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[Senate Hearing 114-217]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 114-217

  UNITED STATES DEFENSE POLICY ISSUES PERTAINING TO THE ASIA-PACIFIC 
                                THEATER

=======================================================================

                                HEARING

                               before the

                      COMMITTEE ON ARMED SERVICES
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 14, 2015

                               __________

         Printed for the use of the Committee on Armed Services

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                      COMMITTEE ON ARMED SERVICES

                     JOHN McCAIN, Arizona, Chairman

JAMES M. INHOFE, Oklahoma            JACK REED, Rhode Island
JEFF SESSIONS, Alabama               BILL NELSON, Florida
ROGER F. WICKER, Mississippi         CLAIRE McCASKILL, Missouri
KELLY AYOTTE, New Hampshire          JOE MANCHIN III, West Virginia
DEB FISCHER, Nebraska                JEANNE SHAHEEN, New Hampshire
TOM COTTON, Arkansas                 KIRSTEN E. GILLIBRAND, New York
MIKE ROUNDS, South Dakota            RICHARD BLUMENTHAL, Connecticut
JONI ERNST, Iowa                     JOE DONNELLY, Indiana
THOM TILLIS, North Carolina          MAZIE K. HIRONO, Hawaii
DAN SULLIVAN, Alaska                 TIM KAINE, Virginia
MIKE LEE, Utah                       ANGUS S. KING, JR., Maine
LINDSEY GRAHAM, South Carolina       MARTIN HEINRICH, New Mexico
TED CRUZ, Texas

                   Christian D. Brose, Staff Director

               Elizabeth L. King, Minority Staff Director

                                  (ii)

  

                            C O N T E N T S

                               __________

                             April 14, 2015

                                                                   Page

U.S. Defense Policy Issues Pertaining to the Asia-Pacific Theater     1

Allison, Dr. Graham T., Director, Belfer Center for Science and 
  International Affairs, John F. Kennedy School of Government....     3
Campbell, Hon. Kurt M., Chairman And Chief Executive Officer, The 
  Asia Group.....................................................    12
Green, Dr. Michael J., Senior Vice President for Asia and Japan, 
  Chair, Center for Strategic and International Studies..........    14
Roughead, ADM Gary, USN, Retired, Annenberg Distinguished 
  Visiting Fellow, Hoover Institution............................    17

Questions for the Record.........................................    38

                                 (iii)
 
  UNITED STATES DEFENSE POLICY ISSUES PERTAINING TO THE ASIA-PACIFIC 
                                THEATER

                              ----------                              

                        TUESDAY, APRIL 14, 2015

                                       U.S. Senate,
                               Committee on Armed Services,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 9 a.m. in room 
SD-G50, Dirksen Senate Office Building, Senator John McCain 
(chairman) presiding.
    Committee members present: Senators McCain, Inhofe, Wicker, 
Fischer, Cotton, Ernst, Tillis, Sullivan, Reed, Manchin, 
Shaheen, Gillibrand, Blumenthal, Donnelly, Hirono, Kaine, and 
King.

       OPENING STATEMENT OF SENATOR JOHN McCAIN, CHAIRMAN

    Chairman McCain. Well, good morning. If we could perhaps 
begin.
    I want to apologize to our witnesses. Getting Senators 
anywhere before 9:30 a.m. in the morning is an insurmountable 
task, and I apologize for the early beginning, but we have a 
briefing at 10:30 a.m. and I wanted to have an opportunity for 
the witnesses to be heard both personally and on the record on 
these very important issues pertaining to the Asia-Pacific 
theater in anticipation of the testimony of our component 
commanders there.
    I would like to thank each of the witnesses for appearing 
before us. Dr. Graham Allison, who is Director of the Kennedy 
School of Government's Belfer Center for Science and 
International Affairs. The Honorable Kurt Campbell, Chairman 
and CEO of The Asia Group. Dr. Michael Green, Senior Vice 
President for Asia and Japan Chair at the Center for Strategic 
and International Studies [CSIS]. Admiral Gary Roughead, the 
Annenberg Distinguished Visiting Fellow at the Hoover 
Institution.
    In the interest of time this morning, I will save my most 
important opening remarks for the record and welcome the 
witnesses and turn to Senator Reed.
    [The prepared statement of Chairman McCain follows:]

  The Prepared Opening Statement of U.S. Senator John McCain, Chairman
 to receive testimony on u.s. defense policy issues pertaining to the 
                         asia-pacific theater.
    The Committee meets today to receive testimony on U.S. defense 
policy issues pertaining to the Asia-Pacific theater. I would like to 
thank each of our witnesses for appearing before us today:

      Dr. Graham Allison, Director of the Kennedy School of 
Government's Belfer Center For Science and International Affairs;
      Honorable Kurt Campbell, Chairman and CEO of the Asia 
Group;
      Dr. Michael Green, Senior Vice President for Asia and 
Japan Chair at the Center for Strategic and International Studies; and
      Admiral Gary Roughead, Annenberg Distinguished Visiting 
Fellow at the Hoover Institution

    In the past three months, this Committee has received testimony 
from many of America's most respected statesmen, thinkers, and former 
military commanders. These leaders have all told us that we are 
experiencing a nearly unprecedented period of global turmoil, a more 
diverse and complex array of crises than at any time since the end of 
World War II.
    This does not come as a surprise to the American people. They see 
it on their television screens every day: Russia's invasion of Ukraine, 
ISIL's murderous conquest in Syria in Iraq, and Iran's pursuit of 
nuclear weapons. These crises rightfully demand our attention.
    But even as we confront immediate challenges in Europe and the 
Middle East, the United States cannot afford to neglect the Asia-
Pacific region, which Secretary Carter has called ``the defining region 
for our nation's future.'' Put simply, if the 21st century is to be 
another ``American Century,'' the United States must remain an Asia-
Pacific power.
    The so-called ``rebalance'' policy may be new, but our national 
interests in the Asia-Pacific are deep and enduring. We seek to extend 
free trade, free markets, free navigation, and free commons--air, sea, 
space, and now cyber. We seek to maintain a balance of power that 
fosters the peaceful expansion of human rights, democracy, rule of law, 
and the many other values that we share with increasing numbers of 
Asian citizens. We seek to defend ourselves and our allies by 
maintaining the capability to prevent, deter, and if necessary, prevail 
in a conflict.
    Achieving these objectives will require sustained American 
leadership. We must use all elements of our national power, including 
our economic, diplomatic, moral influence. In particular, I am hopeful 
that Congress will pass trade promotion authority for the Trans-Pacific 
Partnership. This vital trade agreement will open new opportunities for 
trade and level the playing field for American businesses and workers 
while sending a powerful strategic signal about America's commitment to 
the Asia-Pacific.
    Yet we must remember that our soft power is the shadow cast by our 
hard power. That is why the United States must continue to sustain a 
favorable military balance in the region that secures our long-standing 
political and economic interests, upholds our treaty commitments, and 
safeguards freedom of navigation and commerce.
    Moving forward, the Department will need to merge new concepts of 
operations with emerging military technology to enable our military to 
operate in contested environments. From projecting power over long 
distances, to exploiting the undersea domain, to providing logistics in 
anti-access zones, to developing new precision guided-munitions, to 
investing in innovative ways to build the resiliency of our forward-
deployed forces, we have a great deal of work to do if we aim to 
sustain our traditional military advantages in the Asia-Pacific region. 
None of this will be possible if we continue to live with mindless 
sequestration and a broken acquisition system.
    As we build and posture forces to secure America's interests in the 
Asia-Pacific, we must remain clear-eyed about the implications of 
China's rise and its evolving foreign and defense policy. As Director 
of National Intelligence James Clapper told this Committee back in 
February, China is engaged in a rapid military modernization 
deliberately designed to counteract or thwart American military 
strengths.
    I believe China can and should play a constructive role in the 
Asia-Pacific region. Unfortunately, in recent years, China has behaved 
less like a ``responsible stakeholder,'' and more like a bully. In the 
South China Sea, we have seen the latest example of a trend toward more 
assertive behavior. China's land-reclamation and construction 
activities on multiple islands across the Spratly chain, and the 
potential command and control, surveillance, and military capabilities 
it could bring to bear from these new land features, are a direct 
challenge to the interests of the United States and the nations of the 
Asia-Pacific region. Such unilateral efforts to change the status quo 
through force, intimidation, or coercion threaten the peace and 
stability that have produced and extended security and prosperity 
across the Asia-Pacific for seven decades.
    As I wrote in a letter together with my colleagues Senators Reed, 
Corker, and Menendez, the United States must work together with like-
minded partners and allies to develop and employ a comprehensive 
strategy that aims to shape China's coercive peacetime behavior. This 
will not be easy, and will likely have impacts on other areas of our 
bilateral relationship. But if China continues to pursue a coercive and 
escalatory approach to the resolution of maritime disputes, the cost to 
regional security and prosperity, as well as to American interests, 
will only grow.
    I welcome the opportunity to hear from today's panel of expert 
witnesses. Their testimony will further this Committee's understanding 
of the ways and means available to our Nation as we seek to sustain our 
enduring interests in this critical region.

                 STATEMENT OF SENATOR JACK REED

    Senator Reed. Thank you, Mr. Chairman. I will too make my 
opening statement, with your consent, part of the record and 
simply welcome the witnesses. I have had the privilege of 
working closely with many of them and admire and respect all of 
them. So thank you very much, Mr. Chairman.
    [The prepared statement of Senator Reed follows:]

  Prepared Opening Statement of U.S. Senator Jack Reed, Ranking Member
 to receive testimony on u.s. defense policy issues pertaining to the 
                         asia-pacific theater.
    Good Morning. Let me join Senator McCain in welcoming our 
witnesses. I am glad that we are going to have two hearings this week 
on this very important region of the world. While much of the public 
discussion in recent months has focused on the Middle East and Russia 
and Ukraine, it is critical that we not lose sight of the Asia-Pacific 
theater, home to over half the world's population, 7 of the 10 largest 
militaries in the world, and one of our most difficult national 
security problems--North Korea.
    With that, I would like to briefly touch upon some issues that I 
hope we can cover today.
    First, I would like to hear about the strategy and implementation 
of the Asia rebalance. While most folks agree that the Asia rebalance 
is an important objective given the role that the Asia Pacific will 
play in shaping the global economic and security environment in the 
next century, there has been a lot of discussion of whether the 
strategy has been sufficiently articulated and resourced. I think the 
Department has done a good job putting some strategic pieces in place 
to position us better in the region for the long term, but more must be 
done. I would like to hear from you about how we can continue to 
leverage our military resources to ensure the stability and security of 
this vital region--including how forward stationed military forces 
support these objectives.
    I would also like to hear from you about North Korea and the 
challenges posed by the Kim regime. Last week, NORTHCOM Commander 
Admiral Gortney stated that North Korea ``has the ability to put a 
nuclear weapon on a KN-08 and shoot it at the homeland.'' While North 
Korea hasn't yet tested the KN-08, I believe that the North Korean 
possession of nuclear weapons and pursuit of intercontinental delivery 
capabilities pose serious and growing security challenges. I would like 
to have a frank discussion about the threat posed by the North Korean 
regime, what influence China might have on that regime, and what North 
Korea's intentions are with regard to its nuclear weapons program.
    Finally, a few issues on China that I would like to highlight as 
well. China has been undergoing a massive military modernization 
process, coupled with its aggressive and destabilizing behavior in the 
East China and South China seas, there is some cause for concern. With 
that in mind, how should we engage China? I would also note that there 
are some positive developments, such as the joint confidence building 
measures that were agreed to last year between our two nations. I 
invite your views on China's role in the peace and stability of the 
region.
    Again, we appreciate you joining us this morning and look forward 
to your testimony on these and other topics.

    Chairman McCain. Dr. Allison, we will begin with you and 
thank you for being here today.

STATEMENT OF DR. GRAHAM T. ALLISON, DIRECTOR, BELFER CENTER FOR 
 SCIENCE AND INTERNATIONAL AFFAIRS, JOHN F. KENNEDY SCHOOL OF 
                           GOVERNMENT

    Dr. Allison. Thank you very much for inviting us. It is a 
great honor to be here with such a distinguished group. When 
Senator Reed invited me to come, he said give us a big picture 
with coordinates. Senator King came to visit me about a couple 
of weeks ago, and he said be provocative. The staff said be 
brief.
    Chairman McCain. That is a habit that Senator King has 
himself.
    Dr. Allison. I will try to comply.
    I submitted for the record some testimony, and if you have 
a copy of it--I am not sure if you do, but I tried to summarize 
the essence of what I had to say in two charts.
    So the first asks the question, who is rebalancing whom? 
That has been at the heart of many of your hearings.
    The second asks the question, over the last quarter century 
when many of us have been doing more or less what we are doing 
today, what has happened to the relative power of China and the 
United States?
    I think if you look at these two charts and think about 
them, you will get more than I have to say. So if you take a 
look at the first chart.
    Imagine two competitors who are sitting on opposite ends of 
a seesaw. I do not know. Do members have copies? If they do 
not, I have some extra copies.
    So imagine two competitors sitting on opposite ends of a 
seesaw. This is in 2004 and in 2014 and in 2024. Let us, for 
the sake of the record, call one ``big guy'' or ``big man'' and 
the other one ``little man.'' So if you notice in 2004, big 
man's feet are on the ground, and actually he starts talking 
about rebalancing in which he is talking about whether he puts 
more weight on the left foot, the Middle East, or the right 
foot, Asia.
    In the meantime, little man is just growing his economy. By 
2014, you will notice big man's feet are beginning just barely 
to touch the ground because of the impacts of the growth of the 
little man. If you look at 2024, what used to be big man is 
going to be smaller than what used to be little man, and big 
man's feet are not going to be on the ground at all. So this is 
a tectonic change that is represented by this simplistic graph 
in terms of the relative economic power, measured by purchasing 
power parity of the United States and China.
    The second chart, if you go to page 3, asks what has 
happened to the relative economic power of China and the United 
States over the past 25 years, a generation. If you will look 
at it, it is kind of hard to believe, but a state that was, if 
we measured in terms of height--so I am just representing the 
size of the economy in terms of the height of an individual--
China was 1 foot tall relative to the United States in 1990, 
which we can remember. Today China looks us eye to eye in terms 
of the size of the economy. Actually as the IMF [International 
Monetary Fund] World Bank meeting last October announced, in 
purchasing power parity, China's economy is slightly larger 
than the economy of the U.S.
    Now, what follows from that? Almost everything. So there is 
a wonderful Czech, the former Czech president, whom Senator 
McCain knew and liked, Mr. Vaclav Havel, who has got this 
spectacular quote. He said things have happened so fast we have 
not yet had time to be astonished. So I would say be 
astonished. Look at the two charts. Look at what has happened 
that is in our lifetime, doing what we have been doing.
    So never has a state risen so far, so fast on so many 
different dimensions. That is just basically the essence of 
what I have to say.
    GDP does not measure everything, but it is the substructure 
of power. It does not translate instantly into military power 
or into influence, but over time, bigger, stronger, more 
influential. That is the story of history.
    I then offer three additional questions, which I will just 
go through quickly. First is, is the United States in decline? 
Second, what does China want? Third is, how should Americans 
think about China and the relationship between the United 
States and China?
    The United States in decline? Answer: no. As the anti-
declinists want to insist, we are not shrinking. The problem 
is, however, that the other guy is growing a lot faster than we 
are. So we are bigger and stronger and richer than we were in 
1990, but China is a whole lot bigger, richer, and stronger. So 
relatively--and power is relative in international affairs--
China's power and influence has grown substantially compared to 
ours.
    The second question, what does China want? Answer: a very 
complicated subject, and my distinguished colleagues will 
explain to us how it is even more complicated. Nobody can know. 
I would say read Lee Kuan Yew. For those that do not have a 
copy of the book--I know Senator Reed does--I brought you a 
couple of extra copies, and if you want one, I am happy to send 
you one. This is the world's premier China watcher, a truly 
amazing individual. He has spent more face time with every 
Chinese leader since Deng Xiaoping than anybody in the world. 
Each one of them called him ``mentor.'' So in this book, all we 
did was ask the questions. It captures his answers. So 95 
percent of the words are his answers.
    What does China want? Are China's current leaders serious 
about displacing the United States as the predominant power in 
Asia in the foreseeable future? It is a good question. You can 
read my former professor, Henry Kissinger's book, 500 pages. It 
says on the one hand, on the other hand. It is complicated. Lee 
Kuan Yew. Of course. Why not? Who could imagine otherwise? How 
could they not aspire to be number one in Asia and in time the 
world?
    Then we go on. Will they succeed? He says yes. Chances of 
it going wrong are about one chance in five. So he makes it 
four chances in five they succeed.
    Can the United States stop the rise of China? Lee Kuan Yew: 
No, the United States cannot stop China's rise. It just have to 
live with a bigger China, which will be completely novel for 
the United States since no country has ever been big enough to 
challenge the American position. It is not possible to pretend 
this is just another big player. This is the biggest player in 
the history of the world.
    Must this necessarily lead to war? Lee Kuan Yew: No, no. 
The Soviet Union was contesting the United States for global 
supremacy, but this is not the Cold War. China is acting purely 
in China's national interest.
    Finally, Mr. Chairman, how should we think about the China 
challenge? I have proposed a metaphor I call ``Thucydides 
Trap.'' So this is the inherent and inescapable structural 
stress that occurs when a rising power threatens to displace a 
ruling power. In 12 of 16 cases that I have studied, in the 
last 500 years, when a rising power threatens to displace a 
ruling power, the outcome was war. Think back 100 years ago to 
the rise of Germany, the fear this instills in Britain and what 
becomes World War I. So in 4 of the 16 cases, that did not 
happen.
    My purpose here in trying to understand this in terms of a 
challenge of Thucydides and proportions is not fatalism and it 
is not a prediction about an inevitable war, but it is for us 
to try to realize the magnitude of the challenge that we face 
and to learn the lessons from the success stories, as well as 
from some of the failures, to be a success story in this case 
rather than a failure. Now, I have some specific ideas about 
how that might be done, but I have taken my 5 minutes.
    [The prepared statement of Dr. Allison follows:]

          Prepared Opening Statement by Dr. Graham T. Allison
    Mr. Chairman, Ranking Member Reed, and Members:
    It is an honor for me to address this committee. When he invited 
me, Senator Reed suggested I focus on the big picture--to try to help 
provide coordinates for your thinking about specific defense policy 
choices in the Asia-Pacific. Senator King encouraged me to be 
provocative. The Committee's staff insisted that I be brief.
    I have tried to summarize the essence of what I have to say today 
in two charts. The first asks: who is rebalancing whom? The second: how 
has the relative power of China and the US changed over the past 
quarter century?
    Chart 1 looks just at the past decade and compares the relative 
weight of US and Chinese economies as if they were two competitors on 
opposite ends of a see-saw. The identity of the two parties is left 
blank--to remind us of tectonic realities all of us should keep in mind 
when we hear the word ``rebalance.''
    Chart 2 compares the US and China today with where they stood a 
quarter century ago. It represents the size of the US and Chinese 
economies as the height of a person. If in 1990 China was one foot 
tall, how tall was the US?
    Today? As last October's joint meeting of the IMF and World Bank in 
Washington announced with some fanfare, measured by PPP, China 
currently stands eye to eye with the US. By dollar exchange rates, it 
is about two-thirds our height, on track to overshadow us in the next 
decade.
    Perhaps I should simply stop here and suggest that we all reflect 
on these two charts. As a wise European statesmen observed: things have 
happened so fast, we have not yet had time to be astonished.

                          *  *  *  *  *  *  *

    Nowhere is that statesman's insight more apt in thinking about the 
relative power of the US and China. Never in history has a state risen 
so far, so fast, on so many dimensions. If you want to stump colleagues 
or friends, see the chart from my class at Harvard in the appendix to 
my testimony. It asks whether China could become Number One. It 
considers 23 key indicators, from the primary engine of global economic 
growth and leading trading nation, to the largest number of internet 
users and highest number of patent filings. As the reverse side of the 
chart shows, on every one of the 23, China could not become Number One. 
It already is.
    Moreover, all this has happened in a single generation--a quarter 
century in which many of us have been doing more or less what we are 
doing today. To repeat: we have not yet had time to be astonished.
    Of course, GDP is not the only measure of a nation's power. But it 
is the foundation or sub-structure of national power. While not 
translated instantly or automatically into economic or military means 
of coercion, if the five thousand years of recorded history is our 
guide, nations with larger GDPs over time have proportionally greater 
influence in shaping outcomes in international affairs.

    Coming down from 60,000 feet to 30,000 feet, consider 3 additional 
questions:

      On the record of the past quarter century, is the US in 
decline?

      What does China want? As President Xi Jinping and his 
colleagues think about what has happened in their lifetimes, and what 
they want to make happen in the next decade or quarter century, what is 
China trying to achieve?

      How should Americans policymakers and citizens think 
about the China challenge? Is there a concept that helps illuminate 
what we all recognize is the defining question about global order 
today?

    1. Is the US declining?
    For most members of America's foreign policy establishment, any 
suggestion that the US is declining, or even might be, is rejected as 
heresy. Defenders of the faith have demonstrated great imagination in 
inventing additional measures to demonstrate their claim that: ``we are 
not shrinking!'' While technically correct, this proposition is 
substantively misleading. Power in international affairs is measured by 
one state's ability to get another state to do things it would not do 
otherwise. The concept is inherently relative: my strength as compared 
to yours. So even while the US is unquestionably richer and stronger in 
absolute terms than we were in 1990, China has also been getting richer 
and stronger--at a much faster rate.

    2. What does China want?
    Obviously this is a big question. It can be made even more complex, 
as many China scholars have shown in arguing that no one knows--or even 
can know. Since developments are dynamic and even if current leaders 
have goals or intentions, events inevitably intervene, and their 
successors who will lead the future remain unchosen, the question 
cannot be answered. Statements from US government officials typically 
express this by lamenting the lack of ``transparency'' about China's 
intentions.
    For clarity in answering this question, I believe there is no 
better guide than the individual who has for the past four decades been 
the world's premier China watcher. Founder of Singapore and Prime 
Minister for its first three decades, Lee Kuan Yew, who died three 
weeks ago at the age of 91, was called ``mentor'' by every Chinese 
leader since Deng Xiaoping.
    I had the great good fortune to spend many hours in conversation 
with this grand master of international strategy as my co-author and I 
sought to capture his key insights in a book published two years ago 
entitled Lee Kuan Yew: The Grand Master's Insights on China, the United 
States, and the World. Our contribution was simply to pose the 
questions we thought most Americans and other internationals would find 
most interesting. 95 percent of the book consists of his direct, pithy, 
provocative answers.

      Question: Are China's current leaders serious about 
displacing the US as the predominant power in Asia in the foreseeable 
future?
        LKY: ``Of course. Why not? How could they not aspire to be 
number 1 in Asia, and in time the world?''
      Question: Will they succeed?
        LKY: Yes: ``The chances of it going wrong in China are about 1 
in 5.''
      Question: Can the US stop the rise of China?
        LKY: ``The US cannot stop China's rise. It just has to live 
with a bigger China, which will be completely novel for the US, since 
no country has ever been big enough to challenge its position. It is 
not possible to pretend that this is just another big player. This is 
the biggest player in the history of the world.''
      Question: Must this necessarily lead to war?
        LKY: No: ``This is not the Cold War. The Soviet Union was 
contesting the US for global supremacy. China is acting purely as China 
in its own national interests.''
    For this grand master's answers to additional questions about the 
future of China, the future of the US, US-China relations, India, 
globalization, democratization and other topics, members of the 
Committee who would like a copy of the book have only to ask.

    3. How should we think about the China challenge?
    For perspective, I know of no better lens than ``Thucydides' 
Trap.'' This metaphor reminds us of the inherent and inescapable 
structural stress that occurs when a rapidly rising power threatens to 
displace a ruling power. Think back a century to the rivalry between a 
rising Germany and a ruling Britain that created conditions in which 
the assassination of an archduke triggered a sequence of events that 
became World War I. In 12 of 16 cases in the past 500 years when a 
rising power challenged a ruling power, the outcome was war.
    I will spare you my lecture on Thucydides, though I will guarantee 
you that a couple of hours spent reading his Peloponnesian War will 
compare favorably with the reports you are inundated with weekly from 
the departments. Explaining the Peloponnesian War that laid waste to 
the two great city-states in Ancient Greece, Thucydides wrote in one of 
the most frequently quoted lines in international security studies: 
``It was the rise of Athens and the fear that this instilled in Sparta 
that made the war inevitable.''
    The fact that 4 of the 16 cases did not lead to war reminds us 
vividly that war between China and the US is not inevitable. But 
Thucydides' insight also reminds us that hegemonic challenges or 
transitions are inherently dangerous--even perilous. Left to history as 
usual, on the record, the likelihood of war is much greater than most 
of us have recognized. The point of reviewing the historical record, 
however, is not to wallow in fatalism. To the contrary, it is to learn 
lessons from previous similar encounters that American and Chinese 
statesmen could apply to make this a success story rather than another 
case in my catalogue of failures.

    As Senator Reed often asks me after I have complexified a problem: 
So what? Unfortunately, in this case, there is no ``Washington 
solution:'' a simple response with a lofty goal and a short to-do list 
that will meet the challenge. To borrow a line from my classroom, no, 
Virginia, there is no pill that will make this problem go away. 
Constructing a strategy proportionate to the challenge will require a 
multi-year, multi-mind effort. But as we get started, we will find no 
better source of insights and clues than the historical record of 
precedence and analogs.
    So while I do not have a good answer to the ``so what'' question, I 
will conclude by underlining 3 clues.
    First: stop, look, listen--and think. As Lee Kuan Yew said, this is 
not something we have even seen before: it is ``completely novel: the 
biggest player in the history of the world.'' What the strategic 
community needs most at this point is a serious pause for reflection. 
If the tectonic shift caused by China's rise poses a challenge of 
genuinely Thucydidean proportions, declarations about ``rebalancing'' 
or revitalizing ``engage but hedge'' or 2016-hopefuls' calls for more 
``muscular'' or ``robust'' or ``smarter'' variants of the same are like 
band-aids on a cancer. The rise of a 5000 year old civilization with 
1.3 billion people is not a problem to be fixed. It is a condition--a 
chronic condition that will have to be managed over a generation.
    Second: what nations do inside their borders is as least as 
important as what happens in their external competition. Analyzing the 
record of the 21st century, which has had the larger impact on the 
relative power of the US and China: what China has done to build its 
self up, or what the US has done to tear ourselves down? In my 
analysis, the latter. As the classic Pogo cartoon concluded: we have 
met the enemy and he is us.
      
   
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
      
    Third: as you consider the twin perils of fatalism on the one hand, 
and complacency, on the other, which poses the greater threat to the US 
today? Some of my colleagues worry that by insisting on the real 
possibility that China and the US could find themselves in a war 
neither would have chosen could hasten this very outcome. I believe the 
much greater danger comes from lulling ourselves by repeating 
reassurances that everything is okay. Those who argue that because war 
with China is ``inevitable,'' or very likely, we should get on with it 
now before China becomes even stronger, have no more following among 
serious policymakers than they deserve. To repeat, on the record, war 
is NOT inevitable.
    In my view, however, most policymakers, policy influentials, and 
pundits have failed to appreciate the enormity of this Thucydidean 
challenge--a challenge exacerbated by the contrast between China's 
agility in addressing its daunting internal agenda and America's new 
normal dysfunctionalism. What we need at this point is vigorous debate 
that illuminates the risks we face as effectively as a generation of 
strategists' warning about nuclear war with the Soviet Union clarified 
that danger. By doing so, realism motivated invention of a new strategy 
as unprecedented as Containment in the Cold War. As we should remind 
ourselves every day: we won.
    Who better to stimulate that debate than the distinguished members 
of this Senate Armed Services Committee?
    Graham Allison is Director of Harvard's Belfer Center for Science 
and International Affairs and the Douglas Dillon Professor of 
Government at Harvard's Kennedy School. ``Founding Dean'' of Harvard's 
Kennedy School, he has taught at Harvard for four decades, written many 
books and articles on issues of national security and served as special 
advisor to Secretary of Defense Weinberger in the Reagan Administration 
and as Assistant Secretary of Defense under President Clinton. His 
first book, Essence of Decision (1971), has sold more than 490,000 
copies, and his most recent book, Lee Kuan Yew: The Grand Master's 
Insights on China, the United States, and the World (2013) has been a 
best seller with more than 175,000 copies in print.
                               Appendix 1

When Will China Become #1?

      Manufacturer: 2011

      Exporter: 2009

      Trading nation: 2012

      Main engine of global economic growth: 2010

      Holder of US debt: 2008

      FDI destination: 2014

      Energy consumer: 2010

      Oil importer: 2012

      Carbon emitter: 2006

      Auto market: 2009

      Steel producer: 2010

      Cotton producer: 2008

      Smartphone market: 2012

      E-commerce market: 2013

      Luxury goods market: 2013

      Internet users: 2008

      Fastest supercomputer: 2010

      Holder of foreign-exchange reserves: 2006

      Number of IPOs: 2007

      High school education rankings: 2009 (Shanghai)

      Longest high-speed rail network: 2014

      Biggest solar power market: 2013

      Patent filings (filed in country): 2011
                               Appendix 2
    
    
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    Chairman McCain. Dr. Campbell, welcome.

    STATEMENT OF HON. KURT M. CAMPBELL, CHAIRMAN AND CHIEF 
               EXECUTIVE OFFICER, THE ASIA GROUP

    Dr. Campbell. Great to see you, Senator. Thank you very 
much. Senator Reed, thank you, and it is a great honor. I had a 
chance to travel last year with Senator Wicker around Japan. It 
is good to see you again, sir.
    I very much appreciate the chance to have a quick 
conversation to talk about the challenges that the United 
States faces in the Asia-Pacific region. I will begin with just 
a scheduling issue. Today is a classic case.
    I think if we all sat down and thought carefully, we would 
say, you know, the lion's share of the history of the 21st 
century is going to be written in Asia. There is just no doubt 
about it. Frankly, when we look at this period, most recognize 
the dynamics that I think Graham has laid out are accurate. 
This is where power shifting, economic power is shifting 
dramatically.
    However, the United States, for very good reasons, is 
consumed with the Middle East and South Asia and will be for at 
least a decade. So the greatest challenge of Senate leadership, 
congressional role, the role of the executive branch is how to 
try to find the wit and wisdom to focus more attention in those 
other hours that we are supposed to be doing other things at 
the same time that we are unbelievably dramatically engaged in 
the Middle East and South Asia.
    So the biggest concern in Asia is not just the 
dysfunctionality of our Government. It is that we are 
preoccupied away from this drama. As much as we tried to 
persuade them that we are not--in fact, the more that you tried 
to persuade them, the more that they are convinced that you 
are. One of the great dynamics of Asia: the more that you 
attest to something, the more that your interlocutors are sure 
that the reverse is the case.
    So as you end today and go into the real drama of what is 
playing out in Iran, I want you to keep in mind the challenge 
that we are going to be facing over time is going to shift from 
the Middle East and South Asia to the Asia as a whole, whether 
we recognize it or appreciate it more directly.
    At the beginning of the administration that I served in, we 
had a relatively unhelpful set of back and forth, oftentimes 
between Republicans and Democrats, although I will tell you one 
of the great benefits of Asia is that this is essentially a 
bipartisan commitment. I worked closely with the men on this 
panel and others, and I believe we can sustain this bipartisan 
purpose into Asia into the 21st century.
    We had some, after we started to talk about a rebalance or 
pivot to Asia, who said, you know what? We are back in Asia. We 
are back in Asia. The inevitable retort was, no, no, no, we 
have never left. The truth is both of these are right on some 
level, but both of them are profoundly wrong. Ladies and 
gentlemen, for us to be effective in Asia going forward, the 
price of admittance to get into the disco has gone up 
dramatically. We have got to spend much more time and 
attention, focus more of our military, our trade, our economic 
engagement to be successful in Asia. That is what is expected 
because of the dynamics that Graham has laid out.
    Second, for this to be really effective, we have to 
understand some of our shortcomings. We have not really 
reevaluated some of our very strong positions historically in 
Asia, but it is a position that needs constant refurbishment. 
So I just want to acknowledge that whatever small steps that 
have been taken to date have to be sustained over the course of 
several administrations going forward.
    As you contemplate strategy in Asia, recognize that the 
military dimension is critical. It is important. It is our big 
ticket. It is what countries look to us for to maintain and to 
sustain peace and stability. But ultimately for us to be 
effective in Asia, we have to have a comprehensive strategy, 
and it has to integrate many components of American power. Now, 
I am a Democrat and a very strong supporter of the Trans-
Pacific Partnership [TPP]. If we do everything right in Asia, 
go to all the meetings, bow at the right times, eat the food 
with the appropriate utensils, and we do not get TPP done, the 
best grade we can get over the next 2 years is a C minus, at 
the very best. If we do everything wrong, which we have a long 
tradition of getting sick at state dinners or canceling 
meetings at the last moment or creating some horrible problem 
with some miscommunication or translation, and we get the TPP 
done, we get a B+. That is how significant this is going 
forward.
    So what I would urge this committee--and I want to thank 
you for doing this--is to recognize that as you think about 
military strategy, which is absolutely essential--we do need 
more ships. We need more capabilities. This is a period of time 
where I expect and want the Navy to stand up. This is the 
Navy's time. Over the last several years, we have had a period 
where we have other components of our services that are 
critically energized. This is a period for dramatic, fresh 
thinking, strategic approaches from our expeditionary men and 
women in white. Also our Air Force as well.
    I would say generally we have the wherewithal to be 
successful in Asia. Asian friends want us around. They believe 
that our role is essential and that that can continue for 
decades.
    I will tell you guys one secret and I will conclude and 
turn it over to my friend, Mike Green.
    Americans often, who are trained and experienced mostly in 
foreign policy--that training is in Europe. So that when they 
first go to Asia, they use European analogies. Right? Then 
Asians immediately turn you off because they do not really like 
them. Right?
    I agree very much with Graham's point about Lee Kuan Yew. 
No person has had more time with Chinese leaders. No person was 
more effective at manipulating Westerners than Lee Kuan Yew, as 
Graham knows.
    So I am going to give you, in conclusion, a European 
analogy that works really well for Asia, even though you are 
not supposed to use them. So back in the 1980's, Margaret 
Thatcher had appointed one of her key players as Secretary 
General of NATO, and he was in a meeting listening. This was 
during a period where we were about to deploy missiles in 
Europe. He was listening to Italians and French and Germans 
complaining about the United States, that we were difficult, 
that we had no culture, that we did not coordinate effectively, 
that we were clumsy, that we were difficult and impossible to 
work with. At the end of this, the Secretary General of NATO 
said, ah, alas, they are the only Americans we have.
    That is our role in Asia, and it is a significant one and 
one that we should not take lightly. It is critical going 
forward that the role of the executive branch obviously is 
central. But what is important about Asia, ladies and 
gentlemen, no other arena in the world has been more affected 
by congressional leadership. No other place is more influenced 
by the men and women in this chamber. I will tell you Asians 
are worried after a tremendous passing of the baton with 
Senator Lugar and Senator Inouye that people like Senator 
McCain and others will hopefully continue this role in Asia 
going forward. So I want to encourage the new folks who are 
starting to think about Asia; make a trip. The water is fine. 
It is important for the United States to sustain our leadership 
going forward.
    Thank you very much, Senator.
    Chairman McCain. Thank you.
    Dr. Green?

 STATEMENT OF DR. MICHAEL J. GREEN, SENIOR VICE PRESIDENT FOR 
 ASIA AND JAPAN, CHAIR, CENTER FOR STRATEGIC AND INTERNATIONAL 
                            STUDIES

    Dr. Green. Thank you, Senator.
    This committee has a lot to worry about around the world. 
That is obvious. The American people, though, consistently now 
in polls say that the Asia-Pacific region is the most important 
region in the world to our interests.
    The big question and the big uncertainty is the one that 
Graham Allison highlighted at the beginning, the future 
trajectory of China. There is good news and bad news for the 
U.S. position in Asia. The good news is that most of the 
leaders in the region Xi Jinping, Abe, Pakunai, spend 80 or 90 
percent of their time worrying about how to grow their economy, 
not how to fight with their neighbors. The United States has 
exceptionally strong alliances in Asia. Our alliances with 
Japan, Korea, Australia, measured by opinion polls, by 
exercises, have never been stronger, and we have new 
partnerships with India and expanding relations with countries 
like Vietnam and the Philippines.
    With very few exceptions, our democratic principles have 
far more attraction in Asia than the so-called Beijing 
Consensus of authoritarian rule. At CSIS, we have done surveys 
of elites in Asia the past few years, and it is unmistakably 
the case that what we represent, what countries like Japan and 
Korea represent in democratic norms is what most leaders see as 
the future of the region.
    Our military capabilities, the expanse of our military 
leadership dwarfs any other in the region still.
    Chinese leaders, despite their more aggressive stance in 
the East and South China Seas, in the Himalayan Mountains still 
consider stable U.S.-China relations a vital interest for 
China's own development.
    The bad news. China is developing, as this committee knows 
well, so-called anti-access/area denial, A2/AD, capabilities, 
targeting all of our forward bases with ballistic missiles, 
crowding the Nur Sea, as Chinese officials call it, with white 
hulled coast guard ships, PLA [People's Liberation Army] action 
groups, fighters, drones, cyber, and anti-satellite 
capabilities.
    Second, despite the rebalance or pivot to Asia, China has 
been undeterred from its most recent lightning campaign to 
reclaim land and build military and paramilitary facilities on 
half a dozen or more atolls throughout the South China Sea. 
Now, there is an interesting chart here and our website AMTI 
[Asia Maritime Transparency Initiative] at CSIS. We have unique 
overhead imagery that shows how quickly the Chinese have 
launched these new facilities.
    We suffer somewhat in Asia because our stance on Syria and 
the Ukraine and other parts of the world raises questions about 
our staying power and our willpower.
    Finally, although we have the most capable military in the 
world, I believe the Pentagon is increasingly facing a devil's 
choice between retaining assets that are critical for this 
maritime theater like carriers and investing in new 
capabilities to deal with missile threats, cyber, and anti-
satellites.
    So four things we might consider core to our strategy going 

forward.
    First, we have to take steps to enhance our deterrence 
capabilities against these increasingly capable challengers, 
not only China, but North Korea which is developing with the 
KN-08 a possibility to hit the U.S. homeland. In the 1930s, 
when the Japanese Imperial Navy threatened our forward bases in 
the Philippines and Guam, we took the wrong approach. We let 
the Navy sink in size. We pulled back in War Plan Orange. We 
figured we would fight across the Pacific. Deterrence failed. 
The Japanese destroyed us in the western Pacific.
    In the 1980s, we again faced a threat to our forward bases 
on islands. This time from Soviet ballistic missiles, 
submarines, backfire bombers. Ronald Reagan took a different 
approach. He doubled down, strengthened our alliance ties with 
the Japanese, used the archipelago to bottle up Soviet forces, 
recapitalize the Air Force and the Navy. In 1979, Soviet 
boomers would operate with impunity off the coast of Hawaii. In 
1983, they were afraid to leave the Sea of Okhotsk. 
Technologies changed. Political systems changed, but I think 
the approach of the 1980s and the maritime strategy offers the 
better lesson.
    Second, we have to shore up the vulnerable states in the 
island chain. The first point is about deterrence and frankly 
about warfighting and prevailing in the worst and most 
dangerous scenarios. But to keep the peace, to win the peace, 
we have to invest in what experts in the Pacific Command now 
call shaping activities, dissuading China or others from trying 
to pressure vulnerable states like the Philippines or Vietnam. 
We have done some things like advanced cooperation with the 
Philippines. But right now, less than 1 percent of our foreign 
military finance worldwide--less than 1 percent--goes to the 
Pacific. We are doing very, very little in fact to help the 
Philippines and other countries develop the kind of maritime 
domain awareness and resilience they need to avoid a vacuum.
    Third, as Kurt has highlighted, the Pentagon cannot do this 
alone. We need an all-of-government approach, and in that 
context, TPP is really critical. Kurt put that extremely well. 
If we cannot get TPP right, the rest of this is going to matter 
but we are going to get--I am a Georgetown professor. Maybe I 
am an easy grader--maybe a B-, but it is not going to be a 
place where we want to be. If we get TPP right, we will start 
setting up momentum and rules that will affect the overall 
strategic environment.
    Finally, we need to think about how we talk to and talk 
about China. We have been very inconsistent in recent years. At 
times we have embraced Xi Jinping's idea of a new model of 
great power relations, which is a formula designed to demote 
every one of our democratic allies and put the United States, 
China, the Russians as the great powers, Japan, Australia, 
Korea as secondary powers. We embraced that rhetoric. It was a 
mistake. We do not want to go there.
    On the other hand, we need to be attentive to and 
constantly working at confidence building, transparency with 
China to avoid the kind of accidents that so often happen in 
history. For that to work, we have to be consistent in our 
principles, in our defense capabilities, and in our cooperation 
with allies.
    Thank you.
    [The prepared statement of Dr. Green follows:]

                 Prepared Statement by Michael J. Green
    In public opinion polls a majority of Americans now identify Asia 
as the most important region to U.S. interests. They are right. Five of 
the seven nuclear-weapon states are in Asia (and that is not including 
North Korea); 58 percent of U.S. trade is with APEC countries alone; 
The Asian Development Bank projects that by 2050 Asia and the Pacific 
will account for 51 percent of global GDP.
    The greatest source of uncertainty in Asia today is China's 
trajectory. The good news is that the major powers in the region are 
primarily focused on economic reform and growth; that the United States 
has strong allies and partners in Asia; that with few exceptions our 
democratic principles have more attraction in the region than the so-
called ``Beijing consensus'' of authoritarian rule; that our military 
capabilities remain unmatched; and that Chinese leaders still consider 
positive U.S.-China relations to be a vital interest.
    The bad news is that China is developing anti-access/area-denial 
capabilities that will make it increasingly difficult for us to operate 
within the offshore island chains centered on Japan and Guam; that 
despite the administration's announcement of a ``rebalance'' to the 
Asia-Pacific, China has not been dissuaded from its lightning campaign 
to construct island ports and air bases, nor its military and 
paramilitary operations to consolidate control over the East and South 
China Seas (highlighted this past week by the CSIS Asian Maritime 
Transparency Initiative); that events in Syria and Ukraine have raised 
questions about American willpower; and that sequestration and the 
current trajectory of the defense budget are forcing the Pentagon to 
choose between maintaining legacy assets like carriers and new 
technologies needed to maintain deterrence in the Western Pacific.
    On balance the American grand strategy of building an open trans-
Pacific regional order and deterring other powers from seeking hegemony 
within Asia is succeeding, but we risk losing some of our comparative 
advantages. The following initiatives are critical:
    First, we must shore-up U.S. deterrence against increasingly 
capable challengers. Our forward military presence in Japan, Korea and 
Guam lies at the core of our deterrence posture, but those bases are 
under increasing threat from Chinese and North Korean missiles. When 
our forward bases in the Western Pacific became vulnerable in the 
1930s, we pulled most of our shrinking Navy back and tried to deter the 
Japanese from the West Coast and Hawaii. Deterrence failed. When the 
Soviets built-up their offensive power in the North Pacific in the 
1970s and 80s, Ronald Reagan turned the offshore island chain into a 
picket fence to bottle them up--tightening defense cooperation with 
Japan and recapitalizing the Navy and Air Force. In the late 1970s, 
Soviet boomers operated with impunity off the coast of Hawaii. By the 
mid-1980s, they rarely left the Sea of Okhotsk. Technologies have 
changed, but Reagan's maritime strategy provides the better guide.
    Second, we must shore-up vulnerable states along the first island 
chain. The Departments of State and Defense have taken important first 
steps with the U.S.-Philippines Enhanced Defense Cooperation Agreement 
(EDCA) and U.S. decision to partially lift the ban on lethal weapons 
sales to Vietnam and to provide it with Coast Guard aid. Japan and 
Australia have also stepped up support. The PACOM area of 
responsibility only receives about one percent of all Foreign Military 
Financing, however, these states need better maritime domain awareness 
and transparency about Chinese activities and improved capabilities to 
deal with natural disasters and internal security challenges that leave 
them exposed to external pressure. Enhanced U.S. engagement, access and 
presence will give these states greater confidence, complicate Chinese 
coercion efforts, and disperse U.S. forces by alleviating the heavy 
concentration of bases in Japan and Korea. We have been underinvested 
in Southeast Asia since the 1969 Guam Doctrine and the withdrawal from 
Clark and Subic Bay. We need to restore our defense engagement and 
presence in the region. These so-called ``shaping'' activities are now 
almost as important as deterrence itself, since the United States seeks 
to avoid vacuums that invite expansion and increase the risk of great 
power confrontation. In that context, Department of Defense plans for 
dispersing the U.S. Marine Corps presence in the Western Pacific 
represents sound strategy--though the operational and budget details 
warrant continued scrutiny from the Congress.
    Third, we need an all of government approach. The Defense 
Department cannot do this alone. Secretary Carter emphasized how 
important the Trans-Pacific Partnership (TPP) is to U.S. security 
interests in the Pacific and he is right. Should negotiations on TPP 
falter this year, there will be new doubts about the strategic 
competence and staying power of the United States in Asia and the 
Pacific. That said, trade is not a substitute for deterrence. After the 
multilateral agreements of the 1920s the United States stopped building 
battleships and the President of J.P. Morgan declared that war was with 
Japan would never happen because of growing economic cooperation. The 
2010 Quadrennial Defense Review Independent Panel called for a U.S. 
fleet of 346 ships. That was before China's more aggressive moves in 
the East and South China Seas. We are now on a trajectory for just over 
300 ships.
    Finally, we must consider all of this from China's perspective. 
China respects strength, but also deserves respect. U.S.-China 
relations have been most stable when the U.S.-Japan alliance is 
resolute, so our reassurance strategy must never involve pandering to 
Beijing's calls for a ``new model of great power relations'' between 
the United States and China that demotes our allies to secondary power 
status. But we should continue pushing for transparency, confidence-
building, and above all, consistent articulation of U.S. interests, 
values and commitments.

    Chairman McCain. Admiral Roughead?

    STATEMENT OF ADM GARY ROUGHEAD, USN, RETIRED, ANNENBERG 
       DISTINGUISHED VISITING FELLOW, HOOVER INSTITUTION

    Admiral Roughead. Mr. Chairman, Senator Reed, members of 
the committee, it is great to be here with you, and I will be 
very brief in my remarks. I submitted a statement.
    But as has been mentioned by the gentlemen to my right, 
there is a lot going on in the world today, but the rise of 
China, China's role in Asia is the long game. That is the 
important game that will play out. It is a strategic 
competition that only occurs once in decades, and that is what 
we are going through.
    The question is not whether China will become a 
consequential power, but whether it will be the dominant power 
in Asia, and do we in the United States accept that?
    I think it is also important that as we think about the 
Asia-Pacific region, that we must now begin to think about the 
Indian Ocean as being part of that. That is the puck that we 
have to skate to, because as the military activity there 
increases and becomes more complex, we will have to be ready to 
move into that area. So that is the framing of the force 
structure of the future is this Indo-Pacific region and not 
just the Pacific littoral and the western Pacific.
    I think it is also important that the significant changes 
that are going on in the PLA today is not so much the 
technology that we see coming onto the scene, but the fact that 
President Xi has become the leader of a special group to drive 
through reform in the PLA. It is best captured by my good 
friend and I think the best PLA watcher, Dave Finkelstein, who 
is at CNA [The Center for Naval Analyses], when he says that 
what is happening now is that the PLA is going through their 
Goldwater-Nichols moment. What is happening is that the changes 
that were enacted by this body that so transformed the American 
military into what it is today--that is what the PLA is driving 
through.
    He has many years left to do it, and he will do it. They 
will be better prepared to operate in complex environments. 
Their missions will be to defend at home, to secure their 
interests abroad, to fight and win, which is a bit of a 
different twist than the bide-and-hide strategies of the past--
so they are coming out--and to be viewed as an international 
power of significance.
    With regard to the South China Sea and the chart that Mike 
put up there, that really needs to be viewed in terms of 
maritime force structure. The capability to use those improved 
land features really gives China an opportunity to conduct 
operations in a way that only a maritime force can do in that 
area, and I think we have to consider that.
    With respect to our alliance structure, to me there is 
nothing more important, and China is focusing on trying to 
dismantle or weaken or unravel it. It is very clear in many of 
their writings and in venues where I have been the talk of Asia 
for Asians continues to come through loud and clear.
    Now that said, I think it is still important that we 
continue to engage with the PLA, but we really need to do it in 
a way that is balanced. A lot of the activities that have been 
undertaken before have been hosted by the United States, 
conducted by the United States. It is now time in a more 
balanced military-to-military relationship that we see more of 
that activity taking place in China.
    There is no question that we face some budgetary issues, 
but the key for the military force structure of the future is 
to provide some predictability, and under the current 
circumstances with the Budget Control Act, the lack of regular 
order, it is very difficult to plan the type force structure 
that we are going to need going into the future.
    The last point I would make, to echo what the gentlemen to 
my right have said, is we cannot simply be a military one-trick 
pony. As China is doing in Asia with their Silk Road economic 
belt and their maritime Silk Road and the changes to the PLA, 
there are two vectors. One is a military strategy. One is an 
economic strategy. TPP and our economic initiatives in Asia, 
coupled with our military initiatives in Asia and our presence 
in Asia, is the strategy that we have to pursue. TPP and TPA 
[Trade Promotion Authority] is extraordinarily important to 
send that message and to drive that point home.
    Thank you very much.
    [The prepared statement of Admiral Roughead follows:]

    Prepared Statement of Admiral Gary Roughead, U.S. Navy (Retired)
    Chairman McCain and Ranking Member Reed, thank you for the 
opportunity to appear before you and other members of the Committee to 
discuss U.S. national security interests and objectives in the Asia-
Pacific region and the changes and activity taking place there.
    Events in the Ukraine and the Middle East, particularly the 
aggression of the Islamic State and the recent nuclear negotiations 
with Iran, have dominated recent policy discussions in Washington and 
around the world. That said, the importance of the Asia-Pacific region 
and the strategic competition between the United States and the Peoples 
Republic of China is the long game and the most consequential for our 
country.
    For decades the United States has been the guarantor of a secure, 
stable and prosperous Asia. Over decades, at great cost in blood and 
treasure, and through persistent, credible presence and cooperation 
with allies and like-minded partners, we have been the stabilizing 
force that enabled the rise of Asia. Our role, alliance relationships 
and stabilizing influence are being challenged by the Peoples Republic 
of China. Blending hard and soft power and pursuing strategic military 
and economic policies China seeks the dominant role in Asia.
    To comprehend fully and to assess properly U.S. defense policy and 
strategy in Asia, it is important to define the region beyond the Asia-
Pacific region to include the Indo-Pacific expanse. That broader view 
puts the region's relationship with the Middle East, South Asia, and 
the important energy and resource sea-lanes of the Indian Ocean and, 
soon, those of the opening Arctic in context and best frames the 
military resource demands of the future.
    The transformation of the Peoples Liberation Army (PLA), 
specifically, the Peoples Liberation Army-Navy (PLAN) in the past 
decade, has been remarkable. System capabilities and force structure 
tend to be the most newsworthy but the most consequential changes are 
in organization and culture. PLA transformation will be sustained and 
likely accelerate in the remaining years of President Xi Jingping's 
leadership. President Xi's chairmanship of a leading group that is 
taking on reforms previously deemed too bureaucratically difficult to 
implement will produce changes that will advance the effectiveness and 
combat power of the PLA. Stovepiping within the PLA will diminish and 
the PLA will become more integrated and joint in the complex 
battlespace of cyber, space and electronic warfare. More rein will be 
given to the PLA, especially the Navy, to prepare to defend close to 
home, secure interests abroad, to instill an ethos of fighting and 
winning and to demonstrate that China is an international power of 
significance.
    Strategically and operationally this means the PLA and PLAN will 
operate more routinely in consonance with China's two defined regional 
strategic economic priorities, the ``Silk Road Economic Belt'' and the 
``Maritime Silk Road''. PRC activity will represent a mix of hard and 
soft power presenting opportunities for U.S.-PRC cooperation, to be 
pursued where appropriate, while China seeks to establish itself as the 
dominant Asian power. China will build the maritime force structure to 
be a consequential force in the Indo-Pacific region to include the 
Arctic. The recent rapid expansion of infrastructure on several land 
features in the South China Sea must be viewed as maritime force 
structure as those significant improvements, while reinforcing PRC 
claims, offer future military use in that vital sea-lane. While our 
attention has been landward, China has taken Mahan to heart, 
understands the influence and importance of sea power, and is all in.
    China's military and economic initiatives would be a challenge even 
in the best of budget times. Capabilities coming into the U.S. 
inventory today will support likely operations in the near term. 
However, our nations's ability to advance capability in the mid and far 
term is at great risk given Budget Control Act constraints, the lack of 
regular order in the budget process, and the lengthy bureaucratic 
processes that inhibit rapid fielding of capability. That apart, the 
real need in the region is capacity--adequate numbers of ships and 
aircraft to provide credible, persistent and predictable presence and 
response in the vast expanse of the Indo-Pacific region. The size of 
our fleet must increase, but we cannot simply satisfy ourselves with a 
higher ship count--balance is paramount. Accordingly we should:

    -  Increase the size of our submarine force to meet the increasing 
need in the Pacific and Indian Oceans
    -  Permanently move one aircraft carrier from the Atlantic to the 
Pacific
    -  Procure an additional Amphibious Ready Group to routinely float 
the Marines distributed in the Pacific
    -  Sustain the Navy's current high-low surface combatant program 
mix
    -  Forward deploy a larger, tailored combat logistics fleet and 
enhance alliance logistics capability and interoperability
    -  Move boldly toward unmanned capability and capacity in the 
Pacific; specifically, high altitude/long endurance aircraft for 
maritime domain awareness in the vast Pacific and Arctic areas; 
refuelable ISR and penetrating strike capable carrier launched UAVs; 
long endurance, networked unmanned underwater systems

    China seeks to diminish the strength and efficacy of the Pacific 
alliance structure that has been the foundation of regional stability. 
The importance of our alliance relationships and cooperation with key 
partners in the region must be continuously reinforced and remain a top 
priority. We must pursue increased technical transfer opportunities and 
personnel integration beyond the current modest personnel exchange 
programs with them. This does not mean we should not pursue a 
cooperative military to military cooperative relationship with the PLA. 
Activities should extend beyond what we have done to date contingent on 
a more balanced approach of venue and activity. In short, China should 
take a more active role in initiating and hosting meaningful 
cooperative activity.
    All of the above are challenging, hard and cannot be attained 
without change and reform. Change in accepting the continuation of 
product lines and variants of those lines that are adequate to need 
instead of starting with clean sheet designs and consequent increased 
cost and late-to-need introduction. Reform to reduce bureaucratic 
acquisition time. Reform to be more aggressive with technical transfer 
to allies and like-minded partners, and reform to begin to turn the 
high cost of personnel total compensation so that critical and 
strategic investments in capability and especially capacity can be 
sustained.
    Thank you for the opportunity to appear before you today and I look 
forward to your questions.

    Chairman McCain. Thank you, Admiral.
    It is interesting that all of the witnesses emphasize the 
importance of TPP, and yet we hardly hear anything about it 
here in Washington or amongst the American people. Frankly, 
only the President and the administration can drive that lesson 
home. But I thank the witnesses for their emphasis on that. It 
does not require the construction of a single additional ship 
or airplane.
    Graham, I appreciate your referring to Lee Kuan Yew. I 
remember meeting with him and asking him about China's 
ambitions, and he said that the Chinese would gain control of 
the western Pacific and tell us that we could do what we want 
in the eastern force. Perhaps you recall that.
    Dr. Campbell, you have been involved in your previous work 
on this realignment of forces from Okinawa to Guam. I am 
interested in your views on it. But I will say that because 
Senator Sullivan has just come back from a visit where his 
total emphasis was on this realignment issue, I think he would 
be more qualified on that.
    Admiral Roughead, the whole issue--and this is kind of 
going from macro to micro, but this issue of the drones. You 
have said that we need to move boldly forward toward unmanned 
capability and capacity in the Pacific and specifically for the 
Navy to develop penetrating strike capable carrier-launched 
UAV's [unmanned aerial vehicles]. The present Navy plan does 
not call for that. What is your response to that?
    Admiral Roughead. Yes, sir. I think that what we really 
need to do is to pursue those capabilities that I mentioned in 
my statement. We are on the verge of being able to have a 
carrier drone that is refuelable, that is both strike capable, 
that is ISR capable, intelligence, surveillance, and 
reconnaissance capable. But yet, we seem to be stepping back 
from that.
    Chairman McCain. Have you got any idea why?
    Admiral Roughead. I believe it is probably driven by cost, 
but I also think that we have looked at drones in the more 
benign air atmosphere of Iraq and Afghanistan. The western 
Pacific will not be like that. It will be important that we 
have that capability that can strike long, that can stay 
airborne for a long time, that can operate away from the 
carrier, not organic to the carrier. Those are the technologies 
that we have. We are on the verge of realizing it. I believe 
this week we are going to refuel in the air an unmanned 
aircraft for the first time in history, and to step back from 
that to start a whole new program--and even though I am sure 
that people in the budget shops can make the numbers work--it 
seems to me that we will end up spending much more money in the 
long run to get to that penetrating capability if we do not 
pursue the paths that we are currently on.
    Chairman McCain. Dr. Campbell, the one country we do not 
hear much about that seems to me can be a major player here is 
Indonesia, the world's largest Muslim nation and certainly a 
growing economy, a vibrant nation. Where does Indonesia fit 
into all of the equation here?
    Dr. Campbell. It is a great question, Senator. You know, if 
you had to make a list of the countries that were important to 
the United States that we were not aware of their importance, 
probably Indonesia, as you suggest, would be at or near the top 
of the list, one of the world's largest countries, huge island 
nation, generally a moderate Muslim, multicultural nation, has 
been led very effectively over the last 8 years. We have a new 
leader in place who is still finding his feet, very much 
focused on domestic issues and trying to spur the Indonesian 
economy out of very difficult doldrums.
    Ultimately Indonesia wants a better relationship with the 
United States. They want to take it carefully with us. I 
believe that there is enormous potential to try to build the 
kind of relationship that will be essential if we want to 
maintain peace and stability in Asia going forward.
    The challenges will be that ultimately we need to increase 
substantially investment, more people-to-people engagement. 
Right now, most of the companies that work in Indonesia from 
the United States are extractive, very little manufacturing. 
Really it is not an investment climate that has yet attracted 
the kinds and the scale of business that we would like to see.
    I think Jokowi is currently scheduled to come to the United 
States later this year. The hope is at that time that we will 
put in place a much more ambitious set of objectives, more mil-
to-mil coordination. In the past, that has been hindered 
somewhat by human rights issues. I would like very much for 
those to step up. I would like to see more investment 
protocols. I would like to see a general recognition that we 
can work more closely together across Asia.
    Chairman McCain. Do you think it would be appropriate for 
Jokowi to address a joint session of Congress?
    Dr. Campbell. You know, Senator, to be honest, I am not as 
knowledgeable about who ultimately gets the ticket and who does 
not. Generally speaking, my preference is to reward long 
periods of service, a recognition of accomplishment, as opposed 
to doing it before they have really taken the necessary steps. 
So I would like to see basically what he has in place. I would 
like to see where he wants to take the country. In fact, there 
has been a lot of toing and froing. He spent a lot of time on 
this execution matter. I would like to see more time in the 
saddle personally.
    Chairman McCain. The chief of police.
    Dr. Green, do you have a brief comment or Dr. Allison?
    Dr. Allison. If I could go back to the question you put to 
Gary Roughead about the drones or unmanned. So I would say as a 
first approximation, think unmanned, or as Hoss Cartwright--and 
I know, Senator, you are a flyer--but if you ask if unmanned 
aircraft or modes of transportation had been impacted before 
manned aircraft, would anybody imagine surveiling a site, 
delivering a product, bombing a target by manned. So the legacy 
systems are the main reason why we continue to buy legacy 
systems, and it is hard to get your head around the proposition 
that there is another better, faster, cheaper, less dangerous 
way to do this if you are a flyer or if you are running a 
carrier or otherwise. I would say that is kind of 99 percent of 
the explanation. But I think that is also, unfortunately, for 
our legacy systems in each of the services.
    So while I am a defense hawk in terms of the level of 
effort--that is, I do not think we have a defense budget that 
is large enough. I think the things that we buy may be as much 
a problem as the amount of money that we spend.
    Dr. Green. I would just broaden slightly the point on 
Indonesia and associate myself with what my friend Kurt said. 
We have been episodic in our attention to Southeast Asia. After 
we pulled out of Subic Bay and Clark in the 1990's, we have not 
engaged that region sufficiently. It is now under duress. I 
think we are going to have to sustain engagement across 
Southeast Asia. American companies know this. Our investment in 
the ASEAN [Association of Southeast Asia Nations] countries is 
greater than into China. But on the security and diplomatic 
side, we have to pick up our game. Indonesia is at the core, 
but I would just extend what Kurt said to Thailand, to 
Singapore, to Malaysia and the entire region.
    Chairman McCain. Senator Reed?
    Senator Reed. Well, thank you, Mr. Chairman.
    Thank you, gentlemen, for extraordinarily insightful 
testimony. You have made a compelling case that China is not 
only rising but doing so with extraordinary momentum.
    Let me, for the full picture, sort of look at it the other 
way. Every great country has some critical internal issues, 
some potential challenges that they cannot face. China has to 
continually worry about employing millions of people. They have 
resource issues. They have environmental issues. I hear 
periodically of the threatened collapse of their banking 
system. That shows up every 6 months in the 
``Financial Times''. If I was the leader of China and someone 
showed me a 3D printer, I would say--well, I cannot say it 
here. But the technology could be extraordinarily destabilizing 
to China more so than the West.
    Can I just get your comments, starting with Professor 
Allison, about what are the fault lines? What are the issues 
which they could come off the rails? I think we have to see 
both sides of the story, not just the power but the challenges. 
Dr. Allison?
    Dr. Allison. Thank you very much, Senator Reed.
    I think if you think of Xi Jinping's inbox--I talked to Lee 
Kuan Yew at length about this. In the chapter on the future of 
China, he has got the best description of the vulnerabilities 
and weaknesses of China that I have seen. He said, oh, my 
goodness. This person has the most daunting inbox imaginable.
    First, China has grown at double digits on average for 30 
years. It is now trying to maintain a super level of growth of 
7 percent. This is walking a very high wire act, and he has 
created expectations of very high levels of economic growth. So 
that is unprecedented. Now, it is hard to keep going.
    Second, the Communist Party, the Mandarins, run China. 
Their only mandate for their monopoly of political power is 
their delivery of improved income and lifestyles for citizens. 
So if they fail to do that, they have got a problem with 
stability.
    Third, you cannot breathe the air in Beijing. When you go 
to Beijing--like this is impossible. So everybody is thinking 
what about this. So they got a big, big pollution problem. They 
got a climate problem.
    They have an aging workforce. They are likely to become old 
before they become rich. They got a demographic problem. They 
got a problem that none of their neighbors like them.
    So I would say his list of problems, if he were thinking 
about it rationally, which I think he does--he has got more 
than enough things to do at home.
    So then the question is--you say, well, why is he becoming 
more assertive abroad? I would say think again in Thucydidean 
terms. As the country becomes bigger and stronger, it comes to 
think of its interests as deserving more respect, and it comes 
to think of its ability to influence events to be more natural. 
So the proposition that as China becomes bigger and stronger, 
it will become inherently more influential and assertive I 
think is given in the structure of history.
    Now, how we then adjust that and adapt it is a different 
problem. But I would say if he were to sit down and think about 
his problems, the best thing that he could have would be a 
world that left him alone for 10 or 20 or 30 years. The fact 
that he is not doing that but is also being more assertive I 
think has to do with the fact that in terms of Chinese 
nationalism and in terms of the Chinese population, Chinese are 
proud now. They want to be proud. The China dream is we are 
going to be so rich and so powerful that we will command 
respect for our interests.
    Their expression of this, particularly in the South China 
Sea, I think we will see more of. Their expression of this in 
the Asia Development Bank we will see more of. So what we have 
seen there are just the beginning of what I would say we are 
going to see more and more and more of.
    Now, does this inevitably mean we end up in a conflict? I 
do not think so, but I think it will require a whole lot more 
and different creativity than thinking that we will just shore 
up our relations with the Philippines or we will do a little 
bit about this or we will do a little bit about that. I think 
we are currently still kind of in the unreality zone with 
respect to our potential response.
    Senator Reed. Dr. Campbell, quickly and Dr. Green and 
Admiral Roughead, just quickly please.
    Dr. Campbell. I will not go through--I think that is a good 
litany that Graham has laid out about all the challenges. I 
will talk about one other one, Senator. I do want to commend 
you.
    You know, we have a tendency to do this 10-foot-high 
tallism about any country that we face, and it is important to 
keep in mind that China has huge challenges ahead, and I think 
that is critical. They also have some substantial resources to 
deal with them.
    My biggest concern right now is that I think what we see is 
a leader that is practicing some really unprecedented steps in 
China. So I think what we do not fully recognize, that 2 years 
ago in China, we really had a collective leadership, and almost 
all decisions were taken in a very complex bureaucracy. Today, 
after what can only be described as a bureaucratic blitzkrieg, 
we have a leader--and I got to spend quite a bit of time with 
him--who makes basically every decision in China. So every 
leading group, every economic central decision about interest 
rates, about matters associated with foreign business is 
essentially taken by Xi Jinping. So he has woven himself into 
the very center of power in China.
    I think there are a lot of challenges with that. What that 
means is that there is no one issue that he has the ability to 
spend very much time on.
    Second, I am struck by--he has managed, Senator Reed, to 
discourage a lot of impropriety inside government. A lot of 
people are more worried about taking steps that could lead to 
accusations of graft or incompetence. But at the same time, a 
lot of people do not want to take steps at all. Like they just 
want to hunker down as if they are hopeful that this will pass. 
So there is not a lot of action being taken on some of the 
reform agenda that he has laid out.
    Ultimately, Senator Reed, I think for China to be effective 
right now, as they move from basically a state-led, export-led 
growth model to one that is about domestic consumption and 
domestic driving of the economy, ultimately that is about the 
devolution of power and responsibility at a time where I think 
he is actually gathering it at the center. I think in some 
respects it is contradictory to the aspirational goals he has 
laid out for China. If you work late at night, the ghosts that 
surround him probably are mostly of Gorbachev, and this 
dramatic determination not to go down this path. But in fact, 
some of the steps that he is taking will make the system I 
think more brittle, not more robust. I think at the heart of 
the challenges that China faces, amplified by all the things 
that Graham has suggested, is a decision-led model that is 
incompatible with the fundamental challenges of a 21st century 
economy.
    Senator Reed. Dr. Green?
    Dr. Green. The Chinese----
    Senator Reed. Because the time is so short for my 
colleagues, we have to--please quickly.
    Dr. Green. I would just say since Deng Xiaoping, the 
Chinese Communist Party has relied on two things for its 
legitimacy: first, economic growth but also national security 
and nationalism. If these woes pile up and overwhelm Xi 
Jinping, his successor may decide it is time for greater 
reform, but it is just as possible in my view that they will 
shift everything to the national security/nationalism front.
    So this is why TPP is so important because it creates an 
external structure that reforms in China are already pointing 
to to make the argument that reform on the economic side is the 
better way to go.
    Senator Reed. Thank you.
    Admiral Roughead, if you have a comment.
    Admiral Roughead. The only thing I would say that I think 
China in the long term is going to have to deal with besides 
its demographic is I submit that they are going to have severe 
water problems, and then that water issue will move into South 
Asia, Southeast Asia and set up some significant friction in 
the future. That is going to be a problem.
    Senator Reed. Thank you.
    Thank you, Mr. Chairman.
    Chairman McCain. Senator Wicker?
    Senator Wicker. Thank you.
    Dr. Campbell, I am actually encouraged that you would say 
the history of the 21st century is going to be written in the 
Asia-
Pacific. To the extent that the history of the 21st century is 
not written in the former states of the Soviet Union, I think 
that is a good thing. If the history of the 21st century is not 
written in Iran, I am happy about that.
    I think it is a challenge for us all, and I appreciate what 
you have all said about trade. I subscribe to the statements 
made by the chairman of this committee about the importance of 
TPP. Of course, we will not get the Trans-Pacific Partnership 
without trade promotion given to our President to actually 
negotiate something that can stick. So it is a challenge for us 
all.
    Dr. Campbell, let me mention two things mentioned by your 
fellow panelists and get you to comment on that. Admiral 
Roughead says China seeks to diminish the strengthened efficacy 
of the Pacific alliance structure that has been the foundation 
of regional stability. The importance of our alliance 
relationships and cooperation with key partners in the region 
must be reinforced.
    Now Dr. Green says Southeast Asia is under duress.
    Let me ask you about both of those. Dr. Green mentioned 
Thailand, Singapore, Malaysia in addition to Indonesia which 
have already been mentioned.
    So let us go, for example, to Thailand. Do you agree with 
Dr. Green that Southeast Asia is under duress? Thailand, 
Singapore, Malaysia--are they under duress? Are they the type 
of key partners in the region that China would seek to diminish 
the efficacy of our relationship with?
    Dr. Campbell. Thank you, Senator. Very good questions.
    I do want to say one thing. Not only is TPP critical, but 
in fact the passing of the IMF quota is also critical as well. 
A lot of blame to go around there, but in fact a lot of the 
roots of this Asian Development Bank debacle, frankly, are a 
consequence of us not stepping up and taking the necessary 
steps.
    First of all, let me just strongly associate with everyone 
on this panel. The most important thing that the United States 
can do is to secure our longstanding allies. For many people 
that serve at the highest level in Government, what is 
considered to be really exciting is the high-level diplomacy 
with China. It is imbued with this sense of romance. It is 
important. It is absolutely critical. It needs to be sustained.
    Working on alliance issues are really difficult. Right? It 
is about stationing our forces in another democratic country's 
soil. It is a very hard thing to do. It sometimes requires 
intense, very hard decisions. Working with Japan, South Korea, 
Australia, Philippines, Thailand, our formal alliance 
countries, is going to be central going forward.
    I do believe most of the countries in Southeast Asia are 
under duress, Senator. I believe the country that we need to 
really stand behind currently is the Philippines. I would like 
to see a renaissance in that relationship. I would like to see 
us take steps to build a stronger relationship with Vietnam. I 
agree with the Senator about Indonesia. I am excited about the 
opening to Myanmar. I understand the challenges that----
    Senator Wicker. How is our relationship with Thailand?
    Dr. Campbell. I think our relationship with Thailand right 
now is strained for a variety of reasons. I would like to see 
us deepen a dialogue with the current government. I would like 
to be clear that we have an essential military and security 
relationship with that country that has to be sustained. 
However, it is also the case that the current government needs 
to represent and understand that a move towards a true 
democracy is in the long-term best interests of Thailand. 
Trying to jigger the system in such a way that a small elite 
can sustain power over a long period of time I think is 
contrary to our values.
    So it is a balancing act. We have got to show Thailand 
respect. We have got to work with them. They worked very 
closely with China. They are a central player in ASEAN. They 
are our longest and oldest standing treaty partner in Asia. I 
would very much like to see us develop more of a dialogue with 
the government. I believe we could do more to help create--I do 
not want to say a government of national unity, but we need to 
bridge these terrible divisions that exist in Thailand, and we 
can do more to assist in that. I really believe that.
    Senator Wicker. Thank you.
    Thank you, Mr. Chairman.
    Chairman McCain. Senator Shaheen?
    Senator Shaheen. Thank you, Mr. Chairman.
    Admiral Roughead, I want to go back to--because I did not 
quite understand a point that you made earlier. When you were 
talking about drones, you talked about the benign airspace in 
Iraq and Afghanistan. Were you talking about that in terms of 
no other drones being in the airspace? Can you explain a little 
bit more what you were saying?
    Admiral Roughead. Yes, ma'am. For the past decade, we have 
flown with impunity in Iraq and Afghanistan, no threat of anti-
air weapons coming at us. The western Pacific and the 
capabilities that are being fielded by China--that is a 
completely different ball game. It is going to be a tough space 
to work in, and what we have used in the past, the capabilities 
and the technology, does not equate to that environment.
    Senator Shaheen. So you were suggesting that our drones 
could be shot down, not that China is going to be competing in 
terms of drones that they would be using and developing.
    Admiral Roughead. Absolutely. China--if you look at what 
they are producing now, they are moving into the drone space. 
They will not be drone-on-drone, but they are going to be in 
that space as well.
    Senator Shaheen. In your testimony, you talked about the 
transformation of China's military not just in terms of the 
equipment and all but the organization and culture. Can you 
talk about what has accounted for that? Has it been the 
leadership issues that Dr. Campbell talked about, or has this 
been part of a long-term plan in China?
    Admiral Roughead. Well, I think it has been part of a long-
term plan. The Chinese went to school with us starting in 1996 
after Taiwan. They watched our capabilities evolve in the 
Middle East and our effectiveness because we are a joint force. 
That is where they have wanted to go, but as many of the people 
here who were present at the creation of Goldwater-Nichols 
know, there is a heck of a lot of inertia to overcome 
culturally. That is what is taking place in China today.
    Xi Jinping will drive that through. We are beginning to see 
organizational changes. We are beginning to see more of an 
emphasis on the navy and the air force and the missile forces, 
less on the army because they perceive their challenges and 
their threats to not be on their land borders but really the 
maritime space. That is what he is going to drive. You can see 
the change in the people. You can see the sophistication, their 
ability to engage, their comfort, and their pride in operating 
internationally in ways that did not even happen 5 or 6 years 
ago.
    Senator Shaheen. Thank you.
    You have all talked about the importance of TPP, and I 
think many of us here would agree that that is very important. 
One of the concerns that we have heard from the Senate before 
that I expect to be expressed again is relative to currency 
manipulation. I think that will be raised again as part of TPP 
with some success or not. It is not clear yet. But what will be 
China's reaction to our efforts to address that as part of any 
agreement? Graham?
    Dr. Allison. I would say currency manipulation, 
unfortunately, particularly after quantitative easing, is in 
the eye of the beholder. Is the EU [European Union] involved in 
currency manipulation? They announced that they were going to 
have an expansion of money, and the euro has fallen sharply 
compared to the dollar. So I think this has become an extremely 
difficult and tricky issue.
    The main reason why I think TPP is good for us--there are 
two reasons. First, I think it is good for our economy. In the 
testimony I submitted, one of the points at the end was what 
happens inside a country is much more important or at least as 
important as what happens outside the country. So if you ask 
yourself, as I do, about the 21st century just in the last 15 
years, which has had the bigger impact on the Chinese-American 
relationship. What China has done to build itself up or what 
Americans have done to tear ourselves down? I think we could 
think about that for a long time.
    TPP is one way to improve the performance of a lousy 
economy. Our economy has not grown more than 2 percent on 
average for the whole 21st century. If we stick at two percent 
for a long time, the rest of the story is not going to be very 
interesting if China grows at three times the rate. So this is 
about our economic wellbeing. That is first.
    Second, as Kurt said rightly, in the region it is our 
effort against China to create and construct a rule-based 
trading system at a higher level that China would not become 
part of. China understands this very well. So this is a 
struggle, and if they win, this is going to be a big black mark 
for us.
    Senator Shaheen. Thank you.
    Thank you, Mr. Chairman.
    Chairman McCain. Senator Sullivan?
    Senator Sullivan. Thank you, Mr. Chairman.
    Thank you, gentlemen, for your testimony. As the chairman 
mentioned, I did just get back from a trip to the region. I was 
in Hawaii, Guam, Okinawa, Tokyo, and of course, Alaska, which 
we consider part of the Asia-Pacific. I have also spent a fair 
amount of time in the region as an assistant Secretary of State 
working on economic issues and as a marine deployed out there.
    I first want to commend the committee, Chairman McCain, 
Senator Reed. One of my first takeaways from this trip, was 
with regard to the redeployment of forces, which is just the 
absolutely critical role that committee members on both sides 
of the aisle have played with regard to the oversight of the 
costs and the timelines. I think that this committee has 
brought some strong sense of reality to some earlier plans that 
needed a gut check. So we are going to continue to do that.
    But, Dr. Green, I wanted to just ask you, given the amount 
of time you have spent on this, are you confident that the 
realignment of military forces from Okinawa to Guam can be 
executed at the current costs under current political 
assumptions? I think that, again, as the chairman was focused 
on previously, previous costs and assumptions were, I think, 
way off the chart. What is your sense on that? It certainly 
seems like the Japanese are very motivated. One of my concerns 
continuing is the timeline, the move of forces anywhere, 
literally decades.
    Dr. Green. The whole plan, including a brigade in Hawaii 
and the whole plan--I would not bet that it can come in under 
cost because no one knows yet what the whole plan will actually 
cost.
    I think the plan for redeploying the marines, which has 
roots in the Clinton, Bush, and Obama administrations--it has 
been a bipartisan struggle and effort--has merit at the 
strategic level and political level in the region because we 
need to take the burden off of Okinawa. We need to engage more, 
as some of us were saying, in Southeast Asia. We need to be 
present. We need to have access to more runways, to more 
facilities because the core ones are under risk of ballistic 
missile threats. So strategically there is enormous merit.
    Operationally there is also merit because in Southeast Asia 
you are going to have better opportunities for the marines to 
engage. The marines will have a force that integrates some of 
our most important partners, the Koreans, the Australians, the 
Japanese, the New Zealanders. They are all creating Marine 
Corps. There will never be another Marine Corps, of course, 
Colonel. But they are creating virtual marine corps. They want 
amphibious capabilities and they are training with us in 
Northern Marianas and Japan and now we are going to be doing it 
in Australia. That is huge in terms of interoperability with 
our allies and partners.
    Operationally the down-side risk is lift.
    Senator Sullivan. Can I mention that? That was the next 
question I wanted to get at, and whether you or Admiral 
Roughead--you want to take that on? One of the things that I 
certainly saw on this trip was as you are looking at 
redeploying forces to Hawaii, to Guam, to Australia, you have 
this opportunity of spreading them out, but also the issue of 
strategic lift certainly was something that jumped out to me 
with regard to--particularly if there is a contingency. You 
know, Australia is a pretty darned faraway place. Do you think 
we have the lift capabilities right now, Admiral Roughead, 
whether it is strategic lift of the Air Force or additional 
ARG's [amphibious ready groups] in the Navy?
    Admiral Roughead. No, sir, I do not. I think that if we are 
going to redistribute the Marines in the Pacific--and I think 
it is hugely important--they have to have a way to move around, 
and to simply say that we will take one of our existing ARG's 
and focus it in Southeast Asia, which is where I think it is 
needed the most, will ring hollow.
    At the end of the day, given the amount of money and time 
that we will spend on the infrastructure to base those forces, 
I believe that a better approach is to add an additional ARG, 
amphibious ready group, and dedicate it to Southeast Asia and 
the Indian Ocean. This would also allow marines or other 
service units even to deploy from the continental United States 
and float there. I think that is what is needed. I think it 
will reinforce our presence strongly and moreover, it will 
integrate very well with the capabilities that we see some of 
our allies building in the region. It is expensive, to be sure. 
But I do believe that it will be a heck of a lot less expensive 
than some of the infrastructure that we are talking about.
    Dr. Green. I would agree with that and very briefly add we 
should be working on a regional lift capability. The ARG gives 
you maneuver from the sea, but high-speed vessels, Australian, 
Japanese, United States--we ought to have a regional capability 
for moving our amphibious forces and all our forces in 
peacetime and for maneuvers and exercises.
    Senator Sullivan. Thank you.
    Thank you, Mr. Chairman.
    Chairman McCain. Do you think we are finally on track, Dr. 
Green, Dr. Campbell, Admiral?
    Dr. Green. Well, as Deng Xiaoping liked to say, you cross 
the river by feeling one pebble at a time.
    I am sure the Senator heard this in Japan, but momentum on 
this matters. This committee has done the right thing keeping 
momentum going. My bias would be to approve MILCON [military 
construction] and other things that we know we will need, and 
the milcon now on the table I think fits that category. Further 
down the road, there will be legitimate questions about whether 
some of the investments are things we are really going to need, 
given what the size of the Marine Corps might be, what the 
threat environment might be.
    So a very robust, iterative approach between the Department 
of Defense and this committee I think is critical because the 
plan we are on now I do not think in a linear way we are going 
to implement in 20 years. It is going to eddy and turn and 
adjust, and the Congress and the administration have got to be 
partners in that and honest about costs.
    Chairman McCain. It has had quite a few twists and turns 
and curves.
    Dr. Campbell, did you want to----
    Dr. Campbell. All I would just say, Senator--I first 
started working on Okinawa on this particular base 20 years 
ago, and if you told me----
    Chairman McCain. I remember.
    Dr. Campbell.--this issue had not resolved really 
fundamentally, I would have been surprised.
    Senator Sullivan. I was stationed there 20 years ago.
    Dr. Campbell. So you know what that was like then, Senator.
    So all I would say, generally speaking, I think the 
oversight and the focus that this committee has had propelled 
the Defense 
Department to do the right things here, and I think we have a 
plan that, if it continues, will disperse our forces. I like 
very much what Admiral Roughead has laid out. We are going to 
need more capabilities. It is just undeniable if we are going 
to be effective in Asia. We have been using the term 
``rebalance.'' We are very well positioned in Northeast Asia. 
We are not as well positioned in Southeast Asia and into the 
Indian Ocean, and that is where we need our focus going 
forward.
    Chairman McCain. Senator Hirono?
    Senator Hirono. Thank you very much, Mr. Chairman.
    All of you have talked about how important TPP is, and as 
China watches our efforts and getting agreements with 11 other 
countries, what are they doing in terms of any trade agreements 
that they are pursuing in this area of the world? Anyone?
    Dr. Green. The Chinese preference was bilateral free trade 
agreements within Asia, which gives the larger power, in this 
case China, advantage, or the regional conference of economic 
partnership, a trade agreement of 18 countries in the region 
that we are not in.
    At CSIS, we did surveys of elites in all the APEC [Asia-
Pacific Economic Cooperation] countries, and what was 
interesting was the Chinese elites said in the survey late last 
year that they thought that TPP was now the most significant of 
these groupings. So it was interesting that Xi Jinping, when he 
hosted APEC last November, made in addition to the Asian 
Infrastructure Investment Bank, which is part of their pushback 
and counterproposal, he also said that the APEC countries 
should move to a free trade area of the Asia-Pacific. In other 
words, put China in this process, leapfrog to something 
broader.
    What that tells you is the Chinese think TPP has real 
momentum, and Chinese economic reformers point to it. It will 
be a long time before China is ready to be in something like 
TPP, but I think the Chinese leaders see momentum behind it. 
That is why it will be such a squandered opportunity if we let 
it fall apart in the next year.
    Senator Hirono. Dr. Campbell?
    Dr. Campbell. This is one of the things that is going to be 
hard for us. This is why the challenge is so dramatic. We do 
not have very much in our history of foreign policy that really 
prepares us for China. We had a lot of black and white 
challenges like the former Soviet Union. But the challenge of 
China is they are going to both compete with us relentlessly 
and they are also going to cooperate with us.
    So the irony that we are going to face--I completely agree 
with what Dr. Green has laid out about TPP. It is entirely 
possible that if this is concluded, in the next round the 
Chinese are going to want to talk about the possibility of 
participating because the interesting thing, if you look at the 
last 30 years of Chinese economic performance, every major jump 
in their economy has been associated with either joining an 
international agreement, GATT [General Agreement on Tariffs and 
Trade], MFN [most-favored nation], and the like, and they 
realize that if TPP is effective in bolting and bolstering 
Japan, it could do the same thing for the challenges that they 
face in terms of state-owned enterprises. So their strategy 
will be both to create new institutions to compete with ours 
and to also join some of the institutions that we lead. That is 
the mixture of the Chinese strategy.
    Dr. Allison. Let me disagree slightly with my good friend 
Kurt because I think to your question, what are the Chinese 
doing to the particular countries in question. Again, to go 
back to Lee Kuan Yew, we asked him the question, how does China 
behave when it is relatively stronger than a neighbor? Their 
neighbors are exactly the people who we are trying to sign up 
for TPP. Here his quote. He says we already see this in 
Singapore. Quote. They expect Singaporeans to be more 
respectful of China as it grows more powerful and influential. 
They tell all countries, big or small, we are not a hegemon. 
But when we do something they do not like, they say you have 
made 1.3 billion people unhappy. Know your place.
    Senator Hirono. I would say the countries we are dealing 
with in TPP--they would be much better off in the kind of 
system that we are promoting as opposed to dealing with a huge, 
powerful entity like China.
    It appears that what China does is they look for 
opportunities where there is a vacuum, economic power vacuum, 
military vacuum, and they move in.
    Some of you have said that it is really important for us to 
maintain our alliances, particularly our alliances in these 
areas, that we should not be taking any of these countries for 
granted.
    Mr. Campbell, I think you mentioned that we should 
strengthen our relationships, our efforts with the Philippines. 
Can you be more specific as to exactly what we ought to be 
doing with the Philippines?
    Dr. Campbell. Everything. One of the most important things. 
When Asian leaders come to the United States, we need to give 
them more face. We need to give them more time. We need to give 
them opportunities to speak. I cannot underscore how important 
that is at the basic level. I would like to see Philippines-
U.S. trade grow substantially. I would like to work on 
particular--the Philippines has some specific challenges, but 
there are some initiatives that would allow for greater 
interaction between the two. I would like us to have much more 
mil-to-mil engagement going forward. I think Mike laid out very 
clearly--you know, we give them very little in the way of 
support. What we do provide for them is older military 
equipment that has been retired from our service.
    I think we have a long, powerful tradition with them. I 
would like to see that embraced much more significantly. I just 
think across the board I would like to see the U.S.-Philippine 
relationship grow much, much stronger. They have been through a 
difficult period, but I think there is a recognition in both 
countries that we can do much more together, investment, huge--
I mean, if you look at the great success stories of Asia the 
last 5 years, the Philippines is at the top of that list. 
Remarkable achievements. The current president has gone against 
corruption. The Philippines is growing 5 to 7 percent. I am 
very bullish. I would like to see much more focus on that going 
forward.
    Senator Hirono. Mr. Chairman, if you do not mind. Would the 
rest of you agree that we need to provide a lot more of that 
kind of focused attention, face time, acknowledgement of the 
importance of those alliances, paying more than basically lip 
service, as we are consumed by what is going on in the Middle 
East and other parts of the world?
    Admiral Roughead. Yes, ma?am. I would like to just add to 
the Philippines. I think it is also important that we work with 
the Philippine military on some of the basic reforms and 
fundamental reforms there.
    Also, to go back to what Dr. Campbell said about Thailand, 
they have veered off course. I think it is important that we 
retain particularly the military relationship and the alliance 
that we enjoy. They need to come back on course. But I also 
believe on the economic side there are steps that they need to 
do to get their economy going.
    But the Southeast Asian allies and likeminded partners are 
going to be key going into the future.
    Senator Hirono. Thank you.
    Thank you, Mr. Chairman.
    Dr. Green. Just briefly to give you an idea of what the 
Philippines have gone through recently. In the contest with 
China over atolls like the Scarborough Shoals, the Chinese 
embargoed, cut off imports of food from the Philippines, a 
complete violation of WTO [the World Trade Organization], a 
pure mercantile act. It is bribery and espionage in the 
Philippines to undermine the political system. They sent in 
ships to essentially push the Philippines out of Scarborough 
Shoals where Philippine fishermen fished for hundreds of years 
and cannot go anywhere near it anymore. They have been through 
a lot because of China's growing pains. This is an interest of 
ours. They are an ally. In other words, as Kurt said, we should 
be doing everything.
    Senator Hirono. Thank you.
    Dr. Allison. I disagree. I would ask what the Philippines 
has done for us, but that would be a long conversation.
    Senator Hirono. Thank you, Mr. Chairman.
    Chairman McCain. Senator Kaine?
    Senator Kaine. Thank you, Mr. Chairman.
    To the witnesses, I have gone to school off my colleagues' 
questions, and I just would like you to address one item that 
has not been addressed yet although, Admiral Roughead, you 
pointed the way to it when you used the phrase ``Indo-
Pacific.'' As part of a broader Asia strategy, longer-term Asia 
strategy, talk about the U.S.-India relationship and how that 
fits in. The new Government of India and Prime Minister Modi is 
sort of breaking away from a traditional, non-aligned position. 
I think there are more opportunities for U.S.-Indian military 
cooperation. We are already seeing that. More opportunities for 
opening up the Indian economy. We are so tied culturally. We 
are so tied by small ``D'' democratic traditions. How does the 
U.S.-India relationship going forward fit into a broader Asia 
strategy? I would like each of you to address that. That is my 
only question.
    Admiral Roughead. I will start on this end. From the 
military-to-military dimension, I think that we should 
aggressively pursue that. I think there are opportunities for 
more technical transfer. I also believe that we should engage 
in a more robust personnel--I will not call it an exchange 
program because that tends to imbalance it, but I think we need 
to look at how can we better bring our militaries together 
because there are natural alignments. There is still some 
tension, I think, in India and we cannot become upset if they 
pursue some programs with the French or you pick it. But we 
really need to have an open mind with India. They are going to 
be the key player in the Indian Ocean, and the closer we are to 
them, the better it will be.
    Dr. Green. I think the Indian-U.S. security relationship is 
going to be a growth area for the coming decade. There are 
going to be limitations. The Indian army still has to worry 
about internal insurgencies, still has to worry about Pakistan. 
But under Prime Minister Modi, India's navy and its air force 
and India's ministry of external affairs is much more willing 
to play in the great power game not only of the Indian Ocean, 
but also Southeast Asia and the South China Sea. They are 
developing partnerships with Japan, for example, or with 
Australia that are very much on a pace with what they are doing 
with us.
    Dr. Campbell. Senator, thanks for the question.
    When I was in Government, I had a very extensive set of 
dialogues around Asia with my Indian colleagues, you know, 
sometimes a challenging dialogue, as you know, with Indian 
friends. Sometimes when they got really angry about something, 
I would sit them down. I said, look, I am going to put the 
knife in and it is going to really hurt. He would sort of get 
ready, and I would say the United States and India are destined 
to be close friends over time. That is a bitter blow to their 
nationalism, to their sense of identity, but in truth, there is 
a new generation in India that really understands that they 
need and want a better relationship with the United States.
    I believe fundamentally--what the Admiral and Dr. Green 
have said--not only is defense a growth area, every aspect of 
economic performance, infrastructure issues, matters relating 
to innovation, India will be at the forefront. Their natural 
partners in this are the United States. So I am very bullish. 
It is going to be challenging. It is going to be a difficult 
challenge. But we are going to be much closer together in 10 
years than we are today.
    Dr. Allison. I think I have come today to be the skunk at 
all of this discussion. But I would say India is the country of 
the future and is likely always to be so. We asked Lee Kuan Yew 
about whether since India is a democracy and is going to have a 
larger population than China, it would become a rival of China 
in the economic competition in Asia. Again, there is a chapter 
here called ``The Future of India'', and he says do not use 
India and China in the same breath. Then he goes on from there.
    My colleague in doing this is Bob Blackwell who was the 
ambassador in the Bush administration who managed a good part 
of the realignment.
    I think India will need the U.S. greatly because it feels 
very threatened by China, as will all the other parties. But I 
would say we are Americans first, and we should ask first what 
are they doing for us. So that is a little bit of a different 
view.
    Chairman McCain. I suggest you meet Mr. Modi. I think you 
are going to see a big change in India, for the first time a 
very strong leader.
    Senator Blumenthal?
    Senator Blumenthal. Thanks, Mr. Chairman, and thank you for 
having this hearing, and to our witnesses for your very 
insightful and helpful testimonies so far.
    Admiral Roughead, I want to follow up on one of the points 
in your testimony about submarines in the Pacific, your advice 
that we--and I am quoting--increase the size of our submarine 
force to meet the increasing need in the Pacific and the Indian 
Ocean.
    As you well know, we are increasing the number of 
submarines. We are building two a year. At the same time, as 
you also know--and I am not giving any classified information 
to you because there was a report in the Sunday Times about the 
three new Chinese submarines and their missile capability. To 
what extent do you think we are adequately addressing that 
threat? Because I view submarine undersea warfare as really at 
the crux, at the core of our defense capability in that area.
    Admiral Roughead. Yes, sir. I would say that our undersea 
warfare capability now is unchallenged. But as submarines 
proliferate in the Indo-Pacific region--and they are. China 
just agreed to sell Pakistan eight submarines, for example--the 
fielding of a sea-based strategic nuclear deterrent by India 
and China, submarines are going to become, I believe, the 
significant force in the Indo-Pacific region. The best way to 
go after a submarine is with another submarine. The geographic 
expanse, the time, and the distance that will be involved in 
moving our submarines around to me argues for a larger 
submarine force. As challenging as that will be, we need to 
move in that direction.
    Senator Blumenthal. Thank you.
    I would like to ask a broader question of all the panelists 
beginning with Dr. Allison. To somewhat oversimplify, the 
pattern in Europe, in NATO has been that our commitment of 
increasing resources to the defense there has been accompanied 
by, maybe even caused, a reduction in the commitments of our 
allies there. In effect, we have taken over a lot of the 
burden. How do we avoid the same happening in the Pacific area 
among our allies?
    Dr. Allison. It is a great question.
    If I could do just one footnote on the previous question, I 
would say subsurface unmanned is also a big domain and going to 
be bigger and bigger. It is big for China. It could be big for 
us.
    But with respect to your fundamental question, it is a very 
fundamental question. I think we should recognize that in terms 
of NATO today, basically we provide the defense for Europeans 
who are as wealthy as we are. One could ask, well, how much 
sense does this make? The answer is, well, it is complicated. 
We tell them if you do not do 2 percent--I mean, I gave 
speeches about they should do 2 percent when I was working for 
Secretary Weinberger in the Reagan administration. They never 
do 2 percent, and they are not going to do 2 percent because as 
long as uncle will defend me, why do I need to defend myself? I 
think that is a fundamental dilemma.
    I think in the case of Asia, as China is bigger and 
stronger, all of the parties will feel more threatened. 
Americans, particularly Americans in the diplomacy world, 
think, oh, my God. All these people love us because whenever we 
come, they say come, come, help, help, give us, give us. 
Surprise. Excuse me. You show up anywhere. If you come, give, 
support, secure, provide, everybody says that sounds like a 
very good idea.
    So I think a challenge for us will be to figure out which 
of the countries we have interest in, and we have to have a 
hierarchy of those interests. I do not think they are all vital 
to us. I do not think every rock and every shoal is vital to 
the U.S. Then we need to think for those that are our allies, 
our treaty allies to whom we give defense commitments like 
Japan, we figure out in detail what it is that is required from 
them and what is required from us, and we try to make some of 
this more conditional. But that becomes a longer subject.
    Senator Blumenthal. Thank you. I would welcome any other 
remarks.
    Dr. Campbell. Just a slight difference from Dr. Allison. 
Defense spending in Asia is up dramatically across the board--
dramatically--in the last 5 years. This year it is now the 
dominant arena for spending, and that spending is topped by 
China, followed by South Korea, Japan, Singapore, other 
countries moving up rapidly, Australia, Indonesia coming up, 
Malaysia. That is going to continue going forward. That is 
largely because, as Graham indicated, the security environment 
has become more complicated. Frankly, I think they have more 
questions about the United States than they have had in the 
past.
    The interesting question is why did this take so long. For 
decades, defense spending was actually substantially lower in 
Asia than what many might have anticipated, but now it is off 
to the races. The real issue is going to be can this be 
accomplished in a manner that does not trigger a lot of issues 
as forces rub up against one another out in unclaimed or 
disputed territories.
    Dr. Green. The other factor that is important here, in 
addition to how much allies spend, is how much we integrate, 
are joint, and are interoperable. So when Prime Minister Abe 
comes in 2 weeks, he has agreed to change Japan's 
interpretation of the constitution allow Japanese forces to be 
integrated in our use of force, to 
provide logistical support, anti-submarine capabilities, 
missile defense. A big step. It is not a huge increase in the 
defense budget, a small increase, but it makes available to us 
a lot of assets. So we ought to think about quantity but also 
the quality and the kind of opportunities.
    On rocks and shoals, we should not fight for every rock and 
shoal. But we should bear in mind that China's strategy is to 
kill the chicken to scare the monkey. Send 100-plus ships after 
Vietnam with whom we have no security relationship. What do we 
do? Overwhelm the Philippines with whom we have a security 
treaty but an ambiguous defense commitment. What do we do? Work 
your way up so that ultimately it is the big prize, Japan, 
Guam, the first island chain. We should not draw a red line and 
fight over every rock and shoal, but we have a big stake in 
shoring up the resilience of these countries so that this 
killing the chicken strategy does not end up with us in a 
really disadvantageous position.
    Chairman McCain. Senator King?
    Senator King. Thank you, Mr. Chairman.
    First, I would like to commend Dr. Allison's book about Lee 
Kuan Yew to the committee. I would urge the chair to make it 
required reading. It is one of the most interesting and 
insightful books. It might even sell a few books for Dr. 
Allison.
    Chairman McCain. All of my edicts are carefully adhered to.
    [Laughter.]
    Senator King. They certainly are in this corner, Mr. 
Chairman.
    I want to be the skunk for a minute about the TPP. Dr. 
Allison, I thought the statement on the last page of your 
testimony, the contrast between China's agility in addressing 
its daunting internal agenda and America's new normal 
dysfunctionalism--boy, what a powerful sentence that is. The 
point you make, though, is we are growing at 2 percent. They 
are growing at 6 to 8 percent.
    I come at the TPP from a slightly--you guys are all coming 
from it from a kind of international point of view, what will 
it do to strengthen these countries in Asia. My question is, 
what does it do for us, and will it strengthen the U.S. economy 
or will it strengthen companies which are based in the United 
States but have a lot of their operations abroad? I come from a 
State that has seen their manufacturing base essentially 
disappear except in a couple of areas that are resource-based.
    I mean, the question to Dr. Allison is, does the TPP 
strengthen the U.S. economy? Because I think that is a really 
relevant question because what you are talking about is there 
is a coming imbalance between the Chinese economy and the U.S. 
economy. Can you give me some thoughts on that?
    Dr. Allison. Again, I am not an economist, but I examine 
this and cross-examine it with my colleagues at Harvard 
regularly. If the case cannot be made that TPP strengthens the 
American domestic economy, then I would vote against it myself. 
This should be about helping us grow the American economy. If 
we remain stuck in the so-called ``new normal'' of 2 percent 
for a long time, this country is not going to be this country, 
for sure. China will not be the worst of the problems. The 
worst of the problems will be what we are here at home. So we 
need to find ways to grow our economy.
    As I best understand it, what TPP does is essentially bring 
other parties, more or less, into compliance with rules that we 
are already complying with. So in that sense, it advantages us 
relative to the other parties.
    But I would say for the committee or for Senators, I would 
ask Mike Froman to give me chapter and verse decisively that 
this is strengthening the American economy. If he cannot do 
that, I would vote against it.
    Dr. Green. My uncle owns a small manufacturing company in 
West Virginia, about 100 employees. So what does TPP do for 
him? I do not know about Maine.
    But first, it is going to create billions of dollars in 
growth in the Pacific Rim, and that is exports.
    Second, it is going to open up markets, big markets, that 
have been closed in key sectors like Japan on agriculture and 
some areas.
    Third, it is going to give more purchase for American 
negotiators to deal with what my uncle worries about the most, 
intellectual property rights violations by China. We are in a 
bilateral investment treaty negotiation with the Chinese. I 
have been involved in Government in the intellectual property 
rights negotiations. When we are leading and writing rules that 
most of the major economies in Asia are signing up to, we are 
going to have more purchase to try to deal with these issues 
with China. It is hard, I think, for constituents to draw this 
in a direct line, but in a macro sense, it opens up 
opportunities and gives us leverage on issues that really do 
challenge manufacturers in this country.
    Senator King. Well, as this debate unfolds, that is the 
question I am going to be asking certainly of Mike Froman and 
others because I think sometimes we are up here in the 
stratosphere of strategy and economic theory, and I want to be 
sure that the impacts in our country are going to be positive.
    Let me change the question slightly. What does China want? 
Has China historically and do we think now they are looking for 
territory? I mean, they are building islands and those kinds of 
things. You mentioned Japan and Korea. Does China have any 
history that suggests they want to invade and incorporate Japan 
into China? I mean, is China an expansionist country in a 
military territorial sense as opposed to a commercial sense? I 
think those are two very different questions.
    Dr. Allison. Again, I would refer you back to Lee Kuan Yew. 
I would say nobody was kind of willing to say as clearly as he 
was prepared to say what he says. China would like to be the 
dominant power in Asia.
    Senator King. But my question is what does that mean. Does 
that mean owning real estate?
    Dr. Allison. Generally, they have not insisted on owning 
the real estate. They like relationships that are tributary 
relationships in which you kowtow given by relative power and 
my relative strength, and so your relationship with me is as a 
subordinate to a superior. If you behave appropriately, that is 
good enough.
    Senator King. But if that is the kind of relationship that 
they are seeking, that is not the kind of relationship that our 
military is going to be able to--this is not a military 
confrontation.
    Dr. Allison. I agree it is not primarily a military 
confrontation. Basically if I am bigger and stronger than you 
economically and you need me as your trade market, which they 
are the principal trade market for every Asian country, and if 
I am willing and able to squeeze you, as they squeezed the 
Philippines, as they squeeze Britain--look at Cameron's 
behavior. I mean, it is absolutely astounding with respect to 
the infrastructure bank. They squeeze him and pretty soon he 
comes to behave. So I would say the economic leverage is the 
bigger piece of this. But in military terms, at the edge, for 
example, as we see in their taking more and more assertive 
roles in the South China Sea, they are looking again at a 
little bit of property. The Chinese have a story in which they 
say we have never been territorially expansive. But if you ask 
the prime minister of Vietnam when he comes--one of them once 
said to a friend of mine, look at the map of Vietnam, and ask 
yourself why does it look kind of like an 's.? He said that is 
exactly like the back of a human being on whom China has been 
sitting for 2,000 years.
    Senator King. Thank you very much for your testimony.
    It seems to me, Mr. Chairman, this has been brilliant, and 
what we need to be thinking about is a broad strategy to deal 
with a very rapidly changing circumstance similar to the 
containment strategy but a different strategy. But we need an 
overarching way of thinking about this, it seems to me.
    Thank you very much for your testimony.
    Thank you, Mr. Chairman.
    Chairman McCain. I would like to thank the witnesses for a 
very informative session. I apologize for the fact that we are 
going to be subject to a briefing which has truncated the 
hearing. But I think it has been very valuable and very 
important for us to hear the perspective of very wise and 
experienced individuals.
    Would you not agree, Dr. Allison, that the military is the 
component of Chinese strategy which then leads them to reduce 
other nations to a subordinate status? Without the military 
component, then obviously they are not able to achieve their 
goals.
    Dr. Allison. Absolutely, and it is currently the area of 
our advantage. I would say as the committee thinks about it 
going forward, our traditional approach, which says we 
overwhelm--we are not too smart, but we overwhelm people with 
our resources, is not going to be a good strategy with respect 
to China. So we are going to have to think smart and 
asymmetric, and that is what the committee is actually pressing 
the Department which finds that difficult to do to do.
    Chairman McCain. Well, I thank the witnesses. Thank you.
    [Whereupon, at 10:34 a.m., the subcommittee adjourned.]

    [Questions for the record with answers supplied follow:]
              Questions Submitted by Senator Kelly Ayotte
                        size of submarine force
    1. Senator Ayotte. Admiral Roughead, in your prepared statement, 
you write that the U.S. should ``increase the size of our submarine 
force.'' Why do you believe the U.S. needs more submarines?
    Admiral Roughead. Our attack submarines, particularly the VIRGINIA 
Class, are and will remain the most effective, versatile and stealthy 
sea control, anti-submarine and intelligence, surveillance and 
reconnaissance (ISR) platform in our military. Anti-access strategies 
and the proliferation of submarines globally, particularly in the Indo-
Pacific region, will demand more of our submarine force in the coming 
years. Speed of response in a more connected world requires submarines 
to be persistently present in areas of interest. The distance to our 
strategic areas of interest, maintenance requirements and consideration 
of personnel tempo require approximately four submarines to have one on 
station.

    2. Senator Ayotte. Admiral Roughead, how many attack submarines do 
you believe the Navy needs?
    Admiral Roughead. While fully mindful of the extraordinary 
pressures on our budget, for strategic and operational reasons I 
believe the Navy should maintain an attack submarine force of 72 
submarines.
                   russia's role in the asia-pacific
    3. Senator Ayotte. Dr. Allison, Mr. Campbell, Dr. Green, and 
Admiral Roughead, how would you describe Russia's role in the Asia-
Pacific?
    Dr. Allison did not respond in time for printing. When received, 
answer will be retained in committee files.
    Mr. Campbell did not respond in time for printing. When received, 
answer will be retained in committee files.
    Dr. Green did not respond in time for printing. When received, 
answer will be retained in committee files.
    Admiral Roughead. Russia will attempt to continue to remain a 
consequential power in the Asia-Pacific region. It will be a supplier 
of energy and mineral resources to Asian markets primarily from its 
Arctic region. It will seek to be a supplier of capability to Asian 
militaries. Russia will be challenged by its Far East demographic, one 
dimension economy and having been compelled to accommodate and align 
itself with its strategic rival--China.

    4. Senator Ayotte. Dr. Allison, Mr. Campbell, Dr. Green, and 
Admiral Roughead, what are Russia's goals in the region, and how do 
they conflict with our own?
    Dr. Allison did not respond in time for printing. When received, 
answer will be retained in committee files.
    Mr. Campbell did not respond in time for printing. When received, 
answer will be retained in committee files.
    Dr. Green did not respond in time for printing. When received, 
answer will be retained in committee files.
    Admiral Roughead. Russia's energy relationship with China, its 
diminishing demographic and overall influence in the region will see 
Russia more beholden to China in the coming decades and routinely 
aligned with China on regional matters, especially those that seek to 
diminish the role of the U.S. in the region. Because of its energy and 
mineral resources in the Arctic and the importance of Arctic sea lanes 
to move those resources to Asian markets Russia will assert itself as 
the dominant Arctic nation. Unlike other Arctic nations, it will place 
more of an emphasis on military capability in that region. How 
consequential Russia's military capabilities will be in the Arctic has 
yet to play out. It is likely that Russia's strategic accommodation 
with China will also enhance China's access and activity in the Arctic.
                       china's long-term ambition
    5. Senator Ayotte. Dr. Allison, Mr. Campbell, Dr. Green, and 
Admiral Roughead, what do you assess to be China's long-term goals 
beyond the island chains in the South China Seas and the Asia-Pacific?
    Dr. Allison did not respond in time for printing. When received, 
answer will be retained in committee files.
    Mr. Campbell did not respond in time for printing. When received, 
answer will be retained in committee files.
    Dr. Green did not respond in time for printing. When received, 
answer will be retained in committee files.
    Admiral Roughead. China's ambition is to be the dominant power in 
the Asia-Pacific region, to weaken and eliminate the U.S.--Asia 
alliance structure and to not be denied the sea lanes that carry the 
energy and mineral resources necessary for economic growth. Beyond the 
region it seeks to be the consequential global nation.

    6. Senator Ayotte. Dr. Green, a recent Office of Naval Intelligence 
report said that within the next decade, China will have a navy that is 
capable of conducting worldwide operations. Do you believe China will 
seek to maintain a global naval presence similar to the United States 
and what does this mean for the U.S. and more broadly, the 
international system?
    Dr. Green did not respond in time for printing. When received, 
answer will be retained in committee files.
                             asia rebalance
    7. Senator Ayotte. Dr. Allison, Mr. Campbell, Dr. Green, and 
Admiral Roughead, what are the strengths and weaknesses of the 
implementation of the Asia rebalance to date, and what should be our 
top priorities for furthering the rebalance in the next 2 years?
    Dr. Allison did not respond in time for printing. When received, 
answer will be retained in committee files.
    Mr. Campbell did not respond in time for printing. When received, 
answer will be retained in committee files.
    Dr. Green did not respond in time for printing. When received, 
answer will be retained in committee files.
    Admiral Roughead. The strengths of the Asia rebalance to date have 
been to identify the region as the strategic priority, to highlight the 
importance of the alliance structure in Asia and to reset economic and 
security initiatives there. The weaknesses to date are that the 
narrative is too focused on military capabilities thus diminishing the 
economic and diplomatic underpinnings necessary for a balanced 
strategy, budget uncertainties undermine the credibility of the 
strategy and there has not been an effort to engage in a public 
discourse on the long term strategic importance of the rebalance and 
our Asian interests.
    Top priorities should be to emphasize the economic and diplomatic 
aspects of rebalance with the highest priority being finalizing the 
TPP, enhancing Asian alliances through increased diplomatic engagement 
and more robust security cooperation to include expanded technical 
transfer and personnel interaction.
                                 ______
                                 
              Questions Submitted by Senator Roger Wicker
                            amphibious ships
    8. Senator Wicker. Admiral Roughead, I was interested to read your 
recommendation in your prepared statement that the U.S. should 
``Procure an additional Amphibious Ready Group to routinely float the 
Marines distributed in the Pacific.'' Can you describe how amphibious 
ship resource shortfalls will impact America's ability to decisively 
project force in the Pacific and react to contingencies such as North 
Korea?
    Admiral Roughead. Shortfalls in regional amphibious shipping will 
deprive the Marines distributed in the region the flexibility and 
agility that must be inherent in a ready, capable and credible force. 
The vast distances in the Pacific that separate our northern and 
southern allies, areas of strategic interest and possible contingencies 
demand more than one amphibious group be predictably present in the 
region. One group can be in one place at one time and if employed in 
Southeast Asia it is not available for a Korean contingency and vice 
versa. Access and the availability of adequate airlift and basing in 
simultaneous contingencies will likely be problematic. An additional 
group can mitigate those very real operational challenges. Predictable 
presence, routine interaction with allies and like-minded partners, 
some of whom are developing expeditionary capabilities and forces, will 
be greatly enhanced by an additional group that is focused on operating 
in Southeast Asia and the Indian Ocean region. The offshore option of 
an Amphibious Ready Groups also mitigates the sensitivity with regard 
to foreign forces ashore.

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