMENT OF DAVID B. SHEAR, DEPUTY ASSISTANT SECRETARY FOR EAST ASIAN AND PACIFIC AFFAIRS, U.S. DEPARTMENT OF STATE 

Mr. SHEAR. Thank you, Mr. Chairman, Mr. McKeon. I appreciate 

the opportunity to appear before you today. My colleagues from the 

Department of Defense have already addressed our military-tomilitary relations with China, so my remarks will focus on the 

President’s November trip to Asia as well as our broader security 

goals regarding China and the region. 

Since coming to office, President Obama has repeatedly stated 

that the United States welcomes the emergence of China, and that 

in an interconnected world power does not need to be a zero-sum 

gain. We welcome an international world for China in which its 

growing economy is joined by growing responsibility. And I would 

reiterate our desire that as the Chinese economy grows, they become a responsible member of the international community. 

President Obama’s trip to Asia in November 2009, with stops in 

Japan, Singapore, China, and South Korea, was intended to demonstrate the U.S. commitment to the region, build trust, articulate 

our values on issues such as human rights, and strengthen and expand our cooperation with China. The trip was productive in this 

regard. 

During his first-ever visit to China, the President deepened his 

acquaintance with his Chinese counterparts and demonstrated to 

them the importance we place on cooperating on such issues as 

Iran, North Korea, and Afghanistan. The President set the stage 

for further cooperation with China in preparation for the Copenhagen conference on climate change. He discussed exchange rates 

in trade, clean energy, military-to-military exchanges, human 

rights, and stopping the spread of nuclear weapons. We outlined 

the key accomplishments of the visit in a joint statement issued by 

President Obama and President Hu Jintao on November 17th. 

It has been said before that in order to get China right, you have 

to get the region right. The United States is a vital contributor to 

Asian security and economic prosperity. Our active presence in 

Asia helps promote regional security and stability. We intend to 

deepen our engagement and strengthen our leadership in the region by strengthening our complements to allies and partners and 

enhancing our involvement in regional institutions. And the Secretary addressed these issues as well as our presence in the region 

in an important speech in Honolulu yesterday. 

The President’s trip to China and the region demonstrated the 

importance we place on East Asia, which remains vital to U.S. security and prosperity. In the November joint statement, the Chinese recognized the positive role the United States plays in East 

Asia by stating that China welcomes the United States as an AsiaPacific nation that contributes to peace, stability, and prosperity in 

the region. 

The trip was also a continuation of our efforts to build a positive, 

cooperative, and comprehensive relationship between the United 

States and China. As President Obama has said, the ability of the 

United States and China to partner with each other is a prerequisite for progress on some of the most important issues of our 

times. Those issues include several important security challenges. 
9 

Issues such as North Korea and Iran cannot be successfully addressed without intensive and sustained involvement by China. To 

date we have been encouraged by China’s willingness to cooperate 

with these areas, although there is a lot of work to be done. 

We obviously do not see eye to eye with the Chinese on every 

issue. For example, on Taiwan, the United States remains committed to our one-China policy based on the three joint 

communique ́s and the Taiwan Relations Act (TRA). We believe that 

this policy has contributed greatly to the peace and stability of the 

past several decades, and we remain committed to that framework. 

We welcome the improvement in cross-Strait relations over the 

past year. At the same time we have voiced our concerns about 

China’s rapid military modernization program as it relates to Taiwan. 

China’s continued military buildup across the Taiwan Strait, despite improvements in cross-Strait relations, raises many questions 

about Beijing’s commitment to a peaceful solution to the crossStrait issue. 

Similarly, the United States and China have differences on the 

issue of human rights. The promotion of human rights remains an 

essential element of American foreign policy. As the President has 

said, it is a part of who we are as a people. President Obama has 

stated that the rise of a strong prosperous China can be a source 

of strength for the community of nations. 

This summer, we will hold another meeting of the U.S.-China 

Strategic and Economic Dialogue that we initiated last July. We 

will use this and other forms to continue building our relationship 

with China and to seek pragmatic cooperation on issues of mutual 

concern. At the same time, we will remain engaged and active 

throughout the region, supporting our allies and expanding our 

leadership in this vitally important part of the world. 

Thank you for the opportunity to make these remarks, sir. And, 

Mr. Chairman, if you don’t mind, I would like to say a little something on the subject of Google. As you all may know, Google made 

a statement yesterday about a cyber attack on its facilities allegedly originating from China. And Secretary Clinton made a strong 

statement on this yesterday, which I would like to repeat for you 

all. She said: We have been briefed by Google on these allegations 

which raise very serious concerns and questions. We look to the 

Chinese Government for an explanation. The ability to operate 

with confidence in cyberspace is critical in a modern society and 

economy. 

The Secretary also said that she will be giving an address next 

week on the centrality of Internet freedom in the 21st century, and 

we will have further comment on this matter as the facts become 

clear. The Secretary will deliver a speech on Internet freedom next 

Thursday that was scheduled before Google’s announcement. She 

has been very engaged on the issue of Internet freedom and anticipated the need to stake out clear policy ground on this subject. 

The Secretary had dinner with ten executives of leading hightech companies last week and discussed Internet freedom during 

that dinner. She has been actively listening and learning from 

those assembled executives, including Google’s Chief Executive Officer (CEO) Schmidt . She takes this issue very, very seriously. And 
10 

we have been in touch with Google subsequent to their contact 

with Secretary Clinton, and we have been in contact with all of the 

agencies dealing with cyber security on this issue, and we will be 

happy to remain in touch with you on this subject. 

The CHAIRMAN. Thank you very much Secretary Shear. 

[The prepared statement of Mr. Shear can be found in the Appendix on page 74.] 

The CHAIRMAN. A question to Admiral Willard and Secretary 

Gregson. What is the major security challenge our country has 

with China? And to Secretary Shear, what is the major nonsecurity 

challenge we have with China? Admiral. 

Admiral WILLARD. Chairman Skelton, I think the major security 

challenge is the level of uncertainty that exists in attempting to 

reconcile the public statements that China makes regarding its 

long-term intent, which is generally that it characterizes its military capabilities and capacities as defensive only and seeks a 

peaceful and harmonious environment in which to grow its economy and prosper, with a military capability that is not necessarily 

consistent with that characterization of the future in that the 

power projection capabilities, the capabilities’ capacities, both in 

asymmetric areas and conventional areas, tend to exceed that description. That ambiguity that currently exists and our attempts to 

reconcile that are the security issue that we hope to tackle in a 

military-to-military dialogue with our PRC counterparts. 

The CHAIRMAN. Secretary Gregson. 

Secretary GREGSON. I would only add to the Admiral’s remarks 

that we remain particularly concerned about their ongoing developments in the nuclear arena, cyberspace—as Secretary Shear eloquently discussed—and space capabilities. Their development in 

the air and maritime realms also fit in there, but particularly nuclear, cyberspace, and space capabilities constitute a potential 

asymmetrical threat to our ways of doing business. We watch all 

this very carefully. 

The CHAIRMAN. Thank you. Secretary Shear. 

Mr. SHEAR. Let me discuss the major nonsecurity challenges by 

sharing with you our priorities for our nonsecurity relationship 

with China. The number one priority is coordinating with China on 

the global financial crisis. Economic recovery is President Obama’s 

number one priority. And economic recovery and how we coordinate 

with the Chinese on this subject is the number one issue on our 

agenda with the Chinese. 

We want the Chinese to rebalance their economy as we rebalance 

ours. The Chinese people will need to save less and consume more. 

We would like to see the Chinese economy shift away from its emphasis on heavy industry export-oriented industry. We seek the 

Chinese pursuit of a market-oriented flexible exchange rate. All of 

these issues came up in the President’s meetings in Beijing with 

its Chinese counterparts. 

A second priority is cooperation with China on international security issues such as Iran and North Korea. 

And the third priority is coordination with the Chinese on the 

subject of climate change. And I think on climate change, we 

achieved some progress both with the Chinese and the inter-
11 

national community in the context of the Copenhagen conference 

several weeks ago. 

The CHAIRMAN. Mr. McKeon. 

Mr. MCKEON. Thank you, Mr. Chairman. In my opening statement, I highlighted some of the concerns when it comes to our policy approach toward China. From what I can gather from last 

year’s annual report to Congress, you share some of the same concerns regarding China: a shift in strategic priorities and behavior, 

especially as it expands its need for access to more markets and 

natural resources; expanding and improving disruptive military 

technologies in areas such as space and cyber space; a lack of 

transparency when it comes to military budget intentions and decision-making; and its increasing leverage in the region and around 

the world. 

Gentlemen, what precisely is the President’s China policy, how 

is it different from his predecessor, and how will it seek to address 

these shared concerns? I want to start with you, Admiral. 

Admiral WILLARD. Thank you sir. I think from the military 

standpoint, our approach to China is very much two-fold. It is first 

and foremost to seek to grow a relationship with China that encourages their constructive contributions to the security issues in 

the Asia-Pacific region. It is the purpose behind a military-to-military dialogue. It is the reason for our emphasis to the Chinese on 

the need for continuity, some constancy. In terms of that dialogue, 

we think that it is lagging behind the other engagements between 

our Nation and the People’s Republic of China. 

Secondarily, on the issue of the ambiguities that currently exist, 

the inconsistencies that we deal with in the Asia-Pacific region, we 

bear the responsibility to ensure our forward presence and the 

readiness of our forces in the region, to assure our allies and partners in the region and to continue to grow those relationships, as 

Secretary Gregson described in his opening comments, so as to 

maintain a security in the region that we have frankly been responsible for, for the past 150 years. 

So we will maintain our presence in the region as robustly as we 

have in the past as we continue to engage the Chinese in dialogue, 

and hopefully foster an improved relationship and get to some of 

the ambiguities that have been discussed thus far this morning. 

Mr. MCKEON. Thank you. Secretary Gregson. 

Secretary GREGSON. In the President’s words stated to the Chinese at the Security and Economic Dialogue as well as in Beijing, 

we seek a positive cooperative and comprehensive relationship with 

China. Secretary Gates’ interpretation or his characterization of 

our policy is that China is not a strategic adversary; it is a partner 

in some respects, but a competitor in others. 

Our Defense Strategy released in 2008 states, as you mentioned, 

a Chinese potential for competing with the United States. And that 

U.S. interaction will have to be long-term, multi-dimensional, and 

involve peacetime engagement between our defense establishments 

as much as it involves field and military capabilities. It is impossible to separate our engagement with China from our engagement 

with the region. Our consistent and increased engagement with the 

region are enhancements of our alliances and partnerships there, 

not only in the East Asian region but increasingly through the In-
12 

dian Ocean area, will be essential to us shaping the environment 

that will allow us to also shape or develop cooperative comprehensive relationships with the Chinese. 

Mr. MCKEON. Secretary Shear. 

Mr. SHEAR. In order to build a positive, cooperative, and comprehensive relationship, we are engaging with the Chinese to seek 

out common interests and devise ways of pursuing those common 

interests together. This is not an easy task. It can be very challenging. While we share common interests, our interests are not always identical. And our bilateral relationship with China, our approach to the region as a whole, as well as to maintaining our military strength in the region, are all part of a comprehensive approach to developing a relationship with China. 

Mr. MCKEON. Thank you. 

China, they are shifting away from labor-intensive relations and 

they are moving toward increasing production of high-technology 

goods. They have matured as a manufacturer and assembler of advanced technology products. They have created an attractive environment for foreign companies to make investments with increased 

subsidies, tax incentives, and preferential loans. 

At the same time, we are hearing concerns from industry that 

defense policy changes emerging from the QDR, coupled with recent anticipated cuts in DOD spending, will force U.S. industry to 

divest itself of certain capabilities, reduce our production lines, and 

inhibit innovation. 

Gentlemen, as the President develops his China policy, to what 

extent does U.S. industrial policy enter into his decisionmaking? 

I am concerned about our workforce. Do you share my concern 

that the United States industrial base may be unable to sustain 

the technological innovation that has been the hallmark of U.S. 

military, given the current physical environment? And can you provide specific examples of how the President’s China policy seeks to 

address China’s unfair trade policies and ensure that the U.S. military continues to have access to the manufacturing capacity, technological capacity, and strategic materials necessary to equip our 

warfighters in the future? 

Mr. SHEAR. If I may start, Congressman, with regard to China’s 

unfair trade practices. We have a multipronged approach towards 

trade with China that includes pursuing cases in the World Trade 

Organization (WTO) on Chinese unfair trade practices. And we 

achieved several successes last year in this regard, particularly 

with the protection of intellectual property rights. We are also enforcing our laws and regulations on trade, and the President’s decision on the 421 case on tires is a case in point. 

Again, we are also vigorously pursuing the Chinese on the enforcement of intellectual property rights. Overall, as we pursue economic recovery, I think attention to our technological capabilities 

will be central to the Administration’s approach to both the economy as a whole and to our economic relationship with China. 

Mr. MCKEON. Admiral. 

Admiral WILLARD. Representative McKeon, while trade is not in 

my lane, certainly the industrial base and the production of our 

military capacities is. And I would only offer that the work that 

you do as a committee to help to strengthen the United States in-
13 

dustrial base on behalf of its military, the attention that you pay 

that—and I know that Secretary Gates’ emphasis on doing what we 

can to strengthen the U.S. industrial base in support of our Armed 

Forces is of critical importance. And I would offer, one, my thanks 

to you for our efforts in this particular area, and again offer my 

emphasis on the criticality of an industrial base that can support 

this military not in the near term, but in the long term. 

Mr. MCKEON. Thank you very much. 

Secretary GREGSON. Mr. McKeon, it is clear that China is developing an increasingly capable technical and industrial base. It is 

also clear that they are able to procure certain items of foreign 

military goods and technology and reverse-engineer it to suit their 

needs. 

At the same time, industrial espionage is not unknown. Our intelligence agencies and our technology control agencies exercise as 

vigorous a control as possible to ensure that we not only prohibit 

unauthorized American transfers of technologies to China, but also 

that our other partners around the world obey our tech control restrictions. 

Behind the industrial base, of course, is also the American educational base. And I think that we need to make sure that that 

base, the colleges and universities, the quality of the graduates 

that we are producing, is maintained. We have the advantage of 

qualified students from all over the world that want to come to the 

United States to go to our schools, and we are enriched by that 

process, as is our entire educational and then on into the industrial 

and technical base. We need to make sure we maintain that as a 

priority so that we can meet the goal that you set out that we 

maintain our advantages. 

Mr. MCKEON. Thank you very much, Mr. Chairman. 

The CHAIRMAN. I thank the gentleman. Dr. Snyder. 

Dr. SNYDER. Thank you, Mr. Chairman. I appreciate you all 

being here. 

Secretary Gregson, it is hard to believe it has been about 40 

years since your Vietnam days. We appreciate your service there 

as a marine, a young marine in Vietnam. 

Mr. Shear, I am going to direct my questions to you just because 

of our limitations on time, but Admiral and Secretary, feel free to 

join in if you want to augment what Mr. Shear has to say. Mr. 

Shear, what do you see, what does the Chinese Government perceive as their greatest existential threat? 

Mr. SHEAR. I think Chinese security goals—the Chinese pursue 

a variety of security goals. I think the number one goal is the preservation of the Chinese Communist Party (CCP). I think the Chinese Communist Party is very concerned about the prospects for 

social stability in China. I think they spend a lot of time and resources trying to ensure that the vast social and economic changes 

they are undergoing do not shake their rule of China. 

Dr. SNYDER. So as the Chinese Government is sitting there looking ahead, they see their greatest existential threat not the United 

States, not Taiwan, not the Japanese or any other foreign entity, 

they see their greatest existential threat as being something happening internally. Is that a fair summary of what you said? 
14 

Mr. SHEAR. Yes. I think the Chinese pay a lot of attention to internal security and internal social stability, and that is a number 

one goal for them. 

Dr. SNYDER. Would you—I forget the length of time it has been 

since we had that devastating earthquake in China that I think 

caught the world’s attention probably longer than some of these 

tragedies do because of what happened to the school buildings. And 

I was surprised by the level of cracking down the Chinese Government exerted on parents trying to find out what happened. 

As you look back at that, how do you analyze what occurred with 

regard to the internal discussions, internal investigations, that occurred around the destruction of the school houses? 

Mr. SHEAR. I agree, the destruction of the school houses, the loss 

of lives, as well as the overall destruction in Sichuan province was 

very tragic. We did everything we could to help the Chinese recover 

from that. 

Dr. SNYDER. I am interested in stifling the investigation internally about what occurred, the building codes at school buildings. 

Mr. SHEAR. My belief is that the Chinese Government has conducted an investigation and that that they have concluded that 

they need to improve building codes. They have not been particularly transparent in the extent to which they have conducted this 

investigation. They have, as you say, repressed dissent on this subject. It was very interesting watching the Chinese public’s reaction 

to the earthquake, however. There was a great deal of spontaneous 

interaction on the Internet; voluntary groups arose spontaneously 

through communication on the Internet, and a lot of Chinese simply up and volunteered to go to Sichuan to help things out. So you 

have a very complicated situation. 

Dr. SNYDER. Going back to what you said about the number one 

threat they perceive as internal stability, if you aggressively repress and stifle the efforts of parents to find out why their children 

died because of bad local government policies in terms of approval 

of building codes, isn’t that an indication of evidence for your first 

statement? I mean, I don’t know how to look at it other than they 

were apprehensive that somehow a local effort to figure out what 

happened with local building codes could turn into some kind of a 

national movement. Because if there were bad policies in those 

school buildings, I suspect it could have occurred anywhere. Is that 

a fair analysis? 

Mr. SHEAR. I agree. 

Dr. SNYDER. I want to ask, too, you are a linguist and have 

lengthy State Department experience, where are we with regard to 

the development of Chinese languages skills amongst our folks 

here that aspire to be both part of the military, part of Admiral 

Willard’s group, but also State Department? Where are we at with 

regard to Chinese language skills? 

Mr. SHEAR. The State Department itself has an extensive language product conducted both in Washington, in Taipei, and in Beijing. I myself was one of the first—was the first foreign service officer (FSO) to study Chinese in mainland China after 1949. I went 

to the Johns Hopkins Center in Nanjing. 

Dr. SNYDER. The fact that we have an aggressive State Department program is an indication that we don’t have language skills 
15 

within the American public at large. Where do you see that in 

terms of as we move ahead? 

Mr. SHEAR. I agree that we need more Chinese language skills 

developed within the American public at large. We have seen great 

growth in Chinese language teaching in high schools and at the 

university level. And in this regard the President announced a very 

strong initiative during his trip to increase the number of American students in China to 100,000 over the next 4 years, and we 

will be working to implement that in the coming weeks and 

months. 

Dr. SNYDER. Thank you all for your service. 

The CHAIRMAN. I thank the gentleman. Mr. Bartlett. 

Mr. BARTLETT. Relevant to Dr. Snyder’s question, I would like to 

suggest that China has two concerns that largely illuminate their 

very aggressive military buildup. The first is Taiwan, a tiny island 

the size of Maryland, three-fourths of which is truly uninhabitable, 

20-some million people, versus a homeland of 1,300,000,000 people. 

Why the big concern? I think they see if Taiwan can declare its 

independence, so can a lot of other regions, like Tibet, for instance, 

and they see their empire unraveling if Taiwan can do this. 

So I hope that we can resolve this concern diplomatically because 

I think China will do anything necessary militarily to keep Taiwan 

from declaring its independence. 

The second major concern they have—and, Admiral, you mentioned that in the eighth page of your prepared testimony—energy. 

I led a congressional delegation (CODEL) of nine Members to 

China three years ago to talk about energy, and they began their 

discussion of energy by talking about post-oil. 

We in the Congress have a lot of trouble seeing beyond the next 

election, and our business community is primarily focused on the 

next quarterly report. The Chinese are looking ahead decades and 

generations, and there will indeed be a post-oil world. The Chinese 

are now aggressively buying up oil all over the world and buying 

goodwill. 

And, Mr. Secretary, I ask the State Department, why would they 

buy up oil when in today’s world it makes no difference who owns 

oil? Who comes to that, what is in effect a global auction, with the 

dollars buys the oil. So who owns the oil makes no difference. They 

told me the Chinese were buying oil because they didn’t understand the marketplace. I think they understand the marketplace 

very well. And I think that in the future, the Chinese will tell us, 

‘‘Gee, guys, I am sorry, but we own the oil and we cannot share 

it with the world.’’ 

To make that a reality they have to have a blue water navy big 

enough spread globally across the world far enough to protect all 

of the sea lanes for the passage of this oil. To the extent that we 

continue to use a fourth of the world’s oil, that we have done nothing to reduce our demand for foreign oil, I think we hasten the day 

that the Chinese will tell us we are not going to share our oil with 

the world. 

What should be our policy relative to energy, because I think it 

is an overarching issue. Oil is now $80 a barrel. The world will 

never ever again have sustained good times until we do something 

meaningful about alternative energy. And so far, we the world and 
16 

we the United States have done nothing meaningful about aggressive conservation or alternative energy. What ought we be doing to 

avoid this real potential threat from the Chinese to deny us access 

to oil because they own it? 

Mr. SHEAR. Congressman, we are pursuing intensive dialogue 

with the Chinese on the subject of energy security, in which we 

have raised our concerns about Chinese efforts to lock up oil reserves with long-term contracts, and will continue to engage them 

on this subject at very senior levels. 

Mr. BARTLETT. But, sir, engaging them on the subject is quite irrelevant. As long as we continue to be largely dependent and increasingly dependent on foreign oil, we have no meaningful program of conservation or development of alternative energy to wean 

us from oil. Oil is an incredible energy source. The quantity and 

quality of energy and oil is unmatched anywhere in liquid fuels. 

And to the extent that this 1 person in 22 uses a fourth of the 

world’s oil, to the extent that this continues, do we not make inevitable this confrontation with China over energy? 

Mr. SHEAR. We share your concerns on this subject, Congressman, and our energy security dialogue with the Chinese is aimed 

at avoiding conflict over the search for oil. 

Mr. BARTLETT. I would like to see shared concerns matched by 

some meaningful leadership action. Sir, I just don’t see that. Do 

you see it? 

Mr. SHEAR. We have worked with the Chinese to increase their 

cooperation with the International Atomic Energy Agency (IAEA). 

We have seen some progress there. The Chinese are building an oil 

reserve, an emergency oil reserve, which we welcome. We are going 

to keep pursuing this issue with the Chinese. 

Mr. BARTLETT. Thank you. 

To China envisioning a post-oil world, I think we in no way believe that there will be a post-oil world. I would suggest that we 

ought to confer more with the Chinese so that collectively we do 

not precipitate huge international crises over energy. Thank you. 

The CHAIRMAN. I thank the gentleman. 

Mrs. Davis. 

Mrs. DAVIS. Thank you, Mr. Chairman. 

Thank you to all of you and thank you for your service as well. 

If I could follow up on my colleague’s question, I guess, how 

would you characterize China’s energy dependency as influencing 

its defense policy? Would you say that to a great extent, or if you 

would like to characterize that for us? And how has it used the sale 

of military technologies to secure energy deals? Is that, again, a 

large part of their policy, or to a greater, less extent, and what 

should we be doing about that? 

Mr. SHEAR. I will defer to my Defense Department colleagues on 

this subject. 

Secretary GREGSON. Thank you. 

We see China increasingly developing the ability to get, to move 

beyond concerns of territorial defense and moving around the world 

in large part to protect their access to energy sources and to protect 

the lines of communication. It would suggest it drives not only defense policy for China to an extent, but it also drives a lot of their 

foreign policy. 
17 

We tend to focus on the development of the Chinese navy, thinking of the lines of communication from the Persian Gulf. Saudi 

Arabia is their biggest supplier of oil. Angola is the second. But 

there is also, the Chinese are also concerned with energy extraction, mineral extraction in Central Asia and other areas, so it is a 

definite driver of their policy. 

Sale of military technology is a concern, particularly to states 

that are of keen interest to us, such as Sudan and others, where 

arms deals have been negotiated and executed. One can derive a 

conclusion that if they are importing oil from there, that there is 

a connection between the arms deals. Nevertheless, while we suspect a connection, we are concerned about Sudan. And any arms 

transfers to Sudan, of course, are of concern. Yes, we see that, too. 

Mrs. DAVIS. In our discussions, and I might turn to Admiral Willard in terms of the transparency and the relationships, the military relationships. In that regard, in terms of energy, is that an 

issue that has some transparency in discussion, or would you say, 

again, that that is of great concern to us but one that we are not 

able to impact greatly? 

Admiral WILLARD. I think the Chinese have actually been quite 

vocal regarding their concerns over their sea lines of communication (SLOCs) in particular, as it relates to the movement of all 

their commerce, to include their trade but as well energy and other 

natural resources. 

They refer to, in particular, the Malacca problem, which is their 

choke point, all of our choke point, at the Strait of Malacca, and 

the strategic value of that Strait and the importance of protecting 

and securing those sea lines to include the various choke points 

that exist between the sources of those natural resources and commerce and China itself. 

Secretary Gregson, I think, said it well. The expansion in their 

naval capacity and their Air Forces certainly has a dimension to it 

that has to do with securing their regional commercial interests. 

How far that will extend beyond the Asia-Pacific region, the South 

China region, and East China Sea into the Indian Ocean region remains to be seen. But they are demonstrating the capability to operate at longer ranges by virtue of their assistance to the international counter-piracy issue in Gulf of Aden now and their ability 

to sustain their operations there. 

Mrs. DAVIS. Secretary Shear, would you say that in the development of our relationships, then, and that we are working with that 

in a more cooperative way or, again, not having quite the ability 

to have that at a level of discussion that we are seeking, and what 

are we doing about that? 

Mr. SHEAR. At the same time, we are discussing with the Chinese energy security and regional security issues. At the same 

time, we are seeking more transparency from the Chinese in their 

defense and security policies. 

We are also strengthening our relationships throughout the region, particularly in Southeast Asia. Secretary Clinton has visited 

Southeast Asia three times last year. She is in the region again as 

we speak. And remaining in contact with our friends and allies 

throughout the region, particularly in Southeast Asia, will play an 

important role in our addressing this. 
18 

Secretary GREGSON. If I may touch very briefly on one aspect of 

your question about transparency, it is not strictly a defense equity, but there is active engagement in the scientific and educational communities on development of renewable energy between 

China and the United States. Usually it occurs in conferences and 

efforts under the cognizance of the Department of Energy (DOE) or 

the Department of Interior (DOI). So that is one encouraging sign 

that there is some thought to life beyond oil. 

Mrs. DAVIS. Thank you. 

The CHAIRMAN. I thank the gentlelady. 

The gentleman from Virginia, Mr. Forbes. 

Mr. FORBES. Thank you, Mr. Chairman. 

Mr. Chairman, I want to begin by thanking you for not just this 

hearing but for asking a lot of tough questions about China and the 

United States’ relationships before many Members of Congress did 

that. I appreciate your leadership on that. 

Also, Admiral, thank you so much for your service and for your 

wife’s service. I know that is a partnership team. 

For all of your staff, I know the heavy work that they have to 

do just to come to a hearing like this. 

Mr. Secretary, this year we appreciate so much all of you being 

here. 

I am going to try to ask my questions so that they can have short 

and succinct answers, not because I want to cut you off, because 

I would love for you to extrapolate any way you want in the record; 

just because I only have five minutes, and this microphone goes 

dead. 

But, Admiral, I looked at your testimony, and as I read that testimony, China currently has 290 ships in their navy. Am I accurate 

in that assessment? 

Admiral WILLARD. Roughly, yes, sir. 

Mr. FORBES. Roughly. That number doesn’t exist in a vacuum. 

Isn’t it significant that we try to extrapolate or actually get some 

idea of what their shipbuilding plan actually is so we know how 

many ships they are going to be building over the next several 

months if we want to try to project our strength against theirs? 

Admiral WILLARD. Of course. 

Mr. FORBES. Is that a significant component to our evaluation? 

Admiral WILLARD. It is part of a broad evaluation of China’s future. 

Mr. FORBES. If we look, according to the 2009 Military Power of 

People’s Republic of China Report to Congress produced by the 

Pentagon just a few months ago, the estimate was that they had 

260 ships; is that correct? 

Admiral WILLARD. I would have to go back and seek that number. 

Mr. FORBES. Let me just tell you, for the record, it was, so we 

missed it by about 30 ships. How many ships do we currently have, 

roughly, in our Navy now? 

Admiral WILLARD. In the Pacific Command, I have access to 

about 180 ships. 

Mr. FORBES. Overall in the Navy, any idea? 

Admiral WILLARD. About 283. 
19 

Mr. FORBES. We have 283. According to the report that was given 

us a few months ago, they had 260 ships. Again, just as one component, fewer ships than we did. According to your testimony, they 

have 290. That is more ships than we do. 

Again, I know that is just one component to look at, but it shows 

the importance, I think, and the significance of having some idea 

of what kind of shipbuilding plan they are undertaking so we know 

whether that 260 ships were accurate or the 290 ships were accurate. 

Mr. Secretary, I would like to ask you if the United States currently has a shipbuilding plan, not whether it is being modified, 

not whether you like it, not to even ask you to tell me what it is, 

but do we currently have a shipbuilding plan for the United States 

of America as you know it from the Department of Defense? 

Secretary GREGSON. There is a plan, as delineated in the program and in the President’s budget, yes. 

Mr. FORBES. So it exists? 

Secretary GREGSON. Yes, sir. 

Mr. FORBES. Now, are you aware that, by law, the Department 

of Defense was supposed to give the United States Congress that 

shipbuilding plan when they submitted the budget, so that we 

would know and could make the same kind of comparisons that the 

Admiral talked about were significant in knowing about the ships 

that the Chinese had, that we were supposed to have that by law 

submitted to us at the time the budget was submitted? 

Secretary GREGSON. It is not our intention to ever ignore any requirements from Congress. 

Mr. FORBES. Just asking you whether you knew that that was 

the law or not? 

Secretary GREGSON. No, I did not. 

Mr. FORBES. The question I would ask you, Mr. Secretary, if you 

could supply for the record at some particular point, if that shipbuilding plan existed, I would just submit to you, one, the law required that we get a copy so we could make that same kind of comparison. 

Secondly, this committee unanimously had a congressional inquiry demanding that you comply with the law, the Department of 

Defense, and give it to us. To date, we still haven’t had it. I would 

just ask you to submit to the record for us the legal justification 

of why you refused or the Department of Defense refused to give 

the United States Congress their shipbuilding plan. 

Then I would also ask you if you want to submit for the record, 

because I won’t have time to have you in my minute and 15 left, 

how we can legitimately talk about a lack of transparency with 

China when we won’t submit our own shipbuilding plan to the 

United States Congress? 

Mr. Shear, I would just ask you, again, shortly for your testimony, if you could submit to us for the record, I was excited to hear 

about the victories that we have had in wins with intellectual property rights and the economy with China, and we want to get those 

publicized because I don’t hear them, you know, anywhere that I 

look or study. 

If you would submit a list of those victories that we have had 

this year for the record, both with intellectual property rights and 
20 

the Chinese economically for the record, we would love to have 

them so we can talk about them and get them out. 

[The information referred to can be found in the Appendix beginning on page 83.] 

Mr. FORBES. With that, gentlemen, thank you so much for your 

service and for being here. 

Mr. Chairman, I yield back. 

The CHAIRMAN. Thank you very much. 

Admiral, I might point out that one of those most memorable 

congressional moments was when, along with Mr. Forbes, we planted the tree at Kunming in memory of the American fliers who flew 

the hump and those who were part of the Flying Tigers during the 

Second World War. I certainly hope that you will be able to revisit 

that place for us and give us an update on the tree that we planted. 

Admiral WILLARD. I will do that. 

The CHAIRMAN. Mr. Marshall. 

Mr. MARSHALL. Thank you, Mr. Chairman. 

I would like to yield my time to the chairman of the Seapower 

Subcommittee, the gentleman from Mississippi, Mr. Taylor. 

Mr. TAYLOR. Thank you, Mr. Chairman. 

Thank you, Mr. Marshall. 

Admiral, you know, in my life, I never guessed as a kid we would 

be at war in Panama or Afghanistan or Bosnia. You know, we always thought it would be the war against the Russians, and thank 

goodness that did not happen. 

With that in mind, the things we don’t expect to happen often 

do happen. One scenario that concerns me is that, you know, our 

carriers can go about 15 years from here to there on the fuel that 

is built into that vessel. But the vessels that defend those carriers 

have to refuel every three to five days. 

A logical assumption is that the weak link, then, in our carrier 

task force is the oiler that supplies that destroyer or cruiser that 

protects the carrier. If I am a potential enemy of the United States, 

I am not going to hit us where we are strong; I am going to hit 

us where we are weak. It is my understanding that we have a limited number of oilers in the Pacific, somewhere between 8 and 12. 

And so the logical question would be, you know, since our enemies have been pretty good at finding our weaknesses and exploiting them, and thus the improved explosive device (IED) in Iraq, 

what steps is the Navy taking should some scenario develop in the 

Pacific where a potential enemy’s first step is to take out those 8 

or 12 oilers? Does the fleet then fail to sail? Because one of the 

things really that Congressman Bartlett impressed on me is our 

need for energy independence in the long term. 

One of the ways that we can achieve that, as we know, is with 

nuclear-powered surface combatants. Each one of those can save 

about ten million gallons of fuel per ship per year, plus you don’t 

need that oiler. You lose that weak link. 

Now, Congress has passed language that says our next generation of surface combatants is going to be nuclear-powered. We have 

passed legislation that says the next generation of large-deck 

amphibs is going to be nuclear power. 
21 

But what I don’t see is the Navy taking any steps to implement 

that. That is one thing. 

The second thing is, in the short-term, if you have only got 8 or 

12 of this thing that is vital, what steps does the Navy have as a 

backup should a clever foe decide that round one is to take out the 

oilers? What is your backup plan, and what are we doing in the 

short-term to increase those numbers so that that worst-case scenario doesn’t happen? 

Admiral WILLARD. Thank you, Representative Taylor. 

I think you bring up some provocative issues, and that is how we 

handle some of the tactical level risks to our force complement 

when we conduct major-scale operations. And certainly the protection of our tanking assets at sea is a major factor in our planning 

and in the way in which we attempt to mitigate potential 

vulnerabilities. 

I think, to your point regarding nuclear power, we gain great 

flexibilities with our aircraft carriers and our submarines being nuclear-powered. As you suggest, our surface ships do rely on refueling. I would offer that we refuel at sea. We also refuel in port. 

When we are operating in the western Pacific, the approach is to 

complete both of those. 

We also have the capability, though it is exercised rather rarely, 

to refuel our surface ships from our carriers themselves. Our big 

deck ships have the opportunity to conduct refueling of our smaller 

escort ships. 

Between protection operations around them and the various 

ways in which we can take advantage of geography and the force 

complement to conduct refueling, we manage this problem, and our 

naval commanders are tasked with planning around it and managing it very carefully. 

I take your point that refueling of our ships is keenly an area 

that we have to focus on, and the adequacy of our tanker fleet to 

be able to ensure that we have the freedom of actions that we require in our operations is very important. 

Mr. TAYLOR. Admiral, if I may, the chairman is going to gavel 

this thing in 20 seconds. I have laid out my concerns. Would you 

have someone from your office, at your convenience but hopefully 

in the very near future, come visit with me with a more detailed 

and in-depth answer than you are able to give in public? 

Admiral WILLARD. Be happy to. Thank you. 

Mr. TAYLOR. Thank you, sir. 

The CHAIRMAN. Thank you. 

The gentleman from Minnesota Mr. Kline. 

Mr. KLINE. Thank you, Mr. Chairman. 

Thank you, gentlemen, for your service and for being here today. 

It seems like forever that we have been concerned with, worrying 

about China’s role in a couple of places. I would like for you to 

touch on briefly some of which you already have. One is, of course, 

when General Gregson and I were lieutenants, we were worried 

about Taiwan, the Straits and China and what China’s actions may 

be. And in that case, we were probably mostly worried about what 

the Taiwanese government might do that might precipitate military action on the part of China. 
22 

It seems we are sitting here today, and we still have some of 

those concerns. President Ma in Taiwan and some new folks there 

may have changed some of that dynamic, and I would be interested 

in your discussing where you think we are and what the level, if 

you will, of tension is now in China-Taiwan relations. 

Then the other one that never goes away and we have been discussing in our lifetime, we have had U.S. forces in Korea since before Mr. Gregson and I were lieutenants and certainly before you 

were an ensign, Admiral. And we still have troops there. And the 

question here is China’s role in being able to influence actions in 

North Korea, particularly with their nuclear and missile activities. 

We have 3 minutes and 22 seconds. If any of you or all of you 

can address both of those and how you see China, where China is 

now in both of those issues, relationship with Taiwan, the potential 

for military action there and how China is doing in helping us get 

back to the Six-Party Talks, and what is going on in North Korea? 

Secretary GREGSON. Thank you for those questions. I will go very 

quickly, so my colleagues can jump in. 

Since the election of President Ma Ying-jeou, Taiwan and China 

have undertaken a series of reciprocal actions that we find very favorable. Direct flights, visitations to offshore islands, business ties, 

all the sinews of normal peace-time engagement that we think contributes to a decrease in tension and operates in support of our objective of a peaceful settlement of issues across the Taiwan Strait. 

It has been mentioned more than a few times before, we remained concern about the buildup of PRC military capabilities 

across the Strait. We watch very carefully not only the amount of 

that buildup but the types of systems that they are developing to 

make sure that we maintain the ability to fulfill our obligations 

under the Taiwan Relations Act (TRA). 

On North Korea, we are encouraged by China’s support of United 

Nations (U.N.) Security Council Resolution 1874, very important to 

prevent North Korea from profiting from their nuclear-related technology, their missile-related technology. It is very important to 

keep North Korea from exporting any type of weapon systems that 

are prohibited under 1874. 

China’s support is essential to maintain an international consensus to keep 1874 a viable resolution, and we are very positively 

encouraged, as I said, about their development on that. 

In the meantime, we continue to ask China to exert their influence to work on their neighbor to convince them of the wisdom of 

complete, verifiable and irreversible denuclearization, which remains our goal with North Korea. 

Mr. KLINE. And are you getting a good response from the Chinese in that effort? I mean, that is what we are getting down to. 

We have said for a long time that we cannot have success with the 

denuclearization and the demilitarization or missilization, I guess, 

if that is a word, of North Korea without China’s active participation because of the enormous influence that China has with North 

Korea. 

Are we seeing that influence, or is it sort of quiet now? 

Secretary GREGSON. We are seeing influence. We would like to 

see more influence for our part. We have made it quite clear that 

we intend to fulfill all of our obligations to our allies and that we 
23 

will, to the extent that we are not successful in achieving complete, 

verifiable, and irreversible denuclearization in North Korea, we 

will enhance those alliances, and we will enhance our ability to enforce our alliance obligations, and that that is a condition that contributes as much to instability in Northeast Asia as any other scenario that China could be worried about. 

Mr. KLINE. Thank you. 

I see my time has expired, so I will yield back the two seconds. 

Thank you, Mr. Chairman. 

The CHAIRMAN. I thank the gentleman. The gentleman from 

Washington, Mr. Larsen. 

Mr. LARSEN. Thank you, Mr. Chairman. 

Gentlemen, thank you for coming today. 

Secretary Gregson, with regard to Monday’s missile test, how 

would you characterize the notification China gave to the international community compared to what the U.S. does when we conduct a missile test or even when Russia conducts a missile test? 

Secretary GREGSON. I am not aware that we received any notification until after the test. 

Mr. LARSEN. How would that differ, then, how would that differ 

largely with a ballistic missile test process that the U.S. undertakes or that Russia undertakes? Do we provide notification? 

Secretary GREGSON. Traditionally, through notice to mariners, 

notice to airmen, closure areas, various things, yes. 

Mr. LARSEN. So there was no indication at all or, not indication; 

there was no communication with the international community 

about the missile test and its reasons and so on, at least as far as 

we know from China? 

Secretary GREGSON. I am looking at my colleagues. I am personally not aware of any. 

Mr. LARSEN. Secretary Shear, do you have any thought on that? 

Mr. SHEAR. We are not aware of any prior notification of the test. 

We have spoken with the Chinese since the test. We have asked 

them for more information. We have asked them to be more transparent with regard to this test and their testing in general. 

The Chinese have only responded so far that this particular test 

was defensive in nature. It was not aimed at any specific countries 

and that no orbital debris was created by this test. 

Mr. LARSEN. Something we could all read in the paper ourselves 

but not actually helpful. That is my comment. You don’t have to 

comment on that. 

Mr. Chairman, before we move forward, I have a statement for 

the record. I would like unanimous consent to enter that. 

The CHAIRMAN. Without objection. 

[The prepared statement of Mr. Larsen can be found in the Appendix on page 44.] 

Mr. LARSEN. Thank you. 

For Secretary Shear and Secretary Gregson, China may be our 

most important dialogue in Asia right now, but Japan clearly remains our most important ally in the region. This reports, obviously, with the new Japanese government trying to seek or create 

or develop in concept an East Asia security group between Japan, 

China, and South Korea—recent statements indicate that maybe 

Japan all along was intending to include the United States. 
24 

How would you discuss the steps that the U.S. has taken to 

strengthen the U.S.-Japanese relationship while we are also pursuing a various set of relationships with China? I mean, Secretary 

Shear can start there, and Secretary Gregson can follow. 

Mr. SHEAR. We are working very closely with the Japanese to 

strengthen the alliance. Secretary Clinton met with Foreign Minister Okada in Honolulu yesterday. They celebrated the 50th anniversary of the U.S.-Japan Security Treaty. They recommitted to 

strengthening the alliance. I think it was a very good meeting. 

Mr. LARSEN. Secretary Gregson. 

Secretary GREGSON. We have been undergoing for some time a 

transformation and realignment of U.S. forces and Japanese forces 

within Japan. Pending is the continuation of the realignment with 

the buildup of U.S. forces in Guam. The Guam program also includes near continuous presence of Japanese aviation and ground 

forces in Guam and their training. We look forward to rapid implementation of that as a way to adapt and transform the military 

and security aspects of our alliance for the new century. 

Mr. LARSEN. Thanks. 

Back to the missile test, and this may be for Admiral Willard or 

for Secretary Gregson, given the recent Taiwan arms sales going 

through and in the context of this missile test, do we see this as 

a tit-for-tat, and do we anticipate something else happening because of the Taiwan arms sales, which I think most of us, all stand 

four-square behind? 

For instance, when they were announced in 2008, China suspended any further military-to-military discussions, including the 

consultative talks, but those started up again last month, I think. 

Are we anticipating another tit-for-tat because of the arms sales, 

Admiral Willard? 

Admiral WILLARD. Well, if history bears out at such time as arms 

sales would be announced or their consultation with our Congress 

would take place, the PRC has typically reacted very vocally, and 

our military-to-military engagement has historically been suspended. Whether or not that is the case this time or not will remain to be seen. 

I would offer that in the discussions that General Xu had with 

the Secretary and with me on his way back to Beijing, we emphasized the need for constancy in that military-to-military dialogue. 

We were explaining the mutual benefit of maintaining it, whether 

or not differences erupt between our governments or not. 

Again, I think we will be testing the maturity of that militaryto-military relationship in the future, not just over our legal obligation to conduct Taiwan arms sales, but over other issues between 

our governments as well. 

Mr. LARSEN. Thank you. 

I see my time is up. 

The CHAIRMAN. Mr. Coffman. 

Mr. COFFMAN. Thank you, Mr. Chairman. 

I would like to ask the panel to address what I believe has become a very serious emerging national security threat as it relates 

to China. It has to do with industrial base supply issues controlled 

by China and not any specific military threat, but I am hoping, 

given your background and your current positions focusing on Pa-
25 

cific Rim nations, to garner the benefit of your thoughts and comments. Worldwide demand for rare earth elements are escalating 

rapidly. 

Rare earths are used in a number of applications, including 

emerging green technologies, and many of us on this dais have concerns as to what that means for American innovation and domestic 

job growth. But the fact that so many national security and defense 

systems require these materials to function and operate is of greater concern to us here at this hearing. 

Ninety-five percent of worldwide rare earth reserves being 

accessed today are located in China or controlled by Chinese-led interests. Today, there are no rare earth elements or production sites 

of significance taking place in North America or anywhere outside 

of China. 

China’s domestic demand for rare earth elements could easily 

equal Chinese production as early as 2012. Furthermore, in October of 2009, an internal report by China’s Ministry of Industry and 

Information Technology disclosed proposals to ban the export of 

five rare earth elements and restrict supplies of the remaining metals as early as next year. 

I ask the witnesses to comment on these developments and address their entity’s situational awareness of the reliance on these 

rare earth elements, what they feel are the strategic implications, 

and how they plan to develop an appropriate policy to mitigate this 

impending supply crisis as it relates to national security and defense? 

Mr. SHEAR. Sir, I would like to take that question for the record 

and get back to you as soon as we can. 

[The information referred to can be found in the Appendix beginning on page 84.] 

Mr. COFFMAN. I appreciate that. 

Very well, anyone else care to respond? 

Secretary GREGSON. Likewise. 

Mr. COFFMAN. A second question. About four or five years ago, 

I believe that since we don’t have formal relations with Taiwan in 

terms of an ambassador here, I think general counsel might be the 

term—I am not sure what the term is for their diplomatic representative in Washington—I was at a dinner seated next to him 

and asked him what the most significant national security issue 

was to Taiwan. At that time he said a recession in China. 

I asked him why that was the case. He said because then he felt 

that the leadership of the People’s Republic of China, the PRC, will 

look outward as to threats to deflect the attention of the people of 

China on their own domestic problems, and that is where he felt 

that Taiwan would be the most vulnerable. 

I wonder if any of you could comment on that? 

Secretary GREGSON. That has, the relationship of economic development, national development, to the authority, legitimacy of the 

leadership has been often discussed as a matter of speculation. A 

connection has been drawn, and as a matter of fact, it has often 

been stated that eight percent per year growth or better is necessary to maintain domestic tranquility within China. 

While we watch that from the defense side, we also watch the 

development of capabilities. We try and make sure that we have 
26 

done everything we can to counter the capabilities we see on the 

other side of the Strait. Relying on the fact that we can’t read 

minds and read intentions with clarity, we can draw inferences and 

we can get ideas. But we are not relying on the conditions of prosperity to be a guarantee that nothing bad will happen. 

We are taking all appropriate precautions to make sure we can 

react if the situation worsens, regardless of what the prosperity situation is across the Strait. 

I understand the points of your dinner companion, and I think 

it is an interesting observation, a very interesting observation, particularly from their side. But on the defense side, we remain oriented on the capabilities. 

Mr. SHEAR. The Chinese Government certainly appeals to Chinese nationalistic sentiment frequently, but we don’t see an uptick 

in that or an effort to blame Chinese domestic problems on foreign 

sources as a result of the economic downturn. It looks to us like 

the Chinese economy is turning around. They had eight percent 

growth last year. I think they may have eight to nine percent 

growth this year. We are not seeing that phenomenon happen right 

now. 

Mr. COFFMAN. Thank you, Mr. Chairman. 

The CHAIRMAN. I thank the gentleman. 

Mr. Kissell. 

Mr. KISSELL. Thank you, Mr. Chairman, and welcome gentlemen. 

Admiral Willard, thank you for being here, and thank you for the 

service that you render to your nation. 

I am going to go back a little bit. As we know, China is an ancient kingdom many thousands of years old, and I am going to go 

back 2,000 to 3,000 years. 

Sometimes when we study history, we tend to separate our time 

lines and forget that history moves at the same time period. In the 

time period while Europe was in the Middle Ages and before, 

China was a prospering kingdom and arguably could have made 

some of the same decisions that Europe later made in terms of conquest, expansion, exploration, and did not. And if the history book 

that I taught from was correct, it was a decision that this was not 

a pursuit that they wanted nationally to evolve to. And while Europe later came to dominate the world, China in many ways chose 

not to do that. 

And if you look at the history since then, of course, the time period where the European nations tended to dominate China, that 

China has never pursued that course of what you maybe call aggression or expansion or looking overseas and other places for, you 

know, their national prospects. 

I am trying to get an idea in my mind what is the mindset of 

the Chinese now. How much has that changed, or has it changed? 

We have talked about all the ambiguities that exist among what 

China may be doing. For our two secretaries, if you had to narrow 

it down, what is the Chinese mind set? Is it aggressive? Is it defensive? Is it, we want to be equal to, we want respect? What is the 

mindset of the Chinese now? 

Mr. SHEAR. We are familiar with your view of Chinese history. 

From our historical experience, we see rising powers as a potential 
27 

challenge to the international community. We hope to avoid that in 

China’s case by engaging intensively—— 

Mr. KISSELL. And I don’t mean to interrupt, but what is the Chinese mindset? I understand how we view it, but what do you think 

that they, long-term, how are they trying to position themselves, 

and why? 

Mr. SHEAR. I think the Chinese want to express themselves as 

a major global power. I think they have done that mostly economically so far. I think that remains a lower priority on their list after 

securing communist power, communist party stability in power, 

and after domestic economic development. 

Secretary GREGSON. I would concur with that. 

I might add that I think a lot of Chinese attitude consists of the 

fact that world trends are working in their direction now and that 

it is time for them to enjoy some of the largesse and the benefits 

of being a world power that they were not able to do for the last 

couple of centuries. 

Mr. KISSELL. One other question, going in a different direction, 

I had read recently where water would be a great limitation towards China and its ability to continue its economic expansion. I 

just wonder what your thoughts are, how that may anything figure 

in, how much it figures in, and what that might mean long term? 

Secretary GREGSON. At conservative population growth estimations and conservative economic growth observations, there is 

the potential out there in the future that resource allocation of precious liquids—oil, water—will become an item that is going to require vigorous, active, and cooperative management. 

The Mekong River Initiative right now is one way to try and 

manage water and related items, like fresh water fish, recent 

things. The Mekong starts in China and, of course, goes through 

Southeast Asia. Any time somebody puts a dam at one point on the 

river, it affects everybody downstream, those obvious things. Yes, 

this is going to be an item of major concern. 

Mr. KISSELL. Thank you, gentlemen. 

I yield back my time. 

The CHAIRMAN. I thank the gentleman. 

The gentleman from Louisiana, Mr. Fleming. 

Mr. FLEMING. Thank you, Mr. Chairman. 

My question is for Admiral Willard. As you know, sir, our aircraft carriers are a platform that we use to project power around 

the world. This is certainly relevant to some of the issues brought 

up about oil and energy in general. 

It is my understanding that the Chinese have a mid-range ballistic missile that can travel up to 2,000 kilometers, can easily attack an aircraft carrier, and that we really don’t have any antidote 

for that. Hopefully it is still under development and not fully capable. 

So what is our Navy’s plan to protect our aircraft carriers given 

this potential shift in power and certainly our ability to project our 

Navy and the Naval Air Forces closer to the perimeters of China 

itself? 

Admiral WILLARD. As you suggest, as one element of the anti-access strategy by China, there has been development of a ballistic 

missile capability that we believe is intended to target surface 
28 

ships to include our aircraft carriers, and it is an issue of major 

concern. 

We, within our programs, are developing capabilities to protect, 

you know, obviously, protect our surface ships to include our aircraft carriers. From that, the details, obviously, we would need to 

discuss at some future opportunity in a closed session. 

Mr. FLEMING. Would you agree, sir, that this may put even more 

emphasis on the need for the next-generation bomber, which is an 

air platform that, again, is a standoff type of defense mechanism 

or attack mechanism, if you will, that, you know, we have sort of 

laid that aside here recently, and I am wondering if maybe we need 

to take a stronger look at that in view of what we are seeing here? 

Admiral WILLARD. I think when we approach the anti-access capabilities that are being developed here that we have to look broadly at all of the capabilities that provide us opportunities to continue 

to operate with freedom of action inside the envelopes of that capability. Certainly our bomber force and any recapitalization of our 

bomber force, extended range weapons, as well as our ability to 

penetrate with our surface ships and not give up access where we 

require it are all parts of the defense strategy to accomplish that. 

Mr. FLEMING. Thank you, sir. 

Thank you to the panel, and thank you for your service. 

I yield back. 

The CHAIRMAN. I thank the gentleman. 

The gentleman from Mississippi, Mr. Taylor. 

Mr. TAYLOR. Mr. Chairman, I am going to yield to the only member of the Ranger Hall of Fame that is a Member of Congress, Mr. 

Marshall. 

Mr. MARSHALL. Thank you, Mr. Taylor, I appreciate that. 

I am curious about the extent to which we can expect that China 

at some point might be more helpful to us where terrorism is concerned and specifically the efforts in Iraq and Afghanistan and our 

worries about Pakistan and India and possible conflicts there. 

A couple of Chinese colonels published a book called ‘‘Unrestricted Warfare’’ in the mid-1990s. Probably most of you have already read that or at least read an executive summary of it. And 

that piece, that book, explores ways in which China can engage in 

conflicts with the United States, in essence, asymmetrically, and 

publication of the book was authorized and approved by the Chinese government. Not so many years have passed since the publication of the book. 

Among the things that these two colonels observe, and this 

book’s publication precedes 9/11, is that the close relationship between America’s political elite and the military-industrial state 

combined with America’s military expeditionary capacity means 

that it is only a matter of time before America gets itself involved 

in conflicts that bankrupt it. 

If there is an ongoing attitude in China that it is good for China 

to see the American economy weakened, then it seems to me that 

China might be holding back in assisting us with regard to Iraq, 

Afghanistan, and terrorism generally because this is something 

that is costing us an awful lot of money. 

I would just like general comments about Pakistan, India, the 

flash points there, nuclear power, you know, controlled by both, 
29 

and any thought that China is at some point here going to join this 

effort against terrorism which, if you think about it, given the nature of their evolving economy, they are going to be a target also 

eventually. 

Mr. SHEAR. Congressman, with regard to China’s approach to 

American economic health, I think the Chinese have recognized 

that we are interdependent economically and that our economic relationship benefits both sides. 

On the subject of terrorism, we engage the Chinese on this subject, both at senior levels and at the working level through a 

counterterrorism working group, which has met recently. 

In general, our cooperation on counterterrorism issues with the 

Chinese is at a fairly basic level, but we are working on it. On the 

subject of Afghanistan and South Asia generally, I think the Chinese share our interest in peace and stability in South Asia, particularly in Afghanistan. It is right on China’s border. 

We have engaged the Chinese fairly intensively on the subject of 

Afghanistan. Special Envoy Holbrooke has been to Beijing twice to 

discuss this subject with them. They have expressed an interest in 

cooperating, but we are still at the early stages. 

Mr. MARSHALL. So we haven’t seen anything concrete? 

Mr. SHEAR. Not yet, no. 

Mr. MARSHALL. And where terrorism is concerned, have we seen 

anything concrete there? 

Mr. SHEAR. We conducted exchanges with the Chinese, particularly in the run-up to the Olympics. We are continuing those exchanges, but I would say we are at a very basic level. 

Mr. MARSHALL. What have we proposed that they do with regard 

to terrorism or stability in Afghanistan, Pakistan, India, et cetera? 

What are we proposing that they are just not willing to do? 

Mr. SHEAR. We think, we think, as I say, the Chinese have expressed an interest, a general interest in cooperation. We conducted a working-level meeting with the Chinese to discuss specific 

ways in which we can work together on the ground in Afghanistan 

before the President’s visit in November. I think they are thinking 

this through right now. 

We have proposed such avenues, things they can do to help Afghanistan in agricultural infrastructure, infrastructure generally, 

capacity-building and areas like that. But we are still just beginning. We are pressing the Chinese on this. 

Mr. MARSHALL. What about assistance from China? I know we 

are looking at different ways to get materials into Afghanistan. Is 

there any movement where that is concerned? 

Secretary GREGSON. We are developing alternative lines of communication to avoid overdependence on the lines of communication 

(LOCs) through Pakistan. Generally they involve the Northern Distribution Network. We don’t know of an opportunity yet for China 

to contribute. 

Mr. MARSHALL. Thank you, Mr. Chairman. 

The CHAIRMAN. I thank the gentleman. 

Mr. Franks. 

Mr. FRANKS. Thank you, Mr. Chairman. 

Thank you, Admiral Willard. I want to direct my first question 

to you, thank you just for your lifetime commitment to the cause 
30 

of human freedom and all the things people like us up here talk 

a lot about the importance of protecting freedom. People like you 

personify it, and we are really grateful to have you here today. 

I was encouraged about your discussion related to protecting 

some of our battle groups from emerging Chinese missile technology. As you are probably very aware in the Perry-Schlesinger report, it said that we had to be careful with long-range defenses because it could upset the strategic balance between the U.S. and 

China, and the U.S. and Russia. 

But in light of some of the recent reports in the media that 

China is working to perfect or develop a mid-range and long-range 

missile defense capability, they don’t seem quite as concerned 

about that strategic balance as maybe we are. 

I guess my question to you, can you talk to us a little bit about 

the Chinese missile defense technology advances and specifically 

their medium- to long-range capabilities? 

Admiral WILLARD. I would only offer that, in terms of their missile defense capabilities, that they are by and large still in the research and development (R&D) stages, that this is a subject actually of inquiry regarding the most recent missile-to-missile engagement that has been witnessed and that the Chinese, as we have 

discussed earlier, reported on over the past several days. 

These developments and other developments we would continue 

to watch, but in terms of levels of detail and so forth, obviously, 

in a closed session to discuss. 

Mr. FRANKS. Well, let me, if I could, then, switch—thank you, 

Admiral—to Secretary Gregson. 

Can you tell us about China’s space program? Have there been 

any advances in technology, or have they continued pursuing space 

as a military venue since their 2007 anti-satellite (ASAT) test? The 

question is predicated on the notion that, you know, China has, 

with their ASAT capability, has pursued, in a phrase, weaponizing 

space, and it seems it is pretty clear to me that has already happened. But can you tell us, have they continued pursuing space as 

a military venue since their last ASAT test in 2007? 

Secretary GREGSON. The Chinese have stated that they oppose 

the militarization of space. Their actions seem to indicate a contrary intention. We continue to press the Chinese for explanation, 

and we would be happy to provide details in a closed session. 

Mr. FRANKS. Well, Mr. Chairman, I guess I make the point all 

too often here that I think it is important as a country to maintain 

our missile defense capability. We seem to be moving into a dynamic, militarily and otherwise, in the future that that will be a 

critical consideration for us, and I think that we have a moral responsibility to the citizens to be able to defend the U.S. from any 

missile launched from anywhere on the globe, at least that is the 

goal. 

I know that Mr. Reagan contemplated and hoped for that, and 

we have come probably further than even he contemplated at one 

point. But I think the ultimate concern should still be to be able 

to defend ourselves in that situation because in a world where radical rogue nations are potentially going to be a part of that equation, I think it is vital that we continue in the direction of developing that. 
31 

And I thank all of you for your efforts in that regard. 

I yield back, Mr. Chairman. Thank you. 

The CHAIRMAN. I thank the gentleman. 

Ms. Bordallo, the gentlelady from Guam. 

Ms. BORDALLO. Thank you very much, Mr. Chairman. 

Secretary Gregson, I appreciate working with you on the Guam 

issues and look forward to your answers today. 

Mr. Shear, thank you for appearing before the committee. 

Finally, Admiral Willard, thank you, and I look forward to working with you as our new PACOM commander. 

As you all may know, I co-chair the China Caucus with my colleague, Congressman Forbes, and I have several questions regarding recent security developments in China and how it affects our 

posture in the Asia-Pacific region. 

Secretary Gregson, it seems that China wants to continue becoming a global power that has serious force projection capabilities. On 

his most recent Asia trip, President Obama stated that the United 

States is and will remain a Pacific power. In that vein, how does 

the realignment of military forces in Japan and to Guam play in 

the balance of power in the Pacific? If we are to remain a Pacific 

power, what other enhancements of our current military and civilian capabilities are needed to maintain a robust posture in the Asia 

Pacific area? 

Secretary GREGSON. Thank you for the question. 

Secretary Gates has remarked often that there is sovereign U.S. 

territory in the Pacific, Alaska, Hawaii and Guam, and with the 

help, vital help, from Japan, we are increasing, as you know, our 

air, naval, and marine presence in Guam. This will also enable the 

continuous or near-continuous presence of Japanese and other allied and friendly forces for training with the United States and better position us for continued engagement, not only throughout 

Southeast Asia and the Indian Ocean but also into the area involving the compact states and our other territories in the mid-Pacific. 

I think this will allow us to continue to develop capabilities and to 

continue to develop relationships across a region that will contribute to peace, stability, and prosperity throughout the area. 

Ms. BORDALLO. Thank you. 

My final question is for Admiral Willard. 

The 2009 report to Congress from the U.S.-China Economic and 

Security Review Commission made a very intriguing and a stark 

finding, and that is China’s development of anti-ship cruise missiles. The report states that, ‘‘According to the U.S. Department of 

Defense, this missile will have a likely range of 1,500 kilometers, 

be armed with maneuverable warheads, and is intended to deny regional access to surface ships of the opposing side. When combined 

with appropriate surveillance and targeting systems, this missile 

could have the potential to destroy or disable aircraft carriers and 

their associated battle groups while in transit.’’ 

Now I am concerned by this finding and would like to explore our 

deterrent capabilities in the Pacific to respond to this growing tactical threat by the Chinese. What types of deterrents are in place 

on our surface fleet to combat this tactical weapon? What impact 

would this weapon system have on our ability to project our naval 

power in China, such as port visits to Hong Kong? 
32 

Admiral WILLARD. Thank you, ma’am, for the question. 

I would offer that the Chinese have developed a ballistic missile 

with extended-range capabilities that we believe is intended to 

counter surface ships. They have also developed extended-range 

cruise missiles, as you suggest, for launch from their surface ships 

and from their submarines as part of a broader anti-access strategy. 

All of these developments, capability developments, and the capacities that they are fielding, have led to concerns both on the 

part of the United States and on the part of the region with regard 

to what they are there for and their intended use. 

In the case of—you bring up deterrents, there is a responsibility 

that we bear to the region, writ large, to extend deterrence 

throughout the region to prevent wars from happening, to prevent 

future contingencies from occurring. We have been very successful, 

I would offer, for many decades now in accomplishing that. 

That is by and large accomplished through our presence and posture in the region, and that is unchanged. Regardless of these developments, capabilities, developments that you describe, we maintain a presence on the waters in the region as we have for a century and a half, and we intend to stay. 

We think that the extended deterrence that the United States offers to our allies and partners in the region, our presence to ensure 

security in the sea lines of communication and air lines of communication in this part of the world, are vital to our Nation’s security 

as well as to our Nation’s economy and the economies of our partners and allies. 

Ms. BORDALLO. Thank you, Admiral. 

And I yield back. I thank the chairman. 

The CHAIRMAN. I thank the gentlelady. 

Mr. McIntyre. 

Mr. MCINTYRE. Thank you, Mr. Chairman. 

Thank you, gentlemen, for being here today. Because I was tied 

up in another matter, I got here a little bit later. I want to ask 

about something just for clarification. 

I know in December of a year ago, China began to provide its 

naval vessels to protect the commercial ships navigating in the 

Gulf of Aden from the Somali pirate attacks. Do you characterize 

this as a positive development with regard to U.S.-Chinese cooperation? And are they willing and are currently working with the 

United States in cooperation vis-a`-vis dealing with these pirates? 

Admiral WILLARD. I would, from the PACOM perspective, we 

view it as a very positive development. It is a demonstration of the 

PRC’s willingness to utilize their military capability in a way that 

is contributing to other nations, to the international betterment of 

security in that particular region of the world. 

They began those operations operating outside of the international regime that was put in place to coordinate the efforts by 

the many nations that are contributing to the anti-piracy effort 

over the years. Now that this has been occurring, I would offer that 

the PRC has grown closer to those regimes and to the extent that 

there is a line of communication that has been developed and a 

level of information sharing that is both contributing to their oper-
33 

ations and also contributing to the operations of the combined task 

force that is engaged in counter-piracy. 

To both your questions, yes, it is positive. And yes, they have 

grown closer to cooperating, not just with the United States, but 

with the international effort that is often foreign-led in the Gulf of 

Aden. 

Secretary GREGSON. I concur completely with the Admiral. 

The freedom of navigation, freedom of the seas, freedom of navigation, freedom of innocent commerce, freedom of innocent passage 

is vitally important to both the United States and China as well 

as the rest of the world, particularly considering the Gulf of Aden 

and where it sits across the lines of communication that are vital 

to energy supplies moving around the world. 

The Chinese over time, as the Admiral stated, are increasingly 

coming to understand and to appreciate the norms of cooperation 

that have been established in an international task force out there. 

While they still cannot for their own political reasons join the international task force, they are operating ‘‘in cooperation with’’ the 

task force. And informal lines of communication and cooperation 

are growing, and we see this as overall a very positive development. 

Mr. MCINTYRE. Thank you. 

With the very limited time, let me change to another subject. 

Admiral, do you believe that we are building enough ships to 

counter the continual buildup of ships by the Chinese in their 

naval fleet in the Pacific? Do you feel like we are keeping the pace 

as we need to, or that there needs to be a stronger buildup of the 

American fleet? 

Admiral WILLARD. I would speak for Pacific Command and our 

ability to contend with the security issues within my area of responsibility, and I believe I can do that. I think that the importance of maintaining our industrial base and continuing to recapitalize our surface fleet in the Navy is critically important and that, 

as the Pacific commander, it is critically important to me that my 

naval component contribute the level of combat power that I require for the joint operations that we conduct. 

Mr. MCINTYRE. The question is, do we have enough ships to do 

that? Or do you feel like we are on course to maintain the level of 

the number of ships we need to do that? 

Admiral WILLARD. I am satisfied with the current budget and 

shipbuilding level of effort that we are pursuing in the United 

States Navy to produce the ships that I require to accomplish my 

mission in the Pacific. 

Mr. MCINTYRE. Beyond the number of ships, do you feel like, or 

if in fact there becomes a problem with the number of ships, do you 

feel like we still have the capability otherwise to effectively counter 

the Chinese buildup? 

Admiral WILLARD. The short answer is yes. Currently, the U.S. 

Pacific Command is contributing nearly 30,000 troops to the Middle 

East, and certainly force structure to the two wars that are currently ongoing in our Nation. And as we determine our abilities to 

meet our obligations throughout the Pacific to include the potential 

for future contingencies in the Western Pacific, I have to evaluate 

the associated risks with that force structure commitment to our 
34 

two wars and what mitigations I am obligated to put into place to 

ensure that I can perform my mission. And, yes, I believe I can do 

that. 

Mr. MCINTYRE. We want to support you in that. Thank you, Mr. 

Chairman. 

The CHAIRMAN. I thank the gentleman from North Carolina. 

The last question I would address to Secretary Gregson. In light 

of the Google news this morning and other recent attacks against 

American Government sites, how are we addressing the increase in 

the cyber attacks from China? 

Secretary GREGSON. I think it is not only increased cyber attacks 

from China that the United States faces, but increased cyber attacks from a number of places, including nonstate actors, everybody with access to the necessary—— 

The CHAIRMAN. I understand that. I am asking about China. 

Secretary GREGSON. Among other things, we are standing up a 

Cyber Command as a sub-unified command of Strategic Command 

(STRATCOM). We have a number of security procedures that have 

been put in place over the years throughout the Department of Defense to protect our proprietary networks. And we continue to research ways where we can enhance our defenses in the future. This 

is an ever-evolving threat and we take it very seriously. 

The CHAIRMAN. Secretary Shear, do you have any comments? 

Mr. SHEAR. Cyber security is a national priority for this Administration. Shortly after taking office, the President directed that the 

National Security Council and the National Homeland Security 

Council conduct a top-to-bottom review of our cyber security efforts. 

The results of that review were published in May. We are in the 

process of implementing those. We are particularly concerned, particularly after the Google affair, about Chinese efforts. We will be 

raising this with the Chinese, and we take it very seriously. 

The CHAIRMAN. Secretary Gregson, in open session can you tell 

us what the jurisdiction of the Cyber Command is? 

Secretary GREGSON. I would like to take that for the record, Mr. 

Chairman. 

[The information referred to can be found in the Appendix beginning on page 83.] 

The CHAIRMAN. Thank you very much. 

I certainly thank the witnesses today. I think this is the first 

hearing on China per se that we have had in this Congress, and 

you have done very, very well. 

Admiral Willard, thank you, Secretary Gregson, Secretary Shear. 

It is certainly good for you to be with us, and look forward to seeing you again. The very best to you. 

[Whereupon, at 12:03 p.m., the committee was adjourned.] 
A P P E N D I X 

JANUARY 13, 2010 

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JANUARY 13, 2010 

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WITNESS RESPONSES TO QUESTIONS ASKED DURING 

THE HEARING 

JANUARY 13, 2010 

(83) 

RESPONSE TO QUESTION SUBMITTED BY MR. SKELTON 

Secretary GREGSON. The mission statement for U.S. Cyber Command, which is to 

be a sub-unified command under U.S. Strategic Command, states that: 

USCYBERCOM plans, coordinates, integrates, synchronizes and conducts activities 

to: direct the operations and defense of the specified DOD information networks; 

prepare to, and when directed, conduct full-spectrum military cyberspace operations 

in and through cyberspace in order to enable actions in all domains, ensure U.S./ 

Allied freedom of action in cyberspace and deny the same to our adversaries. The 

DOD will support, when requested and directed to, U.S. Government agency requests for assistance. [See page 34.] 

RESPONSE TO QUESTION SUBMITTED BY MR. FORBES 

Mr. SHEAR. The United States advanced its trade agenda with China on a number 

of fronts in 2009. The U.S. won two major cases on intellectual property rights at 

the WTO as well as a key WTO case on auto parts tariffs and subsidies. In addition, 

President Obama announced a decision to impose three-year ad valorem tariffs on 

Chinese tire imports to stop a harmful surge of imports of Chinese tires. Finally, 

China agreed to open its markets in several key areas in the most recent U.S.-China 

Joint Commission on Commerce and Trade (JCCT). 

World Trade Organization 

On December 21, 2009 the World Trade Organization Appellate Body rejected 

China’s appeal and confirmed important panel findings that Chinese restrictions on 

the importation and distribution of certain copyright-intensive products, such as 

theatrical films, DVDs, music, books and journals, are inconsistent with China’s 

WTO obligations. The WTO ruling is critical to guaranteeing that legitimate, highquality American entertainment products have full access to the Chinese market. 

Getting these products into China’s markets promptly is a vital tool in the fight 

against rampant intellectual property piracy in China. 

In another dispute brought by the United States, a WTO panel ruled that certain 

Chinese intellectual property protection and enforcement rules were inconsistent 

with China’s WTO obligations. The panel found that China’s denial of copyright protection to works that do not meet China’s ‘‘content review’’ standards is impermissible. It also found it impermissible for China to provide for simple removal of an 

infringing trademark as the only precondition for the sale at public auction of counterfeit goods seized by authorities. Finally, the panel clarified China’s obligation to 

provide for criminal procedures and penalties to be applied to willful trademark 

counterfeiting and copyright piracy on a commercial scale. In keeping with the ruling, China has committed to correct these problems by spring 2010, affording American rights holders new opportunity to protect and profit from their goods, services, 

and ideas. 

In December 2009, the Obama administration announced an agreement between 

the United States and China confirming China’s termination of many dozens of subsidies most of which had been supporting the export of ‘‘famous brands’’ of Chinese 

merchandise. The agreement will ensure a level playing field for American workers 

in every manufacturing and export sector, including household electronic appliances, 

textiles and apparel, light manufacturing industries, agricultural and food products, 

metal and chemical products, medicines, and health products. 

As a consequence of WTO litigation, China in September 2009 eliminated discriminatory charges on imported auto parts, creating increased market opportunities for American manufacturers. 

Section 421 Tire Case 

In September, the President announced a decision to impose three-year ad valorem tariffs on Chinese tire imports to stop a harmful surge of imports of Chinese 

tires. This decision was consistent with China’s WTO accession protocol, which allows WTO members to take such action when an import surge from China disrupts 

the market. 
84 

U.S.-China Joint Commission on Commerce and Trade 

Through this year’s JCCT, the U.S. negotiated increased market access in China 

for American businesses and workers in a variety of sectors: 

• China agreed to improve access for U.S. energy companies by removing local 

content requirements on wind turbines. This agreement will enable more American companies to take advantage of the fast growth of China’s wind energy sector. 

• China agreed to accept medical devices that had received prior approval by a 

foreign country. According to industry, China’s prior approval requirement could 

have affected over $350 million in U.S. products. 

• China gave assurances that it will impose maximum administrative penalties 

on individuals that used the Internet to infringe on intellectual property rights 

and began a four-month campaign to clamp down on Internet piracy. This 

agreement will help to ensure that U.S. copyright holders continue to benefit 

from their products as internet use expands across China. 

• China agreed to strengthen oversight and enforcement regarding counterfeit 

pharmaceuticals. 

• China gave assurances that it was in the process of liberalizing its licensing 

procedures for certain types of direct selling services companies. One U.S. company has already received its license. [See page 20.] 

RESPONSE TO QUESTION SUBMITTED BY MR. COFFMAN 

Mr. SHEAR. The Department of State takes very seriously reports that China is 

seeking to limit exports of rare earth elements. We are working closely with other 

agencies to review the consistency of China’s rare earth export restrictions with its 

WTO commitments. In November 2009, the United States requested the establishment of a WTO dispute settlement panel regarding China’s export restraints on nine 

raw materials that are key inputs for numerous downstream products in the steel, 

aluminum, and chemical sectors. Although China is the source of most of the world’s 

supplies of rare earth metals, widespread and substantial reserves of these metals 

exist elsewhere. [See page 25.] 
QUESTIONS SUBMITTED BY MEMBERS POST HEARING 

JANUARY 13, 2010 

(87) 

QUESTIONS SUBMITTED BY MR. ORTIZ 

Mr. ORTIZ. What is the impact of China’s military modernization on the DOD’s 

efforts to transform U.S. military capabilities and the U.S. approach to the Asia-Pacific region? Has thought been given to a greater U.S. Naval presence in PACOM 

AOR, in addition to the buildup in Guam? 

Secretary GREGSON. The Department of Defense takes seriously the potential 

challenge posed by China’s military modernization program. The QDR discusses this 

in the context of how we will deal with increasingly sophisticated anti-access capabilities, such as those China is fielding and developing in large numbers and across 

all domains—air, sea, land, space, and cyber. The QDR outlines several operational 

concepts and capabilities to counter anti-access challenges: developing air-sea battle 

concepts, expanding long-range strike capabilities, exploiting undersea advantages, 

increasing the resiliency and dispersal of U.S. forward posture and base infrastructure, assuring access to space and the use of space assets, enhancing the robustness 

of C4ISR capabilities, defeating enemy sensors and engagement systems, and increasing joint and combined training capacity in the West Pacific. All of these have 

potential applications within the Asia-Pacific region. 

As noted in the QDR report, we are transforming the U.S. sovereign territory of 

Guam into a hub for security activities in the region. We continue to review our 

Asia-Pacific posture with an emphasis on maintaining a credible deterrence and assuring allies and partners. As part of this posture review, we are examining whether positioning additional naval forces within the PACOM AOR is necessary. 

Mr. ORTIZ. With the increase of the PLA Navy, and all the demands being asked 

of PACOM, what does the Pacific Command need to effectively deal with the broad 

range of security concerns in the Area of Responsibility? 

Admiral WILLARD. USPACOM has a requirement for a forward military presence. 

This presence is a combination of U.S. Forces stationed in Japan, the Republic of 

Korea, Singapore, and Guam along with the rotational forces that deploy and transit 

through the Western Pacific. Additionally, USPACOM needs increased intelligence, 

surveillance and reconnaissance (ISR) assets, to provide timely indications and 

warnings. It is important that these forces and assets remain in the Pacific and are 

available. USPACOM along with the Department of State, and the whole of government needs to assure access to bases and support areas. This access is most critical 

in dealing with the broad range of security concerns in the Pacific. 

QUESTIONS SUBMITTED BY MR. FORBES 

Mr. FORBES. Please submit the legal justification used by the Department of Defense that supports the Department’s refusal to submit the Fiscal Year 2010 Navy 

Shipbuilding Plan as required by section 231 of title 10, United States Code. 

Secretary GREGSON. Given that the National Security Strategy (NSS) was due for 

release soon after the FY 2010 budget, the impact of the NSS on force structure 

could not be accounted for in a FY 2010 Shipbuilding Plan. 

In addition to the National Security Strategy, the statutory guidelines require 

that the report reflect the Quadrennial Defense Review (QDR). The latest QDR is 

being developed in parallel with the NSS. Additionally, the Nuclear Posture Review, 

which has direct bearing on the numbers of strategic ballistic missile submarines, 

remains underway in conjunction with the QDR. All of these efforts have substantive impacts on the Navy’s force structure requirements. 

Therefore, the Department considered it prudent to defer the FY 2010 Report and 

submit its next report concurrent with the President’s Fiscal Year 2011 budget. 

The Annual Long-Range Plan for Construction of Naval vessels for FY 2011 will 

be delivered to Congress on 1 February 2010. 

Mr. FORBES. Please explain how the United States can claim to have a level of 

transparency with the People’s Republic of China (PRC) with regards to military 

matters when the Department of Defense cannot provide a legally required shipbuilding plan to the United States Congress. 

Secretary GREGSON. The transparency we see from China’s military is improving, 

but still has a long way to go, and this requirement is something we raise with the 
88 

PLA quite frequently and at all levels. With respect to the U.S. Navy’s shipbuilding 

plan, I understand the Department of the Navy is putting the finishing touches on 

the Annual Long-Range Plan for Construction of Naval Vessels for FY2011 and 

should be submitting it to the appropriate oversight committees shortly. 

QUESTIONS SUBMITTED BY MR. BISHOP 

Mr. BISHOP. As China’s ballistic missile technology and programs continue to mature, their emerging capability makes it even more urgent for the Department of 

Defense to invest in a comprehensive, multi-layered missile defense system. In the 

FY10 Defense Appropriations Conference report, Congress approved additional 

money for Standard Missile-3 Block 1A interceptors. How soon does PACOM need 

this proven defensive capability in order to increase the ability of the U.S. to provide 

additional protection for the Allies of the PACOM theatre? 

Admiral WILLARD. [The information referred to is classified and retained in the 

committee files.] 

Mr. BISHOP. The Department of Defense has asked China to be more transparent 

in their long-range missile testing by providing missile notifications, and we hear 

of more and more Chinese missile technology advances. Do recent Chinese missile 

technology advances provide the United States with an increased urgent operational 

requirement for the Standard Missile-3 Block 1A technology at an accelerated pace? 

Admiral WILLARD. [The information referred to is classified and retained in the 

committee files.] 

QUESTION SUBMITTED BY MRS. MCMORRIS RODGERS 

Mrs. MCMORRIS RODGERS. Secretary Gregson, Mr. Shear, and Admiral Willard, 

I’d like to thank each of you and offer my appreciation for the service you are performing to our nation. Your work in the defense of our country and its citizens does 

not go unnoticed. Thank you. Does the Department of Defense feel threatened at 

any level from a cyber attack emanating from China? And have we had any indications of a threat of a cyber attack from China? In December 2009, President Obama 

named a Cyber Security Chief to the White House. With the increased importance 

the White House is placing on cyber defense, and with the ever-increasing number 

of cyber attacks we are seeing, does the Department of Defense feel the need to increase staff to manage this increased threat? Also, is the DOD coordinating efforts 

with other countries to share intelligence gathered? What can the DOD report to 

Congress on this endeavor? 

Secretary GREGSON. With the difficulty in attributing cyber activities to a specific 

actor, let alone a specific government, DOD defends its networks round the clock 

from a variety of threats regardless of source. Over the past ten years, the frequency 

and sophistication of cyber intrusions and probes into DOD networks have increased 

exponentially. More than 100 foreign intelligence organizations are trying to hack 

into U.S. systems. Foreign militaries are developing cyber capabilities. And some 

governments already have the capacity to disrupt elements of the U.S. information 

infrastructure. 

To address this growing and pervasive threat, Secretary Gates directed the formation of U.S. Cyber Command, a sub-unified command under U.S. Strategic Command. As U.S. Cyber Command and the supporting Service elements are stood up, 

DOD will evaluate over time the staff size required to accomplish the mission. As 

with intelligence gathered in other areas, DOD is coordinating efforts to share information about cyber threats with other countries. The Department has briefed six 

committee staffs, including the HASC, and intends to continue an ongoing dialogue 

with concerned Members and committee staffs on the Department’s efforts to address cyberspace issues, including the stand-up of U.S. Cyber Command. 

QUESTIONS SUBMITTED BY MR. COFFMAN 

Mr. COFFMAN. I’d like to ask the panel to address what I believe has become a 

very serious emerging national security threat as it relates to China. It has to do 

with industrial base supply issues controlled by China, and not any specific military 

threat. But I am hoping—given your backgrounds and your current positions focusing on Pacific Rim nations—to garner the benefits of your thoughts and comments. 

Worldwide demand for rare earth elements is escalating rapidly. Rare earths are 

used in a number of applications including emerging green technologies, and many 

of us on this dais have concerns as to what that means for American innovation and 
89 

domestic job growth. But the fact that so many national security and defense systems require these materials to function and operate is of greater concern for us 

here at this hearing. Ninety-five percent of worldwide rare earth reserves being 

accessed today are located in China or controlled by Chinese-led interests. Today, 

there is no rare earth element production of significance taking place in North 

America or anywhere outside of China, and Chinese domestic demand for rare earth 

elements could easily equal Chinese production as early as 2012. Furthermore, in 

October 2009 an internal report by China’s Ministry of Industry and Information 

Technology disclosed proposals to ban the export of five rare earths and restrict supplies of the remaining metals as early as next year. I ask the witnesses to comment 

on these developments. Please address their entities’ situational awareness of this 

reliance, what they feel are the strategic implications, and how they plan to develop 

appropriate policy to mitigate this impending supply crisis as it relates to national 

security and defense. 

Secretary GREGSON. The Department of Defense is aware of the issues concerning 

the rare earth elements and their importance to U.S. industry and national defense. 

The Office of Industrial Policy has been investigating actions involving rare earth 

resources for many years, particularly in the context of potential foreign acquisitions 

of U.S. rare earth deposits. Section 843 of the National Defense Authorization Act 

for Fiscal Year 2010, Public Law 111–84, requires the Comptroller General to complete a report on rare earth materials in the Defense supply chain. The Office of 

Industrial Policy, in collaboration with other U.S. Government agencies including 

the U.S. Geological Survey, has also initiated a detailed study of the rare earth elements. The study is assessing the Department of Defense’s use of these materials 

as well as the status and security of domestic and global supply chains. The report, 

to be completed this fiscal year, will address vulnerabilities in the supply chain and 

include recommendations to mitigate any potential risks of supply disruption. 

Mr. COFFMAN. I’d like to ask the panel to address what I believe has become a 

very serious emerging national security threat as it relates to China. It has to do 

with industrial base supply issues controlled by China, and not any specific military 

threat. But I am hoping—given your backgrounds and your current positions focusing on Pacific Rim nations—to garner the benefits of your thoughts and comments. 

Worldwide demand for rare earth elements is escalating rapidly. Rare earths are 

used in a number of applications including emerging green technologies, and many 

of us on this dais have concerns as to what that means for American innovation and 

domestic job growth. But the fact that so many national security and defense systems require these materials to function and operate is of greater concern for us 

here at this hearing. Ninety-five percent of worldwide rare earth reserves being 

accessed today are located in China or controlled by Chinese-led interests. Today, 

there is no rare earth element production of significance taking place in North 

America or anywhere outside of China, and Chinese domestic demand for rare earth 

elements could easily equal Chinese production as early as 2012. Furthermore, in 

October 2009 an internal report by China’s Ministry of Industry and Information 

Technology disclosed proposals to ban the export of five rare earths and restrict supplies of the remaining metals as early as next year. I ask the witnesses to comment 

on these developments. Please address their entities’ situational awareness of this 

reliance, what they feel are the strategic implications, and how they plan to develop 

appropriate policy to mitigate this impending supply crisis as it relates to national 

security and defense. 

Admiral WILLARD. This question highlights not only the importance of rare earth 

elements, but also their long-term strategic value to China. Now, with over 50 percent of rare earth ore reserves (the United States has about 10 percent) China is 

not so much reliant but indeed looks to corner the global rare earth market. Confident in a long-term plan for domestic exploitation, some Chinese have gone so far 

as to advocate banning the sale of rare earth (RE) elements to the United States 

as part of sanctions against U.S. companies for their role in recent arms sales to 

Taiwan. 

That China could control not only prices but access to important RE materials is 

worrisome, as the U.S. Rare Earth Industry and Technology Association reports that 

‘‘Rare Earth elements are uniquely indispensable in many electronic, optical and 

magnetic applications for the U.S. military.’’ These systems and subsystems include 

those vital for electronic warfare (jamming), avionics, night vision, and specific 

weapons systems such as the Predator UAV, Tomahawk cruise missile, Excalibur 

Precision Guided Artillery Projectile, the GBU–28 ‘‘Bunker Buster,’’ and other smart 
90 

munitions. Our challenge, therefore, is to secure an environment in which access to 

such strategically important materials is unimpeded. 

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