```

[Senate Hearing 114-780]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 114-780

                       U.S. - CHINA RELATIONS: STRATEGIC 
                            CHALLENGES AND OPPORTUNITIES

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

                                HEARING

                               BEFORE THE

                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              APRIL 27, 2016

                               __________

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                COMMITTEE ON FOREIGN RELATIONS         

                BOB CORKER, Tennessee, Chairman        
JAMES E. RISCH, Idaho                BENJAMIN L. CARDIN, Maryland
MARCO RUBIO, Florida                 BARBARA BOXER, California
RON JOHNSON, Wisconsin               ROBERT MENENDEZ, New Jersey
JEFF FLAKE, Arizona                  JEANNE SHAHEEN, New Hampshire
CORY GARDNER, Colorado               CHRISTOPHER A. COONS, Delaware
DAVID PERDUE, Georgia                TOM UDALL, New Mexico
JOHNNY ISAKSON, Georgia              CHRISTOPHER MURPHY, Connecticut
RAND PAUL, Kentucky                  TIM KAINE, Virginia
JOHN BARRASSO, Wyoming               EDWARD J. MARKEY, Massachusetts

                  Todd Womack, Staff Director        
            Jessica Lewis, Democratic Staff Director        
                    John Dutton, Chief Clerk        

                              (ii)        

  
                           C O N T E N T S

                              ----------                              
                                                                   Page

Corker, Hon. Bob, U.S. Senator From Tennessee....................     1

Blinken, Antony J. Deputy Secretary of State, U.S. Department of 
  State, Washington, DC..........................................     3
    Prepared statement...........................................     6
    Responses to Additional Questions for the Record Submitted by 
      Senator Marco Rubio........................................    36
    Responses to Additional Questions for the Record Submitted by 
      Senator David Perdue.......................................    41

                             (iii)        
 
      U.S.-CHINA RELATIONS: STRATEGIC CHALLENGES AND OPPORTUNITIES

                              ----------                              

                       WEDNESDAY, APRIL 27, 2016

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:34 a.m., in 
Room SD-419, Dirksen Senate Office Building, Hon. Bob Corker, 
chairman of the committee, presiding.
    Present: Senators Corker [presiding], Risch, Rubio, Flake, 
Gardner, Perdue, Isakson, Cardin, Menendez, Coons, Kaine, and 
Markey.

             OPENING STATEMENT OF HON. BOB CORKER, 
                  U.S. SENATOR FROM TENNESSEE

    The Chairman. The Committee on Foreign Relations will come 
to order.
    I want to thank our distinguished witness today for being 
here. You may notice a significant absence on the other side of 
the podium. There was an all-conference meeting that was 
scheduled by Senator Reid at 10:30 a.m., so our colleagues on 
this side of the aisle I think may be a little late. But we 
certainly will welcome them when they come.
    Again, we thank you, Tony, for being here today and 
testifying before us.
    When President Obama and President Xi met at Sunnylands in 
2013, the Obama administration was hopeful about a new 
direction with U.S.-China relations. Yet since then, it has 
been difficult to see a lot of cause for optimism. Whether it 
is China's militarization of the South China Sea or cyber theft 
or discriminatory trade and investment policies, there are far 
more downsides than upsides in the U.S.-China relationship over 
these last days.
    Regrettably, as the strategic challenges increase, the 
opportunities for positive engagement diminish. I say this as 
someone who has always tried to take a balanced view toward 
China in the hopes of fostering a positive engagement, because 
this relationship remains one of the most consequential for 
U.S. political, security, and economic interests.
    We have reached a point now, though, where there is no 
denying the fact that China has positioned itself as a 
geopolitical rival to the United States. The calculated and 
incremental strategy on the part of Beijing to challenge U.S. 
power is having real consequences for U.S. interests and 
international norms in the Indo-Pacific and beyond. It is even 
more troubling that the administration still does not seem to 
have a coherent China policy.
    For example, in the South China Sea, neither the rhetoric 
nor the freedom of navigation operations have deterred or 
slowed down China's land reclamation activities, including the 
stationing of military-related assets on these artificial 
islands.
    Moreover, many experts assess it is increasingly likely 
that Beijing will declare an air defense identification zone in 
the South China Sea. China could undertake further 
destabilizing actions, if the international tribunal ruling, as 
expected, goes against Chinese interests.
    I am also frustrated and concerned about the lack of 
progress on a number of economic and trade-related issues.
    For more than 4 years, the U.S. and China have been engaged 
in a trade war over solar panels and polysilicon imports and 
exports to make those panels.
    Tony, I hope, in particular, you are listening to these 
comments.
    As this dispute drags on, it is hurting U.S. producers of 
polysilicon, one of the main components in the production of 
solar panels. China is the largest producer of solar panels, 
and, until this trade dispute, the country imported significant 
quantities of polysilicon made in the United States.
    I know that Ambassador Froman, and I have talked with him 
about this, has raised this issue with China's Ministry of 
Commerce from time to time. But from what I understand, the 
latest offer from China on polysilicon imports is unacceptable, 
and it looks like simple protectionism.
    This market obviously needs to reopen mutually beneficial 
trade, and I expect this issue to be resolved soon and in a 
serious way.
    The reasonable request made by U.S. polysilicon industries 
here in the U.S. must be taken into account. Surely, the 
Chinese Government and the U.S. Government will be wise enough 
to fully resolve this problem before this committee considers 
the U.S.-China Bilateral Investment Treaty, should it mature 
and be ready to be put forth here.
    As I have said previously, I fully appreciate the 
complexity of the U.S.-China relationship and the need for 
constructive engagement on a number of issues important to both 
Washington and Beijing. But merely managing differences with 
China is not a successful formula, particularly when such 
management cedes U.S. influence and places American interests 
at risk in the Indo-Pacific and beyond.
    North Korea is one area where we hope that there is 
additional room for cooperation between the United States and 
China--I know Senator Gardner will certainly want to get into 
that with his questioning--and that Beijing will follow through 
on commitments to fully implement new multilateral sanctions. 
But only time will tell.
    I hope we will be able to have a thoughtful discussion 
today, one that outlines tangible steps the administration 
plans to take in the coming months to safeguard U.S. interests, 
preserve international norms, and maintain peace and stability 
in the Indo-Pacific.
    I want to again thank our witness. I want to thank him for 
working with us on the issue we talked about just before the 
meeting started. I want to thank him for his service to our 
country. We look forward to your testimony.
    As you know, without objection, your written testimony will 
be entered into the record. So if you would, if you could 
summarize in about 5 minutes or so, we look forward to 
questions. Again, thanks for being here.

STATEMENT OF ANTONY J. BLINKEN, DEPUTY SECRETARY OF STATE, U.S. 
             DEPARTMENT OF STATE, WASHINGTON, D.C.

    Mr. Blinken. Mr. Chairman, thank you very much. Members of 
the committee, thank you. It is very good to be back before 
this committee and have the opportunity to discuss our 
relationship with China, which, as you outlined very well, Mr. 
Chairman, is complicated, indeed.
    I just got back this past weekend from what was my sixth 
visit to the Asia-Pacific region in a little over a year. I 
have seen with each trip that the rebalance efforts that we 
have been making to Asia have, in fact, advanced our interests 
and helped shape Asia's upward trajectory by bolstering our 
alliances, building new partnerships with emerging countries, 
strengthening regional institutions and the rule of law, 
advancing our economic ties, and engaging with China.
    I am very pleased to discuss the last pillar of our 
rebalance with you today. Secretary Kerry has called our 
relationship with China our most consequential relationship, 
and it is, indeed, crucial that we try to get it right.
    The approach that we have taken with China tries to do 
three things. It seeks to broaden and deepen practical 
cooperation on issues of shared concern. It directly confronts 
and then tries to resolve or at least narrow our differences 
wherever we can, and where we cannot, manage those differences 
peacefully.
    Over the past year, we believe we have seen real progress 
on important issues that do advance our interests. The 
relationship that we have been working with China paved the way 
for a landmark joint announcement on climate change that 
galvanized the international community to reach a global 
climate agreement in Paris last December and signed in New York 
just last week. We engaged China in the global response to 
Ebola with positive effect. We grounded our work together to 
craft a deal that prevents Iran from developing a nuclear 
weapon far into the future. We produced new confidence-building 
measures between our militaries. And we sparked growing 
collaboration to meet development challenges from Afghanistan 
all the way to Sierra Leone.
    From top to bottom, the administration has worked to expand 
and deepen our diplomatic, military, economic, and people-to-
people ties to China.
    Since the President took office, our exports to China have 
nearly doubled. China is now the largest market for American-
made goods outside of North America. It is also one of the top 
markets for U.S. agriculture exports and a large and growing 
market for U.S. services.
    These efforts to deepen bilateral ties have been designed 
to turn a challenging rivalry into healthy competition and to 
try to break out of zero-sum thinking on both sides.
    We have seen results of this approach in our collaboration 
on some of the most difficult issues, including most recently 
North Korea and the provocative destabilizing and 
internationally unlawful actions it continues to take to 
advance its proscribed missile and nuclear programs.
    While we have taken significant steps to make it more 
difficult for North Korea to acquire technology and equipment 
for those programs, or the resources to pay for them, the fact 
remains that their development continues. As a result, they get 
closer to the day when they have the capacity to strike at our 
allies, at our partners, and at the United States with a 
ballistic missile armed with a miniaturized nuclear warhead. 
That is simply unacceptable.
    This threat, combined with an inexperienced leader who acts 
rashly, makes it an urgent priority not only for us but, 
increasingly, for China. While the United States and China 
share an interest in ensuring that North Korea does not retain 
nuclear weapons capability, we have obviously not always agreed 
on the best way to reach that objective.
    In the last few months, however, we have worked together to 
draft and pass the toughest U.N. Security Council resolution in 
a generation to try to compel the leadership of the DPRK to 
rethink its pursuit of nuclear weapons and ballistic missiles.
    If fully and effectively implemented, U.N. Security Council 
Resolution 2270 will significantly reduce the regime's ability 
to procure, pay for, or produce weapons of mass destruction, 
and will challenge the calculus of the leadership in North 
Korea, but, I want to emphasize, only if it is fully and 
effectively implemented.
    As North Korea's largest trading partner, China has unique 
leverage. We welcome President Xi's commitment at the Nuclear 
Security Summit earlier this month to fully implement the 
Security Council resolution. It is too early to draw firm 
conclusions about China's enforcement, but there are some early 
trade restrictions that China has imposed that suggest that 
China is committed to following through on implementation of a 
resolution that it took the lead in producing at the U.N., but 
the jury remains out.
    We have encouraged China to contribute more to apply its 
significant capabilities as a rising economic and political 
power responsibly in order to help meet practical needs in the 
international community, from wildlife trafficking to public 
health.
    We have also seen China step up in a meaningful way to the 
challenge of conflict in fragile countries. In Afghanistan, we 
joined together, the United States and China, with Afghanistan 
and Pakistan to form something called the Quadrilateral 
Coordination Group on the Afghan peace and reconciliation 
process.
    And the 2015 U.N. Leaders' Summit on Peacekeeping, at that 
summit, President Xi announced a new Chinese peacekeeping rapid 
response standby force, training peacekeepers from other 
countries, and $100 million for the African Union peacekeeping 
operations. China contributes more troops and police to 
peacekeeping missions than any other member of the permanent 
five members of the Security Council, and it is the second 
largest funder.
    Of course, even as we try to build cooperation with China, 
we are directly engaging our significant differences with the 
goal to resolving or narrowing them while preventing conflict. 
Significant areas of difference remain around China's assertive 
and provocative behavior in the South China Sea, its conduct in 
cyberspace, its denial of internationally recognized human 
rights and fundamental freedoms to its own citizens.
    We, of course, are not a claimant to the territorial and 
maritime disputes in the South China Sea, but we have a clear 
national interest in the way those claims are pursued to 
include upholding freedom of navigation, respect for 
international law, and the peaceful resolution of disputes. And 
our alliance commitments remain ironclad.
    We oppose the use of force or the threat to use force to 
try to advance maritime or territorial claims, and we call on 
all parties in the South China Sea, not just China, to resolve 
disputes in a peaceful manner.
    These issues need to be decided on the merits of China's 
and the other claimants' legal claims, and adherence to 
international law and standards, not the strength of their 
militaries or law enforcement ships or the size of their 
economies.
    For years, we clashed with China over our opposition to 
cyber-enabled theft for commercial gain by state actors. We 
persisted in engaging China on that issue. In the lead up to 
President Xi's visit last fall, China and the United States 
agreed to an unprecedented set of cyber commitments, including 
an agreement that neither government will conduct or knowingly 
support cyber-enabled economic espionage for commercial gain. 
We are watching very closely to ensure this commitment is 
followed by action.
    We remain concerned by recent moves by China that reduce 
space for free expression, including a raft of new domestic 
legislation that, if enacted as drafted, could shrink space for 
civil society and academia, inhibit U.S. business activities, 
and result in further rights abuses. We are alarmed by the 
ongoing crackdown on lawyers, religious adherents, and civil 
society leaders, and by growing attempts to restrict 
internationally recognized fundamental freedoms, including the 
freedom of expression.
    We are deeply troubled by China's willingness to threaten 
journalists with expulsion or the nonrenewal of their visas as 
a tool to influence their reporting.
    The President, Secretary of State Kerry, and others 
regularly raise individual cases and systemic concerns with 
China. We will continue to reinforce the message that 
protecting human rights and fundamental freedoms of 
association, peaceful assembly, religion, and expression, and 
respecting the rights of members of minorities, will make China 
more stable, more secure, and more prosperous.
    Mr. Chairman, for 7 decades now, and as you noted, the 
United States has invested in a system of international 
institutions and principles and norms designed to protect the 
right of all nations to pursue their interests irrespective of 
their size or strength. This international architecture has 
created a foundation of peace and stability that unlocked a 
period of unprecedented economic growth, and nowhere more so 
than in East Asia. It has not only benefited the United States, 
it has benefited China and all the countries in the region. It 
is our shared interest to see that these standards are 
strengthened, not undermined.
    We have shown a readiness to welcome China as a global 
leader and responsible advocate for the international order. We 
want China as our partner in many endeavors, and we believe our 
nations and the world would be undeniably better for it. But in 
the end, only China can choose to assume that role and 
demonstrate the commitment to international law and standards 
necessary to achieve it.
    Thank you very much, and I welcome your questions.
    [Mr. Blinken's prepared statement follows:]

    Prepared Statement of Deputy Secretary of State Anthony Blinken

    Chairman Corker, Ranking Member Cardin, Senators, thank you for the 
opportunity to come before you today to discuss our relationship with 
China. I would also like to recognize this Committee's leadership on 
policy in the broader Asia-Pacific region.
    This past weekend, I returned from my sixth visit to the Asia-
Pacific in a little over a year. With each trip, I have seen growing 
dividends of President Obama's rebalance to Asia and our common efforts 
with our Pacific partners and friends to strengthen a rules-based, 
norms-based, institutions-based order that is advancing U.S. interests 
and addressing regional and, increasingly, global challenges.
    Having inherited a nation immersed in the greatest financial crisis 
since the Great Depression, President Obama recognized from his first 
day in office that America's leadership in the Asia-Pacific was not 
merely peripheral to our future prosperity and security--it was 
indispensable.
    Nowhere in the world are our economic and strategic opportunities 
clearer or more compelling than in the Asia-Pacific--home to three of 
our top ten trading partners, five of the seven of our defense treaty 
alliances, the world's largest and fastest growing economies, and some 
of the most wired and innovative people in the world.
    The rise of Asia will help define this new century. How it rises--
according to which rules, by which means, to what ends--will have 
significant impact on our national well-being, perhaps more so than any 
other region in the world.
    Over the last seven years, our rebalance to Asia has helped shape 
and influence this trajectory by bolstering our alliances, building new 
partnerships, strengthening regional institutions and rule of law, 
advancing our economic ties, and engaging deeply with China.
    Our intensive engagement in Asia has helped foster an increasingly 
broadly accepted vision for the future of the region, and for our role 
in it. A vision wherein countries come to each other's aid in times of 
disaster or crisis. Where borders are respected and countries cooperate 
to prevent small disputes from growing larger. Where disagreements are 
settled openly, peacefully, and in accordance with the rule of law. 
Where diversification of trade and investment flows allow countries to 
pursue their interests freely. And where the human rights of each and 
every person are fully respected.
    This is the environment in which we are advancing our relationship 
with China. Secretary Kerry has called our relationship with China our 
``most consequential'' relationship. It is crucial that we get it 
right.
    As the President has said repeatedly, we welcome the rise of a 
peaceful, stable, and prosperous China that plays a responsible role in 
global affairs. We assess that we have more to fear from a weak and 
insecure China than from a confident and capable China.
    Our approach to China seeks to broaden and deepen practical 
cooperation on issues of shared concern; directly resolve or narrow our 
differences wherever we can; and manage those differences peaceably 
where we cannot. We have encouraged China to contribute more--to apply 
its significant capabilities as a rising economic and political power 
responsibly in order to help meet practical needs in the international 
community, from peacekeeping to public health.
    Over the past year, this approach has produced real progress on 
important issues that advance U.S. interests.
    It paved the way for a landmark joint announcement on climate 
change that ignited momentum in the months leading to the historic 
Paris climate deal. And it brought city, state, and provincial leaders 
from China and the United States together to surface local solutions to 
combat global warming.
    It engaged China in the global response to Ebola.
    It grounded our work together to craft a deal that prevents Iran 
from developing nuclear weapons.
    It produced new confidence-building measures between our 
militaries, and it sparked growing collaboration to meet development 
challenges in partner countries, from Afghanistan to Sierra Leone.
                        deepening bilateral ties
    From top to bottom, this Administration has expanded and deepened 
our diplomatic links with China. Secretary Kerry and National Security 
Advisor Rice meet and speak regularly with their counterparts. The 
Secretary has even hosted State Councilor Yang Jiechi in his Boston 
home. Ambassador Baucus is among the most actively engaged U.S. 
ambassadors in the field, and he and his team work tirelessly in 
support of U.S. interests. And the Administration has created new 
multi-ministry engagement mechanisms, such as the U.S.-China Strategic 
and Economic Dialogue and the Strategic Security Dialogue, that force 
decisions that cut across an unwieldy Chinese bureaucracy and expand 
our access to the Chinese Politburo and State Council. In other words, 
we now have more direct and diverse channels of communication. This has 
led to a structural strengthening of the relationship--helping to lower 
the bar for identifying areas of cooperation, while at the same time 
enabling opportunities to narrow differences early on.
    The same could be said for our colleagues at the Pentagon and the 
military-to-military relationship. This summer China will participate 
in the multinational RIMPAC exercise for the second time--an exercise 
that will include 27 countries working together to increase their 
collective capacity to cooperate on international humanitarian 
assistance and disaster relief operations.
    We have also implemented confidence building measures that reduce 
the risk of incidents in the South China Sea or anywhere else our 
forces might come into contact. These measures are based on 
internationally recognized standards for safe and professional 
conduct--institutionalization of which may also reduce the risk of 
unintended incidents between the Chinese military and its neighbors.
    With China hosting the G-20 this year, China's economy will be an 
important area of focus. An economically vibrant China that moves 
toward more sustainable and balanced growth benefits the global and 
U.S. economies. We continue to push China to implement much needed 
economic reforms to help unlock sustainable long-term growth.
    We have also pressed China to change a number of discriminatory 
policies and practices that harm U.S. companies and workers, while also 
pushing for expanded opportunities for U.S. companies competing with 
Chinese companies. Since President Obama took office, our exports to 
China have nearly doubled, and China is now the largest market for 
American-made goods outside of North America. It is also one of the top 
markets for U.S. agricultural exports and a large and growing market 
for U.S. services. But there is more work to be done, and we will use 
every opportunity to create a more level playing field for U.S. firms, 
farmers, and workers.
    The high-standards of the Trans Pacific Partnership (TPP) are 
increasingly eliciting interest within China itself, which is not a TPP 
signatory. I was in northeast Asia when the agreement on TPP was 
completed. In Beijing, I was struck by what I saw: a manifest turn from 
indifference to serious examination--and even interest in some 
quarters. Even a state-affiliated newspaper published an article 
highlighting the potential benefits of TPP for China.
    And we have also made a significant investment in expanding our 
people-to-people ties, underwriting greater bonds of trust and 
understanding between the next generations in both of our countries. 
Last year more than 2.3 million Chinese nationals received a business 
or tourist visa to enter the United States and 304,000 Chinese students 
studied for credit at universities across the United States, a number 
representing around 30 percent of all foreign students in the United 
States. And through the Consultation on People-to-People Exchange, we 
have a new mechanism to promote additional opportunities for exchanges 
in both directions.
    These efforts to deepen our bilateral ties have been designed to 
turn suspicious rivalry into healthy competition; to break free of 
zero-sum thinking and build a relationship with China that yields 
practical cooperation on regional and global issues.
                    strengthening regional stability
    We have seen results of this approach in our collaboration on some 
of the region's toughest issues, including North Korea and the 
provocative, destabilizing, and internationally unlawful actions it 
continues to take to advance its proscribed missile and nuclear 
programs.
    While we have taken significant steps to make it more difficult for 
North Korea to acquire technology and equipment for those programs or 
the resources to pay for them, the fact remains that their development 
continues. As a result, they get closer to the day when they have the 
capacity to strike at our allies, at our partners, and at the United 
States with a ballistic missile armed with a miniaturized warhead. That 
is unacceptable. This threat--combined with an inexperienced leader who 
acts rashly and does not respect international law--makes it an urgent 
priority not only for us but also for China.
    While the United States and China share an interest in ensuring 
that North Korea does not retain a nuclear weapons capability, we have 
not always agreed with China on tactics for engaging North Korea.
    But in the last few months we have worked together to draft and 
pass the toughest UN Security Council Resolution (UNSCR) in a 
generation to compel the DPRK leadership to rethink its pursuit of 
nuclear weapons and ballistic missiles. It came about because China 
increasingly recognizes that North Korea's actions are the greatest 
source of instability in the region. At the same time, the United 
States has made clear it will take whatever steps are necessary to 
protect itself and its allies and partners--including steps that are 
not aimed at China but which raise its concern, such as the potential 
deployment of the THAAD missile defense system to the Republic of 
Korea.
    If fully and effectively implemented, UNSCR 2270 will significantly 
reduce the North Korean regime's ability to procure, pay for, or 
produce weapons of mass destruction. More than any single previous 
expression of international opprobrium, UNSCR 2270 will challenge the 
calculus of the leadership in North Korea.
    As North Korea's largest trading partner China has unique leverage 
in this regard. We welcomed President Xi's commitment at the Nuclear 
Security Summit earlier this month to fully implement the UNSCR. It is 
too early to draw firm conclusions about China's enforcement, but early 
trade restrictions that China has imposed suggest China is committed to 
following through on implementation.
    The United States has demonstrated that it is prepared to engage 
countries with which we have the deepest of differences to advance our 
national security. The nuclear agreement with Iran is case in point. 
This was only possible because Iran took concrete steps to freeze, and 
in some regards roll back its nuclear program, while allowing 
international inspections, which created the time and space to 
negotiate the Joint Comprehensive Plan of Action--an agreement that, as 
a practical matter, ensures Iran cannot acquire a nuclear weapon far 
into the future.
    China's commitment to reduce its Iranian oil purchases helped build 
the economic pressure that brought Iran to the negotiating table, and 
China continues to contribute to the JCPOA's implementation, playing a 
leading role in redesigning and rebuilding the Arak heavy water 
research reactor.
                      addressing global challenges
    Seven years ago, Chinese leaders were reluctant to take on 
significant responsibilities in dealing with regional and international 
challenges. With our engagement, they are increasingly tackling issues 
of global importance from climate change to wildlife trafficking, 
global health to peacekeeping.
    As the two largest economies and carbon-emitters, the United States 
and China have long been indispensable to global climate agreement 
negotiations. When those negotiations failed to produce an agreement in 
Copenhagen in 2009, there was finger-pointing and recriminations, but 
no obvious path forward and little optimism we could achieve a future 
agreement.
    Yet in November 2014, our presidents made a historic joint 
announcement of our post-2020 climate targets. That announcement 
galvanized the international community to reach a global climate 
agreement in Paris last December.
    This came about through deep personal engagement from the 
President, Secretary Kerry, and others. But it also came about because 
China eventually concluded its own interests--in addressing domestic 
environmental concerns and projecting a global leadership role--
coincided with those of the United States and the international 
community. And with a new joint statement on climate change last month 
from Presidents Obama and Xi, and our two countries signing the 
agreement in New York last week, we are encouraged that we will 
continue to lead global efforts on this issue moving forward.
    China is also an essential part of global efforts to address other 
urgent environmental issues, including wildlife trafficking. China is 
the largest consumer of wildlife products such as ivory, and its 
continued legal ivory market has had theunintended consequence of 
fueling illegal ivory trafficking. As recently as a few years ago, our 
cooperation on this issue was nonexistent, but our persistent 
engagement produced important results last September, including an 
agreement to implement near complete bans on the import, export, and 
domestic commercial trade of African elephant ivory in both countries.
    We also engaged China in the global response to Ebola. American and 
Chinese healthcare specialists worked side-by-side in West Africa to 
help drive the cases of Ebola to near zero. China's significant 
contributions to the international effort far exceeded its responses to 
prior international crises, and, frankly, stunned many long-time China 
observers.
    In an effort to build on our Ebola cooperation, during President 
Xi's State Visit to Washington last September, our countries announced 
a formal partnership on development that includes building health 
capacity in Africa. These efforts, as well as Xi's UN General Assembly 
pledge of $2 billion in support of the UN Sustainable Development 
Goals, will help address the great needs of developing countries while 
inculcating in China best practices in sustainable development.
    And finally, we have seen China step up in a meaningful way to the 
challenge of conflict in fragile countries.
    In Afghanistan, our alignment of interests has led us to join 
recently Afghanistan and Pakistan to form the Quadrilateral 
Coordination Group on the Afghan peace and reconciliation process. 
Chinese Foreign Minister Wang Yi joined Secretary Kerry last fall to 
co-host a high-level event on Afghanistan's reconstruction at the UNGA, 
and the $327 million that China has pledged for Afghan reconstruction 
will provide crucial support to the Afghan government and people.
    At the 2015 UN Leaders' Summit on Peacekeeping co-hosted by 
President Obama, President Xi announced a new Chinese peacekeeping 
rapid response standby force of 8,000 troops, a commitment to train 
2,000 peacekeepers from other countries, and $100 million in aid to the 
African Union for its peacekeeping operations.
    While many of these developments are not the stuff of flashy 
headlines, that does not make them any less consequential. We are 
making methodical progress in pushing China to match its contributions 
to its capabilities on some of the world's most intractable challenges. 
And in the process, we are demonstrating that wewelcome China working 
alongside us--and investing with us--in strengthening the existing 
international order.
                 engaging and narrowing our differences
    Even as we build cooperation with China, we are directly engaging 
our differences with a goal to resolving or narrowing them while 
preventing conflict.
    This is important, as significant areas of disagreement remain--in 
particular those concerning China's assertive and provocative behavior 
in the South China Sea, its conduct in cyberspace, and its denial of 
internationally recognized human rights and fundamental freedoms to its 
citizens, as well as in some cases nationals of other countries.
    China's behavior in the South China Sea is a regular feature of our 
engagement with Beijing, and also our consultations with allies and 
partners in the region, who are concerned by dramatic land reclamation, 
construction, and increasing militarization on reefs and other features 
throughout the South China Sea.
    While we are not a claimant to the territorial and maritime 
disputes in the South China Sea, we have a clear national interest in 
the way those claims are pursued--to include upholding freedom of 
navigation and overflight, unimpeded lawful commerce, respect for 
international law, and the peaceful resolution of disputes. And our 
alliance commitments remain iron-clad.
    We oppose the use or threat of force to try to advance maritime or 
territorial claims, and we call on all parties in the South China Sea--
not just China--to resolve disputes in a peaceful manner. These issues 
should be decided on the merits of China's and other claimants' legal 
claims and adherence to international law and standards, not the 
strength of their militaries or law enforcement ships or the size of 
their economies. The belief that all countries are entitled to equal 
rights irrespective of their size or strength is at the heart of our 
approach to this issue.
    We continue working closely with China, other claimants, and others 
in the region to build regional consensus behind these principles.
    At the East Asia Summit in December, 10 of the 18 leaders 
emphasized the importance of non-militarization of outposts, reflecting 
growing regional concerns about China's activities in the South China 
Sea and consensus around the need to lower tensions.
    In February, the United States and ASEAN issued a joint statement 
at the Sunnylands Special Leaders' Summit, which reaffirmed their 
shared commitment to peaceful resolution of disputes in accordance with 
international law, including full respect for legal and diplomatic 
processes. Weeks later, ASEAN Foreign Ministers issued their own 
statement, which reinforced the themes of the Sunnylands Summit. In 
March, the European Union issued a statement on the South China Sea. In 
April, G-7 Foreign Ministers released a statement on maritime issues.
    China has heard this international chorus, and they don't like it. 
They know their actions are placing them at odds with the aspirations 
of the region, strengthening our alliances, and pushing others in the 
region to deepen security ties with the United States. The further 
China goes down this path, the sharper the choice it will face between 
adjusting its approach and clarifying its claims to be in accordance 
with international law, or instead, risking conflict, instability, and 
isolation.
    Our progress on these challenges would also be improved with U.S. 
accession to the Law of the Sea Convention, as has been conveyed by our 
combatant commanders in their recent testimonies before the Senate.
    China doesn't only face these tough decisions on the water but also 
within cyberspace. For years, we clashed with China regarding in our 
opposition to cyber-enabled theft for commercial gain by state actors. 
Following the 2014 indictment of People's Liberation Army members for 
cyber-enabled theft from U.S. entities to benefit their competitors in 
China, China suspended our bilateral cyber working group. But we 
persisted, making clear our understanding of acceptable State behavior 
and our intent to take action against bad actors. In the lead up to 
President Xi's visit last fall, China and the United States agreed to 
an unprecedented set of cyber commitments including an agreement that 
neither government will conduct or knowing support cyber-enabled 
economic espionage for commercial gain.
    We are watching closely to ensure this commitment is followed by 
action, but it represents a significant step forward from China's 
previous posture of denying all activity emanating from China, and 
defying calls to rein it in. In short succession, the United Kingdom 
secured a similar agreement and the G-20 joined the United States,UK, 
and China in reaffirming that states should not conduct or support 
cyber-enabled theft for commercial gain.
    While we seek to work with China to promote stability in 
cyberspace, we remain concerned about recent moves by China that reduce 
space for free expression, including a raft of new domestic legislation 
that, if enacted as drafted, could shrink space for civil society and 
academia, inhibit U.S. business activities, and result in rights 
abuses.
    Along with international partners, activists, and business leaders, 
we have made clear our concerns, and there have been some signs that 
China may be listening: they have delayed the passage of the cyber-
security and information and communications technology laws from last 
year, and made significant, albeit still insufficient, changes to other 
national security legislation. Again, implementation matters most.
    We are alarmed by the ongoing crackdown on lawyers, religious 
adherents, and civil society leaders and by growing attempts to 
restrict internationally recognized fundamental freedoms, including the 
freedom of expression. Hundreds of Chinese citizens have been detained, 
formally arrested, or held in incommunicado without due process. This 
includes the apparent abduction of five individuals associated with a 
Hong Kong bookstore, an action that strongly suggests that China has 
taken extrajudicial or extraterritorial action that is inconsistent 
with its international commitments. We also are deeply troubled by 
China's willingness to threaten journalists with expulsion or the non-
renewal of their visas as a tool to influence their reporting.
    As China's human rights situation has deteriorated, we have raised 
our concerns directly and candidly, including at the highest levels. 
The President, Secretary Kerry, and others regularly raise individual 
cases and systemic concerns with Chinese leaders. We will continue to 
reinforce the message that protecting human rights and the fundamental 
freedoms of association, peaceful assembly, religion, and expression, 
and respecting the rights of members of minorities, will make China 
more stable, secure, and prosperous. These are freedoms that I believe 
American and Chinese citizens value; we are urging Chinese authorities 
to value them as well. We also urge respect for equal rights of ethnic 
minorities, including Tibetans and Uighurs. We call on China to engage 
the Dalai Lama or his representatives, because we believe such a step 
would be conducive to stability.
    As part of our efforts, we have increased coordination with 
likeminded countries. Last month, we led the first ever joint statement 
on China human rights at the United Nations Human Rights Council. We 
will continue to coordinate our efforts with like-minded partners to 
encourage China to protect the rights of its citizens.
    We view China's adherence to its international commitments as an 
important indicator of the type of power that China seeks to become. 
The 1984 Sino-British Joint Declaration and the Basic Law are the 
bedrock of Hong Kong's autonomy as a Special Administrative Region of 
China. We strongly support Hong Kong's high degree of autonomy and rule 
of law tradition, as well as for the democratic development and 
protection of civil liberties in Hong Kong. This is why we are so 
concerned about China's actions involving the booksellers in Hong Kong. 
Beyond the immediate issue of the welfare of the five booksellers, this 
case called into question Beijing's commitment to ``one country, two 
systems.''
    Taiwan will soon transition to a new administration. During this 
sensitive period, we have been clear with both Beijing and Taipei that 
we have a fundamental interest in maintaining cross-Strait peace and 
stability, and that we remain committed to our one-China policy based 
on the three joint communiques and the Taiwan Relations Act. We have 
encouraged Beijing to exercise flexibility and restraint. We similarly 
have called on both sides to engage in constructive dialogue on the 
basis of dignity and respect, because we believe direct channels of 
communication reduce risk of miscommunication that could lead to 
miscalculation. We would like to see continued improvement in cross-
strait relations.
                                closing
    For seven decades, the United States has invested in a system of 
international institutions and principles designed to protect the right 
of all nations to pursue their interests, irrespective of their size or 
strength. This international architecture has created a foundation of 
peace and stability that has unlocked a period of unprecedented 
economic growth, nowhere more so than in East Asia. This has not only 
benefited our nation, it has also benefited China. It is in our shared 
interests to see that these standards are strengthened, not undermined.
    We welcome China as a global leader and responsible advocate for 
the international order. In areas ranging from climate to public health 
to peacekeeping, we have shown the benefits to both of our countries 
and the world when wecooperate. At the same time, we will continue to 
stand firm in defense of the rules-based international order. We want 
China as our partner in many endeavors and believe our nations and the 
world would undeniably be better for it. But in the end, only China can 
choose to assume that role and demonstrate the commitment to 
international law and standards necessary to achieve it.
    I thank you for your time and look forward to taking your 
questions.

    The Chairman. Mr. Secretary, thank you for your testimony.
    As a courtesy to the committee, I am going to withhold, and 
wait for interjections along the way, my time.
    So I am going to turn to Senator Gardner, and I look 
forward to his questions.
    Senator Gardner. Thank you, Mr. Chairman, for this hearing 
today. It is a very important hearing, one of the most 
important hearings that we will hold this Congress.
    And thank you, Secretary Blinken, for your participation in 
this today. It is very important that we hear from you. I 
appreciate you taking the time to do this.
    On February 18, 2016, President Obama signed the bill that 
Senator Menendez and I had worked together on, the North Korea 
Sanctions and Policy Enhancement Act. It became P.L. 114-122, 
expanding U.S. sanctions against Pyongyang and others who aid 
the North Korean Government. It was followed by the U.N. 
resolution.
    As you know, the legislation calls for mandatory 
investigations and designations of entities, regardless of 
where they are based. We know that China is North Korea's 
largest trading partner. With over $1.2 billion in bilateral 
trade last year, that is a significant amount.
    China has pledged to comply with the sanctions and has 
undertaken some new measures, according to the New York Times, 
including an article on March 31. ``Cross-border trade, legal 
and illegal, flows pretty much as usual, and seems to be 
largely unhindered by the new rules, traders and local 
officials said.'' So that would sort of counter the measures 
that they have said they have put into place.
    On April 13, 2016, according to an announcement by China's 
General Administration of Customs, China's trade with North 
Korea rose by 14.7 percent in the first quarter of 2016, while 
imports from North Korea rose by 10.8 percent.
    To what extent has the PRC so far complied with the 
relevant international restrictions on North Korea, including 
those imposed by the U.N. resolutions?
    Mr. Blinken. Thank you, Senator.
    Let me first thank you for the legislation, which we think 
has been a very, very valuable tool to put in play, along with 
the U.N. Security Council resolution. Indeed, as you mentioned, 
the President signed the executive order in order to implement 
both the legislation and the U.N. Security Council resolution.
    We believe that the combination of the U.N. Security 
Council resolution and the authority in the legislation gives 
us the most effective tools we have had to try to compel a 
change in North Korea's calculus and also to strongly encourage 
other countries to fully implement their obligations.
    So among those obligations, as you know, with regard to the 
U.N. Security Council resolution, are that all cargo in and out 
of North Korea should be subject to mandatory inspection. For 
the first time, we have sectorial sanctions that limit or ban 
even the exports of coal, iron, gold, rare earth materials, and 
also the import of aviation or rocket fuel. There are 
prohibitions on small arms and other conventional weapons 
imports, in addition to financial sanctions targeting banks, 
assets, and ban all dual-use nuclear and missile-related items.
    So with regard to China's compliance, two things.
    First, because China took a lead role in actually designing 
the resolution and caring it forth to the Security Council, we 
believe it would be logical for it to follow through on 
actually implementing the resolution. As you said, it has 
issued certain new regulations regarding restrictions on the 
importation of coal, rare earth, and other materials. 
Similarly, it has issued regulations with regard to exporting 
to North Korea jet fuel, including rocket fuel. It has said the 
right things as well.
    But the proof is in the pudding, and what we are watching 
very carefully is whether, in fact, it will implement those 
regulations.
    I saw the story that you referred to, Senator. I think it 
is a mixed bag. Clearly, there is trade that continues to go 
back and forth across the border. This is something we are 
looking at very carefully, along with our Japanese and Korean 
partners.
    Some of the bigger ticket items, though, it appears as if, 
at least initially, there are efforts to stop the flow. Now, it 
is one thing to stop it even for a brief period of time. It is 
another thing to sustain that. That is the other challenge I 
think we have to face, to make sure that it is sustained.
    Senator Gardner. The administration was required to 
undertake mandatory investigations under the P.L. 114-122. Have 
those mandatory investigations begun?
    Mr. Blinken. My understanding is that we are looking into 
any entities or individuals that we have evidence are violating 
the restrictions, the sanctions.
    Senator Gardner. So those mandatory investigations have 
begun?
    Mr. Blinken. I believe so. But let me come back to you with 
that.
    Senator Gardner. Okay. And if so, do you know how many of 
these investigations are concerning entities that are located 
in China?
    Mr. Blinken. I cannot give you a number, but I am happy to 
come back to you on that.
    Senator Gardner. And has the administration determined so 
far that any of the entities based in China, directly or 
indirectly, engaged in illicit conduct described in section 
104(a) of the act?
    Mr. Blinken. To my knowledge, we have not made any 
determinations as of yet, but I am happy, again, to come back 
to you with the status.
    Senator Gardner. Do you know any date of the findings to be 
released or the conclusions of the investigations?
    Mr. Blinken. I do not have a date for you, but again, I am 
happy to come back with more detail.
    Senator Gardner. Does the administration plan to execute 
national security waivers provided under the law with regard to 
any of these entities, particularly those in China?
    Mr. Blinken. Senator, I cannot say in advance. I think what 
we will have to see is where we are on the full implementation 
of the Security Council resolution and the requirements under 
the law and executive order, and make a determination as well 
on that basis.
    If we are seeing strong, good, sustained cooperation, that 
might be something to factor in. But it is certainly something 
that we need to consider as we go forward.
    Senator Gardner. I am particularly interested in the status 
of the investigations and the status of any national security 
waivers that the President might determine under the mandatory 
investigations required by the act.
    I want to shift now to the South China Sea. PACOM Admiral 
Harry Harris talked in February during his testimony before the 
Armed Services Committee that China is clearly militarizing the 
South China Sea. You would have to believe in a flat Earth to 
believe otherwise. I believe that was his quote.
    China's continued reclamation activities in the South China 
Sea are a violation of international law. Militarization of the 
islands is a clear attempt to bully its smaller neighbors and 
to clearly challenge the United States as a Pacific power in 
one of the most important trade zones, navigation zones, in the 
world.
    Do you agree that we need to dramatically boost our efforts 
underlined under various legislation that has been included in 
the NDAA and others?
    Mr. Blinken. We share your concerns, and, indeed, this is 
something that we are intently focused on. We are working 
across-the-board to address this concern.
    As you know, Senator, we are not a claimant ourselves. But 
as I said earlier, we have a profound national interest in the 
way the various claimants pursue their claims. Anything that 
threatens freedom of navigation, that threatens the peaceful 
resolution of disputes, or that undermines international law, 
including the Law of the Sea obligations, is a problem for us.
    In addition to the extent China is making it more difficult 
for us to carry out our own commitments in our alliances, that 
is also a problem for us.
    Senator Gardner. Do you believe that our FONOP operations 
right now are what you would characterize as routine?
    Mr. Blinken. Yes.
    Senator Gardner. Do you think the current pace of activity 
is a routine activity?
    Mr. Blinken. I would say, Senator, we have seen a number of 
FONOPs, or freedom of navigation operations, increase over the 
last couple of years. I think you can anticipate that they will 
proceed on a regular basis.
    Senator Gardner. Do you believe the current pace of 
activity is what will indicate activities in the future as 
well?
    Mr. Blinken. I do not want to anticipate how the pace may 
change, but I can say that we are engaged in regular FONOPs, 
and those will continue.
    Senator Gardner. I would hope that we would actually step 
up our pace of activities in the South China Sea and move to 
routine efforts, freedom of navigation operations. I believe 
that sending one a quarter is simply inefficient to send a 
strong message to China that we are not just putting some kind 
of lip service or some very minimal action, that we actually 
engage in routine activities in the region, that we would step 
up our activities and make these more than just a regular 
occurrence, but a routine, indeed, occurrence.
    I also believe that we need to step up our asymmetric 
diplomatic efforts when it comes to the South China Seas 
activities.
    Clearly, the freedom of navigation operations that we have 
undertaken in the South China Sea as of today have not sent the 
message to China that this is a navigable waterway under 
international law. And I believe, and I would be interested in 
your opinion on this, that they will ignore the decision. I 
would like to know our diplomatic strategy after the decision 
issued by The Hague on the Law of the Sea Treaty.
    I would also be interested in hearing your thoughts on 
asymmetric diplomatic actions that we can take in theaters that 
are beyond the South China Sea in order to gain the attention 
of China to let them know that this is an egregious activity 
that must stop.
    Mr. Blinken. Thank you, Senator. A couple things on that.
    First, we have been very actively and very aggressively 
messaging China privately and publicly about its obligations, 
as well as obligations of other claimants. We have been working 
very closely with all the claimants to secure from them an 
understanding that, for example, the arbitration is an 
appropriate mechanism to resolve these disputes, and it will be 
binding on the parties, once it is issued.
    We have been rallying support for these principles, 
including at the special summit, the first summit of the ASEAN 
countries with the United States at Sunnylands. The declaration 
that came out of that affirmed the vision of a rules-based 
order. We have been strengthening, at the same time, the 
maritime capacity of most of our partners in the region.
    As long as the United States remains fully present in the 
region, any tactical advantage that China derives from some of 
these outposts will be vastly outweighed by the net effect of 
surrounding itself with increasingly angry, increasingly 
suspicious neighbors, who are increasingly close to the United 
States. As a strategic proposition, China's actions are 
alienating virtually every country in the neighborhood, and 
they are looking to the United States increasingly.
    So our engagement with those countries has reached, I 
think, unprecedented levels. If you go down the list of 
countries in Southeast Asia, as well as in Northeast Asia, the 
relationship with our treaty allies as well as with emerging 
partners is deeper and stronger than it has been. And, in 
particular, the cooperation on maritime security is greater 
than it has ever been.
    So the arbitration decision is an important moment, and it 
is our hope that whatever the decision, China and the 
Philippines will respect the decision and adhere to it. Indeed, 
we have said to China, if the decision gives you reason on any 
of the different issues in dispute, we will be the first to 
defend it. But similarly, if the Philippines is given reason, 
we will defend that very strongly.
    The Chairman. I think we are good. Thank you.
    Mr. Blinken. Thank you.
    The Chairman. I would, just before turning to Senator 
Menendez, say that freedom of navigation operations that happen 
once a quarter are viewed as nothing but symbolic. With the 
availability of vessels that we have in the region, I do not 
know why we are not doing it weekly or monthly to 
operationalize that in a real way.
    I do not think there is any question but that China views 
that solely as a light-touch, symbolic effort. I have no idea 
why we are not cruising within those 12 nautical miles on a 
weekly basis.
    But with that, Senator Menendez?
    Senator Menendez. Thank you, Mr. Chairman.
    Mr. Secretary, as the co-author with Senator Gardner on the 
North Korea sanctions act, I would ask you to give me the same 
set of answers you are going to give him. I would have asked 
you those lines of questions, and I appreciate that Senator 
Gardner did, so I will not belabor it other than to say I think 
it was a moment in which we saw how we can, in a bipartisan 
way, be a partner with the executive branch. I hope the 
executive branch would embrace that more in the future in 
similar sets of circumstances. So I would like to see those 
answers as well.
    I see much of the United States political and economic 
future depending on the Asia-Pacific. That means robust 
engagement across the region, but that engagement needs to be 
strategic.
    From my perspective in the region, China is dominating, 
leaving partners there fearful that the United States will 
stand by as China exploits the lack of Western challenges to 
its aggressive posturing. It seems to me that instruments of 
national power--diplomacy, economic, intelligence, and 
military--are only useful when they are fully deployed.
    And while I have heard your comments and those of the 
administration, and the attempt to do your best, China is doing 
its worst.
    It is not playing the role that it could be playing with 
respect to North Korea, a stabilizing influence.
    It is constructing artificial landmasses and militarizing 
them--it is not just that they are trying to claim them; they 
are militarizing them--that threaten shipping lanes and 
international boundaries.
    It is conducting cyberattacks and cyber espionage against 
the United States, including the high-profile theft of the 
personal information of 21 million Americans, including maybe 
yours and mine. Some would call that an act of war.
    And on human rights, you yourself publicly noted at the 
U.N. Human Rights Council in March that the United States is 
``alarmed by the ongoing crackdown on lawyers, religious 
adherents, civil society leaders, and by growing attempts to 
restrict internationally recognized freedoms, including the 
freedom of speech,'' and, for that matter, China's consistent 
support for Russia against the United States and other Security 
Council members on important votes.
    So is it that China does not understand that their 
activities are escalating threats against our national 
interests? Or has China chosen to push our limits, believing 
that we will not impose consequences?
    Mr. Blinken. Senator, I think that in various areas, China, 
increasingly, but not dispositively, understands that its 
actions are potentially having repercussions that are 
undermining its interests.
    So as it acts in the South China Sea in a manner that is 
aggressive, and, as you said very rightly, not only reclaiming 
pieces of land but building on them, and then not only building 
on them but militarizing them, they run the serious risk of 
alienating virtually everyone in the neighborhood and pushing 
those countries in the direction of the United States. That is 
not a good strategic proposition for China.
    Now, whether it fully absorbs that lesson and works in a 
much more cooperative fashion to resolve these disputes, that 
remains to be seen.
    With regard to North Korea, just to cite another example, 
we said for a long time to the Chinese that if they would not 
join us in trying to effectively use the leverage that they 
have over North Korea to try to move the regime and Kim Jong-un 
on the very objectionable and unlawful conduct they are engaged 
in with the nuclear missile program, we would be compelled to 
take steps to further defend our partners and allies, and 
ourselves.
    While these steps would not be directed at China, they 
might well be things that China does not like. Indeed, that is 
exactly what we have done, including beginning formal 
consultations on the deployment of a THAAD missile defense 
system to North Korea, to which China objects, to include 
increasing our presence and posture in the region.
    We now have in the Asia-Pacific region in general, overall, 
close to 60 percent of our entire Navy. We have our most 
sophisticated assets deployed in the region, F-22s, F-35s, 
Poseidons.
    Again, this is not directed at China, but to the extent 
that China is not using its influence in a positive way, and 
the leverage that it has in a positive way, we are going to 
continue to take additional steps to defend ourselves.
    So I think China has to factor all of that in. But I would 
agree that the jury is still out.
    Senator Menendez. So let me ask you this, if their actions, 
as you say, are affecting their own interests, but they seem to 
be on a course that continues to affect their own interests in 
the negative, to take your view, then pushing countries within 
the region closer into association and commitment with the 
United States is one element, but the result of that is 
obviously those countries in and of themselves do not have the 
wherewithal to face the challenge that China presents 
economically and militarily.
    So the question is, for example, other than that of course 
we appreciate the relationship with countries in the region, 
longstanding in many cases, notwithstanding whatever China does 
on our own bilateral basis and multilateral basis, but what is 
it that you do about the continuing escalation in the South 
China Sea of China's claiming of territories and militarizing 
them? What is it that you do to stop the continuous march that 
they are on? Because right now, I view us as observers of what 
is going on, maybe as protesters of what is going on, but not 
much beyond that.
    Mr. Blinken. Senator, I think we are taking significant 
actions to uphold freedom of navigation, to uphold 
international law, and to encourage the peaceful resolution of 
disputes.
    First, we have worked together with virtually all of the 
countries in the region to establish those principles and to 
create a greater understanding of what requirements are of 
international law.
    Second, as we have discussed, we have been engaging in 
freedom of navigation operations. Their number has increased.
    The Chairman. There is something wrong with the microphone.
    Senator Menendez. Hopefully, that was not the Chinese 
interfering. [Laughter.]
    Mr. Blinken. Their number has increased. We have engaged in 
joint patrols, most recently with the Philippines. We have been 
engaged in air patrols over some of the land features that 
China has been acting on.
    We have been working to build the maritime capacity of 
virtually all of the countries in the region. We have a 
significant program to build that capacity. It is focused 
intensely on the Philippines, Vietnam, and other countries that 
have expressed strong interest.
    At the same time, we have strengthened our treaty alliances 
with all of the countries with whom we have alliances, and we 
are working to engage other partners.
    So in all of this, we are both developing the capacity and 
asserting the principles of international law that we expect 
all of the countries in the region to adhere to.
    Senator Menendez. Let me make two observations, Mr. 
Chairman, in closing.
    One is that some of us believe that we need a more robust 
engagement in this regard, and a more robust response. I would 
just simply say that part of our challenge, which I recognize, 
if we are going to be intellectually honest, is that, with 
China as our banker, that is an increasing challenge. And we 
need to liberate ourselves from that in order to not have that 
as part of the equation going on here.
    The second thing is I want to wave my saber early. I know 
you are not going to tell me what the 2016 TIP Report is going 
to be like, but I will tell you this, I want to know the 
standards, the material steps that China needs to take to 
demonstrate the kind of significant progress it would need to 
raise its ranking, because I am concerned about what happened 
in the last TIP Report, in general.
    I would be extremely alarmed, after listening to your 
comments at the U.N. Commission on Human Rights, and others, 
that all of a sudden China does well. Passing a law is not 
enough, unless you have enforcement.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    First of all, I am always glad when my friends on your side 
of the aisle mention the indebtedness that we have. I want to 
thank you for that. I think it is still the greatest national 
security threat we have.
    But to our Secretary, I just want to recite what you just 
said. We have 60 percent of our naval assets in the region, yet 
we conduct freedom of navigation operations once a quarter. 
China knows we have 60 percent of our assets there, and they 
know that what we are doing is playing. They understand that we 
are not really serious about this issue that you have been 
asked about now by two Senators.
    I would just say it is evident that there is not much 
seriousness and really pushing on this freedom of navigation 
issue, when we have 60 percent of our vessels in the region and 
once a quarter we take them within 12 nautical miles of areas 
that they are improving.
    With that, Senator Isakson?
    Senator Isakson. Thank you, Mr. Chairman.
    I want to talk about two things that are redundant. One is 
North Korea, and one is the South China Sea. I apologize for 
continuing to bring those up. The other is sub-Saharan Africa, 
if I could, for just a second.
    First of all, with regard to North Korea, you said, if I 
heard it right in your stated testimony, that China played a 
critical role in development of U.N. Resolution 2270. Is that 
correct?
    Mr. Blinken. Yes, it is, Senator.
    Senator Isakson. You then said that it was important that 
China demonstrate they would fully and effectively embrace that 
resolution. Is that correct?
    Mr. Blinken. That is correct.
    Senator Isakson. Does that mean they have yet to 
demonstrate they are going to fully embrace that resolution?
    Mr. Blinken. It takes time to gauge whether any of the 
countries are fully implementing the resolution. We have to see 
countries take practical measures to fulfill their obligations, 
including with regard to inspections, including with regard to 
exports from North Korea. And China, of course, because of its 
unique relationship, is particularly important in this regard.
    But this is something that takes some time to fully 
evaluate.
    Senator Isakson. Which leads me to my point or question, 
every alcoholic needs an enabler. Every addict to any bad habit 
of human nature needs an enabler. I worry sometimes that China 
may be an enabler to North Korea, for reasons that benefit them 
by keeping the United States busy.
    So if they are not fully and effectively a part of 2270, 
even if they tried to help develop it, then they are not 
helping us in a situation that is very dangerous to the United 
States.
    And every time Pyongyang launches a missile or talks about 
nuclear fissile material or anything, it is always talking 
about it vis-a-vis the United States, never the Chinese, yet 
the Chinese are right there on the border.
    I read yesterday somewhere, and I wish I had written it 
down because I did not, the Chinese put 2,000 more troops on 
their border with North Korea.
    Is that right? That is what I understand.
    Mr. Blinken. I saw that report.
    Senator Isakson. Then you have a situation where the 
enabler, if they are the enabler--I am not making an 
accusation; I am making an observation--but if they are an 
enabler for North Korea, they are putting 2,000 troops on their 
border to send the signal, hey, do not mess with us. But yet we 
are looking to them to be the helpful arbiter in 2270.
    China is having the best of both worlds. On the one hand, 
they are enforcing their security. On the other hand, they are 
not really helping us to enforce what we need for the world 
community. Can you address that?
    Mr. Blinken. Thank you, Senator.
    I would say that China is both increasingly frustrated with 
North Korea and its actions, and increasingly concerned about 
the implications of those actions for China's interests, not 
just our interests.
    China does share an interest with us in seeing North Korea 
denuclearize, but it has chosen different means of trying to 
achieve that objective.
    Is it is especially concerned, as you know, with the 
prospect of instability on the peninsula that leads to millions 
of North Koreans heading into China. It also has found utility 
in having North Korea as a strategic buffer between us and our 
ally, in this case, South Korea.
    But what China seems increasingly to be recognizing is that 
the greatest source of instability in the region is North Korea 
and the actions of its regime. That is why it is taking a 
tougher line.
    Similarly, it has repeatedly tried to get the North Koreans 
to stop the provocative actions. And instead of stopping those 
actions, North Korea has actually humiliated the Chinese by 
engaging in those actions on the very day or the day after 
senior Chinese officials were visiting Pyongyang to try to get 
them to stand down.
    So for those reasons, as well as what I said earlier, the 
fact that we have made clear to China that we will take steps 
to better protect ourselves and our partners if this continues. 
And we have. Even though those steps are not directed at China, 
they are things that China is not enthusiastic about. For all 
those reasons, we think it is more serious.
    Now, whether it does enough and whether it fully uses its 
leverage and whether it fully implements the resolution, that 
remains to be seen.
    Senator Isakson. Following up on that point, I hope the 
State Department will send a signal to us, if they reach a 
point that they see that the Chinese are not fully and 
effectively engaging in their role in terms of 2270. If they 
are having it both ways--on the one hand, they are saying they 
are helping us and the U.N. to get a good resolution. On the 
other hand, they are looking the other way on the North Korean 
border, they are looking the other way on their responsibility, 
it does not help us at all and we need to call them out for it. 
That is my point.
    I will skip the South China Sea, because I am going to run 
out of time, because I want to go to sub-Saharan Africa. But I 
want to associate myself with everything the chairman said with 
regard to the visibility of the United States naval assets in 
the South China Sea. The current visibility that we have is 
paltry at best, and we need to send the right signal to the 
Chinese that we do care about the South China Sea, and we do 
care about open and navigable waterways in that part of the 
world.
    My last point is on sub-Saharan Africa. I have been there a 
number of times. I have seen the Chinese working in building 
roads, building buildings, building hospitals, building all 
kinds of things, and extracting a lot of rare earth minerals, 
extracting a lot of assets and energy and things of that 
nature.
    Are they continuing on their push to do that in Africa?
    Mr. Blinken. Yes.
    Senator Isakson. What are we doing to match that from a 
standpoint of our own soft power interests?
    Mr. Blinken. I would say two things, Senator.
    First, we have seen in Africa--and, by the way, in other 
regions, including in Latin America--a significant increase 
over the last decade or so of China's economic and political 
engagement. It is typically driven by commodity exports to 
China. That is what they are mostly after.
    We have seen an increase in loans from state-run banks in 
China to countries in Africa and other parts of the world.
    From our perspective, if, and this is a big ``if,'' if as 
China engages it actually upholds international trade and 
investment standards, if it upholds worker and environmental 
rights, intellectual property rights, if it does all those 
things, and if it engages in transparent transactions with good 
governance, then additional investment, particularly in 
infrastructure, for example, is a positive, and we would like 
to find ways to work with China, and in some places we have.
    On the other hand, if it engages in practices that are a 
race to the bottom in terms of the way it invests, that is a 
bad thing, and something we have real concerns about, which we 
have expressed directly to the Chinese.
    You are also seeing, I think, including as I know you have 
seen in your travels, that the initial bloom on the rose can 
wear thin. So a country gets significant investment from China, 
but then if it undertakes an infrastructure project but it 
imports all of the workers from China for that project, that is 
something that the host country is usually not enthusiastic 
about. If the quality of the product that is built is 
underwhelming, that is something that the host country is 
eventually not enthusiastic about either.
    So I think there is a sort of market signal that gets sent 
over time that China has to, if it wants to keep doing this, up 
its game to higher standards.
    Now, the challenge that we have is that China has state 
resources that it can apply that we do not have. They have 
money that they can invest officially that we cannot match with 
our various programs.
    We need to clear the way in particular for the private 
sector, our private sector, to be able to engage, to invest, to 
trade. That is our great strength, and that is why working to 
improve the business climate in these countries is so 
important.
    We can be a facilitator. We can catalyze. But ultimately, I 
think the private sector is the key actor.
    There, I am very confident that when these countries are 
able to work with our companies, to see our technology, our 
innovation, our products, that is where they are going to want 
to go.
    Senator Isakson. My time is up, but I just want to 
underline what you just said. That is why this committee's work 
on AGOA and passing that last year was so helpful to the United 
States in terms of sub-Saharan Africa and the entire continent.
    The second thing I would say is that I have seen some 
evidence that China's investment of money in some of the 
African countries has a little bit to do with their influence 
with those countries in the U.N., in leveraging those votes in 
the U.N. Although the U.N. is not a governmental body, per se, 
it is a body that has a lot of influence, and we have to be 
very careful to see that they are not buying influence in the 
U.N. for their own purposes.
    Mr. Chairman, I yield back.
    The Chairman. I want to thank you for that exchange. There 
is no doubt that, in many cases, China will invest in a metal-
rich country, and then end up using their own workers and, over 
time, end up charging far more for repayment than was 
necessary. That is a totally self-interested model.
    On the other hand, I will say there is something to be 
learned, and I appreciate this last exchange. What we did with 
Electrify Africa, what you did, what members of this committee 
did, was really empower the private sector to put in place 
processes that, over time, over the first 4 years, will allow 
50 million people in Africa to have electricity--50 million 
people--and, over time, hopefully, 600 million.
    So I do hope that this exchange will help us. Much of what 
we do in foreign aid is a Cold War model, let's face it, where 
we are trying to buy influence. But we are not really 
furthering our business interests. We are not really furthering 
the quality-of-life on a sustainable basis of the people we are 
dealing with.
    So I do think there is something to be learned from this, 
and an evolution that we ourselves should make to benefit 
people that we are applying foreign aid to, and benefit our own 
businesses.
    But with that, I want to turn to our ranking member. I know 
he had a very important day yesterday in Maryland and this 
morning was still dealing with that. I appreciate him coming in 
and his participation in this committee hearing.
    Senator Cardin. Thank you, Mr. Chairman.
    I do apologize for being late. This is the day after the 
primary election in Maryland. I had obligations in my State 
this morning and could not get here until just recently, so I 
apologize to our witness.
    I wear two hats in regard to the Senate Foreign Relations 
Committee, one as the ranking Democrat on the full committee, 
but also the ranking Democrat on the East Asia and Pacific 
Subcommittee chaired by Senator Gardner.
    The two of us have been working very carefully in regard to 
China, which was one of our biggest foreign policy challenges 
that we have on so many different dimensions. It is critically 
important we get this relationship right in the rebalance to 
Asia.
    Some of this discussion has already taken place. Let me 
just underscore the military aspect of this.
    Senator Gardner and I are very concerned about the use or 
threat of military force to address territorial and regional 
disputes in the China seas. We have seen repeated activities by 
China, which really defy the rule of law in resolving 
territorial issues, and also jeopardizes freedom of navigation 
as well as potential military conflicts.
    There is currently a case pending by the Philippines under 
the Law of the Sea. It will be interesting to see how the 
response go to that particular action.
    But this is the committee of jurisdiction as it relates to 
that issue, and Senator Gardner and I today will be introducing 
the Asia-Pacific Maritime Security Initiative Act, which will, 
we believe, give clear direction on the U.S. policies, as has 
been articulated by this administration and previous 
administrations, and our commitment to maintain the freedom of 
navigation and to protect our treaty obligations, as well as to 
make sure that the international waters are protected, in 
regards to commercial interests.
    So it builds on the administration's Maritime Security 
Initiative and provides the Departments of State and Defense 
with strategic context and resources they need to take clear 
and concrete measures to support rule-based order for the Asia-
Pacific region.
    So, Mr. Secretary, we look forward to working with you. As 
many times the administration has said, we speak much stronger 
when we speak in a united voice and when Congress is giving you 
the clear direction you need in order to implement U.S. policy.
    Now, there are other issues I want to make sure that we 
have a chance to talk about.
    On the economic front, there are significant issues, 
particularly in light of China's declining economy and the 
realization of adjustments it needs to make. It is the United 
States and China, two largest trading countries in the world. 
Clearly, how they deal in international trade is of great 
interest to us. We have major concerns about currency 
manipulation and protection of intellectual property as we have 
seen in recent years.
    But I want to concentrate on the good governance issue, 
just for one moment. There is a real concern whether China will 
open space for its citizens to express their own views and 
ideas, or will continue to brutally oppress its own people. We 
have seen that in the stifling of the ability to disagree with 
your government, with the religious freedom, with access to the 
Internet, freedom of the media. There are corruption and 
fighting corruption issues.
    All that, I think, very much affects the future 
relationship between the United States and China, and I would 
argue affects the long-term growth and stability of China 
itself.
    So can you just share with us what steps the United States 
is taking to make it clear that we expect continued progress 
made on the governance side as it relates to human rights and 
anticorruption?
    Mr. Blinken. Thank you very much, Senator.
    We share this concern. We share the concern about the 
crackdown on civil society, on lawyers, on the media. More than 
300 people over the last months detained, arrested, some 
incommunicado.
    We have seen, most recently, the use of forced confessions 
in state media before people were put on trial or charges were 
issued against them, particularly in the case of those who were 
in Hong Kong and were apparently abducted by Chinese 
authorities.
    And we have seen a raft of new laws that potentially, in 
their implementation, seriously infringe on human rights and 
civil liberties, the national security law, the cyber law, the 
NGO management law, et cetera.
    We have, in public and in private, very vigorously 
expressed our concerns to the Chinese Government at the highest 
levels, starting, of course, with the President.
    On my own most recent trip to China in January, I raised 
this with all of my counterparts. I met with a number of 
lawyers whose friends had been imprisoned. We mobilized 12 
countries at the United Nations at the Human Rights Council 
meetings, to issue a joint statement expressing their concern 
and the concern of the international community.
    We have, of course, our own human rights report, which you 
are very familiar with, that is very clear about our concerns 
about China's actions. We have called for the release of Falun 
Gong practitioners, more than 2,000 of whom are jailed, and 
religious freedom for Christians, Tibetan Buddhists, Uighur 
Muslims.
    We had just recently the International Women of Courage 
Award issued to Ni Yulan, an extraordinary woman who, 
unfortunately, was not given a visa to come to the United 
States to receive the award. We gave her the award in Beijing, 
and then the authorities actually cracked down on her after 
receiving the award at our Embassy. But she wanted to receive 
it, and she wanted to help shine a light on those fighting for 
human rights, religious freedom in China.
    So this is a regular, active, and high-level part of our 
engagement with China across-the-board.
    We also have human rights dialogue with China that seeks to 
make progress on these issues.
    Ultimately, though, I think it is exactly what you said. 
China has to come to the recognition that it will not fulfill 
its potential, if it continues to hold its citizens down, and 
that the stability it seeks is actually undermined, not 
advanced, by repressive actions. That realization has not yet 
taken hold.
    Senator Cardin. I thank you for that answer. I want to ask 
one other question in regards to North Korea. I was listening 
to your exchange with Senator Isakson, I think it was, on the 
North Korea issue.
    Yes, they joined us in the United Nations Security Council 
resolution in regards to North Korea's activities, but it sort 
of defies logic. China has perhaps the most at stake as to what 
is happening, along with the Republic of Korea, in what is 
happening on the Korean Peninsula.
    And yet it seems like we have seen this before. They get 
tough for a little while and then they relax. It seems like 
they worry about regime change in North Korea, and, therefore, 
they back off and they continue to reward North Korea, which 
sends a really mixed signal to their government about being 
able to get away with these types of international violations.
    Is there any indication we have that China may, in fact, 
remain strong in condemning the type of activities we have seen 
in North Korea?
    Mr. Blinken. Maybe, Senator, that the best guarantee are 
the ongoing provocations by the North Korean regime. We have 
seen since the resolution was passed further provocative 
actions. I think we can anticipate that there will be more to 
come. It is certainly possible in advance of the Korea Workers' 
Party Congress, which is to take place on May 6, that the 
regime will do something else, another missile test, maybe even 
another nuclear test.
    Every single one of those provocations is another dig at 
China. I think it is, again, underscoring for China something 
we have been saying for a long time, and that it is now 
increasingly beginning to realize, which is that the greatest 
source of instability in the region is North Korea and the 
actions of its regime, and that if it fears instability, and we 
understand that it would, that it should use the leverage that 
it has, which is unique, to try to get the regime to change its 
conduct.
    So we see increasing signs that it is doing that, but the 
resolution has to be fully implemented, and that implementation 
has to be sustained, as you rightly said.
    That is what we are looking at.
    Senator Cardin. I would just encourage you to keep a big 
spotlight on what China is doing or not doing in regards to 
North Korea.
    I believe Senator Perdue was next.
    Senator Perdue. Thank you.
    Thank you for testifying again.
    I lived in Singapore and Hong Kong years ago. I worked 
extensively in China the latter part of my career in business. 
I personally believe the adage that the 20th century was the 
century of the Atlantic and the 21st is the century of the 
Pacific. I really believe that.
    So I welcome your heightened efforts to engage China, to 
deal with them diplomatically, because I think the 21st 
century, to a large degree, depends on what we do economically, 
socially, politically, with China.
    So I think these are formative years right now. They have 
only been out since the late 1980s and reengaged in the modern 
world. They have 20 provinces that have yet to really achieve 
the economic miracle of the 13 coastal provinces.
    I met with Admiral Harris late last year, and he was 
explaining how, in his opinion, we are approaching parity 
militarily with China in the Asian theater, that they are 
spending upwards of $300 billion a year on their military, up 
some 10 percent each year the last few years. Our military 
expenditures have declined the last 5 years by about 14 
percent.
    Having said that, it is how they are using it and what that 
is enabling them to do in the South China Sea vis-a-vis North 
Korea, et cetera, in Africa, and so forth.
    But I think one of the questions I have for you today is, I 
want to relate to the cyber issue and it relates to the 
military spending too, because I think the world is very 
dangerous on five different levels. You have the rise of Russia 
and China. You have ISIS. You have nuclear proliferation threat 
with rogue nations. You have cyber warfare and a hybrid warfare 
that we are dealing with right now. Then the arms race in space 
that we are not talking about.
    So I want to put China and perspective in that, but 
relative to their efforts in cyber warfare, I know that 
President Obama and President Xi met in March of this year 
after the September agreement, that we had some cyber 
commitments back then that, and I quote, ``Neither country's 
government will conduct or knowingly support cyber-enabled 
threat of intellectual property.'' That was in September last 
year.
    Just a few days after the March 31 meeting between the two 
Presidents, Admiral Mike Rogers, commander of U.S. Cyber 
Command, testified before Congress, and I quote, ``Cyber 
operations from China are still targeting and exploiting U.S. 
Government, defense industry, academic, and private computer 
networks.''
    Are you aware of specific cases that Admiral Rogers is 
discussing there?
    And secondly, what are we doing diplomatically with them 
that you can talk about today in open session, relative to this 
cyber activity that they continue to conduct and enable?
    Mr. Blinken. Thank you very much, Senator.
    First, I very much share your views about the importance of 
the region as a whole, as well as China in particular.
    Second, with regard to cyber, we, indeed, have profound 
differences with China over its behavior in this space. That 
really came to a head last year in advance of the summit, as 
you said, between President Obama and President Xi Jinping.
    We have differences over the philosophy of how the 
cyberspace is managed, and, of course, we have differences over 
China's actions in cyberspace, especially a place we have drawn 
a very bright red line, and that is with regard to cyber theft 
for commercial gain.
    It is no secret or surprise that countries seek to get 
information about each other. But what we do not do, what we 
will not do, and what we insist that others do not do, is to 
use cyber tools to gain information for commercial gain. We 
have tried to impress that on the Chinese.
    Out of that meeting, because we elevated this issue, we got 
a series of commitments from China: a timely response to 
requests for assistance when there is malicious activity that 
we see emanating from China in the cyber domain; no theft for 
commercial gain; working together to identify and promote norms 
of state behavior in cyberspace during peacetime; and then a 
minister-level, secretary-level mechanism to fight cybercrime.
    Since that meeting, and in recent months, we have seen some 
positive steps toward making good on those commitments. There 
was a reaffirmation at the G-20 meeting most recently of 
international law, that it applies to state conduct in 
cyberspace--the Chinese signed on to that--and that all states 
need to abide by norms of responsible behavior, and no theft 
for commercial gain. That was reasserted.
    We held the first secretary-level, minister-level dialogue. 
Our Secretary of Homeland Security as well as the Attorney 
General took part. There will be another one in June.
    We have been engaged in tabletop exercises.
    Senator Perdue. I am sorry to interrupt. I recognize the 
commercial dimensions. I am going to run out of time.
    Mr. Blinken. I am sorry.
    Senator Perdue. No, no. This is great information.
    But we do have evidence that this is state involvement and 
that the PLA is involved, and so forth. Is that correct?
    Mr. Blinken. So in the past, as you know, we actually 
indicted people affiliated with the PLA, or members of the PLA, 
for that conduct. We are working very actively when we see 
something happening to try to find the source of that and to 
act accordingly.
    With regard to the cases that Admiral Rogers referenced, I 
am not exactly sure which ones those were, but I am happy to 
follow up, and there may well be active investigations.
    Senator Perdue. I have one other question in this area.
    In September last year, there was a joint statement put out 
that included four points of this agreement, September 15, I 
believe it was. We reported the State Department, I think, and 
the White House reported that the agreement had four points. 
This is a small point, but I want to get clarity on it.
    When it was reported in China, in Xinhua, their paper, they 
included a fifth point. So the question is, does the fifth 
point relate to the Office of Personnel Management 
specifically? Was there something in there that was a reason 
that we did not want to disclose that?
    Mr. Blinken. There is an ongoing investigation of what 
happened with regard to the Office of Personnel Management. 
Certainly, I think we all share the concern, both as a matter 
of public policy and as a personal matter, since, as was 
referenced earlier, that intrusion gained access to the files 
of many people working in government.
    Trying to attribute the exact source of that intrusion is 
an ongoing effort.
    Senator Perdue. I understand. Was there a fifth point in 
the agreement?
    Mr. Blinken. I am not recalling, except other than to say 
we have made it clear to the Chinese that there are some 
actions in the cyber realm, again, understanding that countries 
try to get information from each other, that there are some 
intrusions that are too big to ignore. And certainly, what 
happened with regard to OPM would fit into that category.
    Senator Perdue. When do you think we will have a definitive 
report on that intrusion?
    Mr. Blinken. Let me, if I can, Senator, come back to you on 
that. I need to check with my colleagues. Thank you.
    Senator Perdue. Thank you, Mr. Chairman.
    The Chairman. I apologize. We were in a little bit of 
conversation.
    I want to take make a commercial announcement, if I could. 
I know there has been some discussion in the caucus regarding 
the Cotton amendment. I know we are going to have a cloture 
vote at noon.
    I just want to say that I met with him earlier today. He 
dropped the provision in his amendment that was problematic 
relative to licensing, so that U.S. companies could still 
license the purchase of heavy water, relicense to purchase 
heavy water. The only provision that he still has in his 
amendment is blocking next year's appropriations money from 
being used to buy heavy water directly with U.S. Government 
funding.
    I have talked to the Energy Secretary about it. There is no 
plan for that anyway. All the heavy water we are going to 
purchase is now in Oman, and the funds are set aside for that 
out of this year's money.
    It seems to me he has shown some flexibility. I just wanted 
to share the other side of this. I appreciate that very much, 
and I hope that somehow, probably not at noon, I understand, 
but, later today, we will figure out a way to move ahead, 
because he is showing responsible flexibility on this. And I 
hope that we will not just take a dogmatic position that 
Congress cannot have its will, if you will, on some of these 
provisions that matter to folks.
    Senator Cardin. Mr. Chairman, first of all, thank you for 
the manner in which you have been trying to resolve these types 
of issues.
    This is clearly within the jurisdiction of our committee, 
because it deals directly with the Iranian compliance with the 
JCPOA. So it is clearly a matter for our committee to take up.
    I get a little prickly when there are appropriation 
amendments offered that are within the jurisdiction of the 
Senate Foreign Relations Committee. Taking the collective input 
of our committee I think would be useful. Of course, that is 
not available when we get these amendments and then we are 
asked to act on them.
    There is going to be sensitivity to anything that is done, 
anything remotely related to the JCPOA. We know that. It is 
always helpful to be able to know the facts before we have to 
vote on it. Sometimes the Members that are not on this 
committee offer amendments that do not know all the facts.
    I want to see the Appropriations Committee move forward, 
the appropriations process move forward. I just think they 
would be better off not offering amendments that are within the 
jurisdiction of another committee on an appropriations bill. 
That is regular order.
    So I think we would have been better off if there was no 
amendment offered, and that this committee could take up this 
issue. If there is a problem in regards to Iran's disposal of 
heavy water, let us take it up. Let us try to develop the right 
policy. But do not try to do it on an appropriations bill.
    At least, that is my view, that we are better off using the 
order of this committee than trying to resolve it on the floor 
the Senate.
    The Chairman. I appreciate the protection of our 
committee's jurisdiction. I would just say that it is also in 
the Energy Committee, and this is an appropriation for the 
Energy Committee. And the Energy Secretary is the person who is 
charged with purchasing heavy water from Iran. It is, actually, 
the way it is written now, in particular, a fairly thoughtful 
amendment, and I would hope that what would happen is the 
Energy Secretary and Chief of Staff at the White House and 
others would engage with all of us, and we would figure out a 
way to resolve this and move ahead.
    Senator Cardin. I am with on that. I agree.
    The Chairman. So with that, Senator Markey?
    Senator Markey. Thank you, Mr. Chairman, very much.
    It is just important to know that we purchased the nuclear 
warhead material from the Soviet Union, thank God we did, 500 
metric tons. We used it to generate electricity in the United 
States. Thank God that we did that. It cost us $1.6 billion. It 
was a win-win for our country. Thank God that Libya dismantled 
its nuclear weapons program. Thank God that South Africa 
dismantled its nuclear weapons program.
    So toward the goal of advancing our nonproliferation 
objectives, which are the highest that we have, ostensibly, in 
our government, repurchasing that heavy water from Iran 
advances that goal. I just think we have to keep that in mind. 
It has been a bipartisan goal that we have had over the years. 
We should not interrupt a program like this without 
understanding its long-term consequences.
    Secretary Blinken, 2 weeks ago, the Department of Justice 
indicted China General Nuclear Power Corporation, a state-owned 
firm, of conspiring over the course of 2 decades to illegally 
obtain U.S. nuclear technology. The Justice Department has 
previously indicted five members of the Chinese military on 
charges of hacking into Westinghouse computers to steal reactor 
designs.
    From your perspective, if proven, would allegations that 
have been made constitute violations of the U.S.-China nuclear 
cooperation agreement that entered into force last year?
    Mr. Blinken. Senator, I would have to look at the very 
carefully. I would want to give you a considered opinion. If I 
can come back to you on that, I would appreciate it.
    Senator Markey. That would be fine, but I just want to say, 
from my perspective, that these alleged thefts of U.S. 
technology are deeply alarming. They raise the question of 
whether China can be trusted not to divert U.S.-origin 
technology or fissile material to military purposes. And they 
underscore the imperative of tightening regulations on U.S. 
nuclear exports to China.
    Together with the proliferation risks exemplified by the 
case of serial proliferator Karl Li, this latest indictment 
reinforces the concerns that I raised about the new U.S.-China 
civil nuclear agreement when the committee reviewed it last 
May. Although the agreement went into effect last year without 
the conditions that I suggested during our review, which I 
thought was a huge mistake, I will soon introduce legislation 
that would, among other things, require the President to 
temporarily suspend nuclear technology transfers to China until 
violations like the ones cited in these indictments are, in 
fact, resolved.
    We just cannot allow China to continue to steal U.S. 
nuclear secrets with impunity or turn a blind eye to 
proliferation by notorious scofflaws within its jurisdiction. 
That is where I really do feel that the U.S.-China agreement is 
still very weak, and we are just going to have to deal with it.
    So I am going to be looking to work with members of this 
committee on a bipartisan basis so that we can police this and 
hopefully work together in order to advance the goal of 
nonproliferation.
    I want to ask you some questions as well about the deadly 
influx into the United States of the synthetic opioid fentanyl 
from China. We are now seeing an alarming increase in the 
number of deaths caused by illicitly manufactured fentanyl and 
synthetic opioid painkillers.
    They, unfortunately, are emanating as a percent very 
largely from China coming into our country.
    Just in Massachusetts alone, 336 people died from fentanyl-
related overdoses last year. You multiply that by 50 States, 
and you can see that this fentanyl crisis is absolutely 
overwhelming the numbers that we have historically been seeing 
from OxyContin, Percocet, or heroin. In fact, increasingly, 
they mixed the fentanyl in with the heroin.
    But a new phenomenon has opened up where fentanyl itself 
alone is being sold on the streets. And it does not take one 
hit of Narcan to have someone survive. It takes two hits or 
three hits of Narcan. That is how serious this epidemic is in. 
And China is the epicenter of the problem, which is going to 
kill tens of thousands of Americans per year, unless we stop 
it.
    So can you give me an update as to what the conversation is 
that is going on between the United States and China? And what 
additional actions are you planning on taking?
    Mr. Blinken. Thank you very much, Senator.
    Like you, we have seen the impact that this is having on 
communities across the country, including particularly in New 
England. It is devastating. We have also seen bipartisan 
leadership in Congress to try to address this problem, which is 
greatly appreciated.
    Indeed, China has to be a big part of the solution. We have 
been engaging them both directly and in multilateral 
organizations to reduce the production and trafficking of 
fentanyl and also any precursor chemicals as well as synthetic 
drugs more broadly.
    Last week, there was, actually, as I know you know, a 
meeting of more than 150 countries in New York at the U.N. 
special session on drugs. China took part at a very high level, 
its Minister of Public Security representative. The effort 
there is to work on both decreasing global demand, reducing the 
availability of these chemical precursors, and holding states 
accountable for their responsibilities under the three 
international drug conventions. China is, indeed, a party to 
all three of those conventions.
    So we have been trying to encourage China to meet its 
obligations in these multilateral fora, but also in our direct 
conversations.
    We have as well with China something called the Joint 
Liaison Group on Law Enforcement Cooperation. There is a 
working group, in particular, on counternarcotics where we also 
try to advance this effort.
    We have seen some progress, but not enough. We have seen 
progress in terms of enforcement of cases. We have seen 
progress in terms of China putting, I believe, 116 drugs and 
psychotropic substances on their control list, including 
fentanyl. So that was a step forward.
    The DEA has the primary lead on this, and I am happy as 
well to go back to them to be able to tell you----
    Senator Markey. I do not know what the authority is that 
the DEA has to tell China to cut it out, to just stop it or 
else--or else--or else--or else. The same thing is true with 
the proliferation of nuclear materials--or else. I mean, we are 
dead serious about these things. These are ticking time bombs, 
the nuclear materials and the fentanyl. These are the things 
that are going to kill people--kill them.
    So fentanyl is just the epidemic that is rising. China is 
at the center of it. And I am still not sure that fentanyl has 
been elevated to the level of intellectual property, for 
example, as an issue. It should be at least as high as 
intellectual property--at least. It is going to be killing tens 
of thousands of people a year in the United States.
    So I just think it is critical that this conversation take 
place at the highest level, and that they know, Xi knows, and 
everybody else knows, that that this is the top priority.
    So once you let nuclear nonproliferation and fentanyl go 
by, now you are talking about things which can be managed for 
the most part, but these things cannot be managed. They have 
long-term consequences that go far beyond the term of office of 
any one President or any one Cabinet officer.
    So I just do not think the head of the DEA is a high enough 
level. I do not think anyone in China knows the name of the 
head of the DEA in the United States. With all due respect, 
even in the United States, he or she might as well be in the 
witness protection program. Who is that person?
    They need to know that that person who is saying to you 
from the DEA that this is a huge problem for our country is 
being backed up at the highest levels. And if the Chinese 
leaders do not know, then we are going to suffer a world 
whirlwind of consequences in our country.
    So I thank you for your service.
    Mr. Blinken. I heard you clearly on that, Senator.
    Thank you.
    Senator Markey. I appreciate it.
    The Chairman. Thank you. I hope the Senator at some point 
will indulge me and share with me the name of the head of DEA.
    Senator Kaine?
    Senator Kaine. Thank you, Mr. Chair.
    Thank you, Mr. Secretary.
    How would the U.S. efforts to address China's land 
reclamation activities in the South China Sea and also to 
defend freedom of navigation in that part of the world be more 
effective if the Senate ratified the U.N. Convention on the Law 
of the Sea?
    Mr. Blinken. It would certainly give us a stronger leg to 
stand on, because we constantly, in our engagements with the 
Chinese as well as other claimants, refer to the Law of the Sea 
Treaty and the obligations thereunder and, in particular, the 
arbitration that is now taking place between the Philippines 
and China, which is a critical moment in seeing if we can move 
to a place where these differences are resolved peacefully 
through mechanisms like arbitration. That is under the Law of 
the Sea Treaty. Under the convention, that arbitration should 
be binding on the parties. We continue to point this out to the 
Chinese.
    The Chinese love to say to us, ``You really have no 
standing to talk about the Law of the Sea, because you have not 
ratified it. So stop talking to us about it. You really are not 
in a good place to do that.''
    The last time I was in China talking at great length about 
the South China Sea with our counterparts, I said that we are 
in the ironic situation where the United States has not 
ratified the Law of the Sea, but we abide by it; China has 
ratified it, but ignores it.
    But it would certainly help us in making the argument to 
actually proceed to ratification. I think we are hearing that 
across-the-board, from our military as well as from business 
leaders and others who have testified to that before this 
committee.
    Senator Kaine. There has not been a focus on it during my 
time in the Senate, but just my recollection is 167 nations 
have ratified the convention, including China. The U.S. is the 
only major power not to have ratified the treaty. The past 
three presidential administrations, bipartisan, have supported 
ratification, along with all service chiefs, Secretaries of 
State, U.S. business community. There have been two positive 
votes in SFRC for ratification, one in 2004, one in 2007. But 
it has not seen a vote on the Senate floor.
    The Law of the Sea Convention is not solely relevant to 
contemporary issues with China in the South China Sea. It is 
also relevant to claims being made by Russia in the Arctic for 
extracontinental drilling rights. The U.S. might be able to 
make such claims as well because of Alaska, but we cannot make 
those claims under the Law of the Sea without ratification.
    So I appreciate your concern about that, and I hope that we 
might see the advantages of the U.S. taking it up.
    We express concern in this committee frequently, and in 
other committees frequently, about Chinese island reclamation 
activities. I do not know why we would want to cut off one path 
for diplomatic challenge to those island activities.
    Those are the only questions I had, Mr. Chairman.
    The Chairman. Thank you.
    Senator Markey. Mr. Chairman, may I have 30 seconds?
    The Chairman. You can. Let me just say, the Law of the Sea 
Treaty probably was brought up prior to you coming here, I 
think.
    Just for what it is worth, there just was not a case made 
for it. In fairness, some of the companies that came up here to 
advocate for it, you would call them after their testimony, and 
they would say, ``Look, on a list of 10 items we have, this 
would be number 11. It is just not on the radar. The 
administration asked us to testify.''
    So I think that there really was not much of a case made. 
There were some sovereignty concerns, no doubt.
    But it seems to me that as we watch this case play out 
right now, we can learn about whether this process is one that 
has some degree of validity. So we will see what happens with 
the tribunal and go from there.
    Senator Markey?
    Senator Markey. Thank you, Mr. Chairman, very much.
    I was speaking, obviously, facetiously, when I was talking 
about the DEA. Chuck Rosenberg is the head of the DEA. He does 
a fantastic job, as do the DEA agents all across our country.
    But right now, they are frightened about the impact that 
fentanyl can have on our country--frightened. And the pathway 
is China through Mexico up to Ohio, up to Massachusetts, to 
Virginia, to Tennessee, to Maryland. That is the route.
    So Chuck Rosenberg needs help. The DEA needs help. The DEA 
cannot tell China what to do. We need officials at the highest 
level.
    Americans are going to die from this. This is a national 
defense risk that is far greater than any other that China 
poses to us, and it is happening on a daily basis, this 
epidemic that is killing Americans.
    So I just want to say that Chuck Rosenberg and the DEA 
agents are heroes, but heroes need help.
    They are battling this every day. When a DEA agent goes 
into a home right now, the fumes actually from the fentanyl 
that they find in the house could kill them right there, the 
DEA agent, kill them right there, okay? That is how dangerous 
this stuff is. So even as they are trying to police it, they 
get killed as they walk into the house with the fumes.
    That is China coming in through Mexico, and we owe these 
DEA agents, Chuck Rosenberg and his entire team, the help which 
they need.
    Thank you, Mr. Chairman.
    The Chairman. I think we may finish by noon, so I am hoping 
to do so, but I know----
    Senator Cardin. I just want to make a brief comment on the 
Law of the Sea, and I support the ratification of the Law of 
the Sea. I think it is unlikely we are going to get that in 
this Congress.
    But I know the chairman is working with our staff to see 
whether there are certain treaties that we could not get 
completed this year to at least start a track record of how we 
consider treaties. There are some that are pretty much I think 
teed up for ratification, if you could get them through this 
Congress.
    And then I would hope, early in the next Congress, the Law 
of the Sea would be one of the ones that we might want to have 
a hearing on and see where we are as far as the importance. 
Then we would have the experience of the Philippines case, 
which I thank the chair makes a very good point on.
    The Chairman. So that my position is not misunderstood, the 
tax treaties that we have before us should have already passed, 
and they are hurting American companies right now, and they 
should pass. I have issues with the Law of the Sea. I do not 
want my discussion of the Law of the Sea, for people to think 
that I think it is a good treaty. I have some issues with it, 
and I do have some sovereignty concerns, and those have not 
been explained fully to me.
    As always, on every issue, we want to make sure we fully 
understand what is at stake, and how it involves U.S. national 
interests. But I had significant concerns that were not 
answered last time. Again, I think we will have an opportunity 
to see how it works with this Philippines-Chinese issue.
    Do you want to make a final statement of maybe 60 seconds 
before we adjourn?
    Mr. Blinken. Thank you, Mr. Chairman. Let me just say that 
I very much appreciate this morning the opportunity to discuss 
a very complicated but vitally important relationship with 
China. I very much appreciate the leadership of this committee 
in working on many of the issues that flow from that 
relationship.
    Indeed, I think the work that was done on the DPRK and, in 
particular, the legislation that gave us an important and 
powerful new tool is a very good example, as you have said, of 
the executive and this committee working closely together in 
the national interests.
    So I just want to thank you, thank the ranking member, and 
all the members of the committee, for the good work that we 
have been able to do, and I hope we will be able to continue in 
the months ahead. Thank you.
    The Chairman. Thank you. I think we have filibustered long 
enough that Rubio is going to step in, in just a second, so I 
think that is the case.
    But if you guys need to head on down to the floor, I think 
that would be fine.
    I guess one of the benefits of becoming a household name is 
the entire audience staying here, waiting to listen to your 
questions.
    Senator Rubio. I appreciate it.
    I am sorry. I had to run over to Commerce. We have to get 
better elevators in this building. Is it my turn?
    I appreciate you doing this. I really do. Thank you for 
being here today.
    I want to just start out with a statement from an article I 
read. I just want to ask if you agree with this line: China is 
consistently pursuing a single long-term strategy with the 
effective control of the entire South China Sea as its ultimate 
goal.
    Mr. Blinken. Yes, I think that is China's objective.
    Senator Rubio. Okay. I just wanted to make that clear, 
because at the end of the day, some of these things are covered 
as some sort of one-off experiments or explorations. This is, 
in fact, the pursuit of their nine-dash line position. You see 
it in their passport documents. For example, we saw today in 
the Wall Street Journal, I know this was discussed earlier, 
``U.S. Sees New Flashpoint in South China Sea Dispute.'' This 
time it is the Scarborough Shoal, which is only, I believe, 120 
nautical miles off the coast of the Philippines, where they 
have now begun preliminary exploration.
    I want to talk about human rights. There was a report 
earlier this week that China's overseas NGO management law is 
being considered by the National People's Congress standing 
committee. According to this report, the text is going to 
require NGOs to register with the public security bureau, I 
guess indicating that the Chinese Government continues to see 
foreign NGOs as a potential threat to national security.
    First of all, has the State Department expressed its 
concern over this proposed legislation?
    Mr. Blinken. Yes, Senator, repeatedly and, indeed, at the 
highest levels, starting with Secretary Kerry. I have done it 
repeatedly. We share exactly that concern.
    It sends a very bad signal to have NGOs overseen by the 
Ministry of Public Security. I think you are exactly right.
    Senator Rubio. There are also reports that there are 
possible carveouts for academic exchange programs in the new 
draft, which seems to indicate that some favored 
nongovernmental programs will continue while others are going 
to face more intense scrutiny.
    Is the State Department going to seek carveouts for certain 
NGOs?
    Mr. Blinken. No. What we are seeking to do is to make sure 
that the entire community of such organizations and 
institutions, whether they are academic, whether they are not-
for-profit, whether they are business associations, whether 
they are professional associations, that are working in China 
to the benefit actually of China and the Chinese are all 
treated the same way and treated appropriately.
    Senator Rubio. Can I ask you, why has the President not met 
with any Chinese rights lawyers, activists, religious leaders, 
feminists, or others who have been harassed, detained, and 
repressed by the Chinese Government during what has been a 
marked deterioration in human rights and rule of law in China 
on his watch?
    Mr. Blinken. Senator, I would have to go back and check and 
see the meetings that he has had. I have not been on those 
trips. I can tell you that on my most recent trip to China, I 
am obviously not the President, I made a point of meeting with 
lawyers whose colleagues and partners and, indeed, in one case 
someone that----
    Senator Rubio. You are pretty aware of the rights community 
within China. Are you aware of any meeting the President has 
ever had with any of them?
    Mr. Blinken. I believe he has, but I need to go back to 
check. Certainly, other senior members of the White House, the 
National Security Advisor, and others have met with members of 
the human rights community.
    Senator Rubio. For some time, there has been this 
conversation regarding the utility of various human rights 
dialogues and concerns that these dialogues have yielded little 
in terms of substantive outcomes and have had the unintended 
consequence of ghettoizing human rights in U.S. foreign policy.
    So can I ask, can you share with us any significant 
deliverables during the course of the Obama administration that 
have emerged as result of U.S.-China human rights dialogue?
    Mr. Blinken. Senator, I think it is two things.
    One, it is not either/or. It has to be both. In other 
words, these issues need to be and are raised not simply in the 
context of human rights dialogue, but at the highest levels by 
the President, by the Secretary of State, by other senior 
officials. At the same time, having these dialogues and working 
groups can be a way to see if we can advance in practical 
areas. That is the idea.
    Now, we have seen, over the course of time, various 
political prisoners released. Now, that may be in advance of a 
summit meeting or some other meeting, but we see that. We are 
looking, though, for systemic change as well as the release of 
political prisoners.
    So it goes to laws, including the NGO law that you just 
cited. It goes to, across-the-board, the way the Chinese 
approach this issue. I think it is a process that just takes a 
lot of time to see progress.
    We are doing two things--more than that, but, in 
particular.
    First, this is something, again, that is on the agenda of 
every single meeting we have at every level with the Chinese.
    Second, we are trying to put a spotlight on it 
internationally. We went to the Human Rights Council in Geneva. 
We led an effort by more than a dozen countries to show the 
deep concern that exists across the world about some of China's 
recent actions in terms of repression of lawyers, civil rights 
activists, religious leaders, et cetera. We have our human 
rights report, as you know, that tries to put the spotlight on 
it. We have given awards to leading members of the rights 
community to put a spotlight on it.
    That is very important, too, because, at the end of the 
day, it goes to China's reputation around the world. That is a 
reputation that, as China engages more and more around the 
world, it cares more and more about.
    Senator Rubio. Okay, my last question is, I have been 
following the troubling developments in Hong Kong, including 
the long arm of Beijing's power on display most dramatically 
with the abduction of the booksellers. We have also seen 
shrinking space for press freedom and academic freedom all 
across China, particularly concerning the ongoing trials 
against several of the young pro-democracy activists like 
Joshua Wong, who was a leader in the Hong Kong Umbrella 
Movement of 2014.
    Has the U.S. Consulate sent a representative to observe his 
trial?
    Mr. Blinken. I am not aware that we have. Let me check and 
come back to you. We share your concern.
    Senator Rubio. Has the State Department expressed those 
concerns with his particular case with the Chinese Government?
    Mr. Blinken. Absolutely. We are watching it very carefully. 
We are following the trial. Let me check. I believe we have, if 
we have had an opportunity. But let me come back to you on 
that.
    Joshua Wong, Alex Chow, Nathan Law, all of these people.
    Senator Rubio. The last one is, is the U.S. working with 
our allies like Sweden to press for the return of bookseller 
Mr. Minhai, a naturalized Swedish citizen, Gui Minhai? He is a 
naturalized Swedish citizen. Have we worked with our allies to 
press for his return?
    Mr. Blinken. Yes, and I have raised that myself directly 
with my counterparts when I have been there.
    We find the actions that have taken place in Hong Kong to 
be of deep concern.
    As you know, Senator, there are basic guarantees that were 
written into the Sino-British Joint Declaration to the Basic 
Law, and these guarantees go to freedom of expression, freedom 
of association, freedom of assembly, an independent judiciary, 
an independent executive and legislative branch.
    The only thing that is carved out for China in this is 
foreign policy and defense. And we have seen increasing Chinese 
encroachments on the rights that are established under the 
Basic Law.
    And the bookseller's case is an egregious one, including 
apparently the abduction of people from Hong Kong to mainland 
China, and even the abduction of people from other countries. 
This is something that we have raised directly with senior 
Chinese leadership, and it is, I think, raising and ringing 
alarm bells not just here in the United States but around the 
world.
    Senator Rubio. Thank you.
    The Chairman. We thank you for being here. I think what you 
have heard today from both sides of the aisle are significant 
concerns about territorial issues and claims, the militarizing 
of those; economic issues; the issues of human rights that was 
just raised; the lack of cooperation, which is almost beyond 
belief relative to the North Korean issue; and I think a sense 
on both sides of the aisle that where the administration has 
been with China is truly just managing differences.
    I do not know if you are a short-timer or the election 
process ends up generating a longer tenure for you, but I would 
just say in the remaining months that you have here, I hope 
that you will take concerns that were expressed on both sides 
of the aisle and understand that I think most people who care 
about foreign relations matters here do you feel that we are 
lacking something that is more coherent on all fronts, and what 
we are really doing, again, is just managing differences as we 
move along.
    I appreciate the committee's interest in China, in what 
they are doing, the concerns that they have about the 
relationship. I think all of us understand that it is still the 
most important relationship over time that we are going to 
have. And I think all of us hope that the administration will 
be more strident in their actions and more clear over time as 
to what the overall strategy is.
    But we thank you for your testimony. The record will remain 
open until the close of business Friday. If you would answer 
questions fairly promptly, we would appreciate it.
    The Chairman. Again, thank you for your service.
    With that, the meeting is adjourned.
    [Whereupon, at 12:14 p.m., the hearing was adjourned.]

                              ----------                              

              Additional Material Submitted for the Record

           Responses to Additional Questions for the Record 
                    Submitted by Senator Marco Rubio

    Question 1.  Do we have appropriate authorities to sanction Chinese 
companies working in the South China Sea? Are we prepared to use all 
authorities to respond to China's provocations?

    Answer. We are prepared to use all available authorities, as 
appropriate, to respond to Chinese actions in the South China Sea that 
threaten U.S. interests. The President has authority under the 
International Emergency Economic Powers Act (IEEPA) to impose sanctions 
to deal with any unusual and extraordinary threat, which has its source 
in whole or substantial part outside the United States, to the national 
security, foreign policy, or economy of the United States, if the 
President declares a national emergency with respect to such a threat. 
Although there are no current sanctions programs specifically targeting 
China over the South China Sea, the President has the authority to 
implement a sanctions response if the President determines it is 
necessary and appropriate under IEEPA.

    Question 2.  Can you state for the record that we do not accept 
China's attempt to distinguish between the freedom of navigation for 
civilian vessels and the generally recognized freedom of navigation for 
all vessels, including military vessels and aircraft? At what level of 
the Chinese government have we conveyed this policy?

    Answer. Freedom of navigation, as we use the term, refers to all 
the rights, freedoms, and lawful uses of the sea provided for under 
international law. We consistently convey this to Chinese officials at 
all levels. We make clear that the same rules and standards that apply 
globally also apply to the South China Sea.
    More specifically, we have made clear that we do not recognize or 
accept any Chinese attempts to regulate our military activities in ways 
that are contrary to international law, as reflected in the Law of the 
Sea Convention. These include unlawful attempts to regulate military 
activities in China's exclusive economic zone; demands for prior 
notification for foreign warships to exercise the right of innocent 
passage through China's claimed territorial sea; and attempts to warn 
foreign vessels and aircraft away from features China controls in 
various areas of the South China Sea without regard to whether those 
operations would be lawful under international law.
    The United States is committed to upholding freedom of navigation 
for all vessels, from the largest aircraft carrier or container ship to 
the smallest boat operating at sea. We will continue to fly, sail, and 
operate wherever international law permits, and we welcome all nations 
to exercise these legitimate rights and freedoms as well.
    More fundamentally, the U.S. military presence in the Asia-Pacific 
is more than a century old and has been instrumental in supporting the 
rules-based international system that has laid the foundation for peace 
and prosperity in the region and from which all countries in the 
region--including China--have greatly benefited.

    Question 3.  Reuters reported that in mid-March the United States 
agreed to China's request to remove four ships from the sanctions list. 
Why would we accept this weakening of the North Korea sanctions?

    Answer. This is an example of sanctions working effectively to shut 
down commercial ties with a designated North Korean entity. In U.N. 
Security Council Resolution (UNSCR) 2270, the U.N. Security Council 
identified as blocked property (i.e., vessels that must be impounded) 
31 vessels controlled by the U.N.-sanctioned North Korean shipping 
firm, Ocean Maritime Management (OMM). A key basis for identifying 
these ships as OMM-controlled was the presence onboard of North Korean 
crews contracted through OMM. After the UNSCR's adoption, the owners of 
four identified vessels asserted their vessels were not controlled by 
OMM. We did not simply take their word for it. We insisted the ship 
owners provide evidence to the U.N. Security Council's North Korea 
sanctions committee that they had replaced the North Korean crew 
onboard the ships, and provide assurances they would not hire any North 
Korean crew for the vessels in the future. Only then did the committee 
vote to remove these vessels from the list of blocked property.
    By imposing these sanctions, we pressured these ship owners to 
sever contracts with OMM, thereby cutting off a source of revenue to 
the North Korean regime and ensuring these vessels could not be used to 
support illicit North Korean proliferation.
    We continue to closely monitor maritime traffic to and from North 
Korea for any links to prohibited entities or activities. We will 
continue to pursue sanctions designations, as appropriate, through the 
U.N. Security Council and under U.S. law.

    Question 4.  Why have we not designated the jurisdiction of North 
Korea as a primary money laundering concern?

    Answer. The Department of State remains concerned about North Korea 
as a destination for money laundering, narcotics trafficking, and other 
financial crimes, especially as it continues to fail to live up to its 
international obligations.
    The North Korea Sanctions and Policy Enhancement Act of 2016 states 
that the Department of Treasury, in consultation with State and 
Justice, shall determine whether reasonable grounds exist for 
concluding that North Korea is a jurisdiction of primary money 
laundering concern within 180 days of its passage (August 16, 2016).
    The Departments of State, Justice, and Treasury continue to 
evaluate this matter carefully.

    Question 5.  Why are State and Treasury briefing teams engaged in a 
worldwide campaign to tell companies and banks how to avoid U.S. 
sanctions?

    Answer. As you know, under the Joint Comprehensive Plan of Action 
(JCPOA), the United States and the European Union (EU) lifted nuclear-
related sanctions on Iran on Implementation Day, the day that the 
International Atomic Energy Agency confirmed that Iran had fulfilled 
key-nuclear related commitments. While we lifted nuclear-related 
sanctions, many of our non-nuclear-related sanctions, including those 
related to Iran's destabilizing activities within the region, human 
rights abuses, support for terrorism, and ballistic missiles programs, 
remain in place and continue to be enforced. In addition, the U.S. 
domestic trade embargo remains in place.
    In an effort to provide greater clarity to the public and private 
sectors on what sanctions were lifted and what sanctions remain in 
place, the Departments of State and Treasury have been participating in 
extensive outreach with the public and private sectors, mostly at the 
request of other governments, in order to explain U.S. commitments 
under the JCPOA, inform stakeholders of what sanctions were lifted, and 
to inform stakeholder of which sanctions remain. Our engagement is 
focused on providing clear information about U.S. sanctions laws to 
assist companies in ensuring that their activities are consistent with 
U.S. law and therefore are not sanctionable.

    Question 6.  Can you state unequivocally for the record that the 
United States will not provide Iran access to the U.S. dollar? Can you 
state unequivocally that the State Department has not asked the 
Treasury Department to address this issue?

    Answer. The United States did not commit to restoring Iran's access 
to the U.S. financial system under the Joint Comprehensive Plan of 
Action (JCPOA). Moreover, while the Department of the Treasury can 
speak to this issue in more detail, the Administration is not planning 
to reinstate the ``U-turn'' authorization as has been widely reported.
    It is important to note, however, that under the JCPOA, the U.S. 
did commit to removing secondary sanctions on the provision of U.S. 
banknotes to Iran on Implementation Day, and this is now permissible 
activity as long as U.S. persons or the U.S. financial system is not 
involved. Further, while we continue to work with Treasury to ensure 
that Iran receives JCPOA-related sanctions relief, this effort does not 
involve assisting Iran in gaining access to the U.S. financial system, 
which we have noted is not a U.S. commitment under the JCPOA.

    Question 7.  The Financial Action Task Force (FATF) has called for 
counter-measures against Iran; can you confirm the United States will 
not facilitate Iran's ability to conduct U.S. dollar transactions until 
FATF rescinds its calls for counter-measures?

    Answer. The Administration is not planning to reinstate the 
authorization for ``U-turn'' transactions or give Iran access to the 
U.S. financial system. The Administration fully stands by our previous 
statements, and on April 1, President Obama confirmed during a press 
conference that reports that the Administration will grant Iran access 
to the U.S. financial system are inaccurate. In fact, we will continue 
to vigorously enforce the sanctions that remain against Iran, including 
our primary sanctions that generally prohibit U.S. financial 
institutions from clearing U.S. dollars through the U.S. financial 
system for Iran-related transactions, holding correspondent account 
relationships with Iranian financial institutions, or entering into 
financing arrangements with Iranian banks.

    Question 8.  Iran continues to test ballistic missiles designed to 
deliver nuclear weapons, including a test earlier this month of an ICBM 
based on North Korean technology and a missile test on March 9 that 
included a missile reportedly emblazoned with the statement ``Israel 
must be wiped off the arena of time'' written in Hebrew. How can we 
continue to ignore such obvious threats to our ally Israel and the 
safety of the entire region?

    Answer. We share the concerns of Congress about Iran's ballistic 
missile activity and its destabilizing effect in the region. Iran's 
efforts to develop increasingly capable ballistic missile systems are a 
significant nonproliferation challenge and a very real threat to 
regional and international security. We retain a wide range of 
multilateral and unilateral tools to address Iran's ballistic missile 
development efforts and we continue to deploy those tools.
    Following Iran's October ballistic missile launches, the United 
States, on January 17, designated three entities and eight individuals 
involved in a network that has been procuring materials and other 
equipment for Iran's ballistic missile program. Iran conducted another 
set of dangerous and provocative missile tests in March. On March 24, 
we designated two Iran-based entities directly involved with Iran's 
missile program. Designated entities and individuals are subject to 
U.S. asset-blocking sanctions, effectively cutting them off from the 
U.S. financial system, and potentially making any non-U.S. person who 
deals with them subject to secondary sanctions.
    We continue to work with partners to interdict missile-related 
transfers to Iran and to target Iranian missile proliferation 
activities in third countries. This includes working multilaterally 
through our participation in the Missile Technology Control Regime and 
the Proliferation Security Initiative.
    We also continue to work closely with our Gulf allies, as part of 
the Camp David process the President started last year, to develop 
missile defense capabilities and systems to mitigate the regional 
threat posed by Iran's missiles. This missile defense effort, of 
course, is complemented by our longstanding relationship with Israel to 
develop one of the world's most advanced missile defense systems.
    Additionally, we are continuing our unprecedented level of security 
and intelligence cooperation with Israel. Israel remains the leading 
recipient worldwide of U.S. Foreign Military Financing (FMF). The 
current ten-year $30 billion Memorandum of Understanding between the 
United States and Israel, under which Israel currently receives $3.1 
billion per year, is just one example of our strong, ongoing 
partnership and the United States commitment to Israel's security.

    Question 9.  Why did the U.S. agree to a lower standard of ``calls 
upon'' in the U.N. Security Council Resolution implementing the JCPOA 
rather than the previous outright ban using the stronger ``decides'' 
language?

    Answer. Unfortunately, Iran has consistently ignored for years U.N. 
Security Council resolutions requiring it not to conduct ballistic 
missile activity. Thus, the prohibitions on Iran's access to missile 
technology and expertise are the most important and effective 
restrictions on Iran's missile program, and they remain in full effect. 
U.N. Security Council Resolution (UNSCR) 2231 maintains all legally 
binding requirements on states to deny Iran access to missile 
technology and expertise, and the international community continues to 
rely on these provisions to limit Iran's missile program.
    Under UNSCR 2231, transfers of items to Iran that are contained on 
the Missile Technology Control Regime (MTCR) Technical Annex require 
approval in advance of the Security Council. As a permanent member of 
the Council, we have the ability to veto any such transfer. The MTCR 
Technical Annex was also the basis for the missile-related restrictions 
under previous UNSCRs targeting Iran (UNSCRs 1737, 1747 and 1929). 
Iranian ballistic missile launches remain inconsistent with UNSCR 2231, 
which is a clear and unanimous expression of the Council's position on 
Iran's ballistic missile programs.

    Question 10.  Is it the administration's position that any 
ballistic missile test is a violation of UNSCR 2231? If the UNSCR 1929 
provision on ballistic missiles were still in effect, would the 
ballistic missile tests have been violations of UNSCR 1929?

    Answer. In early March 2016, Iran conducted a series of ballistic 
missile tests, which included tests of the Qiam-1short range ballistic 
missile (SRBM) and Shahab-3 medium range ballistic missile (MRBM). 
United Nations Security Council Resolution (UNSCR) 2231 calls upon Iran 
not to undertake any activity related to ballistic missiles designed to 
be capable of delivering nuclear weapons, including launches using 
ballistic missile technology. As a general matter, ballistic missiles 
designed to be capable of delivering a payload of at least 500 
kilograms to a range of at least 300 kilometers are inherently capable 
of delivering nuclear weapons. This is why the vast majority of 
missile-related items and technology that require explicit Security 
Council authorization to be exported to Iran under UNSCR 2231 (2015) 
are related to missile systems with these basic capabilities.
    The Qiam-1 and Shahab-3 ballistic missiles tested by Iran clearly 
are designed to exceed these basic range and payload performance 
parameters and thus are inherently capable of delivering nuclear 
weapons. For this reason, on March 11, U.S. Ambassador to the United 
Nations Samantha Power made a public statement raising concerns about 
Iran's missile launches, calling them provocative and destabilizing and 
pledging follow-up in the Security Council. The U.S. requested the 
discussion of the launches that occurred in the Security Council on 
March 14. Along with France, Germany, and the UK, we also submitted a 
report on these launches to the Security Council, which asked for a 
meeting of the Security Council in its UNSC Resolution 2231 experts 
format to consider an appropriate response. We used the April 1 experts 
format meeting to underscore our concerns about these launches in 
defiance of UNSC Resolution 2231. We rejected the notion that it is in 
any way excusable for Iran--or any other country--to behave contrary to 
the clear and unanimous expression of the Security Council's will. U.S. 
missile experts briefed on the launches at this meeting to help make 
clear to our Council partners that the launches were inconsistent with 
the resolution. In parallel, the United States designated (sanctioned) 
two Iran-based entities directly involved with Iran's missile program 
pursuant to Executive Order (E.O.) 13382 on March 24.
    The United States continues to use a number of tools to prevent 
transfers of equipment and technology to Iran's missile programs and 
impede Iran's missile development efforts. Unfortunately, these March 
2016 launches continue a longstanding pattern of Iran ignoring Security 
Council resolutions targeting its missile activity. Under UNSCR 1929, 
which was in effect until January, 2016, Iran routinely conducted 
missile launches, including tests of the Shahab-3, which violated that 
resolution. As is the case with the March 2016 launches, the United 
States called attention to Iran's destabilizing missile activities, 
reported those launches to Security Council, and urged the Council to 
address Iran's testing of ballistic missiles designed to be capable of 
delivering nuclear weapons. Regretfully, a number of other Council 
members consistently blocked U.S. efforts to seek a more vigorous 
response to these violations of UNSCR 1929.

    Question 11.  Now that China's onerous new NGO law has officially 
passed, is the administration developing contingency plans for the USG-
funded programming in China which will be negatively impacted beginning 
in January 2017?

    Answer. The new Law on the Management of Foreign NGO Activities has 
created a highly uncertain and potentially hostile environment for 
foreign non-profit NGOs and their Chinese partners that will no doubt 
discourage activities and initiatives. We expect it will have a 
significant impact on U.S.-funded programming in China, and we are 
closely following Chinese government implementation plans as we 
continue to review our programming policies in light of the law's 
passage. Our implementing partners are also reviewing or carrying out 
contingency plans in response to this development.
    We remain committed to supporting programs intended to have a 
direct and lasting impact in China, including projects promoting rule 
of law reform, human rights, and a free and flourishing civil society. 
We will continue to urge China to respect the rights and freedoms of 
human rights defenders, journalists, religious and ethnic minorities, 
business groups, development professionals, and all others who make up 
civil society, including by protecting the ability of foreign NGOs to 
operate in China.

    Question 12.  When was the last time the administration requested 
an American consulate in Lhasa and what was the official response? Are 
the Chinese presently seeking to open any additional consulates in the 
U.S.?

    Answer. The Department continues to explore options to expand 
consular facilities in China. In 2005, China formally requested to open 
new consulates in Boston and Atlanta. In 2008, we responded with a 
diplomatic note expressing our interest in expanding our diplomatic 
presence in China, with Lhasa and Xiamen as top priorities. The Chinese 
government has not responded to the Department's request. We also 
continue to work to regularize our consular and diplomatic access to 
the Tibet Autonomous Region. For more detail, please see the ``Report 
to Congress on Status of Efforts to Establish a United States Consulate 
in Lhasa, Tibet'' transmitted to the Senate Foreign Relations Committee 
in 2015.

    Question 13.  Is the administration pressing the Chinese government 
in the lead-up to the G20 they'll be hosting this Fall to make tangible 
progress on certain human rights and rule of law issues, especially 
related to religious freedom violations in Zhejiang province where the 
summit will be held? Will there be any consequences if they fail to do 
so?

    Answer. Secretary Kerry recently re-designated China as a ``Country 
of Particular Concern'' (CPC) under the International Religious Freedom 
Act for particularly severe violations of religious freedom, a 
designation first made in 1999.
    On April 27, Secretary of State John Kerry highlighted ongoing 
official harassment of Tibetan Buddhists and restrictions on their 
faith as cause of great concern during public remarks.
    On March 6, Deputy Secretary Anthony Blinken expressed his alarm 
over the ongoing crackdown on religious adherents in his public remarks 
to the United Nations Human Rights Council.
    We remain particularly concerned by the ongoing detentions of 
church leaders and activists in Zhejiang province, many of whom were 
detained for protesting a government campaign to remove crosses from 
church buildings and demolish others. This includes human rights lawyer 
Zhang Kai and Pastor Gu ``Joseph'' Yuese, both of whom released earlier 
this spring but remain under restrictions.
    The United States strongly believes that the protection of human 
rights and freedom of religion is critical to China's prosperity, 
security, and stability. We continue to raise our religious freedom 
concerns at the highest levels, both privately with Chinese government 
officials and in public forums. We will continue to call on the Chinese 
government to release all activists and pastors, ensure they are free 
from future harassment, and bring to an immediate end the cross removal 
and church demolition campaign.

                               __________

           Responses to Additional Questions for the Record 
                   Submitted by Senator David Perdue

    Question 1a.  You've stated that China needs to play a 
``constructive role'' regarding North Korea. Indeed, given its 
historically close relationship with Pyongyang and continuing economic 
ties, China's strict implementation of the U.N. sanctions against North 
Korea is crucial to their effectiveness. Since 2010, China is believed 
to have accounted for more than two-thirds of North Korea's total 
trade. The Obama administration has credited China with helping to pass 
U.N. Security Council Resolution 2270, which imposes new sanctions on 
North Korea over its nuclear weapon and missile activities. China's 
Ministry of Commerce and General Administration of Customs went so far 
as to issue a public notice on April 5th, detailing not only what's 
banned under U.N. sanctions, but also what is still allowed. 
Specifically, to the Chinese business community, China has emphasized 
categories of trade that are still allowed under those sanctions--
including trade imports of coal, iron ore, and iron that China deems to 
be completely for ``livelihood purposes.'' I'm not sure exactly what 
China means when it says ``livelihood purposes,'' given the fact that 
Chinese food and energy shipments to North Korea, which provide a 
lifeline to Pyongyang, are not covered by sanctions.

   When the Obama administration agreed to exemptions in sanctions for 
        ``livelihood purposes,'' what did it understand ``livelihood 
        purposes'' to mean?

    Answer. The United Nations' targeted sanctions against the 
Democratic People's Republic of Korea (DPRK) are designed to stem the 
flow of funds, materials, and expertise that the regime uses to further 
its nuclear and ballistic missile programs, while also minimizing the 
impact these measures have on North Korea's impoverished people. Some 
U.N. sanctions measures include an exemption for ``livelihood 
purposes.'' This exemption is intended to allow for transactions that 
provide for basic necessities and other materials, consumer goods, and 
common equipment needed for DPRK citizens to carry out their daily 
lives and allow the North Korean people to maintain a reasonable level 
of sustenance and comfort, while not generating any revenue (for 
example, through resale) for prohibited regime activities, including 
its nuclear and ballistic missile programs.

    Question 1b.  Has the State Department been able to clarify how 
China defines the term?

    Answer. It is too early to reach a definitive conclusion regarding 
China's interpretation and implementation of this term, only two months 
after the adoption of UNSCR 2270. We are actively working with all U.N. 
Members States, including China, to ensure that they vigorously 
implement the sanctions measures included in U.N. Security Council 
Resolution (UNSCR) 2270 and previous UNSCRs, including through 
bilateral consultations and engagement through the U.N. Panel of 
Experts for DPRK sanctions. UNSCR 2270 includes a request to member 
states to report domestic measures taken to implement sanctions. China 
has submitted such implementation reports in the past for previous 
resolutions, describing its view on sanctions measures, when requested 
in previous DPRK sanctions UNSCRs (1718, 1874, and 2094). These reports 
are available on the U.N. website. We will closely review China's 
submission for the 2270 report due on June 2, 2016, as well as what the 
U.N. Panel of Experts will uncover over the next year and report on in 
its 2017 Final Report expected in February 2017.

    Question 1c.  How concerned are you about China's public focus on 
trade that continues to be allowed under sanctions?

    Answer. We continue to monitor closely China's trade with the DPRK. 
Chinese efforts to educate the public on sanctions measures, with 
respect to both permitted and proscribed activities, are expected and 
important to their effectiveness.

    Question 2a.  China has traditionally been unwilling to put strong 
economic pressure on North Korea over its nuclear and missile 
activities for fear of destabilizing the regime in Pyongyang, and 
potentially unleashing refugee flows into China, among other 
consequences.

   Do you believe China's calculus has changed?

    Answer. While the United States and China may not share a perfectly 
congruent set of interests with regard to North Korea, we have long 
agreed on the fundamental importance of denuclearization. China's 
actions in the U.N. Security Council--working with us to impose the 
strongest U.N. sanctions in a generation--demonstrate that China is 
particularly concerned by North Korea's recent behavior.

    Question 2b.  How committed do you believe China is now to seeking 
to change North Korea's behavior through economic pressure?

    Answer. President Obama and President Xi discussed at length during 
their recent meeting in Washington the importance of effective 
implementation of U.N. Security Council Resolution 2270, and China's 
leaders have publicly committed to full enforcement. While it is too 
early to assess China's implementation of the UNSCR, we have seen some 
encouraging steps, such as the promulgation of trade regulations to 
implement the UNSCR's restrictions on coal and mineral trade.
    China has now repeatedly called on the DPRK to live up to its 
international obligations and commitments, including by taking 
meaningful, concrete, and irreversible steps toward verifiable 
denuclearization. We will continue to urge China to do more until we 
see concrete signs that Kim Jong-un has come to the realization that 
the only viable path forward for his country is denuclearization.

    Question 2c.  Do you believe we can change North Korea's behavior 
through economic pressure?

    Answer. We are realistic. Pyongyang has prioritized the pursuit of 
nuclear weapons over just about anything else, including the lives of 
its own people. We do not think economic pressure alone will 
automatically convince the regime's leader to cease. However, the DPRK 
has never before been subject to the kind of pressure contained in 
UNSCR 2270. This UNSCR is not ``more of the same''--it represents a 
major increase in pressure compared to the previous UNSCRs.
    To achieve our goal--complete, verifiable and irreversible 
denuclearization--we will need a serious and sustained campaign to 
enforce these sanctions, along with diplomatic efforts to negotiate 
credible denuclearization.

    Question 3a.  While I was pleased to see China support U.N. 
Security Council Resolution 2270, imposing new sanctions on North Korea 
for its nuclear weapon and missile activities, I'm curious if we made 
any concessions to get them to ``yes.''

   Do you believe China's decision to support UNSCR 2270 was related 
        in any way to the discussions between the U.S. and Seoul over 
        the deployment of a U.S. Terminal High Altitude Area Defense 
        (THAAD) missile defense system to South Korea?

    Answer. The United States and China have long agreed on the 
fundamental importance of a denuclearized North Korea. China's decision 
to support UNSCR 2270 was, in our view, the only responsible choice for 
a P5 member of the U.N. Security Council. It was also a logical 
response to the DPRK's repeated and dangerous provocations which 
increasingly threaten regional stability and thus directly affect 
China's own security.
    We remain in contact with Chinese leaders at the highest levels, 
and have repeatedly confirmed to them that THAAD is a purely defensive 
system designed to counter short- and medium-range regional ballistic 
missiles and that its potential deployment in the ROK would not impact 
China's strategic deterrent.

    Question 3b.  To win China's support at the U.N., did the United 
States or South Korea make any commitments to Beijing related to THAAD?

    Answer. The United States made no commitments or trades with 
Beijing related to THAAD in order to secure China's support for UNSCR 
2270. THAAD is not a bargaining chip. As for South Korea, I don't want 
to speak for our ally, so I would refer that question to the ROK 
government. What I can say is that President Park has clearly stated 
the South Korean government will review a potential THAAD deployment 
based on its own security and national interests.

    Question 4a.  I'm very concerned by China's aggressive activities 
in the South China Sea. While President Xi said in September that 
China, ``does not intend to pursue militarization'' of the Spratly 
Islands, actions speak louder than words. Just last month, it was 
reported that China has deployed surface-to-air missiles and an anti-
ship cruise missile battery on a disputed island in the Paracel Chain. 
And on the day of our hearing, the Wall Street Journal reported that a 
new potential flashpoint has emerged-that Beijing is considering 
expanding the area where it is seeking to reclaim islands and extend 
its influence.

   Can you describe our diplomatic efforts aimed at lowering tensions 
        in the South China Sea? What, if anything, is being done to 
        discourage China's aggressive behavior?

    Answer. We share the concerns outlined in your question. Our South 
China Sea strategy has several elements. First, we are actively 
strengthening our alliances and partnerships. This includes closer 
consultations with allies, upgraded diplomatic relations with ASEAN, 
new defense cooperation agreements, and providing equipment and 
training to help partners better patrol at sea. We are assisting our 
allies and partners in Southeast Asia to increase their maritime 
security capacity and enhance intelligence-sharing, especially in the 
area of maritime domain awareness. Second, we have raised our concerns 
in intense, high-level diplomacy with China. President Obama, Secretary 
Kerry, Secretary Carter, and I have had frank discussions with our 
Chinese counterparts about their provocative actions. Third, we are 
pushing for territorial disputes in the South China Sea to be resolved 
peacefully. We have consistently called on all parties to complete 
negotiations of a Code of Conduct in the South China Sea, which would 
build on the Declaration they made in 2002. And we publicly express our 
support the right of any country to use available international legal 
mechanisms, including arbitration, as the Philippines is doing. Fourth, 
we are strengthening our defense presence in the South China Sea. As 
part of a long-term strategy, we are positioning 60 percent of our Navy 
fleet to the Pacific and rotating more of our forces through friendly 
countries in the region. And fifth, we protest excessive maritime 
claims by any countries through our Freedom of Navigation operations, 
upholding the right of all to fly, sail, and operate everywhere the law 
allows.

    Question 4b.  Given the news about China's intent to expand the 
area where it's seeking to reclaim islands, is our current approach 
failing?

    Answer. The short answer is no. Our relationships throughout the 
region are strengthening, support for a common vision of a rules-based 
regional order is deepening, and demand for us to play a more active 
role in upholding regional stability is increasing. From my discussions 
with counterparts in the region, it is becoming increasingly clear that 
China's actions have fueled renewed calls for a greater U.S. presence 
in the region. In February, ASEAN leaders joined the President in 
calling for maritime disputes to be resolved peacefully. We and our 
ASEAN friends also stressed the importance of international law, 
including the freedoms of navigation and overflight. These messages 
have been echoed elsewhere, most recently by the G-7.
    There is no doubt China has heard our concerns. I have articulated 
them to my counterparts on numerous occasions, and I know that other 
countries within and outside the region have expressed similar concerns 
to China about its recent activities in the South China Sea. What is 
clear is that if China ignores these concerns and continues down its 
current path, its standing in the international community will suffer 
as will its relations with its neighbors.

    Question 4c.  Does there remain any doubt in your mind that China's 
ultimate objective is to claim disputed territories through the use of 
force?

    Answer. We believe that China's strategic objective in the South 
China Sea (SCS) is ultimately to consolidate effective control over the 
area while avoiding armed confrontation with the United States or 
China's neighbors. China's leaders recognize that they must balance 
their ambitions in the SCS against their interest in continued economic 
growth and development, as well as in maintaining stable ties with the 
United States and their neighbors.

    Question 4d.  Can you explain why such behavior represents a 
flagrant violation of international law?

    Answer. China is pursuing ambiguous and expansive maritime claims 
that it has yet to define in a manner consistent with international 
law, as reflected in the Law of the Sea Convention. China has also 
declared straight baselines, most notably in the Paracel Islands, that 
do not comport with the international law of the sea, unlawfully 
extending the limits of China's claimed internal waters and territorial 
sea. The Department of State has discussed China's maritime claims in 
depth in its Limits in the Seas series, in particular studies 117 and 
143.
    Unfortunately, there are also numerous examples of China's 
interference with freedom of navigation and overflight and other lawful 
uses of the sea. These include unlawful attempts to regulate military 
activities in its exclusive economic zone; demands for prior permission 
for foreign warships to exercise the right of innocent passage through 
its claimed territorial sea; and attempts to warn foreign vessels and 
aircraft away from features it controls in various areas of the South 
China Sea without regard to whether those operations would be lawful 
under international law.
    China has also declared an Air Defense Identification Zone in the 
East China Sea which (among other problems) unlawfully purports to 
apply to aircraft exercising the freedom of overflight in international 
airspace with no intention of entering Chinese national airspace.

    Question 5.  China recently announced that its defense budget would 
grow another 10 percent in 2015. Although official statistics are not 
reliable, a leading estimate suggests that Chinese defense spending 
sped past $200 billion per year in 2014, a six-fold increase over the 
course of 15 years. Meanwhile, the Pentagon's base budget has fallen by 
14 percent over the past five years, and the 2015 Department of Defense 
report on military and security developments involving the People's 
Republic of China finds that ``China's military modernization has the 
potential to reduce core U.S. military technological advantages.'' 
Further, President Xi has recently launched a plan to revamp China's 
armed forces, making them a more modern force capable of projecting 
power outside of China's traditional sphere of influence.

   In light of these facts, do you agree that the regional balance of 
        power continues to shift in China's favor?

   Is it possible to begin shifting the balance back in our favor 
        while sequestration remains in place?

   Does the continuing shift in China's favor undermine the U.S. 
        ability to deter provocative behavior, such as China's 
        intimidation tactics in the South and East China Seas?

   How do you view President Xi's plans to revamp China's military? If 
        President Xi succeeds in this overhaul, how will this impact 
        our calculus in the region, and in dealing with China? Do you 
        predict we'd see an even more aggressive China and challenges 
        to our military dominance worldwide?

    Answer. We carefully monitor China's military developments and 
encourage China to exhibit greater transparency with respect to its 
capabilities and intentions. As Chinese economic and political 
interests expand beyond its own borders, it is not surprising China 
would seek to protect its overseas interests. For example, Chinese 
decisions such as building a logistics facility in Djibouti have been 
informed by their experience in evacuating Chinese citizens from Libya 
and Yemen, and by China's expanding role in international efforts like 
counter piracy and U.N. peacekeeping. China has also claimed that the 
need to protect its maritime and territorial claims in the South and 
East China Seas, as well as its position on Taiwan, drives the 
modernization and growth of its military forces.
    For 2016, China has announced a military budget increase of 
approximately 7.6 percent. This followed 10 years of annual budget 
increases of more than10 percent. We encourage China to use its 
military capabilities, as we do with all countries, in a manner 
conducive to the maintenance of peace and stability in the Asia-Pacific 
region.
    It is important that the United States and China have a 
constructive military-to-military relationship, one that focuses in 
particular on risk reduction as our forces come into closer and more 
frequent contact in the Asia-Pacific region. The Confidence Building 
Measures (CBMs) concluded with China in 2014 and 2015 on the rules of 
behavior of our ships and planes during unplanned encounters and on 
major military notifications will serve to reduce risk and increase 
transparency.
    Regarding sequestration, as Secretary of Defense Carter has said, 
``under sequestration . . .  our nation would be less secure,'' and 
``we would have to change the shape, and not just the size, of our 
military, significantly impacting parts of our defense strategy.''
    The United States has had a security presence in the Asia-Pacific 
since the end of World War II, a presence we believe has laid the 
foundation for peace and stability that has facilitated phenomenal 
economic growth for all countries in the region. We plan to continue 
that presence to ensure our allies and partners are free from coercion. 
We call on all parties in the region--not just China--to resolve 
disputes in a peaceful manner that is consistent with the rules-based 
international system that has laid the foundation for peace and 
security in the Asia-Pacific for the last 70 years and that includes 
the freedom of navigation and overflight, unimpeded lawful commerce, 
and the peaceful resolution of disputes.
    As China's military capabilities have increased, we have not stood 
still. As part of the Rebalance, the United States has further 
strengthened our alliances with Japan, the Republic of Korea, and most 
recently, with the Philippines where we signed an Enhanced Defense 
Cooperation Agreement on April 11to increase bilateral cooperation and 
long-term modernization of Filipino forces. We have also worked to 
develop new defense partnerships with countries like Vietnam, Malaysia, 
and Indonesia. We are now focusing on increasing the maritime security 
capacity of our allies and partners in Southeast Asia.
    We continue to work closely with partners in the region--and 
China--to build a regional consensus behind the principles that 
undergird this rules-based order. China has been selective in its 
response. Elsewhere we are making notable progress. For example, in 
February, the United States and ASEAN issued a joint statement at the 
Sunnylands Special Leaders' Summit, which affirmed the shared 
principles of freedom of navigation and overflight and unimpeded lawful 
commerce, and affirmed the right of countries to pursue peaceful 
resolution of disputes in accordance with international law and the 
1982 Law of the Sea Convention. China has heard this international 
chorus. It knows its actions are increasing China's isolation, 
strengthening our alliances, and pushing others in the region into 
security relationships with us. China will need to decide whether to 
join us in supporting the established rule-based international order or 
face greater instability and isolation.
    We have noted China's recent military reorganization. Because of 
the increasing interaction between our two militaries, the 
administration has sought to pursue a constructive and productive 
military-to-military relationship with China as one part of an overall 
bilateral relationship capable of managing strategic differences, 
addressing common global challenges, and advancing our shared 
interests.

    Question 6a.  China has called for a ``dual track'' approach to the 
North Korean challenge, involving negotiations over denuclearization on 
one track, and negotiations over the replacement of the Korean 
armistice with a peace agreement in a separate track. The Obama 
administration has said that it will agree to return to comprehensive 
negotiations only after North Korea takes the initial steps of freezing 
its nuclear program and opening its nuclear facilities to international 
inspectors.

   If North Korea takes those steps, would the Obama administration be 
        willing to return to talks that include a peace treaty on their 
        agenda?

    Answer. The United States has long made clear that we remain open 
to authentic and credible negotiations based on the September 2005 
Joint Statement agreement reached with all members of the Six-Party 
Talks. The United States has long been committed to the full 
implementation of all facets of the Joint Statement, including its core 
goal of the verifiable denuclearization of the Korean Peninsula in a 
peaceful manner and other issues, which includes the establishment of a 
peace regime. But before we can enter such talks, North Korea must 
first take concrete steps toward denuclearization and demonstrate its 
willingness to live up to its commitments and international 
obligations.

    Question 6b.  China has called for a ``dual track'' approach to the 
North Korean challenge, involving negotiations over denuclearization on 
one track, and negotiations over the replacement of the Korean 
armistice with a peace agreement in a separate track. The Obama 
administration has said that it will agree to return to comprehensive 
negotiations only after North Korea takes the initial steps of freezing 
its nuclear program and opening its nuclear facilities to international 
inspectors.

   How realistic is this scenario?

    Answer. North Korea's track record indicates it is neither serious 
about denuclearization or peace, nor that it would be a credible 
negotiating partner. In 2016 alone, North Korea has committed a spate 
of provocations, including conducting a nuclear test, launching a long-
range ballistic missile, testing a submarine-launched ballistic 
missile, and conducting three mobile intermediate-range ballistic 
missile launches.

    Question 6c.  China has called for a ``dual track'' approach to the 
North Korean challenge, involving negotiations over denuclearization on 
one track, and negotiations over the replacement of the Korean 
armistice with a peace agreement in a separate track. The Obama 
administration has said that it will agree to return to comprehensive 
negotiations only after North Korea takes the initial steps of freezing 
its nuclear program and opening its nuclear facilities to international 
inspectors.

   Do you agree with Assistant Secretary Russel's comments that North 
        Korea's efforts on a peace treaty are quote, ``diversionary 
        tactics to shift the international community away from 
        denuclearization''?

    Answer. We should judge North Korea by its actions, not its empty 
rhetoric. And North Korea's actions make clear that its purported 
openness to peace treaty discussion is an attempt to deflect attention 
away from the fact that the biggest obstacle to peace and regional 
stability is the DPRK's continued pursuit of its nuclear and ballistic 
missile programs; penchant for provocative, destabilizing behavior; and 
failure to abide by its commitments and obligations.

    Question 7.  You delivered the United States' National Statement at 
the March 2016 session of the U.N. Human Rights Council, in which you 
expressed concern over China's domestic crackdown on human rights. In 
the same council session, the US organized an unprecedented joint 
statement on China-on behalf of 12 nations-criticizing China's 
``deteriorating human rights record.''

   Why do you think more nations did not sign on to this joint 
        statement on China?

   China dismissed the statement as, quote, ``an attempt to interfere 
        in China's domestic affairs and judicial sovereignty under the 
        pretext of the human rights issue.''

   What can the US do to overcome this ``judicial sovereignty'' 
        argument globally?

    Answer. China continues to pressure Human Rights Council (HRC) 
members not to support any effort to highlight its deteriorating human 
rights conditions. Although this tactic has been effective with some 
members, the United States was joined by 11 countries in delivering the 
first China-focused statement in the history of the HRC in March. We 
consider this to be a significant accomplishment, and judging by the 
reaction of the Chinese representative to the HRC, the Chinese too 
regarded it as significant. We will continue to work with international 
partners to call on China to uphold its laws and human rights 
commitments and make clear that China cannot use the ``judicial 
sovereignty'' argument to shirk its international obligations. The 
Universal Declaration of Human Rights, to which China is a signatory, 
stipulates that sovereignty does not provide a limitation on 
fundamental freedoms.

    Question 8.  China's legislature is also set to pass a law 
governing foreign NGOs, which would give the government broad latitude 
to regulate activities and funding of foreign NGOs operating in China.

   What can you tell us about the status of this law?

   To what degree does the latest text address concerns raised by the 
        U.S. government and other U.S. entities?

    Answer. The National People's Congress passed the Law on the 
Management of Foreign NGO activities on April 28. Although sustained 
U.S. engagement led to the law's passage being forestalled for over a 
year and some objectionable provisions being eliminated, the final 
version does retain problematic elements such as requiring foreign NGOs 
to register with and submit to the supervision of the Ministry of 
Public Security. The law also formalized criminal penalties for NGO 
activities deemed illegal by Chinese authorities. The United States 
will continue to work with likeminded countries as well as civil 
society actors to now urge China to implement the law in a way that 
addresses the concerns of the international community about the ability 
of foreign NGOs to operate in China, before the law goes into effect 
January 1, 2017.

    Question 9.  The State Department's most recent human rights report 
criticizes China for its treatment of North Korean refugees. A 
consistent issue is that China continues to consider all North Koreans 
as ``economic migrants'' rather than refugees or asylum seekers, and 
forcibly returned many of them to North Korea. The Chinese government 
also continues to prevent the U.N. High Commissioner for Refugees 
(UNHCR) from having access to North Korean and Burmese refugees in 
China. Reports continue to show that various exploitation schemes 
targeting North Korean refugees exist in China, such as forced 
marriages, forced labor, and prostitution.

   Can you tell me what is being done to press this issue of treatment 
        of North Korean refugees and asylum seekers with China? Are we 
        making any progress here?

    Answer. The United States takes seriously reports of refoulement, 
whether in China or elsewhere. Prior to April 2015, there were credible 
reports that Chinese authorities forcibly repatriated North Koreans. 
Since then, there have been no confirmed reports, but NGOs continue to 
assert that repatriations occur along the China-DPRK border.
    We continue to encourage the Government of China to provide 
appropriate protections for North Korean refugees and asylum seekers, 
including some who may have been victims of human trafficking. 
Secretary Kerry has raised our concerns with Chinese officials on 
multiple occasions, and Ambassador King, Special Envoy for North Korean 
Human Rights, has reiterated these concerns with Chinese interlocutors 
in Beijing and at the Human Rights Council in Geneva.

    Question 10.  On March 18, 2016, President Obama signed into law 
legislation to require the Secretary of State to develop a strategy to 
obtain observer status for Taiwan in INTERPOL. The host country for the 
85th INTERPOL General Assembly this fall is Indonesia.

   Has the State Department reached out yet to Indonesia on this 
        matter? When do you estimate the State Department's strategy 
        will be fully prepared?

   What more can the State Department do to help Taiwan expand its 
        international space?

    Answer. We remain committed to supporting Taiwan's membership in 
organizations that do not require statehood and promoting its 
meaningful participation in organizations where membership is not 
possible. We fully support Taiwan's engagement with the International 
Criminal Police Organization (INTERPOL), and we are continuing to 
develop a strategy aimed at helping Taiwan obtain greater access to 
INTERPOL resources, including observer status in the organization. We 
will continue to coordinate with all of the relevant parties at 
INTERPOL including this year's General Assembly host, Indonesia. It is 
our belief that enabling Taiwan to directly interact with INTERPOL and 
share pertinent information about criminals and suspicious activity 
contributes to regional and international security.
    In June 2015, the American Institute in Taiwan (AIT) and the Taipei 
Economic and Cultural Representative Office in the United States 
(TECRO) launched the Global Cooperation and Training Framework (GCTF), 
an innovative initiative that showcases Taiwan's strengths and 
expertise by addressing global and regional challenges. Through GCTF, 
the U.S. and Taiwan jointly conduct high-impact training programs to 
build the capacities of experts throughout the region in key areas. Our 
priorities for this year include women's rights, global health, energy, 
and information and communications technology. We have held four major 
conferences under GCTF thus far, which have all helped Taiwan 
strengthen its relationship with its neighbors and dedicate resources 
to programs that increase regional stability.

    Question 11.  I appreciate our discussion regarding cybersecurity 
concerns with China and implementation of the cyber security 
commitments made between President Obama and President Xi in March of 
this year, and I wanted to follow up on your offer to clarify your 
answers on this subject. If you'll recall, during the hearing I posed a 
question about specific cases testified to by Admiral Mike Rogers where 
China continues to target and exploit key government, defense, 
academic, and private computer networks.

   Could you elaborate on these specific cases?

   With the understanding that multiple agencies are involved in the 
        efforts to address the cybersecurity challenge from China, 
        could you tell us how the State Department is addressing the 
        challenge?

    Answer. We refer you to our colleagues in the U.S. Intelligence 
Community for information on the remarks by Admiral Rogers.
    As two of the world's largest cyber actors, we believe that the 
United States and China must have sustained policy engagement on cyber 
issues, combined with meaningful practical cooperation, in order to 
positively contribute to international stability in cyberspace. The 
Strategic Security Dialogue (SSD)--which takes place just prior to the 
Strategic and Economic Dialogue--has served as an important mechanism 
to raise cyber issues of strategic importance, including activities of 
concern that can lead to instability. Engagement via the SSD is 
complemented by two new dialogues established by the cyber commitments: 
a Senior Experts Group to discuss international security issues in 
cyberspace and the law enforcement and network protection-focused Cyber 
Ministerial, led for the United States by the Department of Justice and 
Homeland Security.
    As we move forward, we will continue to monitor China's cyber 
activities closely and press China to abide by all of its September 
2015 commitments as agreed to by President Obama and President Xi. We 
have been clear with the Chinese government that we are watching to 
ensure their words are matched by actions.

    Question 12.  We also spoke briefly on the discrepancies between 
the public White House version of the September 2015 cyber agreement, 
which includes four points, and the version circulated by China's state 
news agency, Xinhua, which refers to a five-point agreement.

   Is there in fact a fifth point in the agreement?

   If so, why did the administration choose not to make public this 
        fifth point? (which appears to be related to the intrusion into 
        OPM)

    Answer. We refer you to the White House Fact Sheet on President Xi 
Jinping's State Visit to the United States, which outlines the U.S.-
China Cyber Commitments. The Department is happy to provide further 
information in a classified setting.

    Question 13.  I would also like to follow up on what the 
administration has learned from China in relation to the OPM intrusion?

   Has China arrested suspects, as The Washington Post reported in 
        December 2015?

   As you alluded in your testimony, when can Congress expect to see a 
        definitive report on this incident?

   Will this report include action items for how the administration 
        plans to respond to this incident? To future incidents, should 
        they occur?

    Answer. We are aware of Chinese media reports that China arrested 
suspects and that they believed the incident was criminal in nature. 
There is an ongoing investigation by the FBI over what happened in the 
OPM incident. I refer you to FBI for the status of that investigation. 
We will not comment on the attribution to specific actors.
    Determining attribution is a complicated process, and publicly 
identifying those actors, once identified, is a step that the U.S. 
government will consider when we believe it will further our ability to 
hold accountable those responsible for an incident.

    Question 14.  Today, China is the United States' second-largest 
trading partner, its third-largest export market, its biggest source of 
imports, and the largest foreign holder of U.S. debt in the form of 
U.S. treasury securities, holding more than $1.3 trillion. China has 
recently seen slowing growth which has caused them to invest more of 
their foreign earnings domestically. However, the amount of U.S. debt 
held by China still concerns me greatly. In 2011, Admiral Michael 
Mullen said that the national debt is the greatest threat to our 
nation.

   How does China's holding of such a large portion of our debt impact 
        our decision-making with regard to security? Particularly with 
        security decisions in this increasingly violate region?

    Answer. Foreign holdings of U.S. Treasury securities do not impact 
our decision-making with regard to security; this includes China's 
holdings. China holds U.S. Treasury securities for the same reason that 
other investors do--for their safety and stability, and because the 
market for Treasuries is deep, liquid, and not influenced by individual 
decisions to buy or sell. Externally owned U.S. debt is held by a 
diverse group of countries, and we are not overly reliant on any one 
overseas holder of U.S. Treasury securities.

    Question 15.  At an estimated $365 billion in 2015, the U.S. trade 
deficit with China is significantly larger than its trade deficit with 
any other partner. One problem we face now is that we have gotten out 
of balance on the trade front with China, and I'm concerned that this 
lack of balance on trade is causing China to act out more aggressively.

    Answer. U.S. consumer demand and China's continued role as an 
exporter for a vast number of consumer and industrial goods for the 
developed world are at the heart of the trade deficit. These are 
structural problems in both our economies. China, as we have seen, has 
made some attempt to shift from its reliance on export-led growth 
toward increased domestic consumption. We continue to encourage China 
to make the reforms necessary for this economic shift. In addition, we 
are negotiating a Bilateral Investment Treaty that will greatly level 
the playing field for U.S. investors and ensure that U.S. products and 
services enjoy the necessary environment to increase our exports to 
China.

    Question 16.  Do you think that increased trade and economic 
dependency between our two nations might ease China's recent military 
behavior?

    Answer. Examples in the Asia region indicate that China's strong 
economic ties with its neighbors do not preclude it from aggressive 
military behavior. China's military growth and expansion are byproducts 
of its economic development and growing international interests.
    We welcome the rise of a peaceful and prosperous China that plays a 
responsible role in the international community. We don't seek to 
contain China, but rather seek to influence China's choices toward 
acting as a responsible member of the international rules-based system. 
We also recognize that in order to protect its citizens and its 
expanding interests overseas, China will seek to modernize and develop 
its military capabilities. We continue to encourage China to exhibit 
transparency regarding its military capabilities and intentions.

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