[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

ASSESSING CHINA'S BEHAVIOR AND ITS IMPACT ON U.S. INTERESTS

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BRIEFING

BEFORE THE

COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

__________

JANUARY 19, 2011

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Serial No. 112-2

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Printed for the use of the Committee on Foreign Affairs

Available via the World Wide Web: http://www.foreignaffairs.house.gov/

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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

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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

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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 impacts 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:]

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:]

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 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,
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:]

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:]

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:]

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, 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
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.]

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