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| <title> - ASSESSING CHINA'S BEHAVIOR AND ITS IMPACT ON U.S. INTERESTS</title> | |
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| [House Hearing, 112 Congress] | |
| [From the U.S. Government Publishing Office] | |
| ASSESSING CHINA'S BEHAVIOR AND ITS IMPACT ON U.S. INTERESTS | |
| ======================================================================= | |
| BRIEFING | |
| BEFORE THE | |
| COMMITTEE ON FOREIGN AFFAIRS | |
| HOUSE OF REPRESENTATIVES | |
| ONE HUNDRED TWELFTH CONGRESS | |
| FIRST SESSION | |
| __________ | |
| JANUARY 19, 2011 | |
| __________ | |
| Serial No. 112-2 | |
| __________ | |
| Printed for the use of the Committee on Foreign Affairs | |
| Available via the World Wide Web: http://www.foreignaffairs.house.gov/ | |
| ______ | |
| U.S. GOVERNMENT PRINTING OFFICE | |
| 64-008 WASHINGTON : 2011 | |
| ----------------------------------------------------------------------- | |
| For sale by the Superintendent of Documents, U.S. Government Printing Office, | |
| http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202�09512�091800, or 866�09512�091800 (toll-free). E-mail, <a href="/cdn-cgi/l/email-protection" class="__cf_email__" data-cfemail="7017001f301305030418151c005e131f1d">[email protected]</a>. | |
| COMMITTEE ON FOREIGN AFFAIRS | |
| ILEANA ROS-LEHTINEN, Florida, Chairman | |
| CHRISTOPHER H. SMITH, New Jersey HOWARD L. BERMAN, California | |
| DAN BURTON, Indiana GARY L. ACKERMAN, New York | |
| ELTON GALLEGLY, California ENI F.H. FALEOMAVAEGA, American | |
| DANA ROHRABACHER, California Samoa | |
| DONALD A. MANZULLO, Illinois DONALD M. PAYNE, New Jersey | |
| EDWARD R. ROYCE, California BRAD SHERMAN, California | |
| STEVE CHABOT, Ohio ELIOT L. ENGEL, New York | |
| RON PAUL, Texas GREGORY W. MEEKS, New York | |
| MIKE PENCE, Indiana RUSS CARNAHAN, Missouri | |
| JOE WILSON, South Carolina ALBIO SIRES, New Jersey | |
| CONNIE MACK, Florida GERALD E. CONNOLLY, Virginia | |
| JEFF FORTENBERRY, Nebraska THEODORE E. DEUTCH, Florida | |
| MICHAEL T. McCAUL, Texas DENNIS CARDOZA, California | |
| TED POE, Texas BEN CHANDLER, Kentucky | |
| GUS M. BILIRAKIS, Florida BRIAN HIGGINS, New York | |
| JEAN SCHMIDT, Ohio CHRISTOPHER S. MURPHY, Connecticut | |
| BILL JOHNSON, Ohio FREDERICA WILSON, Florida | |
| DAVID RIVERA, Florida KAREN BASS, California | |
| MIKE KELLY, Pennsylvania WILLIAM KEATING, Massachusetts | |
| TIM GRIFFIN, Arkansas DAVID CICILLINE, Rhode Island | |
| TOM MARINO, Pennsylvania VACANT | |
| JEFF DUNCAN, South Carolina | |
| ANN MARIE BUERKLE, New York | |
| RENEE ELLMERS, North Carolina | |
| VACANT | |
| Yleem D.S. Poblete, Staff Director | |
| Richard J. Kessler, Democratic Staff Director | |
| C O N T E N T S | |
| ---------- | |
| Page | |
| BRIEFERS | |
| Mr. Larry Wortzel, commissioner, U.S.-China Economic and Security | |
| Review Commission.............................................. 7 | |
| Mr. Gordon Chang, author of ``The Coming Collapse of China,'' | |
| Forbes.com Columnist........................................... 22 | |
| Yang Jianli, Ph.D., president, Initiatives for China and Harvard | |
| Fellow......................................................... 27 | |
| Mr. Robert G. Sutter, visiting professor, School of Foreign | |
| Service, Georgetown University................................. 31 | |
| LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE BRIEFING | |
| The Honorable Ileana Ros-Lehtinen, a Representative in Congress | |
| from the State of Florida, and chairman, Committee on Foreign | |
| Affairs: Prepared statement.................................... 3 | |
| Mr. Larry Wortzel: Prepared statement............................ 9 | |
| Mr. Gordon Chang: Prepared statement............................. 24 | |
| Yang Jianli, Ph.D.: Prepared statement........................... 29 | |
| Mr. Robert G. Sutter: Prepared statement......................... 34 | |
| APPENDIX | |
| Briefing notice.................................................. 64 | |
| Briefing minutes................................................. 65 | |
| ASSESSING CHINA'S BEHAVIOR AND ITS IMPACT ON U.S. INTERESTS | |
| ---------- | |
| WEDNESDAY, JANUARY 19, 2011 | |
| House of Representatives, | |
| Committee on Foreign Affairs, | |
| Washington, DC. | |
| The committee met, pursuant to notice, at 10:35 a.m., in | |
| room 2172, Rayburn House Office Building, Hon. Ileana Ros- | |
| Lehtinen (chairman of the committee) presiding. | |
| Chairman Ros-Lehtinen. The briefing will be called to | |
| order. Welcome to my fellow members of the committee, our | |
| distinguished panel of witnesses, honored champions of the | |
| struggle for human rights in China, who are joining us today, | |
| ladies and gentlemen. There is an old saying that the Chinese | |
| invoke when they wish to avoid political discourse with the | |
| central powers in Beijing; the mountains are high and the | |
| Emperor is far way. | |
| Well, ladies and gentlemen, this morning there are no | |
| mountains to shield us. And China's newest Emperor has just | |
| landed in Washington and is at the front lawn of the White | |
| House; yet the pressing issues which separate our countries | |
| need to be urgently addressed. | |
| Three of those many issues, which will be the focus of | |
| today's briefing, include security concerns, human rights, and | |
| how our trade imbalance and the Chinese currency manipulation | |
| adversely impact<greek-l>s deg. our U.S. economy. | |
| When the Cold War ended over two decades ago, many in the | |
| West assumed that the threat from communism had been buried | |
| with the rubble of the Berlin Wall. However, while America | |
| slept, an authoritarian China was on the rise. China became one | |
| of our biggest mortgage companies, holding over $900 billion of | |
| our international debt. And in these past two decades Western | |
| observers forgot that while freedom blossomed in Eastern | |
| Europe, reform in China failed. | |
| China was led by a cynical group of leaders who, sobered by | |
| the Tiananmen massacre and marked by the blood of its victims, | |
| were determined to go forward with economic but not political | |
| change. And the China that emerged has fallen far short of the | |
| benign China of which former Deputy Secretary of State Zoellick | |
| spoke in the coining of the phrase ``responsible stakeholder.'' | |
| Does a responsible stakeholder, as reported in the Western | |
| press, allow the transshipment of North Korean missile | |
| components to Iran via Beijing airport in open defiance of | |
| those U.N. sanctions, which as a Perm-5 Member State, it is | |
| duly bound to enforce? Does a responsible stakeholder declare | |
| that the South China Sea is one of its core interests, in open | |
| defiance of the navigational and territorial rights of its | |
| Southeast Asian neighbors? Does a responsible stakeholder | |
| admonish the U.S. Navy that it cannot operate in the Yellow Sea | |
| in the very waters where General Douglas MacArthur undertook | |
| the heroic landing which turned the tide of the Korean War? | |
| Would a responsible stakeholder refer to the Nobel Peace | |
| Prize Committee as a ``bunch of clowns'' for awarding an honor | |
| to a distinguished Chinese human rights advocate? Would a | |
| responsible stakeholder arrest the wife of a Nobel Peace Prize | |
| winner as further retaliation for speaking the truth about the | |
| gross human rights violations in China? | |
| The United States took a big gamble when it voted for | |
| permanent normal trade relations for China over a decade ago in | |
| what some termed as the most important vote since World War II. | |
| The vote was based upon what I see as a sadly mistaken belief | |
| that economic openings and a free market reform would lead to | |
| democracy, respect for the rule of law, and a full array of | |
| political and human rights for the Chinese people. | |
| Yet today as we meet here, the Laogai Research Foundation | |
| estimates that there are close to 7 million people currently in | |
| Chinese labor camps. It is as if the entire population of | |
| Switzerland was being held behind barbed wire. Chinese | |
| authorities' ruthless campaign against Falun Gong | |
| practitioners, a peaceful organization which promotes truth, | |
| compassion, and tolerance, has continued unabated for more than | |
| 11 years. | |
| I was proud to be the sponsor of a resolution in the last | |
| Congress which received overwhelming bipartisan support | |
| addressing the persecution of Falun Gong. The brutal denial of | |
| rights to the people of Tibet and the Uyghur people and the | |
| forced repatriation of North Korean refugees continue to draw | |
| the attention of concerned citizens throughout the world. | |
| And the American people have also borne the brunt of | |
| China's mercantile trade policies which promote trade surpluses | |
| through cheap exports based upon an artificial depreciation of | |
| China's currency. Jobs and American dollars have flown across | |
| the Pacific to China for the past two decades as the American | |
| people have suffered high unemployment and a diminished | |
| standard of living. | |
| Last fall I was pleased to be able to vote in favor of the | |
| Currency Reform for Fair Trade Act, which overwhelmingly passed | |
| the House 348 to 79. We are back with a new energy from our | |
| newly elected Members who are determined to take back America's | |
| economy and are committed to a foreign policy that stands with | |
| our allies and holds accountable those who threaten our | |
| Nation's security interests. | |
| And now I am pleased to turn to my distinguished ranking | |
| member for this committee Mr. Berman for his remarks. | |
| [The prepared statement of Chairman Ros-Lehtinen follows:] | |
| <GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT> | |
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| Mr. Berman. Well, thank you very much, Madam Chairwoman. | |
| And Chinese President Hu Jintao is in Washington this week | |
| for a state visit; and as we speak, he and President Obama are | |
| meeting at the White House. After an often tense year in U.S.- | |
| China relations, the two leaders will try to set the contours | |
| of the relationship for the immediate future. | |
| The U.S.-China relationship, one of the most interconnected | |
| and complex in global affairs, has major implications for the | |
| future of Asia and the entire world. The challenge for the | |
| Obama administration is to manage that relationship in a way | |
| that strengthens our cooperation with Beijing in areas where we | |
| have shared interests, while at the same time addressing the | |
| serious concerns we have regarding a number of China's | |
| policies. | |
| China is neither an ally nor an enemy. It is both a | |
| competitor and a partner in foreign affairs, security, and | |
| economics. A key goal of our China policy must be to prioritize | |
| our myriad global interests, identify those issues where we are | |
| most likely to positively change China's position, and then | |
| find and use our leverage with the Chinese to achieve those | |
| changes and accomplish our wider foreign policy objectives. | |
| In my view, our highest priority with China should be Iran. | |
| Gaining China's acceptance last year for tougher United Nations | |
| sanctions on Iran was a significant diplomatic achievement for | |
| the Obama administration. But there is ample evidence that | |
| Chinese entities continue to invest in Iran's energy sector. | |
| This helps Tehran avoid the full impact of sanctions and | |
| facilitates Iran's continued development of nuclear weapons | |
| capability, which threatens the United States, our allies in | |
| the Middle East, and China, which is dependent on stable | |
| sources of oil from the Middle East. We must intensify our | |
| efforts to ensure China's full participation in the multi- | |
| lateral sanctions regime against Iran. | |
| The United States and China must also strengthen our | |
| collaboration to denuclearize the Korean Peninsula. As North | |
| Korea's economic lifeline, Beijing holds considerable leverage | |
| over Pyongyang; yet it has been too slow to make it clear to | |
| the North Korean leadership that security and respect can be | |
| obtained only by giving up its nuclear weapons and refraining | |
| from other aggressive behavior. | |
| The promotion of human rights and political freedom is a | |
| central goal of American foreign policy. These universal values | |
| must remain a central focus of our relationship with China, | |
| whose record in this area remains deplorable. Moreover, those | |
| values are in China's self-interest. Both its international | |
| image and its economic growth are dependent on developing a | |
| society based on the rule of law. | |
| In the sphere of economics and trade, one area of | |
| particular concern is China's theft of intellectual property | |
| and its indigenous innovation policy. In addition to compliance | |
| with the recent WTO decision, China must do more to stop the | |
| piracy and counterfeiting that occurs openly on street corners | |
| and over the Internet and step up its enforcement efforts. | |
| The crossroads we currently face in the U.S.-China | |
| relations present less of a choice for the United States and | |
| more of a choice for China. The Obama administration has | |
| articulated a pragmatic policy toward China, and in several key | |
| areas the administration has had some modest success. There is | |
| no clear indication, however, that China has made a fundamental | |
| decision to alter its strategic goals of leveraging the | |
| international community to promote its own policies of economic | |
| growth, with heightened political control and military | |
| modernization, with regional and extra regional power | |
| projection, while at the same time insulating China as much as | |
| possible from outside influences. As much as the rest of the | |
| world looks to China to play a constructive role, it is not | |
| clear China wants to play a positive influence beyond its | |
| borders. | |
| I look forward very much to hearing the testimony from all | |
| of our witnesses today and I yield back. | |
| Chairman Ros-Lehtinen. Thank you very much, Mr. Berman. | |
| And now I would like to yield 3 minutes to the chairman- | |
| designate of the Subcommittee on Asia and the Pacific, Mr. | |
| Manzullo. | |
| Mr. Manzullo. Thank you, Madam Chairwoman, for calling this | |
| important briefing concerning China's rise and its impact on | |
| the United States. I strongly believe that China's new | |
| assertiveness in foreign and economic relations is one of the | |
| greatest foreign policy challenges that we must face in this | |
| century. China's weight in the global economy cannot be | |
| ignored; that nation's rapid modernization represents both | |
| opportunity and peril for America. | |
| As chairman-designate of the Subcommittee on Asia and the | |
| Pacific, I am keenly aware of the challenges our Nation faces | |
| when it comes to dealing with China. As experience has shown, | |
| China's unfair trade practices, including currency | |
| manipulation, illegal subsidies, and lax enforcement of | |
| intellectual property law make it very difficult for the | |
| hardworking people of America to compete at a level playing | |
| field and benefit from this relationship. | |
| American manufacturers have been hurt most by this | |
| unbalanced relationship. Manufacturing is the lifeblood of the | |
| 16th Congressional District of Illinois, which I represent. Our | |
| congressional district has somewhere between 1,400 and 2,500 | |
| factories--no one is quite sure--supporting more than 51,000 | |
| jobs. In fact, 24 percent of value-added manufacturing in our | |
| congressional district represents exports. It is one of the | |
| most dense areas in terms of manufacturing base and one of the | |
| most exporting congressional districts in the country. These | |
| hardworking men and women want to know what their government is | |
| doing to enforce our trade laws with China and preserve | |
| America's industrial base. | |
| I hope our distinguished witnesses will focus their remarks | |
| on what the administration is doing and what more it can do to | |
| urge the Chinese Government to follow the rules. Very little | |
| has been done in the past several years. | |
| My experience with the Chinese Government is that it is in | |
| fact capable of stopping the violators when they see it is in | |
| their interests to do so. With so many Americans out of work, | |
| now is the time for this administration to work with Congress | |
| to hold China responsible and give American manufacturers a | |
| chance to compete with China on a level playing field so our | |
| manufacturers can create jobs. | |
| Madam Chairwoman, I commend you for giving the American | |
| people a well-deserved voice when it comes to China. I look | |
| forward to the testimonies of our witnesses. | |
| Chairman Ros-Lehtinen. Thank you very much, Mr. Manzullo. | |
| We would be recognizing the ranking member-designate, Mr. | |
| Faleomavaega, but he is not present, so we will proceed with | |
| the testimony. | |
| We are pleased to have as our witnesses a wonderful panel. | |
| Thank you. We are pleased to welcome Mr. Larry Wortzel to | |
| today's briefing. Larry is a commissioner on the U.S.-China | |
| Economic and Security Review Commission, appointed by Speaker | |
| Boehner. Among his many qualifications, Mr. Wortzel served two | |
| tours of duty as a military attache at the American Embassy in | |
| China and retired from the Army with a rank of colonel. Thank | |
| you for briefing us today. | |
| Also with us is Gordon Chang, who is currently a columnist | |
| at Forbes.com. Mr. Chang practiced law in China and Hong Kong | |
| for nearly 20 years and has written extensively on China and | |
| North Korea. We are grateful to have him today, as he is a much | |
| sought after expert on the future of China's economy. | |
| Mr. Yang Jianli is the founder and president of Initiatives | |
| for China. In 2002 Mr. Yang was imprisoned in China. And | |
| following an outcry by Congress and others for his release, Mr. | |
| Yang was freed in April 2007. Immediately following his return | |
| to the United States, Mr. Yang formed Initiatives for China, a | |
| pro-democracy committee that is committed to peaceful | |
| transition to democracy in China. | |
| And lastly, Mr. Robert G. Sutter, who has been a visiting | |
| professor of Asian studies at the School of Foreign Services in | |
| Georgetown University since 2001. In addition to his full-time | |
| position, Mr. Sutter teaches regularly as an adjunct professor | |
| of Asian studies in the Elliott School of International | |
| Affairs, George Washington University. Mr. Sutter had an | |
| extensive government career--an extensive government career in | |
| Congressional Research Service and other U.S. Federal agencies | |
| that lasted 33 years. | |
| So we will begin with Mr. Wortzel. I am sorry that I am not | |
| so great with the pronunciations, but look at my name. I don't | |
| get too picky. So I will be rather ruthless with the 5 minutes, | |
| so please confine yourself to 5 minutes. Larry, you are | |
| recognized. Thank you. | |
| STATEMENT OF MR. LARRY WORTZEL, COMMISSIONER, U.S.-CHINA | |
| ECONOMIC AND SECURITY REVIEW COMMISSION | |
| Mr. Wortzel. Chairwoman Ros-Lehtinen, Ranking Member | |
| Berman, members of the committee, thank you for the opportunity | |
| to brief you today. The views I present are my own and formed | |
| by my service in the U.S. Army, on the U.S.-China Economic and | |
| Security Review Commission, and my own research. | |
| In late 2004, Chinese Communist Party Chairman Hu Jintao | |
| set out a new set of missions for the People's Liberation Army, | |
| or PLA. These new historic missions provide the basis for | |
| China's future defense research and weapons acquisition plans. | |
| They also set the stage for a more assertive use of the armed | |
| forces inside and outside of Asia in pursuit of expanding | |
| national interests. The PLA's military modernization efforts | |
| provide the means for the armed forces to fulfill these new | |
| missions. | |
| China's military modernization efforts are comprehensive, | |
| affecting all of the domains of war, including space and cyber | |
| operations. In recent years, China has acquired advanced | |
| surface ships and submarines, modern combat aircraft, ballistic | |
| and cruise missiles, and advance command and control missions | |
| that tie everything together. | |
| In addition, as Admiral Willard, the PACOM commander, | |
| recently stated, China will field an antiship ballistic | |
| missile, a potential threat against U.S. aircraft carriers in | |
| the region. The PLA is still the fallback force of repression | |
| for the Communist Party against the populace. | |
| The combination of these new missions and the means to | |
| carry them out has brought about changes in China's military | |
| operations. Traditionally, the PLA focused on domestic response | |
| and local contingencies. Now it is a military with a wider | |
| range of missions and activities. The dispatch of Chinese naval | |
| vessels in support of antipiracy operations off Africa is one | |
| example. | |
| China's national interests are global and the PLA is | |
| becoming a force capable of acting beyond China's periphery. A | |
| more capable military accompanies a more assertive Chinese | |
| foreign policy. This can be seen in China's recent provocative | |
| activities concerning its disputed territorial claims in the | |
| South and East China Seas and in the exclusive economic zone. | |
| China's military capabilities also stoke Beijing's | |
| confidence. China's officials stridently complained about U.S. | |
| and allied operations in the Western Pacific. Beijing failed to | |
| condemn North Korean attacks on South Korea and strongly | |
| objected to joint military exercises in the region between the | |
| United States and South Korea. | |
| In military-to-military relations, Beijing continues to | |
| circumscribe the range of discussions between China and the | |
| United States, refusing to address strategic issues such as | |
| cyber warfare and space operations. I am pleased to see that | |
| Secretary Gates got to visit the 2nd Artillery Corps and there | |
| was some discussion of nuclear doctrine during his visit. | |
| Despite a noticeable improvement in relations across the | |
| Taiwan Strait, Beijing continues to insist on the right to use | |
| force should it interpret Taiwan's activities as moves toward | |
| independence. The cross-Strait military balance increasingly | |
| favors China, and Beijing has deployed over 1,100 short-range | |
| ballistic missiles opposite the island. In my view, Taiwan's | |
| most pressing need is for new or modernized fighter aircraft. | |
| China continues arms sales in support to international | |
| pariah states such as North Korea, Burma and Iran. In addition, | |
| the food and energy and foreign investment that China provides | |
| to North Korea indirectly enabled Pyongyang to continue its | |
| nuclear efforts. It showed its economic power by a stoppage of | |
| the supply of rare Earth minerals to Japan when it was unhappy | |
| with Japanese policy. | |
| Madam Chairwoman, members of the committee, thank you for | |
| the opportunity to address you today. I look forward to your | |
| questions. | |
| [The prepared statement of Mr. Wortzel follows:] | |
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| Chairman Ros-Lehtinen. Thank you so very much, and thank | |
| you for the time limit. | |
| Mr. Chang, we appreciate your time. Five minutes, please. | |
| STATEMENT OF MR. GORDON CHANG, AUTHOR OF ``THE COMING COLLAPSE | |
| OF CHINA,'' FORBES.COM COLUMNIST | |
| Mr. Chang. Chairwoman Ros-Lehtinen, Ranking Member Berman, | |
| distinguished members of the committee, thank you for the | |
| opportunity to be here today. | |
| The dominant narrative in the United States and elsewhere | |
| is that China has the upper hand when it comes to the United | |
| States, and that is why President Obama is hosting a state | |
| visit for an autocrat, Chinese President Hu Jintao. | |
| But does China really have the upper hand? I think that | |
| most Americans misperceive the economic relationship between | |
| the United States and China, and today I would like to comment | |
| on three of those misperceptions. | |
| First of all, everybody says that China is decreasing its | |
| dependence on the United States. Well, China has an economy | |
| that is geared to selling things to us. The Chinese economy is | |
| dependent on exports, and its export sector is especially | |
| reliant on sales to the United States. Last year, when all the | |
| statistics are in, I think that we are going to see that more | |
| than 140 percent of China's overall trade surplus related to | |
| sales to the United States. That is up from an already | |
| stupendous 90.1 percent in 2008. Now, China's trade dependence | |
| on us gives us enormous leverage, because China is not a free | |
| trader. China has accumulated its surpluses because of real | |
| clear violations of its obligations under the World Trade | |
| Organization. | |
| Second, everybody says that China's debt provides--our debt | |
| held in the hands of China--provides a weapon that the Chinese | |
| can use against us. Since August 2007, the Chinese have talked | |
| in public about using debt as a weapon, and of course they call | |
| it, appropriately, ``the nuclear option.'' Well, China hasn't | |
| used the nuclear option since it first started talking about | |
| it, and the reason is they know their attack plan won't work. | |
| Let's think about the worst possible scenario, that the Chinese | |
| drop all of our debt at one time. Well, we have got to look at | |
| the way the global markets operate. If the Chinese do that, | |
| they have got to buy something, which means they have got to | |
| buy things denominated in pounds, euros and yen. That would | |
| send those currencies soaring through the ceiling in their | |
| values, which means that London, Brussels, and Tokyo would have | |
| to go out into the global markets to rebalance their | |
| currencies; in other words, to bring their currencies back down | |
| in value. And the only way they can do that is <greek-l>is | |
| deg.to buy dollars. There would be turmoil in the global | |
| markets, but it wouldn't last very long, just a few weeks, | |
| maybe a calendar quarter at the most. And after this is all | |
| done, we would have our debt held by our friends rather than a | |
| potential enemy. I think the global markets are deep and they | |
| can handle just about everything, and although I don't think | |
| the United States should be accumulating debt, and certainly I | |
| don't want the Chinese to hold it, I also don't think it gives | |
| them a weapon. | |
| Third, you hear many commentators say that China's currency | |
| manipulation is not the sole cause of America's trade deficit. | |
| Well, of course that's right, because there are a number of | |
| reasons that relate to our trade deficit, but China's currency | |
| manipulation is an important reason. Due to Beijing's active | |
| manipulation of its currency--it intervenes in the markets | |
| every day--the discount value of the renminbi to the U.S. | |
| dollar is somewhere in the vicinity of 20 to 40 percent. Maybe | |
| 30 percent would be a good estimate for today. A discount of | |
| that magnitude, of course, is significant. | |
| When I practiced law in Asia, many of my clients were U.S. | |
| manufacturers, and I would just watch my clients haggle for | |
| days over pennies on unit prices. That is how important price | |
| is. | |
| So it is counterintuitive to think that a discount of 30 to | |
| 40 percent--and that is what we are talking about--would not | |
| have an effect on our trade deficit. But you don't have to take | |
| my word for it. Chinese Premier Wen Jiabao, the top economic | |
| officer in China, came to the United States last September and | |
| he said--he talked about the possibility of<greek-l>, | |
| quote, deg. ``countless Chinese enterprises going bankrupt and | |
| countless Chinese workers becoming unemployed if the renmimbi | |
| increased in value.'' Well, if that is what the currency does | |
| to China's manufacturers and their employees, then what do you | |
| think it does to ours? | |
| Nonetheless, many economists say, well, you know, you | |
| shouldn't do this, this currency bill, H.R. 2378, which passed | |
| the House. I think that we certainly need to do that. China | |
| won't change its destructive currency practices if we appeal to | |
| its self-interest, which is what the Bush administration and | |
| the Obama administration were doing. I think that we have to | |
| apply pressure. | |
| [The prepared statement of Mr. Chang follows:] | |
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| Chairman Ros-Lehtinen. Thank you Mr. Chang. Thank you so | |
| much. | |
| Mr. Yang. | |
| STATEMENT OF YANG JIANLI, PH.D., PRESIDENT, INITIATIVES FOR | |
| CHINA AND HARVARD FELLOW | |
| Mr. Yang. Thank you, Your Excellency. Thank you for the | |
| opportunity for me to testify on a very fundamental matter in | |
| the relationship between the United States and China that must | |
| be addressed. It is the matter of how the Chinese Government | |
| treats its own citizens. China is the country with the most | |
| prisoners-of-conscience in the world, including a Nobel Peace | |
| Prize winner. Among thousands, if not tens of thousands of | |
| prisoners-of-conscience, is Dr. Liu Xiaobo who got the longest | |
| prison term, life imprisonment. His two children, Song Tung, | |
| and a daughter Tiana are here with us today. | |
| In addition to the official prison system, it is | |
| practically public knowledge that in China there exist hundreds | |
| of black jails established and run by local governments of | |
| various levels. These prisons take in numerous innocent | |
| petitioners arbitrarily. | |
| Going beyond this prison system, there are three new types | |
| of measures of control that the Chinese authorities have been | |
| increasingly using in the past 3 years. | |
| Number one, direct violence. The direct violence against | |
| dissidents, human rights activists, and petitioners has | |
| increased in recent years. The people who have been doing this | |
| are local policemen or rogues hired by the police. In some | |
| cases governmental officials are also involved. | |
| Number two, house arrest. In recent years, house arrest has | |
| become more and more widely used as a means for limiting | |
| dissidents and their families. Yuan Weijing and Liu Xia are two | |
| typical examples. As the wife of the blind human rights lawyer | |
| Chen Guangcheng, Yuan Weijing was placed under house arrest not | |
| long after her husband had been arrested. Ever since Chen | |
| Guangcheng was released after serving 4 years and 3 months in | |
| prison last September, the entire family has been put under | |
| house arrest. The Chens, the entire family, has been cut off | |
| from all contacts with the outside world. Those who tried to | |
| visit them were badly beaten. Liu Xia, Liu Xiaobo's wife, has | |
| been put under house arrest ever since last year, when her | |
| husband won the 2010 Nobel Peace Prize. And her communication | |
| with the outside world has been completely cut off since | |
| October 20th, last year. | |
| Number three, ``made disappearances.'' I also urge you to | |
| pay attention to the disappearance of Chinese citizens as the | |
| result of the government's unwarranted actions. The most | |
| notorious case is Gao Zhisheng. He has not been heard from ever | |
| since last April, after repeatedly being detained and severely | |
| tortured. And his wife is with us today here. | |
| Another important case is Mongolian scholar Hada who was | |
| arrested in December 1995 for peaceful activities demanding | |
| more autonomy for the Mongolian region. He was later sentenced | |
| to 15 years in jail. His prison term was set to end on December | |
| 10th last year, but a few days before that the Chinese | |
| authorities detained his wife and their son. Hada was never | |
| seen getting out of prison. And to date, the entire family has | |
| not been heard from. | |
| Around the time of the Nobel Peace Ceremony, more than 100 | |
| of Mr. Liu's friends, family members, and supporters, including | |
| Tiananmen mother Ding Zilin and her husband, were either put | |
| under house arrest or made missing. | |
| So coming back to the issue I raised at the outset, the | |
| question is why should China's treatment of its citizens be an | |
| important concern for U.S. foreign policy toward China? Pundits | |
| and laymen can give a slew of analysis on and answers to this | |
| question, and some people can even denounce this question as | |
| irrelevant. But I just want to echo Phelim Kine's question from | |
| his Wall Street Journal article last Monday: Will a rising | |
| power that fails to honor commitments to its own people act | |
| responsibly to fulfill its commitments to other nations and | |
| their peoples? | |
| [The prepared statement of Mr. Yang follows:] | |
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| Chairman Ros-Lehtinen. Thank you. That is a good question. | |
| Thank you. | |
| Mr. Sutter. | |
| STATEMENT OF MR. ROBERT G. SUTTER, VISITING PROFESSOR, SCHOOL | |
| OF FOREIGN SERVICE, GEORGETOWN UNIVERSITY | |
| Mr. Sutter. Thank you very much, Madam Chairwoman and | |
| members of the committee. | |
| The U.S. relationship with the People's Republic of China | |
| has been troubled throughout its twisted history. Important | |
| areas of converging interests between the two powers are | |
| usually accompanied by important areas of differences. The | |
| relationship has become very broad ranging, multifaceted and | |
| complicated, and it is the most important bilateral | |
| relationship in the world today. | |
| A pattern of seeking to advance common ground while | |
| managing differences prevailed throughout most of the George W. | |
| Bush administration. Like President Bush, President Obama | |
| showed a course with China involving pursuing constructive | |
| contacts, preserving and protecting American interests, and | |
| dealing effectively with challenges posed by rising Chinese | |
| influence and power. A strong theme in President Obama's | |
| initial foreign policy was to seek cooperation of other world | |
| powers, including China, to deal with salient international | |
| concerns. He worked very hard at this, but he found the Chinese | |
| leaders offered only limited cooperation on issues like climate | |
| change and others. | |
| More worrisome were the challenges that the Chinese | |
| administration posed for the Obama government, and this has | |
| been well documented by my colleague, Mr. Wortzel, particularly | |
| about the maritime areas about the periphery of China, but also | |
| a hard line on the President's arms sales to Taiwan, on his | |
| meeting with the Dalai Lama, and the U.S. interventions in the | |
| South China Sea and other issues. | |
| The Obama government reacted calmly and firmly to what | |
| Secretary of State Clinton called these tests or manifestations | |
| of new assertiveness by China. It gave no ground on any of the | |
| Chinese demands. It also found that Chinese assertiveness with | |
| the United States in neighboring countries over various issues | |
| damaged China's efforts to portray a benign image in Asia. | |
| These Asian governments became more active in working more | |
| closely with the United States and encouraging an active U.S. | |
| presence in the Asia Pacific. The overall effect was a decline | |
| in China's position in the Asia Pacific and a rise in the | |
| position of the United States. | |
| Meanwhile, the Obama government made clear to the Chinese | |
| Government and to the world that the United States is prepared | |
| to undertake military measures needed to deal with the buildup | |
| of Chinese forces targeting Americans and American interests in | |
| the Asia Pacific. It also helped to move China to curb North | |
| Korea's repeated provocation by warning privately as well as | |
| publicly that the United States viewed North Korea's nuclear | |
| weapons development as a direct threat to the United States. | |
| Over the past few months China has tried to ease | |
| differences with the United States in the period leading up to | |
| the current visit of President Hu Jintao. We have done a number | |
| of different things in calming the situation between the United | |
| States and China over these various areas of differences. | |
| Looking out, President Obama wants to pursue closer engagement | |
| with China as part of his administration's overall reengagement | |
| with the Asia Pacific. His administration also has made clear | |
| that it will not give in to Chinese assertiveness or pressure | |
| and, if needed, will respond to such Chinese actions with | |
| appropriate military diplomatic or other means. | |
| Given China's recent assertiveness, it may appear less | |
| certain that President Hu Jintao shares President Obama's | |
| interest in reengagement. On the other hand, China's recent | |
| assertiveness has proven much more costly than beneficial for | |
| China's broader interest. | |
| It is against this background it seems likely that | |
| prevailing circumstances will preserve and reinforce the | |
| positive equilibrium in U.S.-China relations for three general | |
| reasons. First, both administrations seek benefit from positive | |
| engagement in various areas. Second, both administrations see | |
| that the two powers have become so interdependent that | |
| emphasizing the negatives in their relationship will hurt the | |
| other side but also will hurt them. Third, both leaderships are | |
| preoccupied with a long list of urgent domestic and foreign | |
| priorities. In this situation one of the last things they would | |
| seek is a serious confrontation in relations with one another. | |
| Thank you for your attention. I look forward to responding | |
| to your questions. | |
| [The prepared statement of Mr. Sutter follows:] | |
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| Chairman Ros-Lehtinen. Thank you so much to an excellent | |
| set of panelists. I will be recognizing members for 5 minutes | |
| of questions and answers in order of seniority, for those who | |
| were in their seats when the gavel fell, and in order of | |
| arrival for those who arrived after the briefing began. I would | |
| like to yield my 5 minutes for questions and answers to | |
| Congresswoman Buerkle of New York. The Congresswoman is | |
| recognized for 5 minutes. | |
| Ms. Buerkle. Thank you, Madam Chairwoman. I will direct my | |
| question to Colonel Wortzel, but if anyone else on the panel | |
| would like to comment, I would welcome the answer as well. | |
| First of all, thank you for your service. According to | |
| recent news reports, China facilitated the transshipment of | |
| missile parts from North Korean aircraft to Air Iran cargo | |
| flight at Beijing's airport. How involved are both the Chinese | |
| Government officials and Chinese companies in weapons | |
| procurement for Iran and in the development of Iran's nuclear | |
| and missile programs? | |
| Mr. Wortzel. Congresswoman Buerkle, they are pretty heavily | |
| involved. They accept those transshipments from North Korea | |
| through China. They facilitate them. Those things don't happen | |
| without the concurrence of central authorities in the provinces | |
| and from a national air control system. They have got their own | |
| customs people, so they are well aware of it and they could | |
| stop it. They have refused to participate in the Proliferation | |
| Security Initiative which would have the effect of at least | |
| helping to control North Korean proliferation. I mean, they | |
| simply have very different interests in Iran than we do. And I | |
| would argue that one of their interests is frustrating United | |
| States policy and creating a second potential military | |
| competitor that is at least a barb down in that part of the | |
| world. That limits what we can do. That means we have to be a | |
| lot more careful in how we act. | |
| They have sold--everything falls below the limits of the | |
| missile technology control regime, but they have sold short- | |
| range missiles, they have sold cruise missiles, anti-aircraft | |
| missiles. So they are not doing a thing to reduce the potential | |
| level of violence and tension in that region. | |
| Ms. Buerkle. Thank you very much. | |
| Chairman Ros-Lehtinen. The gentlelady yields back. I would | |
| like to recognize the ranking member, Mr. Berman, for 5 | |
| minutes. | |
| Mr. Berman. Well, thank you very much, Madam Chairwoman. | |
| And I would like to get Mr. Chang's response and also perhaps | |
| hear from Mr. Wortzel and Sutter on the very interesting thesis | |
| that Mr. Chang had, essentially looking at the issue of our | |
| debt obligations to China and our trade deficit as perhaps more | |
| our leverage than China's leverage, and to ask you to play that | |
| out a little longer. | |
| To what extent are you suggesting we use that leverage and | |
| whether it is in countervailing duties or in passing the kind | |
| of legislation that the House passed last year, and for what | |
| policy purposes should they be restricted to persuading and | |
| pushing China to live within the WTO ground rules, or should | |
| they be utilized to achieve broader geopolitical and military | |
| purposes? So that is one question. I will ask them all right | |
| now. | |
| And then the second question, 15, 20 years ago, there was a | |
| notion that in its heart of hearts, China liked American | |
| presence in the Western Pacific, that that was a lot better for | |
| them than Japan reconsidering its traditional military policy, | |
| thinking about its own nuclear weapons; more recently, what | |
| South Korea might decide to do. But in a way there was a | |
| beneficial effect. Is that just out the window now? | |
| Is the Chinese military modernization so strong now that | |
| they are not concerned about that, and they are truly seeking | |
| to have us reverse a position we have had since the end of | |
| World War II? | |
| And add to that, if either Robert Sutter or Larry Wortzel | |
| would do it, this notion that this weekend, that this isn't the | |
| visit of the most recent Emperor of China, that there is a | |
| People's Liberation Army out there that is starting to do their | |
| own things without necessarily under the direct direction of | |
| the leadership of the Communist Party. Is there anything to a | |
| couple of those stories that have emerged recently? | |
| And then finally, if we can get it--I don't know if there | |
| will be time--Mr. Yang, you were eloquent regarding the issue | |
| of political disappearances and the families and the abuse and | |
| what goes on inside China. But what you weren't able to get | |
| into is how do you think we--what role can we play in affecting | |
| and changing that? I do worry that there won't be time for that | |
| last one, but go ahead. | |
| Mr. Chang. First of all, I would like to thank the | |
| Congressman for being so polite in his characterization of my | |
| views. Most people think that I am wrong, and you were very | |
| nice in saying so, in saying what you just did. | |
| I think there are a couple of things that we need to do. | |
| First of all, we need a little bit less diplomacy. We are | |
| feeding China's self--a sense of self-importance. I think we | |
| don't need new agreements on economic matters, because everyone | |
| says when there is a problem with China let's go out and | |
| negotiate a new deal. We have tons of deals with the Chinese. | |
| All we need to do is enforce them; and we need to enforce them | |
| more vigorously, which means that we need to take cases to the | |
| WTO more quickly. And also because of the real problem that | |
| China does pose to American manufacturers, as I heard earlier, | |
| I think we need to do a little bit of self help, which is H.R. | |
| 2378; in other words, imposing penalties at an early stage for | |
| Chinese subsidies. Of course, currency manipulation is one. | |
| Mr. Berman. Basically, you want to limit that to the | |
| economic issues--the currency valuation, the violation of trade | |
| rules, the subsidies--not to larger geopolitical issues? We | |
| only have 30 seconds. I would just like to get real quickly | |
| from Mr. Wortzel and Mr. Sutter. | |
| Mr. Wortzel. I think the PLA is not an independent actor. | |
| It is currently under the control of the Politburo Standing | |
| Committee of the Chinese Communist Party and the Central | |
| Military Commission. I think China is ambivalent about the U.S. | |
| presence. It is very happy that extended deterrents restrains | |
| Japan from becoming a nuclear power but wants a more forceful | |
| role in the Pacific. And I think Gordon is absolutely correct | |
| on U.S. treasuries. | |
| Chairman Ros-Lehtinen. Thank you. We will continue with Mr. | |
| Sutter at another time. | |
| Before yielding to Mr. Smith, I would like to recognize, as | |
| has been pointed out, the presence of Chinese human rights | |
| dissidents in the audience, representing a cross-section of | |
| oppressed groups inside China, including representatives of Liu | |
| Xiaobo, the Falun Gong, the Uyghurs, the wife of Mr. Gao, one | |
| of several Chinese political prisoners unjustly imprisoned by | |
| the Chinese regime. | |
| And now I am pleased to recognize Mr. Smith, the chairman- | |
| designate of the Subcommittee on Africa, Global Health, and | |
| Human Rights for 5 minutes. | |
| Mr. Smith. Thank you very much, Madam Chairwoman. Besides | |
| being the jailer of Liu Xiaobo, the 2010 Nobel Peace Prize | |
| winner, we have to ask ourselves a very serious question: Who | |
| is Hu Jintao? Let us not forget that in 1989, just a few months | |
| before the massive Tiananmen Square, the massacre at Tiananmen | |
| Square, Hu Jintao was Beijing's iron fist in Tibet, the man who | |
| ordered the savage beating of Tibetan nuns and monks, even | |
| children--there are eyewitness accounts of children being | |
| pummeled to death--and the murder of hundreds of Tibetans. | |
| Hu Jintao presides over a gulag state, clearly a | |
| dictatorship. President Hu is directly responsible for the | |
| systematic detention and torture of millions of peaceful | |
| Chinese, Tibetans, and Uyghurs. Harry Wu, who is here with us, | |
| spent almost two decades in the Laogai. He knows what happens | |
| in those gulags--torture, cattle prods put under the armpits | |
| and at the genitals. President Hu Jintao presides over that | |
| sickness and that perversity. | |
| President Hu's secret police hunts down Christians, Uyghur | |
| Muslims, Falun Gong, and Tibetan Buddhists and beats them often | |
| to death, especially the Falun Gong who are massively being | |
| killed in China today. President Hu is responsible for the | |
| barbaric, and really the worst violation of women's rights, in | |
| my opinion, ever: The one-child-per-couple policy, which relies | |
| on forced abortion to achieve its goals. | |
| In President Hu's China, brothers and sisters are illegal. | |
| They are illegal. Anyone in the audience who has a sibling in | |
| China, you are only allowed one. As a direct result, the | |
| cumulative effect of this barbaric policy, there are 100 | |
| million missing girls in China. Why haven't the feminists--most | |
| of them have been silent about this terrible gendercide | |
| directed against little girls. | |
| Let me ask Yang Jianli who has been an outspoken leader on | |
| behalf of Chinese human rights. It seems to me that when a man | |
| like Hu Jintao comes in, the press give him a free pass. There | |
| will be a press conference. I would ask the press to ask the | |
| hard questions, not just the generic questions about human | |
| rights. Ask specifics about what is happening in the Laogai, | |
| what is happening to Liu Xiaobo, what is happening to Gao, | |
| whose wife is with us today, missing, who has been repeatedly | |
| tortured, and the misuse--and the terrible burden they put on | |
| the children of the dissidents. Ask the tough questions of the | |
| press. | |
| And to President Obama and Secretary Clinton, please be | |
| very specific in your conversation with Hu Jintao. Just a | |
| glossing over of we talked about human rights, something on a | |
| list of talking points simply won't cut it. Be specific and | |
| press this man who I believe ought to be at The Hague being | |
| held to account for crimes, rather than being treated with a | |
| state dinner. So I would ask Mr. Yang Jianli, please. | |
| Mr. Yang. I agree, Congressman Smith, and I will answer | |
| Congressman Berman's question also--I think the U.S. Government | |
| should, at least what the U.S. Government can do and should do | |
| is to raise the specific occasions in various meetings with | |
| their counterparts. | |
| This upcoming--I mean this meeting, for example, if Obama | |
| really raised the cases like Liu Xia, Liu Xiaobo, it works. It | |
| worked with my case; it will continue to work with the other | |
| cases. And look at the practice of the U.S. Government in the | |
| past 2 years. The government believes that the private talking | |
| will work more effectively. But look at the record. The U.S. | |
| Government has not been successful in the past 2 years in | |
| helping get any of the prisoners out of the prison. So we have | |
| to do it, we have to apply pressure, raising specific cases, | |
| both privately and publicly. And that is the least the U.S. | |
| Government can do and should do. | |
| And another way to do it is to engage with Chinese | |
| democracy movements directly. Now we have recognized the | |
| leadership. Then we have a shared principle that is enshrined | |
| in China weight. As the democracy movement is viable in China, | |
| so engagement with China contains a part that is engaged with | |
| the people, with the China's democracy movement. Thank you. | |
| Mr. Smith. Thank you. And you emphasized the word | |
| ``publicly,'' not just private conversations. | |
| Mr. Yang. Yes, also public. | |
| Mr. Smith. Conversations with President Obama must be very | |
| public. | |
| Chairman Ros-Lehtinen. Thank you. The gentleman's time is | |
| expired. | |
| I am pleased to recognize Mr. Payne, the ranking member- | |
| designate of the Subcommittee on Africa, Global Health, and | |
| Human Rights for 5 minutes. | |
| Mr. Payne. Thank you very much for yielding, Ms. | |
| Chairperson. I would like to focus my line of questioning on | |
| China's economic interest in Africa and impact and implications | |
| of China's engagement with African nations for governance, | |
| economic growth, and human rights across the continent. | |
| The expansion of China's investment in Africa that we | |
| witness today began in the 1990s. In that decade alone, China's | |
| investment grew by an impressive 700 percent. Accompanying this | |
| economic expansion was the wave of Chinese migrants, some | |
| 750,000 in 2007, who live in Africa now, mainly construction, | |
| mining workers, and oil workers and private traders, but not an | |
| expansion of the Africa middle class that would normally | |
| accompany infrastructure development. | |
| There has been complex and varied reactions among analysts | |
| regarding the implications of China's engagement in Africa. | |
| These range from enthusiasm and guarded optimism to concern | |
| over potential Chinese strategy and economic threats to Western | |
| or African interests. | |
| So I would like to get your thoughts on the overall scope | |
| of China's growing ties with Africa. What are the main | |
| political and economic goals? What are the main potential | |
| benefits and drawbacks for Africa of these ties? Also, in what | |
| way would you say China's relations with African governments | |
| have a negative impact on human rights in Africa? And what are | |
| the potential opportunities for U.S.-China cooperation on | |
| political humanitarian development priorities in China? | |
| They have had a meeting where 43 countries were invited to | |
| China; 42 showed up, heads of states in Africa. On the one | |
| hand, they have opened fire on workers who protested about poor | |
| working conditions in Zambia. Chinese soldiers just fired on | |
| them and wounded 11 or 12 of them. But on the other hand, they | |
| give 4,000 scholarships a year to African students, and that | |
| may be to indoctrinate them as to China. So maybe Mr. Wortzel | |
| or Mr. Sutter would like to take that. | |
| Mr. Sutter. Thank you very much, Congressman. This is a | |
| very complicated and important issue. Keep in mind that China-- | |
| I think the driving force of China's high profile in Africa is | |
| somewhat desperate in a way. They need resources. And so what | |
| you find is a highly competitive environment where companies of | |
| China are in Africa getting these resources. In a way, the | |
| government is sort of lagging behind these companies as they | |
| search and get these resources. | |
| The intensity of the Chinese economic development is such | |
| that for the Chinese to improve their GDP they have to use four | |
| times the level of resources that are used in the United States | |
| for the same amount of improvement. They need stuff. And so | |
| they are all over Africa trying to get the material that they | |
| really need to promote their economic development. | |
| At the same time, China is full of competitive companies | |
| that are looking to sell things, and the Chinese administration | |
| wants to have a balanced trade with Africa. And they have one | |
| because all these Chinese enterprises, very competitive with | |
| one another, are building things throughout Africa, selling | |
| things. And as you say, these migrants have gone to Africa to | |
| sell these sorts of things. It is a very understandable way to | |
| keep a balanced type of relationship that the Chinese seek with | |
| Africa. | |
| So if you understand it this way, you can see the driving | |
| force isn't really to control Africa; it is really to get the | |
| stuff and to make money at the same time. And there are several | |
| good books on this. Deborah Brautigam of American University | |
| has done an excellent book on this if you are interested in | |
| this topic. I am sure as you are interested. And so the upshot | |
| of Chinese behavior vis-a-vis the United States and so forth, | |
| it is secondary. They are out to get the material. And as a | |
| result there is collateral damage, if you will, there is a | |
| variety of things that aren't very good. | |
| Just a small point. I am not sure the PLA were the people | |
| that shot these people in Zambia; I think it may have been | |
| guards of some sort. | |
| Mr. Wortzel. Congressman, thank you for the question. I | |
| agree with Mr. Sutter. I do not believe there are PLA soldiers | |
| in Africa. I believe they are people out of the PLA working for | |
| government-controlled security companies. And we have done a | |
| lot of work on that in our committee. | |
| Mr. Payne. In Ethiopia in the Ogadan region they were | |
| soldiers that actually were killed by the OLF. They are in the | |
| Ogadan region. | |
| Mr. Wortzel. I think they were U.N. peacekeepers, United | |
| Nations peacekeepers, but I will look at that. | |
| Mr. Payne. All right. No, they were there protecting the | |
| oil reserves in Ethiopia. | |
| Mr. Wortzel. I will have to look at that. I may be | |
| incorrect. China is interested in the extraction of resources. | |
| They don't care about human rights in those countries, and they | |
| bring in their own labor and transfer no jobs whatsoever to the | |
| African citizens. And that is the major dissatisfaction in | |
| Africa. | |
| Chairman Ros-Lehtinen. The gentleman's time has expired. I | |
| recognize Mr. Rohrabacher, the chairman-designate of the | |
| Subcommittee on Oversight and Investigations, for 5 minutes. | |
| Mr. Rohrabacher. Thank you very much, Madam Chairwoman. And | |
| also I would like to thank you for having this hearing at this | |
| moment, because we have to understand that as we speak, our | |
| country is officially welcoming President Hu as if he had the | |
| same stature and acceptability here as a democratic leader. And | |
| we welcome him the same as we do countries that are democratic | |
| and respect their human rights. This is wrong. We should not be | |
| granting monstrous regimes that are engaged with massive human | |
| rights abuses. And, in this case, the world's worst human | |
| rights abuser is being welcomed to our White House, with | |
| respect. Now, what does that do to those people in China who | |
| are our only hope for a peaceful future with that large chunk | |
| of humanity? The people of China are America's greatest allies. | |
| The people of China who want democracy, the people of China who | |
| want to respect human rights, and are looking forward to a more | |
| humane system at peace with the world, those are our allies. | |
| What do we do to them when we welcome their oppressor, their | |
| murderer, the one who is murdering their children, here to the | |
| United States with such respect? | |
| And as we look to this visit with President Hu, if our | |
| government, if our President follows suit the way our former | |
| Presidents have as well--this isn't just President Obama--we | |
| are doing a great disservice not only to the people of China | |
| and to our future, the cause of peace, but we are doing a great | |
| disservice to the American people. Because what is happening? | |
| We have for three decades leaned over backwards for this | |
| regime. We have permitted the regime in China, a monstrously | |
| human rights abusing regime, to have trade benefits that we | |
| wouldn't give to democratic countries. We have built them with | |
| technological transfers, with investments. We have let them get | |
| away with murder, economically as well as human rights--in the | |
| area of human rights. | |
| Well, these are things we have got to call them to task for | |
| or our situation will continue to deteriorate. We are now | |
| vulnerable to a regime that was weak 30 or 40 years ago. We are | |
| vulnerable to them. If we do not change our way of dealing with | |
| that regime, they will destroy the peace of the world and we | |
| will be to blame for that, not only the repression of their own | |
| people. | |
| So I would like to ask Mr. Wortzel in particular, China | |
| now, not only does it have a more peaceful stand to the rest of | |
| the world, we see claims, slowly but surely, more land claims | |
| and sea claims coming out. China is making claims in the | |
| Pacific that threaten Korea, Japan, the Philippines, and | |
| commerce throughout that area. We see claims against India and | |
| Vietnam. And, frankly, let me just say, our Russian friends | |
| someday are going to wake up and find out that they have now | |
| become partners with a country that means them great harm and | |
| is willing to take away their territory. Do these Russian--do | |
| you see any major threat to the peace of the world in the | |
| expanding territorial claims of China? | |
| Mr. Wortzel. Mr. Rohrabacher, first of all, I think it is | |
| ironic that while China is brutally repressing the Falun Gong, | |
| the Chinese Government is flooding the United States with | |
| Confucius institutes, that are universities that are supposedly | |
| spreading this peaceful Chinese culture. | |
| With respect to their security claims, as they get stronger | |
| militarily, they are simply becoming more forceful in the | |
| region and they are expanding their claims. And that affects | |
| all the countries in Southeast Asia and all the countries on | |
| their periphery. | |
| For that reason, I think it was very important that both | |
| Secretary Clinton and Secretary Gates took pretty forceful | |
| stands on ensuring the peaceful resolution of these disputed | |
| claims in the South China Sea and East China Sea. And I think | |
| it is very important that our military works with and backs up | |
| Japan, even though we don't take a position on the disputed | |
| claims, because it is a threat to peace and stability. | |
| Mr. Rohrabacher. Let me just note that this government | |
| which we have bolstered with policies that we knew would make | |
| that country stronger under the idea if it was more prosperous | |
| it would be more peaceful, that strategy hasn't worked. And | |
| this country now is the head of an alliance of rogue nations | |
| that threaten the peace and freedom of the entire world. | |
| Chairman Ros-Lehtinen. The gentleman's time is expired. | |
| I would like to recognize Mr. Sires of New Jersey for 5 | |
| minutes. | |
| Mr. Sires. Thank you, Madam Chair. | |
| You know, as I read the newspaper, some of the accounts, I | |
| am always fascinated by the statement that the Chinese simply | |
| have different interests in many parts of the world than we do. | |
| I think that that hides an awful lot. | |
| I do think that the Chinese have a hidden agenda. And their | |
| agenda, in my eyes, is more like world domination. Somehow they | |
| want to go back to 2,000 years ago, and I think they never lost | |
| that. But we seem to help them in their goals. They just fill | |
| the void wherever we are not. | |
| Take North Korea, for example. They do nothing. They do | |
| nothing, and they use North Korea to their benefit. | |
| The relationship with Iran. All they do is just boost Iran. | |
| And everywhere we seem to have a void they are there. | |
| I look at South America, and I see going in South America | |
| many of the businesses. I look at what they are doing in | |
| Africa, the way they are using Africa. | |
| I don't know. We just don't seem to get it. And I was just | |
| wondering, Dr. Yang, you have been a spokesman for human rights | |
| and the abuses that have gone on in China. Do you still fear | |
| for your life or your family's life back home? | |
| Mr. Yang. Yes. | |
| Mr. Sires. You still do, after all these years? | |
| And some of the members that are here today from some of | |
| the other groups, I assume that they also fear for their | |
| families as they speak up against this, you know, this monster | |
| that is developing before our eyes. I was just wondering if you | |
| could comment on that. Do you still get threats? Does your | |
| family still get threats back home? | |
| Mr. Yang. Yes. My family members in China need to report to | |
| the authorities on a regular basis. | |
| Mr. Sires. They have to report to the authorities on a | |
| regular basis? | |
| Mr. Yang. Yes, so that is why I minimize my correspondence | |
| with them, to minimize the trouble to them. And my case may not | |
| be the worst. I think many of my colleagues and their family | |
| members are being with us today. And I want to emphasize that | |
| China has the largest Communist system in the whole world, and | |
| it is still able to put anybody in prison, disappear anybody if | |
| it determines to do so. So this government is not responsive to | |
| its own people, and treats its own people harshly. | |
| So I am wondering this kind of a government will do any | |
| good in the rest of the world. So we have to keep asking this | |
| question once and once again. So when we come to the foreign | |
| policies toward China, we cannot forget this component. And I | |
| often hear many people in this country talking about Cold War | |
| mentality. So whenever we hear the word Cold War we will fear. | |
| So I don't understand. But I, my comment is, we just cannot | |
| simply explain away the component which can be described as | |
| Cold War in the relationship between U.S. and China. | |
| Look at the U.S. allies, friends with China, Japan, South | |
| Korea, Taiwan, these countries are democratic, and these two | |
| countries, U.S. and China, have fundamentally conflicting | |
| values which you just cannot explain away. It will not go away | |
| in the days to come. So there is a component that can be called | |
| Cold War. And the only difference is that U.S. and China has | |
| economic interdependence that the Cold War did not. The United | |
| States has no such close economic relationship with former | |
| Soviet Union and Eastern Europe. But that is the only different | |
| element. | |
| But I echo what Mr. Gordon Chang said. There is a myth in | |
| this country that China always has upper hand in economic | |
| relationship with U.S. | |
| Chairman Ros-Lehtinen. The gentleman's time has expired. | |
| Thank you. | |
| I recognize Mr. Manzullo, the chairman-designate of the | |
| Subcommittee on Asia and the Pacific. | |
| Mr. Manzullo. Thank you, Madam Chair. As I mentioned in my | |
| opening statement, manufacturing is the backbone of our economy | |
| in northern Illinois. This question is for Mr. Chang, but | |
| others on the panel are obviously welcome to answer. I spend | |
| much of my time working with numerous small and medium size | |
| manufacturers that have been harmed in one way or another in | |
| China. Most of the time the issue is theft of intellectual | |
| property and piracy, which is the case with a waste water | |
| treatment company in my district called Aqua Aerobics. We | |
| actively engaged the Chinese embassy and asked them to | |
| intervene and actually got a favorable ruling in the Chinese | |
| courts on that issue. But how many companies can pick up the | |
| phone or go to their Congressman to get a direct intervention | |
| on an obvious IP violation? | |
| Other times the problem is more complicated, such as the | |
| case of the office shredder maker Fellows. It is, I think, the | |
| number one paper shredder maker in this country. They are | |
| fighting a fierce battle in China on a joint venture where they | |
| were locked out, inventory stolen, machine tools, business | |
| practices and IP. And if you are big you can succeed. But the | |
| small guys or the medium sized manufacturers are having an | |
| extraordinarily difficult time. And so how do we encourage the | |
| national provincial and local governments of China to enforce | |
| the law? And beyond the rhetoric and grand themes there has to | |
| be a better way of dealing with China. | |
| I guess that is an easy question. | |
| Mr. Chang. Right. And I think the important thing that we | |
| have to do is start, as I said, less diplomacy in a way. But I | |
| also think that we need to follow the approach of H.R. 2378, | |
| which is really to impose penalties whenever we see that there | |
| are violations of China's trade obligations because this gives | |
| us immediate relief. You talk about the problems of small | |
| manufacturers. They can't wait for the 3 or 4 years that it | |
| takes to get through the dispute resolution mechanism of the | |
| World Trade Organization. That is just not a practical remedy | |
| for them. And that is why I think that we need legislation, | |
| which is really tough, because when we do that the Chinese will | |
| understand. They have reacted to pressure, and this is really | |
| about the only way I think that we can do it in terms of saving | |
| small manufacturers because their plight is not only important, | |
| it is also urgent. | |
| Mr. Manzullo. And sometimes it is like Whack-a-Mole. You go | |
| in there, I have testified twice before the ITC on tires, | |
| recreational vehicle tires and automobile tires, and once was | |
| on the surge and the other two were on dumping and illegal | |
| subsidies. And you get the remedies, and then they come right | |
| back again and all of a sudden someone is doing the same thing | |
| under a different name. It is over and over and over and over | |
| and again, and these companies spend fortunes on attorney's | |
| fees trying to protect their intellectual property. | |
| Isn't there, can't there be a mechanism that our government | |
| can have, for lack of a better word, an 800 number for people | |
| who are the objects of piracy that simply can't afford | |
| attorneys to go in there and do battle for them? | |
| Mr. Chang. Well, we certainly could do that in many ways. | |
| That would basically involve beefing up the commercial sections | |
| of our embassy in Beijing and in the consulates around China, | |
| but also in the Department of Commerce. It just needs to be put | |
| at a higher priority that we have. | |
| Normally, what happens in trade disputes, as you point out, | |
| is you have this enormous litigation, and the United States | |
| really relies on injured parties to bring their case and to | |
| prosecute it. I think that your suggestion is an excellent one, | |
| which is really to have the government be much more proactive | |
| and to bring all sorts of proceedings, both internally in the | |
| United States and through the WTO because that is about the | |
| only way we can do it. We need to speed up the process because | |
| time, I think, is critical. | |
| Mr. Manzullo. I would look forward to meeting you in my | |
| office and putting our heads together and try to come up with | |
| some type of remedy there. | |
| Mr. Chang. I will be there. | |
| Mr. Manzullo. Thank you very much. I yield back my time. | |
| Chairman Ros-Lehtinen. Thank you very much, Mr. Manzullo. | |
| We are proud to recognize Mr. Cicilline of Rhode Island. | |
| Welcome to our committee, sir. | |
| Mr. Cicilline. Thank you, Madam Chairman. I appreciate the | |
| opportunity to ask some questions. My questions also relate to | |
| the impact of our relationship with China on American | |
| manufacturing. And I know that, I think it has been pretty | |
| clear to most of us that the Chinese have really woefully been | |
| weak in addressing the theft of intellectual property, and it | |
| is presenting real problems for American businesses, and so I | |
| would like to hear your thoughts on what actions we might take | |
| to really protect American businesses from this theft of | |
| intellectual property, the seizing of assets in joint ventures, | |
| and the refusal to meet contractual obligations. And related to | |
| that, I am particularly interested in your thoughts on what | |
| mechanisms we have, in particular on the opportunity that | |
| exists for the production and development of renewable energy. | |
| I know there was a recent complaint filed at the WTO against | |
| the Chinese subsidy policy which the administration contends | |
| favored Chinese producers of wind equipment and that there have | |
| been examples where those kinds of conflicts have been resolved | |
| at the U.S.-China Joint Commission on Commerce and Trade. | |
| So in answering that, I am wondering whether you think | |
| those are an effective place for resolution, if there are | |
| changes we need to make that really will help American | |
| manufacturers be sure that we are enforcing in every way | |
| policies that protect the American manufacturers and the jobs | |
| connected to those manufacturers. | |
| Mr. Chang. We really have two problems. One of them is | |
| China's internal rules such as the new indigenous innovation | |
| product accreditation rules that President Hu Jintao has been | |
| pushing. Those would basically force a transfer of American | |
| intellectual property to joint venture companies for anyone who | |
| wants to sell to government or state enterprises. And that is | |
| really an issue for the United States itself in its discussions | |
| with China. The Obama administration has put this up at a | |
| higher priority because it is so important. And I think that it | |
| is just a question of these needing to be discussed all the | |
| time. | |
| The other point which as you raised, which is just the | |
| outright theft, this is extremely difficult because you can't | |
| litigate in the Chinese courts because the courts are | |
| controlled by the party and often controlled by local interests | |
| that have been, really, the culprits. And so the only way the | |
| United States can deal with this issue really is to have the | |
| commercial section in the embassy and in the various consulates | |
| make it known to both national and provincial authorities that | |
| this is a case which is of importance to the United States | |
| which oftentimes is sending the Ambassador or the Consul | |
| General to a court case to show the presence of Washington and | |
| its importance to us. But this is extremely very difficult. | |
| Mr. Cicilline. Mr. Sutter, do you have anything to add? | |
| Mr. Sutter. I would agree. I think you need to keep the | |
| pressure on. It has to cost the Chinese. I think you are | |
| advocating an approach, you are pushing on an opening door with | |
| the Obama administration, it seems to me. Listening to the | |
| Secretary of Commerce and the USTR, they very much want to do | |
| this kind of thing. Maybe they need more people. Maybe they | |
| need some funding from the Congress to help in this regard. But | |
| I think there is a broad sentiment in the Obama government that | |
| this should be done, that you have just what Mr. Chang was | |
| saying. You need case-by-case, you need to work these issues, | |
| you need to pressure in a way that is credible. And I think | |
| that high level attention to it with officials is a way to go. | |
| And I think that is going to, as I say, it is going to win some | |
| support, I think, from the USTR and the Commerce Department. | |
| Mr. Cicilline. Thank you very much. I yield back the | |
| balance of my time. | |
| Chairman Ros-Lehtinen. Mr. Cicilline yields back. Thank you | |
| for that. | |
| I recognize Mr. Rivera of Florida for 5 minutes. | |
| Mr. Rivera. Thank you very much, Madam Chairman. I am going | |
| to ask about two island nations, Cuba and Taiwan, one, an | |
| island prison and the other a bastion of democracy surrounded | |
| by a fortress of tyranny. And we will start with Cuba. | |
| Given China's involvement in Cuba, and this question | |
| specifically we will start off with Dr. Wortzel. Given China's | |
| involvement in Cuba, I wonder if you could give us your | |
| thoughts as to China's geopolitical intentions in Cuba, perhaps | |
| as establishing another beachhead in Latin America, generally, | |
| and specifically, what you believe China is up to with regard | |
| to oil drilling, given information that has been published | |
| regarding the company involved with oil drilling also having a | |
| nexus with Iran. So generally speaking, China's geopolitical | |
| interest in Cuba, and specifically with regard to oil drilling. | |
| Mr. Wortzel. Thanks for the question. First of all, China | |
| has taken over, as I understand it, the entire signals | |
| intercept complex that the Soviet Union had in Cuba. So there | |
| is, without question, a military and an intelligence purpose | |
| for their relationship. I think part of it is also support for | |
| another socialist state, and I think you can link Chinese | |
| activities with Venezuela and support there, their support in | |
| Cuba and for Cuba. | |
| With respect to resources, I think they would be very happy | |
| to extract resources any way they could get it. But if you look | |
| at the visits of Chinese military leaders and political | |
| leaders, I always ask myself why the head of China's strategic | |
| rocket forces, the Second Artillery, is visiting Cuba? We are | |
| not going to be in another Cuban missile crisis, but there is | |
| certainly something to a military relationship going on there, | |
| and the same goes with Venezuela. | |
| In some cases their relationships in Central America and | |
| Latin America are related to diplomatic relations with Taiwan, | |
| and they have managed to wean a couple of countries away from | |
| recognition of Taiwan and toward recognition to China. And that | |
| is part of it. I think it is fair to say, and I sum it up, that | |
| they sure don't recognize the Monroe doctrine. | |
| Mr. Rivera. Thank you very much. With respect to Taiwan, | |
| and I will direct this question to Mr. Chang, and the issue of | |
| the F-16s and this administration's decision or decisions, | |
| previous decisions on prolonging shipment of F-16s to Taiwan | |
| and what you believe is your perspective on how this affects | |
| the Taiwan Relations Act and fulfillment of the Taiwan's | |
| Relations Act. | |
| Mr. Chang. I would love to talk about this topic, but I am | |
| sitting next to the world's expert, and so perhaps---- | |
| Mr. Rivera. I yield to Mr. Wortzel. Thank you. | |
| Mr. Wortzel. Taiwan's Air Force really needs modernized | |
| aircraft. The debate is F-16 CD, which has longer range and | |
| could be used for deeper strikes inside China if their military | |
| chose to do that, versus modernizing the AB. When I talk to | |
| aviation engineers, they think you could take the AB, put in | |
| brand new avionics, new radar and targeting equipment, it needs | |
| new refrigeration to be able to handle that, and that they | |
| would then have a very, very capable aircraft. It is not one | |
| that would necessarily satisfy the Taiwan legislature. And | |
| there would still be a fight over the programming for the | |
| weapons systems and the avionics. They are going to want | |
| program codes. We are not going to transfer them. We never do. | |
| So they need it. If you have made the decision, I don't think | |
| there is any guarantee that they would accept the way we make | |
| it. And then there is the political cost of approving a brand | |
| new system that China would object to. They are going to object | |
| no matter what we do, but they need the aircraft and I think | |
| they have to have that need addressed. | |
| Mr. Rivera. Thank you. Thank you, Madam Chair. | |
| Chairman Ros-Lehtinen. Thank you, Mr. Rivera. | |
| I am pleased to recognize Mr. Connolly of Virginia. Welcome | |
| back, my friend. | |
| Mr. Connolly. Thank you very much, Madam Chair. And thank | |
| you for your service. I want to thank the panel. And | |
| particularly Bob Sutter. Bob, we used to work together when I | |
| was on the Senate Foreign Relations Committee and you were at | |
| CRS, as I recall, so great to see you on the other side of the | |
| table. Let me ask you, Bob, understanding serious, serious | |
| human rights issues in China, and lots of other issues that we | |
| are concerned about that have been enumerated here at this | |
| dais: In your view, given the fact that since Richard Nixon we | |
| have had a level of relations with the head of state of that | |
| country notwithstanding, is it a mistake for this | |
| administration to receive the President of China? | |
| Mr. Sutter. Thank you, Congressman. It is great to be here. | |
| I think what you find is that we have a very complicated and | |
| interdependent type of relationship. We have so many | |
| priorities, we have to balance them. And as you have indicated, | |
| every President that we have had since Nixon has done this. And | |
| so people can object in various ways and have very good reasons | |
| for this, but obviously Republican and Democratic Presidents, | |
| they prioritize these things and they determine no, this is the | |
| best way to go. | |
| We may be at a crossroads now. We may have to change the | |
| situation. China may be trying to dominate the world and this | |
| type of thing. I don't think so. I think China has got too many | |
| problems. I think the United States is the leading power in the | |
| world, and that is going to stay that way for some time. And so | |
| it gives me a lot of confidence in this situation. | |
| But I think the bottom line is, you have to figure out | |
| where do you come down on these priorities and I think it is, | |
| and as you have indicated, every President of the United States | |
| has endorsed this kind of approach. | |
| Mr. Connolly. Thank you. Mr. Wortzel, you were talking a | |
| little earlier about Taiwan's defense capability, and you said | |
| they are in bad need of an upgrade of their fighter aircraft. | |
| Is there any reason to believe that the government in Taiwan is | |
| not capable of defending itself in the event of a military | |
| incursion? | |
| Mr. Wortzel. I don't think that that is the issue. I think | |
| that the issue is how capable would they be of doing it and | |
| what form might any attack take. They would have a hard time | |
| defending against all those 1,100 ballistic missiles which | |
| could do a lot of damage. I think they would be very hard | |
| pressed if there were massive special operations insertions | |
| into Taiwan to disrupt infrastructure. They themselves could do | |
| more to harden some of their air fields and their storage | |
| facilities. I think they have been woefully deficient in the | |
| way they dribbled in the command and control and data links for | |
| their current forces. I mean, if I--and I said this to their | |
| Minister of Defense. If there is one thing you could do to | |
| immediately improve your capabilities, it is take the whole | |
| data link and C-4 ISR package and link all your ground and | |
| naval and air assets and missiles so they could take part in | |
| cooperative targeted engagements. | |
| But they are doing things, and they have bought a lot, not | |
| everything that we offered. They are also developing their own | |
| modable launch rocket systems. They could probably use | |
| assistance with precision guided rounds. | |
| Mr. Connolly. Let me ask you another part of that, given | |
| the limitation of time. We have 1 minute. Is there--one of the | |
| things that always concerns somebody about the Taiwan Straits | |
| is that there is a misunderstanding about the nature of the | |
| United States' commitment to the security of Taiwan. | |
| In your view, does the current government of China fully | |
| understand the nature of the U.S. commitment to Taiwan? | |
| Mr. Wortzel. I think the government of China does. I think | |
| at times some of the political actors in Taiwan misinterpret | |
| our support as--I mean, I had a legislator from Taiwan say, you | |
| know, we are glad to get this $16 billion arms package. As far | |
| as we are concerned it is a $16 billion insurance policy that | |
| you will come to our defense. They have to be ready to defend | |
| themselves. | |
| Mr. Connolly. That is right. Mr. Chang, we have 20 seconds, | |
| but you wanted to answer that, too. | |
| Mr. Chang. I think that with the remilitarization of | |
| Chinese politics and policy, there is a danger that Beijing | |
| does not understand our commitment and thinks that we will not | |
| defend Taiwan. | |
| Mr. Connolly. Thank you. | |
| Chairman Ros-Lehtinen. Thank you so much, Mr. Connolly. | |
| I would like to recognize Congresswoman Ellmers of North | |
| Carolina; so pleased that you selected our committee. Welcome. | |
| Mrs. Ellmers. Thank you, Madam Chairman. I would like to | |
| thank our distinguished panel, and I would also like to reach | |
| out to the individuals and family members who have suffered | |
| human rights violations in China. You are a constant reminder | |
| to us that we need to be vigilant around the world to human | |
| rights violations and how fortunate we are here in the United | |
| States. | |
| My question is for Dr. Wortzel, do you prefer to be | |
| referred to as Colonel? Doctor? | |
| Mr. Wortzel. It doesn't matter, ma'am. Either are very | |
| polite. I have been called a lot of other things. | |
| Mrs. Ellmers. Along the security issues that we have been | |
| discussing, last September a Chinese fishing boat, thought to | |
| be a spy vessel, deliberately collided with some Japanese Coast | |
| Guard vessels in the vicinity of the Senkaku Islands. Tensions | |
| rose to an unprecedented level before the Chinese boat captain | |
| was released. How close did the two sides come to military | |
| conflict? And in your opinion, what are the implications for | |
| the United States, given our treaty obligations with Japan? | |
| Mr. Wortzel. I don't think in that instance they came close | |
| to military conflict, but it was a very serious diplomatic | |
| spat, and it still continues to reverberate among the populace | |
| in both countries. But I think these things can escalate and | |
| could escalate if there are other incidents. | |
| We have a treaty obligation with Japan. It is a very, very | |
| important ally. And without question, if Japan got into a | |
| conflict, a military conflict with China, we would be at their | |
| side. I think that the Pacific Commander and the Secretary of | |
| State have taken very strong and principled positions not | |
| recognizing the sovereignty of the island, of the islands, but | |
| at the same time, ensuring that the Chinese understand that the | |
| United States is fully supportive of its treaty ally, and I | |
| think the Japanese understand that. We need to be very close to | |
| them. We need to work very closely with them. And even under | |
| the Democratic Party in Japan I know the Foreign Minister well, | |
| they have got a strong leadership that understands the threats | |
| from China. | |
| Mr. Sutter. If I could say something about this, it is part | |
| of a pattern we have seen over the last 2 years of China being | |
| very assertive about the maritime area around their periphery, | |
| South China Sea, Yellow Sea, this type of thing. The net effect | |
| of this has really damaged China's position in the Asia Pacific | |
| region. China is weaker today than it was a year ago because of | |
| this behavior. The United States is much stronger and the Obama | |
| government has this re-engagement of Asia strategy which this | |
| just feeds into. And so what you are doing is reinforcing | |
| America's stature and strength in Asia while weakening China. | |
| If I were a calculating person in China I would say this is | |
| really dumb policy. We have to stop doing this type of thing. | |
| And so the thing to watch, after Mr. Hu Jintao's visit is will | |
| they stop. Will they stop doing this kind of thing? Because it | |
| really is dumb. It is hurting them. And I think this is how you | |
| get the attention of the Chinese leaders. It costs them. You | |
| make it hurt them and then they stop. And I think the Obama | |
| government has done a very good job, very quietly, of | |
| intervening in various ways and saying, we are not going to | |
| allow this; this isn't going to happen. And I think it has been | |
| quite effective. And so let's watch. Let's see what happens. | |
| If we have a situation where the military is out of control | |
| in China, if it is being remilitarized, as Mr. Chang suggested, | |
| then it could be a more dangerous situation. But at this point | |
| I would have to agree with Mr. Wortzel. I think the civilian | |
| leaders do have ultimate control and when they look at their | |
| cost and benefits this kind of behavior hurts them, and so I | |
| think they have to calm it down. | |
| Mrs. Ellmers. Thank you very much. And thank you, Madam | |
| Speaker. I yield back the remainder of my time. | |
| Chairman Ros-Lehtinen. Thank you so much. The gentlelady | |
| yields back. | |
| I am pleased to recognize Mr. Ackerman, the ranking member- | |
| designate on the Subcommittee on Middle East and South Asia. | |
| Mr. Ackerman. Thank you, Madam Chair. The Chinese have | |
| always been bad actors. They were the national focus of | |
| attention for being almost exclusively the world's number one | |
| recluse until Richard Nixon, as was pointed out, came along and | |
| decided to have an intervention, and decided it was a better | |
| policy to try to engage the Chinese rather than to continue | |
| with China bashing, which to some seemed counterproductive to | |
| reaching a particular policy and behavior change end. Now we | |
| have noticed that there is a small club of recluse nations, and | |
| the Chinese and the North Koreans have found each other, and | |
| have formed Recluse Anonymous, with China being the recovering | |
| recluse, trying sometimes very unsuccessfully to affect the | |
| behavior of the North Koreans. Both seem to be engaging in very | |
| provocative activities on and off, especially of late. | |
| Can the Chinese really affect the behavior of the North | |
| Koreans? They seem to be looking like they are trying, | |
| sometimes looking like they are not. Is that something that | |
| they dial up, dial down, depending on China's needs, kind of a | |
| control? Or do they lack any influence in the end? | |
| Mr. Wortzel. I don't think it is a can they. The question | |
| is will they?, Congressman Ackerman. | |
| Mr. Ackerman. You are saying they can? | |
| Mr. Wortzel. Well, they provide somewhere between 70 and 90 | |
| percent of North Korea's energy needs, somewhere around 40, 50 | |
| percent of their fuel needs, and a great deal of foreign | |
| investment. So, yes, they can. They fear that if they cut some | |
| of that, it would lead to instability in North Korea, and they | |
| would end up with South Korea, Japan, and the United States on | |
| their border. That is one thing. | |
| Second, my view is that they absolutely enjoy the fact that | |
| the United States is pretty heavily dependent on them, at least | |
| perceptually, to interact with North Korea, and that certainly | |
| restrains, in my view, a lot of the State Department's | |
| diplomacy against China--or toward China. | |
| Mr. Sutter. I think China could help with North Korea, too, | |
| and I think their interest is very much on stability. That is | |
| what they want. And they worry that pressure on North Korea not | |
| only could lead to the effects that Mr. Wortzel pointed out, | |
| but North Korea, you could see them as an enemy. The North | |
| Koreans talk like this quite often, how hostile their feeling | |
| is toward China. And so--but the net effect is what will the | |
| Chinese do? I would think they will seat their interest in | |
| stability. If the situation in North Korea looks like it is | |
| going to become very unstable then they will intervene. And I | |
| think they did intervene in the case of the North Korean | |
| provocation at the artillery barrage that killed several South | |
| Koreans later, in the latter part of last year. And the United | |
| States has maintained to the North Koreans that North Korea's | |
| provocations, and particularly its development of nuclear | |
| weapons, is a direct threat to the United States. | |
| So the United States put I think very good pressure on the | |
| Chinese to get them off the dime to move the North Koreans into | |
| their tactical---- | |
| Mr. Ackerman. You are saying that the Chinese have an | |
| actual 12-step plan? | |
| Mr. Sutter. No, they don't have a 12-step. I think this the | |
| idea of China rising and being in control. They are not in | |
| control. They are riding the tiger on this one. They don't | |
| control North Korea. They have a lot of influence over it, but | |
| this is---- | |
| Mr. Ackerman. The same can be said with their very | |
| different but also dangerous relationship with Iran. | |
| Mr. Sutter. Iran is much further away and their influence | |
| in Iran is much lower than it is in a place like North Korea. | |
| They are fundamental in North Korea. It is right on their | |
| border, it is very---- | |
| Mr. Ackerman. But they are dealing with a nuclear power and | |
| a nuclear wannabe. And the Chinese are usually pretty | |
| farsighted. Don't they see this as a threat, not just to us, | |
| but to themselves? | |
| Mr. Sutter. They see the more near term threat more | |
| dangerous. The danger of instability, not so much the | |
| geopolitical. It is the geopolitical element of South Korea | |
| being on the border of China. It is the basic whole idea of | |
| instability. | |
| Mr. Ackerman. You are talking about the economic | |
| instability? | |
| Mr. Sutter. Exactly. It is bad for business. | |
| Mr. Ackerman. And they are threatened more by that than the | |
| nuclear instability? | |
| Mr. Sutter. I believe they are, yes, sir. | |
| Mr. Ackerman. I yield back the remaining 4 seconds. | |
| Chairman Ros-Lehtinen. Thank you very much, Mr. Ackerman. | |
| I recognize Mr. Burton, chairman-designate of the | |
| Subcommittee on Europe and Eurasia. | |
| Mr. Burton. Thank you, Madam Chair, for having this | |
| hearing. I am going to ask, after I ask a couple of questions, | |
| I am going to yield my time to my good friend, Mr. Smith. First | |
| of all, you may have answered this question, Mr. Yang, but is | |
| there any, do you have any idea how many people, how many | |
| million people are in Communist gulags? | |
| Mr. Yang. It is really difficult to get a number, for the | |
| obvious reason. And I am talking about a prison system. I have | |
| to talk to two prison systems. One is official. Through the | |
| court, you can get a record of how many people they detained. | |
| But there is another prison system that is black jail. There | |
| are hundreds of them in China now run by local government on | |
| various levels. So you just cannot find out how many people are | |
| being detained. And on top of that, many people are made | |
| missing, and many people are being put under house arrest. So | |
| you just don't know how many people. | |
| Mr. Burton. Well, we have been told it is in the millions. | |
| And I presume that you would agree with that. | |
| Mr. Yang. I don't have a specific number, and I would say | |
| many. I would say China has the most prisoners of conscience in | |
| the world. Yeah. | |
| Mr. Burton. One of the things that I gathered from | |
| listening to these learned people is that I believe China is | |
| not dumb. I believe they are very smart. They are leaders and I | |
| think that they are playing chess and they are doing it over a | |
| long period of time. They are moving as they can into the | |
| Caribbean and into South America. They are making friends and | |
| supporting tyrants who are not socialists, but many of them are | |
| just plain out Communists. And they are putting us in a trick | |
| bag because of the economic things that they are doing to us. | |
| Right now we have a $270 billion trade deficit with them. I | |
| think we are well over $1 trillion in hock to them as far as | |
| what we owe them. And if they started pulling those strings, | |
| which I think they probably will at some point, they can make | |
| us, at least to some degree, dance to their tune. | |
| And so I would like to get from you gentlemen your | |
| perception on the long term goals of China and whether or not | |
| they are doing what I think they are doing, both economically | |
| and militarily. They are building their military up | |
| dramatically, and so they have got us by the throat as far as | |
| our debt to them. And that would threaten our economy long | |
| term. And if they are building up their military and making | |
| these connections around the world, does that pose as a real | |
| long-term threat to the United States and our security? And I | |
| yield to Mr. Chang and Mr. Wortzel. | |
| Mr. Wortzel. Let me say that, in my view, there is a long- | |
| term historical and cultural---- | |
| Mr. Burton. Can you sum up pretty quickly? | |
| Mr. Wortzel. Yes, long-term cultural affinity for the | |
| accrual of power and dominance in China, and that creates the | |
| sense of suzerainty where Chinese leaders believe they can | |
| almost dictate to other independent states how they should | |
| behave. And that is the way I read a lot of their behavior, | |
| particularly around their periphery. | |
| Mr. Chang. I believe that they want to be a peer competitor | |
| to the United States. They want to drive the United States out | |
| of Asia, which I think is very clear. They would like the | |
| renmimbi, their currency, to be the world's reserve currency. | |
| And certainly, they want to dominate nations on their | |
| periphery. | |
| This is clear from what the Chinese have been doing. And as | |
| we have seen in this past year, it has been very concerned | |
| about their relations with Japan, South Korea, India, where we | |
| see military or semi-military moves against these countries, | |
| which are after all our allies. So clearly, China is an | |
| adversary, and one that we have to be very careful about | |
| because, yes, I do think that they do play chess. But the one | |
| thing though is that they often make very serious strategic | |
| errors. They are very good on tactics, but long-term strategic | |
| moves may be not so good, as we saw in this past year, and as | |
| Dr. Sutter talked about. | |
| Mr. Burton. Thank you. I yield to Mr. Smith. | |
| Chairman Ros-Lehtinen. Mr. Smith is recognized. | |
| Mr. Smith. Thank you very much. Let me just make a point. | |
| My friend and colleague, Mr. Connolly, a moment ago asked the | |
| question about receiving, you know, a Chinese President like Hu | |
| Jintao. It is not that you don't meet with or receive, it is | |
| how you do it. And the concern that many of us have is that a | |
| state dinner, when Bush had a working lunch in 2006, it sends a | |
| message, especially when he is the jailer of Liu Xiaobo. | |
| Chairman Ros-Lehtinen. Thank you, Mr. Smith. Thank you. | |
| We welcome Congresswoman Bass of California to our | |
| committee. Thank you. And I am pleased to recognize Mr. Chabot | |
| of Ohio. We are so pleased to have you return to serve with us. | |
| Thank you. The gentleman is recognized. | |
| Mr. Chabot. Thank you very much, Madam Chair. Mr. Wortzel, | |
| I have a couple of questions for you first. I was, for quite a | |
| few years, one of the cochairmen of the Congressional Taiwan | |
| Caucus and so have been very interested in those issues and | |
| been there many times over the years. And relative to their | |
| defense, you had mentioned the fighter planes, in particular. | |
| Could you discuss, at the time there was a move for some | |
| submarines as well, and that ultimately didn't go anywhere. I | |
| see you frowning. What are your thoughts about that? | |
| Mr. Wortzel. It is a very difficult problem. It is a | |
| problem for the United States Navy because they really don't | |
| want to have to work on or produce diesel submarines. | |
| Mr. Chabot. They were talking about doing it in France or | |
| Europe or someplace. | |
| Mr. Wortzel. The French got away with bribing enough | |
| Chinese and Taiwanese to get some destroyers there. Everybody | |
| involved in that had an accident falling off a tall building. I | |
| don't think that will work a second time. They need this | |
| submarine. I mean, if the United States could get Costa Rica to | |
| buy a dozen submarines from Germany and then transfer them it | |
| doesn't hurt anybody, if the Germans look the other way on the | |
| retransfer license. If we brought them and retransfer, they | |
| need them. But I don't think it is viable to think that they | |
| are going to begin to produce them from nothing and then fill | |
| out the rest of their defense budget. | |
| Mr. Chabot. Okay. And relative to the missiles, I think | |
| when we first organized the caucus, and this has been 12, 14 | |
| years ago or so, I think the number then was 400 or 500 | |
| missiles, then it went to 600 or 700, kept going up now to | |
| 1,100. I mean, clearly China has been threatening Taiwan for | |
| many, many years now, and bullying to a considerable degree. | |
| Relative to the missiles, is there anti-missile technology that | |
| would be helpful? There was talk about that at the time. You | |
| mentioned some missile system. Could you elaborate on that | |
| slightly? | |
| Mr. Wortzel. Well, we have sold them ballistic missile | |
| defense technology. They bought a limited amount. It will help | |
| them. It could protect specific areas. That is still an awful | |
| lot of missiles. My personal view, and this is really a United | |
| States defense need, we need to be working on a laser. We don't | |
| want to be shooting two or three missiles at another missile. | |
| We need to melt them right out of the sky quickly. | |
| Mr. Chabot. Okay. And then slightly off topic, but not | |
| really that much, again, continuing in the Taiwan vein, | |
| President Chen Shui-bian has been in prison now for some time. | |
| And you know certainly he has been punished for his alleged | |
| transgression. Isn't enough enough? Isn't it about time--I | |
| mean, have they reached the point where you have perhaps the | |
| criminalization of politics here? | |
| Mr. Chang, I see you nodding. If you want to jump in you | |
| are welcome to do so. | |
| Mr. Chang. I think the real issue with former President | |
| Chen is the procedures under which he was convicted, and at | |
| this point there needs to be a thorough review of the way that | |
| the current government, the Kuomintang government, has been | |
| prosecuting and persecuting members of the Democratic | |
| Progressive Party. This is really a very bad story. The United | |
| States needs to pay attention. Freedom House has talked a lot | |
| about the erosion of human rights in Taiwan and it is going to | |
| be a big story in Taiwan for the next 2 or 3 years. | |
| Mr. Chabot. Okay. Thank you. | |
| Mr. Sutter. Congressman, if I could just say something | |
| about Chen Shui-bian and your comments about Taiwan. One thing | |
| about the--first, on the Chen Shui-bian side, yes, there have | |
| been problems perhaps with the due process. But, my God, the | |
| charges against him that have been proven are very damning. So | |
| the fact that he is in jail it seems to make a lot of sense to | |
| someone like me. | |
| Mr. Chabot. How long has he been in prison now? | |
| Mr. Sutter. 2 years maybe, a little less than 2 years. | |
| Mr. Chabot. Family members in prison as well, son, I think | |
| wife. | |
| Mr. Sutter. Yes. His wife. I am not sure where she is right | |
| now but she has been convicted. So this is big corruption, sir. | |
| And so I think the charges are worth looking at carefully. On | |
| the military side, just keep in mind, with the one reservation | |
| I have about this, one of the most important ones, is Taiwan | |
| willing to buy? Taiwan, their GDP, their military budget is | |
| less than 3 percent of their GDP. You are not dealing with a | |
| country that really wants to militarize itself or build itself | |
| up militarily. | |
| Mr. Chabot. And I have only got 5 seconds. That was one of | |
| the frustrating parts. We kept pushing them to buy the weapons | |
| system and the legislature just couldn't find a way to do it. | |
| Chairman Ros-Lehtinen. Thank you. And we thank Ms. Bass of | |
| California for yielding her time. And recognize Mr. Marino of | |
| Pennsylvania who will be yielding his time to Mr. Smith. If you | |
| could make that motion. | |
| Mr. Marino. Madam Chair, I do yield my time to Mr. Smith. | |
| Thank you. | |
| Chairman Ros-Lehtinen. Mr. Smith is recognized. | |
| Mr. Smith. Thank you, Madam Chair, for that courtesy, and | |
| my good friend and colleague, the new member. Just a couple of | |
| questions in follow-up. I kind of ran out of time a moment ago | |
| about the issue of how you receive a person who, with his past | |
| and present, raises serious issues about what we are actually | |
| doing, especially to the dissidents who we know in the laogai | |
| throughout all of China, including Liu Xiaobo and his wife who | |
| is under house arrest, that the jailer of Liu Xiaobo is getting | |
| a state dinner. These aren't nuances. These are profound issues | |
| that are raised here. | |
| So if you could perhaps some of you might want to speak to | |
| that issue. And let me also say that and the distinguished | |
| chairlady mentioned a moment ago that in this audience are some | |
| of the greatest and finest human rights defenders and their | |
| loved ones. Liu Dejun was abducted out of Vietnam right as the | |
| President took over in 2002. They have not seen their father. | |
| They try to get in to see him. He was abducted out of Vietnam | |
| back to China where he is now spending a horrific, enduring a | |
| horrific ordeal in the laogai. Geng He, who is Gao's wife, who | |
| is here today, she made a 2000 trek to Thailand with her two | |
| children, after her older daughter was so despondent, perhaps | |
| even suicidal because she was being so mistreated. | |
| What we often forget, it is not just the dissidents, but it | |
| is their families who share in the cruelty meted out by the | |
| Chinese dictatorship. She made it, thankfully, and her | |
| children. But again, it raises the question about how can a man | |
| who is responsible, and I would say directly responsible, he | |
| gets a state dinner. When Frank Wolf and I made several trips | |
| to the PRC we met with Li Peng, premier. I believe we do have | |
| meetings like that. We had a list of prisoners. We had issues | |
| dealing with forced abortion, religious persecution. We laid it | |
| all out. He wasn't happily in receipt of all that, but it was a | |
| very, very real conversation. And I wonder if, when the toasts | |
| are made later on tonight and there is all of this hoopla | |
| around a state dinner that all of that kind of like simmers | |
| into the background and what message have we sent? | |
| Also, if you can speak to this then I will yield to you, | |
| the bad governance model. You know, I chaired, when I chaired | |
| the Africa Subcommittee years ago, three hearings on what China | |
| is doing in Africa, you know, when people like Bashir in | |
| Zimbabwe, Mugabe and so many others who are dictators love the | |
| Chinese model of control and secret police. And I am very | |
| worried about the influence that their bad governance model and | |
| their bad human rights model is having, unless we really speak | |
| loud and clear. And I would again make my appeal to the | |
| President, to the Press Corps, be public. Don't namby pamby, | |
| don't walk on egg shells. Speak boldly about, especially | |
| President Obama, about his fellow Peace Prize winner, because | |
| he won it last year, this year obviously Liu Xiaobo, who is | |
| languishing guilty in prison and his wife under house arrest. | |
| Mr. Yang. Congressmen, I am personally upset about the | |
| honor that Hu Jintao is receiving. So it is not a matter | |
| whether to meet or to receive Hu Jintao. It is how to do it. I | |
| agree with you totally. And giving Hu Jintao this honor will | |
| send two messages to China, one to Chinese government and the | |
| other to Chinese people. To the Chinese government that can be | |
| described as that we can get away with the atrocities we | |
| perpetrated in the past. Disappearing people. Put Nobel Peace | |
| Prize winner in jail. We can get away with any human rights | |
| violations. | |
| The message to the people, that is, U.S. may not be that | |
| sincere about human rights issues in China. And I want to | |
| emphasize that China is a very practical, very rational player. | |
| Chinese government legitimacy is performance based; namely, the | |
| only source of legitimacy for this regime to continue its rule | |
| in China is fast economic growth. | |
| So we have too much imposed fear on ourselves thinking that | |
| if we take a stronger position on human rights issues, that | |
| will jeopardize our economic relationship with China. Why | |
| should I fear? They are the persons, it is them that we should | |
| fear, you know, any jeopardizing of economic relationship with | |
| the United States and the rest of the world because the slow | |
| economic growth will leave bare all the problems we have been | |
| accumulating in the past years that will cause the government | |
| to collapse. | |
| Mr. Smith. Thank you. | |
| Chairman Ros-Lehtinen. Thank you very much, Mr. Marino, for | |
| yielding the time to Mr. Smith. | |
| And now, batting cleanup, one of our committee's super | |
| stars, Mr. Royce, chairman-designate of the Subcommittee on | |
| Terrorism, Nonproliferation, and Trade, is recognized for 5 | |
| minutes. | |
| Mr. Royce. Thank you, Madam Chair. I was going to ask Larry | |
| a question. I think this is an issue that maybe everybody who | |
| is representative of the business community who does business | |
| in China should be thinking about. There was an article on | |
| extortion in the Harvard Business Review in December entitled | |
| ``China vs the World: Whose technology Is It?'' It is an | |
| exhaustive study of the actual consequences for U.S. businesses | |
| in China. Let me just read you, Larry, one of the conclusions | |
| that the authors wrote here: | |
| ``Chinese officials have learned to tackle multi- | |
| national companies,'' including U.S. companies, ``often | |
| forcing them to form joint ventures with its national | |
| champions and transfer the latest technology in | |
| exchange for current and future business opportunities. | |
| Companies that resist are simply excluded from | |
| projects. The Chinese Government uses the restrictions | |
| to drive wedges between foreign rivals vying to land | |
| big projects in the country and induce them to transfer | |
| the technologies that state-owned enterprises need to | |
| catch up.'' | |
| This is extortion, and we all know numerous examples. We | |
| have heard from witnesses; I think 2 years ago we heard from | |
| Nancy Weinstein, of Nancy's Lifestyles, who opened a business | |
| in Beijing, only to have it stolen out from under her. She was | |
| in Shanghai. That was a Shanghai example. But since that | |
| hearing I have probably heard from a half dozen businesses that | |
| said we don't want to go public, but this is their modus | |
| operandi. Now this appears in the Harvard Business Review, | |
| laying out the case that this is the modus operandi for the | |
| Chinese Government. | |
| Could I have your thoughts on that. | |
| Mr. Wortzel. Mr. Royce, it is the modus operandi. Now, I | |
| have to say that American companies that are induced to do that | |
| do that of their own volition because they hope that, based on | |
| the ability to enter the marketplace, they can earn a lot of | |
| money. Some do, some don't. | |
| Mr. Royce. Larry, we understand that part. But the next | |
| chapter is once the technology is stolen, that company had | |
| better be prepared for a pretty quick exit out of China because | |
| its contracts are often about to change, its work force doesn't | |
| show up the next morning. This is in violation of any number of | |
| new rules, its leases are terminated. We have heard the stories | |
| over and over again. | |
| Mr. Wortzel. Well, I would only suggest a legislative | |
| strategy to remedy it, and that is if a company can | |
| legitimately demonstrate that its products or its technology | |
| were stolen, then prohibit the sale of that stuff in the United | |
| States. | |
| Mr. Royce. Well, that is a good remedy. But from the | |
| experience that we have had going to bat with our constituents | |
| out in California, and Nancy Weinstein would be an example, we | |
| have not been able, through the court system in China, to have | |
| any success and, to my knowledge, I don't know of any success. | |
| I wondered if you would agree with one of the points made | |
| in this report, and the authors conclude, it might be useful | |
| for the United States to dispense with the premise that it can | |
| have an economically compatible relationship with China; in | |
| other words, knowing that these are two radically different | |
| systems and China has failed to bring their system into | |
| compliance with any of the international norms for commercial | |
| activity or for rule of law. | |
| Mr. Wortzel. I don't know why you would choose to do | |
| business with a documented thief. | |
| Mr. Royce. Well---- | |
| Chairman Ros-Lehtinen. Excuse me. Did you say ``documented | |
| thief''? | |
| Mr. Wortzel. Yeah. | |
| Mr. Royce. My hope would be that there are many other | |
| countries in Asia that have an interest in closer relations | |
| with the United States. We see this in polling all the time, | |
| and I think a key aspect of managing China's rise will be our | |
| alliances with China's neighbors across East Asia and South | |
| Asia. I think that giving reassurance to our friends and | |
| placing a check on China's regional ambitions is going to be | |
| necessary. But, what more should we be doing with these | |
| countries to encourage trade investment? And what more should | |
| we do to let the U.S. business community know their return on | |
| investment is a negative one in terms of China? That gets out | |
| occasionally in the Journal, but not often enough. | |
| Chairman Ros-Lehtinen. Thank you, the gentleman's time has | |
| expired. And now for truly our last question and answer, 5 | |
| minutes, will be Mr. Fortenberry of Nebraska, a strong pro-life | |
| legislator, Mr. Fortenberry to close out our hearing. | |
| Mr. Fortenberry. Thank you, Madam Chair, for the time. And | |
| thank you, gentlemen, for appearing before us today. I have a | |
| fairly lofty sentence in front of me. Basically it says, I want | |
| to stress the importance of managing our complex relationship | |
| with China in a manner that honors the transcendent principles | |
| that define our national purpose and identity. | |
| But let me stop there. As I look out into the audience | |
| here, I see a number of young people. And I think it is | |
| important to get your mind around this. Many of you are perhaps | |
| newly married or hope to be married in the future. Let's | |
| suppose you were in China, and the authorities come by and say, | |
| how many children do you have? We have one, and we have one on | |
| the way. Well, that is one too many. Come with us. | |
| Can you imagine that in the United States? We can't even | |
| get our mind around these concepts. And yet, this is President | |
| Hu Jintao's China of today. Now, I sincerely hope that as the | |
| President meets with--as President Obama meets with President | |
| Hu, that human rights issues are going to figure most | |
| prominently in these discussions and the White House has | |
| indicated some direction in that regard. But since I have been | |
| serving in Congress, members of both sides of the aisle have | |
| boldly challenged Beijing on the ruthless treatment of | |
| democracy activists and their families, Internet freedom | |
| activists, religious minorities, and women and families | |
| victimized by a callous policy of coerced abortion. | |
| Now, let's turn to economics. A full estimate is that we | |
| owe about $2 trillion to China, and we have a bilateral trade | |
| deficit approaching $300 billion and, of course, this poses | |
| weighty concerns. Where appropriate, I believe we must | |
| challenge China to abandon its unbridled mercantilism which | |
| manifests itself in massive subsidies and other trade | |
| distorting practices that contribute to this staggering | |
| imbalance. I think also we must look ourselves in the eye in | |
| the United States and take action to get our fiscal house in | |
| order, to revive our stagnant manufacturing industries, | |
| refurbish our industrial base and take responsibility for our | |
| economic future. | |
| The reality is we buy their stuff and they buy our debt, | |
| and this is a truly dysfunctional marriage. So I think we have | |
| an obligation to forthrightly address the sources of tension in | |
| this relationship with China, and our commitment to mutual | |
| respect should never entice us to ignore these very serious | |
| concerns. And I hope that the administration will echo these | |
| concerns in their meetings today with the Chinese leadership. | |
| My question to the panel is this: The Chinese give cover to | |
| the North Koreans. The Chinese do business with Iran. The | |
| Chinese do not respect human rights. What type of world does | |
| China envision? What is their end game? A nationalistic surge | |
| underwritten by a new capitalistic Communist model never | |
| foreseen in the history of the world? Can you comment on that, | |
| please? | |
| Mr. Sutter. I would be very happy to comment. I think the | |
| Chinese objective is very much focused on the here and now. Mr. | |
| Yang emphasized that they have a legitimacy deficit. And their | |
| legitimacy rests on economic performance and to do that they | |
| need stability. And to do that they have to interact with the | |
| world on a lot of different ways, in a lot of different ways, | |
| with economic development being primary. And so to confront the | |
| United States in a major way is something that I think is not | |
| fundamental to what they are about right now. Their long-term | |
| plans are very vague. They have got a very big agenda for the | |
| short term, and it is going to keep them busy for a long time. | |
| Mr. Fortenberry. So does raising the concerns that I | |
| raised, as well as many others today, help address or give rise | |
| to more legitimacy concerns as they further distance themselves | |
| from what we would consider to be the international community | |
| of responsible nations? | |
| Mr. Sutter. The idea that we should address all the issues | |
| that you have mentioned in a forthright way is very, very | |
| clear. We should do that. No question. But I think your idea | |
| that somehow the Chinese have this plan for domination and | |
| control of the world, I think, a better image is that China is | |
| a bit scrambling, trying to keep legitimacy, trying to keep | |
| control over their very, very vibrant economic and social | |
| situation, that isn't under good control in many respects. | |
| Mr. Fortenberry. Does raising the issues I just raised | |
| hinder their quest for this legitimacy. | |
| Mr. Sutter. I think it could. It could. | |
| Mr. Fortenberry. Or do you not care, because economics | |
| trumps everything? | |
| Mr. Sutter. No, economics does not trump<greek-l>, deg. | |
| everything because prestige is important as well and their | |
| position is important as well. | |
| Chairman Ros-Lehtinen. Thank you. The gentleman's time has | |
| expired. | |
| It is a testament to the great interest that this topic has | |
| that members keep coming back. So pleased to recognize Mr. | |
| Deutch, my Floridian colleague, for 5 minutes. | |
| Mr. Deutch. Thank you, Madam Chair, I appreciate it. I | |
| appreciate your leadership of this committee. | |
| I would like to spend a couple of minutes talking about the | |
| way in which the Chinese Government has been willfully weak in | |
| enforcing intellectual property rights. The creativity, the | |
| imagination, the innovation of American workers, their | |
| intellect, is being stolen and it is being stolen on a regular | |
| basis in China. It is being stolen by illegal downloads, it is | |
| being stolen by pirated DVDs, it is being stolen by seizing, | |
| again, the intellectual property of our Nation. | |
| What can we do to increase the pressure on the Chinese | |
| Government to be more serious in enforcing and protecting the | |
| intellectual property rights of our citizens? | |
| Mr. Chang. I think the one thing that we can do if we | |
| really are serious about it is start adding tariffs for goods | |
| of countries that do engage in willful theft of intellectual | |
| property. This is a really important thing for us to do, and I | |
| think it is probably about the only way to do it. | |
| There are a number of other strategies. And one thing the | |
| Obama administration has done is, it has gone after these | |
| indigenous innovation rules that President Hu Jintao has | |
| sponsored and really does put American companies at a serious | |
| disadvantage if they want to do business in China. So that is | |
| one thing. | |
| But when it comes to the actual theft, which is another | |
| issue, I believe that the only way to deal with this is | |
| sanctions of some sort, penalties of some sort. And they | |
| probably are going to follow the general trajectory of H.R. | |
| 2378. | |
| Mr. Deutch. Dr. Wortzel, are you nodding your head? | |
| Mr. Wortzel. I agree with Mr. Chang. We have to avail | |
| ourselves of the available World Trade Organization remedies, | |
| and we are not always doing that. They are more limited than we | |
| might like, but we must avail ourselves of them. And we have to | |
| work particularly with our European allies and friends, so that | |
| when a case is brought, it is not just brought by one country. | |
| I think that helps. | |
| Countervailing duties is another potential remedy that I | |
| think would be useful. | |
| Mr. Deutch. I would like to broaden the discussion to the | |
| implications of the theft of intellectual property to the links | |
| between stealing intellectual property and the funding of | |
| terrorist organizations like Hezbollah and Hamas. A majority of | |
| the counterfeit goods originate in China and wind up in places | |
| like the tri-border region of South America, where millions of | |
| dollars in direct contributions have then been to Hezbollah. | |
| One such specially designated global terrorist entity in | |
| Paraguay provided a lump-sum payment of $3.5 million | |
| <greek-l>dollars deg.to Hezbollah. | |
| Is there a way, even moving beyond the important nature of | |
| intellectual property rights on its own, to helping, to | |
| reinforcing the severe implications of these violations in our | |
| own and helping to protect our national security? | |
| Mr. Wortzel. I kind of think you just pointed the way | |
| toward a response to that. And that would be to take a look at | |
| the Iran Sanctions Act, and with the terrorism nexus see if | |
| legislation could be modeled along the lines of the Iran | |
| Sanctions Act that would specifically sanction the Chinese | |
| violators that are engaged in that activity. | |
| Mr. Deutch. And along those lines, Dr. Wortzel, under the | |
| Iran Sanctions Act and the legislation that we passed last | |
| year, by all accounts there are Chinese firms that ought to be | |
| sanctioned. They have not been. Do you have thoughts on the | |
| actions taken by these Chinese companies, state-owned in Iran, | |
| in helping them to overcome the sanctions that have been | |
| imposed on other companies? | |
| Mr. Wortzel. You know, here you really have to get the | |
| Oversight Administration and Enforcement. If they are not doing | |
| the job, they are not doing the job. | |
| Mr. Chang. You know, we sanctioned individual Chinese | |
| enterprises, but essentially they all are controlled by the | |
| state. So essentially what we should be doing is thinking about | |
| sanctions that go beyond just the individual enterprise. | |
| Because essentially what we are doing is, we are going after | |
| the pinkie when we really should be going after the head. | |
| Mr. Deutch. In the remaining seconds on that specific | |
| issue, how do we go after the head? | |
| Mr. Chang. It would be basically putting sanctions on goods | |
| from countries that are involved in certain prohibitive | |
| behavior. This is going to be very difficult for the United | |
| States to do. We haven't, up to now, had the will to do it. But | |
| when it comes to things like Iran sanctions or selling arms to | |
| the Taliban, something else, we really have to think about our | |
| priorities. | |
| Mr. Deutch. Thank you. Thank you, Madam Chair. | |
| Chairman Ros-Lehtinen. Thank you very much, Mr. Deutch. | |
| Thank you, panelists, for excellent testimony. And thank you to | |
| the members who participated, thank you to the audience. And | |
| the briefing is now adjourned. Thank you. | |
| [Whereupon, at 12:43 p.m., the committee was adjourned.] | |
| A P P E N D I X | |
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