[House Hearing, 112 Congress] [From the U.S. Government Publishing Office] INVESTIGATING THE CHINESE THREAT, PART I: MILITARY AND ECONOMIC AGGRESSION ======================================================================= HEARING BEFORE THE COMMITTEE ON FOREIGN AFFAIRS HOUSE OF REPRESENTATIVES ONE HUNDRED TWELFTH CONGRESS SECOND SESSION __________ MARCH 28, 2012 __________ Serial No. 112-137 __________ Printed for the use of the Committee on Foreign Affairs Available via the World Wide Web: http://www.foreignaffairs.house.gov/ or http://www.gpo.gov/fdsys/ ---------- U.S. GOVERNMENT PRINTING OFFICE 73-536 PDF WASHINGTON : 2012 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, Washington, DC 20402-0001 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 SamoaDONALD A. MANZULLO, Illinois DONALD M. PAYNE, New Jersey-- EDWARD R. ROYCE, California deceased 3/6/12 deg. STEVE CHABOT, Ohio BRAD SHERMAN, California RON PAUL, Texas ELIOT L. ENGEL, New York MIKE PENCE, Indiana GREGORY W. MEEKS, New York JOE WILSON, South Carolina RUSS CARNAHAN, Missouri CONNIE MACK, Florida ALBIO SIRES, New Jersey JEFF FORTENBERRY, Nebraska GERALD E. CONNOLLY, Virginia MICHAEL T. McCAUL, Texas THEODORE E. DEUTCH, Florida TED POE, Texas DENNIS CARDOZA, California GUS M. BILIRAKIS, Florida BEN CHANDLER, Kentucky JEAN SCHMIDT, Ohio BRIAN HIGGINS, New York BILL JOHNSON, Ohio ALLYSON SCHWARTZ, Pennsylvania DAVID RIVERA, Florida CHRISTOPHER S. MURPHY, Connecticut MIKE KELLY, Pennsylvania FREDERICA WILSON, Florida TIM GRIFFIN, Arkansas KAREN BASS, California TOM MARINO, Pennsylvania WILLIAM KEATING, Massachusetts JEFF DUNCAN, South Carolina DAVID CICILLINE, Rhode Island ANN MARIE BUERKLE, New York RENEE ELLMERS, North Carolina ROBERT TURNER, New York Yleem D.S. Poblete, Staff Director Richard J. Kessler, Democratic Staff Director C O N T E N T S ---------- Page WITNESSES Mr. Dean Cheng, research fellow, Asian Studies Center, The Heritage Foundation............................................ 8 Mr. John J. Tkacik, Jr., senior fellow and director of the Future Asia Project, International Assessment and Strategy Center..... 25 Larry M. Wortzel, Ph.D., Commissioner, United States-China Economic and Security Review Commission........................ 70 Taylor Fravel, Ph.D., associate professor of political science, Security Studies Program, Massachusetts Institute of Technology 81 LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING Mr. Dean Cheng: Prepared statement............................... 10 Mr. John J. Tkacik, Jr.: Prepared statement...................... 27 Larry M. Wortzel, Ph.D.: Prepared statement...................... 72 Taylor Fravel, Ph.D.: Prepared statement......................... 83 APPENDIX Hearing notice................................................... 112 Hearing minutes.................................................. 113 INVESTIGATING THE CHINESE THREAT, PART I: MILITARY AND ECONOMIC AGGRESSION ---------- WEDNESDAY, MARCH 28, 2012 House of Representatives, Committee on Foreign Affairs, Washington, DC. The committee met, pursuant to notice, at 10 o'clock a.m., in room 2172 Rayburn House Office Building, Hon. Ileana Ros- Lehtinen (chairman of the committee) presiding. Chairman Ros-Lehtinen. The committee will come to order. Welcome to my fellow members on the committee and to our distinguished panel of witnesses who are joining us today. If they could take their spots, thank you so much. After recognizing myself and my friend, Mr. Berman, the ranking member, for 7 minutes each for our opening statements, I will recognize the chairman and the ranking member of the Subcommittee on Asia and the Pacific for 3 minutes each for their opening statements, followed by 1-minute opening statements for all other members wishing to speak. We will then hear from our witnesses. I would ask that you summarize your prepared statements to 5 minutes each before we move to the questions and answers with members under the 5- minute rule. As Mr. Wilson, Mr. Bilirakis, and Mr. Duncan were unable to ask questions during the hearing with the Secretary of State, I had said publicly toward the end that I will be recognizing them, when they come, first by seniority for questions before returning to the regular order of questioning for the majority side. So, without objection, the witnesses' prepared statements will be made a part of the record. Members may have 5 days to insert statements and questions for the record, subject to the length limitation and the rules. The Chair now recognizes herself for 7 minutes. Napoleon once famously remarked that ``China is a sleeping dragon. Let her sleep, for when she awakes, she will shake the world.'' The 21st century is the era of China's awakening. The decades to come will test whether China will truly shake the world. This hearing is a first in a series to examine the range of threats to U.S. national security, our interests, and allies, posed by a rising China and, also, to receive recommendations on how to counter such threats. Today we will examine recent military and economic actions taken by the People's Republic of China and evaluate what they mean for United States interests and those of our allies. In advance of his transition to the presidency of China, China's Vice President visited the United States last month. The White House went to great lengths to ensure that the visit went smoothly, reiterating a commitment to a peaceful and stable relationship. The actions taken may have included a turning-away of a high-level asylum-seeker at a consulate in China and included Vice President Biden's dismissal of a meeting request from the spouse of one of China's most prominent dissidents. With respect to Mr. Wang, the reported defector, China's dissent news service posted an audio broadcast of a Chinese official who read the report from the Chinese Party of China, CPC, Central Committee on Mr. Wang. Allegedly, the report stated that Wang entered the U.S. Consulate in Chengdu on February 6th, spoke to U.S. officials about ``relevant exchange and cooperation projects, then asked for asylum.'' The report allegedly goes on to say that, at the request of U.S. personnel, Wang filled out an application for political asylum, but late the next day, on February 7th, after ``a face- to-face talk with a comrade directly dispatched from the CPC Central Committee,'' Wang agreed to leave the U.S. Consulate. The possibility that the administration turned away an asylum-seeker, and possibly a high-value intelligence source, raises a number of serious questions that require immediate answers. I have a pending request with the Department of State for specific information on this matter. Generally, the administration's overtures have failed to alter Beijing's behavior or its policies. China continues the artificial depreciation of its currency, which steals American jobs away. China continues to undermine the U.S. technological edge through all available means, including circumvention of U.S. export controls and by hacking into private and governmental computer systems. China's ongoing participation in industrial espionage is evidenced by a recent criminal indictment of individuals charged with stealing trade secrets from the DuPont Corporation. Also, piracy of intellectual property rights remains a significant problem for U.S. companies doing business in China, such as the Illinois-based paper shredder manufacturer Fellowes, Incorporated. Through such illegitimate means, China has made tremendous advances in the modernization of its military with a budget that some experts expect by the year 2015 will surpass the totality of all 12 of its Asia-Pacific neighbors. Along with increased maritime capacity, Chinese aggression has manifested itself in its broad territorial claims throughout the South China Sea, the East China Sea, and the Yellow Sea. Last November, the White House finally acknowledged Beijing's bullying of its neighbors and President Obama announced a pivot to emphasis the U.S. strategic and economic interests in the Asia-Pacific region. In reaction to President Obama's pivot, one People's Liberation Army general wrote a commentary which quickly spread across Chinese Web sites. The general said, ``This is aimed at China, to contain China. The United States has committed a fatal strategic error. It has misjudged its foes.'' Among the expert panel of witnesses today is Dr. Larry Wortzel, Commissioner of the U.S.-China Economic and Security Review Commission, who will testify that China has prepared for cyber warfare. According to the Commission's latest report, the PLA has the cyber attack capacity to cripple computer networks in the U.S. Pacific Command. China also remains a significant benefactor of other authoritarian regimes, providing missile defense, missile- related technology to Iran, investing heavily in Iran's energy sector, blocking strong action in Syria, expanding its relations with and seeking energy resources from Sudan, Venezuela, and Cuba. And Beijing has supplied Castro with a massive $750-million oil rig designed to extract offshore oil from sites near the United States. Any future accident would risk a nasty oil spill into Florida's coastline. China's refusal to cooperate with sanctions contributed to North Korea's acquisition of nuclear weapons. Although North Korea's new leader recently announced that he would suspend nuclear tests and allow inspections in exchange for food, North Korea shortly followed up by announcing that it would launch a satellite in April. This would be in violation of U.N. Security Council resolutions. China is North Korea's major supplier of food, energy, and weaponry, but Beijing does nothing in the face of North Korea's threatened missile launch. The Nuclear Security Summit, which President Obama recently attended in South Korea, does not seem to have affected the North Korean decision. In fact, Pyongyang responded to the President's warnings by moving the missile to the launch pad. When push comes to shove, Beijing always sides with its authoritarian allies, be they in Damascus, Havana, Tehran, or Pyongyang. The Obama administration spent its first 2 years seeking accommodation with Beijing with little in return. Having failed with charm, the administration has come belatedly to seeking a more realistic approach to the China issue. Hopefully, it is not too little too late. Now I am pleased to turn to the distinguished ranking member for his opening statement. Mr. Berman is recognized. Mr. Berman. Thank you very much, Madam Chairman, for calling this hearing. It was 40 years ago last month that President Nixon undertook his historic trip to China, a visit that changed the course of world events and continues to reverberate today. That trip and the establishment of diplomatic relations with China were rooted in a Cold War strategic context in which the ultimate goal was to prevent Soviet expansionism. In the early years of the U.S.-China relationship, the interactions between our two nations were narrowly-focused and took place almost exclusively at the government-to-government level. Today, four decades later, the bilateral U.S.-China relationship has its own strategic rationale that is global in scope. In addition to the ties between our two governments, the two countries have formed deep and wide economic, educational, and cultural connections that resonate not only in Washington and Beijing, but in the farmlands of Iowa and rural China. At the time of the Nixon visit, China was a poor and isolated nation. Today, after decades of astonishing economic growth, hundreds of millions of Chinese citizens have been lifted out of poverty; a large middle class is forming. China has become the world's second-largest economy and plays an integral role in the international system. With China's rise as a global power, Chinese influence can be seen and felt all over the world, from the boardrooms in the world's major financial centers to the back roads of Africa. There are some in this country, and some on this committee, who argue that a rising China poses a significant threat to the United States, that China is looking to supplant America's leadership role in the world. And in China, some believe that the United States is in decline and determined to contain China and curb its rise. However, many others, including on this committee, believe that U.S. cooperation with a rising China is both possible and desirable, and that a bitter and acrimonious rivalry between our two countries would have detrimental impact on global stability. As Henry Kissinger recently wrote in Foreign Affairs, ``The U.S.-China relationship should not be considered a zero-sum game, nor can the emergence of a prosperous and powerful China be assumed in itself to be an American strategic defeat.'' Even if the U.S. and China are able to work together on a positive basis to address regional and global issues--and I hope that we are--there will inevitably be disagreements and points of friction in our bilateral relationship. When those arise, the United States must never hesitate to speak out and take action, particularly when American interests and those of our allies and partners are at stake. This means calling on China to end its discrimination against U.S. companies, stop the theft of U.S. intellectual property, cease its unfair currency practices. It means shining the spotlight on Beijing's appalling lack of respect for human rights, democracy, and rule of law. It means calling on China to renounce the military option in resolving its ongoing political dispute with Taiwan. And it means demanding that China explain its rapid military buildup, abide by international maritime laws and norms, cooperate with the international community to end violence in places like Syria and Sudan, and work with the United States and others to solve the North Korean and Iranian nuclear problems. It remains to be seen how China will ultimately address these issues, what kind of role Beijing wants to play on the world stage, as it continues its economic growth and geopolitical rise. At times, China seems to want to be treated like a great power. Yet, it often ducks the responsibility that comes from being a leading player or, even worse, as we saw in the Chinese veto of the U.N. Security Council resolution on Syria, blocks the rest of the world from doing the right thing. China has benefitted greatly and achieved prosperity for its citizens from an open international economic system. Yet, China has engaged in mercantilist behavior, sometimes ignored rules of the global economy, and constructed a playing field for non-Chinese companies in China that is unfair, opaque, and corrupt. All of this boils down to a choice for China. Will it use its growing power and newfound standing in the world solely for its own benefit or will it pursue a constructive path that strengthens the global order for the benefit of all nations? I thank the panel of witnesses for being here today and look forward to hearing their views on the future of the U.S.- China relationship, and yield back the balance of my time. Chairman Ros-Lehtinen. Thank you, Mr. Berman. Thank you for your opening statement. And the Chair wishes to send greetings to that heckler in the back, Harry Wu, a wonderful friend of our committee, and who understands a thing or two about China's brutality. Mr. Smith is recognized for 1-minute opening statements, and we will recognize everyone to speak for 1 minute. Mr. Smith. I thank you very much, Madam Chair, and I would ask unanimous consent to have my full statement made a part of the record. Chairman Ros-Lehtinen. Without objection. Mr. Smith. China's declared defense budget, already the second-highest in the world, will increase by 11.2 percent this year to $106.4 billion. This follows a nearly unbroken string of double-digit increases over the last two decades. As Beijing has escalated its military buildup, China has also expanded its geopolitical ambitions and increased its claim within the South China Sea. China's Asian neighbors have started to strengthen their own defenses and sought new security ties with the U.S. and other partners. The challenges of China that it presents are not limited to any corner of the globe. China continues to advance its capabilities to initiate cyber attacks and exploit U.S. cyber security vulnerabilities, which present grave threats to U.S. national security and economic interests. Finally, China's economic investments into Africa and other parts of the world also pose significant threats, such as locking up the supply of strategic minerals or rare earth elements used in high-tech products, including smart bombs, and offering a poor policy example of the respect for human rights to its partners. Tomorrow I will chair my fourth hearing on China's growing influence in Africa and the bad governance model that it is exporting to African countries like Sudan and elsewhere. Chairman Ros-Lehtinen. Thank you. Thank you so much, Mr. Smith. Mr. Sherman is recognized. Mr. Sherman. If we had balanced trade with China, our unemployment rate would be under 5 percent and the cost of containing China's aggressiveness in its region would be far less. But there are high, enormous profits available by maintaining the present trade system. And so, a huge propaganda effort is deployed to convince the American people that our current trading system is both fair and beneficial. We have a choice between two roads. One is to renounce the current MFN treatment of China and demand the negotiation of a balanced trade agreement, with a voucher system perhaps, that you need a voucher to import anything from China. But the road more traveled is to keep repeating empty criticisms of China, in order to lull the American people to sleep, as if such repetitions for decades are going to cause a change in Beijing's policy, and to leave us with an aggressive China, unemployed Americans, and a highly-contempted foreign policy and economic establishment. I yield back. Chairman Ros-Lehtinen. Thank you, Mr. Sherman. Ms. Schmidt is recognized. Ms. Schmidt. Thank you, and I want to thank you for this hearing. I am increasingly concerned about this administration's approach with China, be it its relationship with Taiwan, the issue with the Dalai Lama, and, most importantly, the issue currently about AsiaSat, which is an issue whether the administration is agreeing to transfer communications satellite to munition controls for China. And that concerns me greatly. So, I hope we touch on those issues in this hearing. Chairman Ros-Lehtinen. Thank you very much, Ms. Schmidt. Mr. Sires is recognized. Mr. Sires. Thank you, Madam Chairlady, and thank you for being here today. You know, I have many concerns with China: Their abysmal human rights record, their increase in defense budget, their disregard for total international norms. So, I just want to hear what you have to say about some of those concerns that I have about China. Thank you very much for being here. Chairman Ros-Lehtinen. Thank you very much. Mr. Chabot is recognized. Mr. Chabot. Thank you, Madam Chair, for pulling together such a distinguished panel here as you have this morning. Having been one of the founding chairs of the Congressional Taiwan Caucus, and having served as co-chair of that for about a decade, I do hope that our witnesses will take at least some time today to focus on China's military threat to our long-time friend and ally, Taiwan. I remember when I first came to Congress back in 1995, I learned at that time that China had approximately 100 missiles, and every year it would go up. There would be a few hundred more and a few hundred more and a few hundred more. Now they are up to approximately 1,600 missiles, both medium-range and short-range ballistic missiles aimed at Taiwan. So, I hope during the hearing that we can focus some time on that. I know Mr. Tkacik and I have discussed the threat to Taiwan many times. So, I particularly look forward to hearing his testimony and the other members as well. And I yield back. Chairman Ros-Lehtinen. Thank you, Mr. Chabot. Ms. Bass is recognized. Ms. Bass. Thank you, Madam Chair and Ranking Member Berman. I do look forward, as the chair of the Subcommittee on Africa mentioned a few minutes ago, tomorrow we are going to have a committee hearing on China's role in Africa, and I look forward to that. Also, perhaps some of the panelists might comment on that relationship as well. Specifically, I am interested in the labor issue, so when the Chinese go into African nations, bringing Chinese labor with them as opposed to hiring the local population. As China continues down a path of growth, there are important questions that must be answered regarding China's military power, its foreign exchange policies, human rights, cyber espionage, China/Taiwan relations. While China's ascent can neither be stopped nor ignored, we must continue to focus attention on ensuring responsible Chinese policies and practices that promote peace, growth, and opportunity. Thank you. Chairman Ros-Lehtinen. Thank you very much, ma'am. Mr. Connolly is recognized. Mr. Connolly. Thank you, Madam Chairman, and thank you for holding this hearing. The U.S.-China relationship is absolutely one of the most important, obviously, in the world, and it is a relationship that must be worked out. But the United States has to insist on its interests in this relationship; otherwise, it is one of unequal partners. And we need to focus, obviously, on our human rights values, as we interact with the Chinese, and we also have to insist economically on the increasing pressure of intellectual property rights. Intellectual theft is epidemic in China, and it must be addressed as we move forward in this relationship on behalf of not only our interests and our business interests, but, frankly, for the future maturation of China itself as an interest of the family of nations. I thank the chair. Chairman Ros-Lehtinen. Thank you. I thank all the members for their opening statements. And now, the Chair is pleased to welcome our witnesses. First, Dean Cheng, who is currently the research fellow for Chinese Political and Military Affairs at the Heritage Foundation. Prior to joining the Heritage Foundation, he was the Senior Analyst with the China Studies Commission and also served with the Science Applications International Corporation. Welcome. Next, I would like to welcome John Tkacik, a senior fellow and director of the Future Asia Project at the International Assessment and Strategy Center. Mr. Tkacik is a retired Foreign Service officer who has devoted over 20 years of government service to Chinese/Taiwanese affairs. From the years 2001 to 2009, Mr. Tkacik was also a research fellow on China at the Heritage Foundation. We welcome you, sir. And we are also pleased to welcome Larry Wortzel, the Commissioner of the United States-China Economic and Security Review Commission. Dr. Wortzel was reappointed by Speaker Boehner for a 2-year term, expiring on December 31, 2012. He has a distinguished career in the U.S. Armed Forces, which included two tours of duty as a military attache at the American Embassy in China. And he likes to go bass fishing in my home state of Florida. And finally, I would like to welcome Taylor Fravel. He is associate professor of political science and member of the Security Studies Program at MIT. Dr. Fravel studies international relations with a focus on international security, China, and East Asia, and is currently completing a study of China's military doctrine since 1949. A wonderful set of panelists. I welcome you all. I ask that you, again, keep your presentation to no more than 5 minutes. And without objection, your prepared statements will be made a part of the record. So, Mr. Cheng, please proceed. STATEMENT OF MR. DEAN CHENG, RESEARCH FELLOW, ASIAN STUDIES CENTER, THE HERITAGE FOUNDATION Mr. Cheng. Thank you, Chairman Ros-Lehtinen, Ranking Member Berman, and distinguished members of the committee, for the opportunity to be here this morning. The views I express in this testimony are my own and should not be construed as representing any official position of the Heritage Foundation. My comments today will focus on the military aspect of the threat from the People's Republic of China, but I would like to emphasize that the Chinese concept of national security is a holistic one, rooted in the idea of comprehensive national power, which includes not only military capabilities, but economic capacity, level of science and technology, diplomatic respect, and even culture. The Chinese People's Liberation Army is the most visible aspect of China's comprehensive national power. China fields the world's largest military and has enjoyed double-digit increases in its defense budget for the last two decades. China's official defense expenditure, generally seen as understating actual defense spending, has now passed the $100 billion mark. These expenditures have funded what Jiang Zemin termed ``the two transformations'' involving a shift from quantity to quality and emphasizing the ability to fight high-tech wars, what the Chinese now call informationized wars. In short, this is not your father's or your grandfather's PLA. Chinese military writings regularly note that future warfare will require networks of sensors and communications in order to win the contest between systems of systems. So, China is building, for example, a constellation of high-resolution, multi-spectral earth observation satellites to support its new fighters, tankers, submarines, and missiles. At the same time, Chinese tests of anti-satellite capabilities in 2007 and again in 2010 underscore the growing ability of the PLA to deny opponents C4ISR capabilities. To be fair, it is important to recognize that China, as the world's most populous country and second-largest economy, is bound to have a very large military, given its expanding economic interest and substantial manpower pool. And it is wishful thinking to expect that China will follow the Soviet path and bankrupt itself on defense spending. And indeed, the Chinese leadership regularly emphasizes that national economic construction is higher priority than army-building. But while weapon systems are important, how the Chinese think about employing them is vital. And one of the great concerns that should worry us is that the Chinese do not necessarily think the way we do, especially in terms of deterrence and crisis management. The American outlook has been heavily shaped by the Cuban missile crisis, itself affected by President Kennedy's lessons drawn from World War I. This has focused American attention on avoiding inadvertent escalation and accidental war. By contrast, the PRC chose to precipitate a conflict with the USSR in 1969, when both nations were nuclear-armed. And this different attitude is also reflected in the Chinese refusal to talk about creating maritime rules of the road. In the Chinese view, such rules allow both sides to feel safe when operating in close proximity, but the Chinese have very little interest in making the United States feel safe in the western Pacific in disputed waters, when they are engaging in what Beijing sees as illegitimate activities. The solution to avoiding accidents or crises, in their view, is for the United States to pull back. This fundamentally different perspective on deterrence and crisis management is symptomatic of the reality that China is different from Iraq, Serbia, or Afghanistan. China has a substantial indigenous military industrial base. It possesses space and cyber capabilities on a rough par with the United States, as well as its substantial nuclear arsenal. The Chinese pose a fundamentally different scale of threat than have other states in the past or even North Korea or Iran would in any calculation in the future. These differences are exacerbated by what U.S. analysts have termed China's anti-access/area denial strategy. As the PRC takes a holistic view toward assessments of national power, so Chinese efforts to prevent the United States from readily deploying to the western Pacific involve strategic and operational as well as tactical elements. At the strategic level, the Chinese pursue a range of political warfare measures, including the so-called warfares of legal warfare, public opinion warfare, and psychological warfare, all of which seek to influence domestic, adversary, and third-party audience perceptions and attitudes by undermining legitimacy, strengthening friendly will, and arousing sympathy. At the operational level, Chinese military writing suggests an emphasis on establishing information superiority or dominance over an opponent, which, in turn, involves securing space and cyber dominance, thereby preventing an opponent from coordinating their forces or targeting their weapons. When coupled with tactical systems, such as anti-ship ballistic missiles, we then see a unified approach that links tactical to operational to strategic, the objective being to allow the Chinese leadership to dissuade local states from supporting the United States for allowing it to operate in its area. The Chinese have a consistent approach with persistent actions. The challenge from Beijing seems clear. It is up to us to respond. [The prepared statement of Mr. Cheng follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] ---------- Chairman Ros-Lehtinen. Thank you very much. Mr. Tkacik, did I get your name, more or less? Nailed it? You are recognized, sir. Thank you. STATEMENT OF MR. JOHN J. TKACIK, JR., SENIOR FELLOW AND DIRECTOR OF THE FUTURE ASIA PROJECT, INTERNATIONAL ASSESSMENT AND STRATEGY CENTER Mr. Tkacik. Madam Chairman, Ranking Member Berman, distinguished members, thank you for giving me the opportunity to appear here today. I have submitted extensive written remarks, and I appreciate the chairman's offer to put them in the record. Let me say at the outset, China, since 1989, and, indeed, since the collapse of the Soviet Union in 1992, has assumed an adversarial posture toward the United States, Europe, and Japan, and others, in a variety of foreign policy and war- fighting areas. As one Chinese strategist puts it, ``In the world today, virtually every one of America's adversaries are China's friends.'' This is not a coincidence. China's leadership sees the United States as a challenge to the legitimacy of the regime. And indeed, across the board, from nuclear and missile proliferation to human rights, to global climate change, and fisheries, China adopts a diametrically-opposite policy to the United States. And even during the Iran and Iraq wars--or excuse me--the Iraq and Afghanistan wars, China has gone out of its way to provide weapons and explosives, and I would argue computer network assistance, to hostile states and insurgents in direct combat with U.S. coalition and NATO forces. My job is to look out into the future of Asia 20 years or so and calculate what we are likely to see. Basically, I am following straight-line trends over the past 20 years, and I will project them into the next 20 years. What we have is not reassuring. When you try to integrate multiple trend lines and aggregate the results, the margins for error grow and the conclusions are necessarily speculative. But if 20 years ago one had done a straight-line projection of China's previous decade of economic and population growth, or for military spending, or even foreign exchange reserves growth, your projections 20 years later in 2012 would be low. They would be sort of on the mark, but they would have been low. China is now the largest industrial power on earth. China's industrial sector has overtaken America's. Now, many of the international threats that the United States faces around the world are discrete military, transnational terrorism, et cetera, but, as such, analyzing them is more or less straightforward. Not so with China. China poses a direct, multidimensional matrix of threats and approaches it with a strategy which I believe the Beijing leadership has thought through in great detail over the past two decades. China is now clearly following a broad national strategy of state mercantilism which has scant regard for international norms, intellectual property. It has an immense industrial spying apparatus. And in fact, any tools that expand China's wealth are utilized without regard to legality, proprietary, or convention. The threats are economic. They are industrial. They are commercial and financial. They are technological, scientific, territorial, and political. They involve transnational crime and environmental challenges. There are also colossal demographic challenges that, too, can turn into threats on very short order. The military threats posed by China are intensely more complicated by the non-military dimensions. And all these threats can blow up in America's face in a moment's notice. My written remarks are quite extensive, but they only touch upon a few areas where America's national security is already in jeopardy. Let me start with the economic threats from China. They include trade, financial, industrial, and technological factors and the Chinese strategies that underpin them. There's no question but that the cyber threat is the single greatest threat to the United States, and to be a bit dramatic, to the entire rules-based international system that China now has approached. Chinese intelligence and the entire Chinese state have access to everything in everyone's computers. I wish I were exaggerating, but, alas, I am not. Imagine what you could do with complete, unfettered access to the emails of your political rivals, your economic rivals, your banks, your news organizations, the personal emails of anybody you wanted, all of the Fortune 500 companies of America, the Fortune 1,000 across the world. That is precisely the threat. In my written submission, I will also touch upon China's territorial sea claims, but not its threats to its continental neighbors because those are penumbral to America's core interest and to those of our treaty allies. Suffice it to say that China's territorial sea claims in the South China Sea, the Taiwan Strait, the East China Sea are absolute. They brook no challenge. China's own legislation, its supreme national law, permits only the intrusion on these waters of foreigners who ``abide by Chinese law.'' And I must say, recent Chinese statements that no country claims the entire South China Sea are true, except that China claims 1.5 million square kilometers of it. The rest of it is negotiable. I will leave that as my oral presentation. I would like to get into the issues of Taiwan and others in the questions and answers. Thank you. [The prepared statement of Mr. Tkacik follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] ---------- Chairman Ros-Lehtinen. Thank you very much, sir. Thank you. Dr. Wortzel? STATEMENT OF LARRY M. WORTZEL, PH.D., COMMISSIONER, UNITED STATES-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION Mr. Wortzel. Madam Chairman, Ranking Member Berman, committee members, thank you for the opportunity to appear today. On March 7th, the U.S.-China Economic and Security Review Commission released a report on Chinese capabilities for cyber espionage and cyber warfare. The report concluded that the People's Liberation Army has developed information warfare capabilities to defend military and civilian computer networks while seizing control of an adversary's information system. In peacetime, cyber espionage is a cornerstone of China's intelligence-collection operations. Cyber attacks are appealing to China because they leave no clear fingerprints, and such attacks would be preemptive. The PLA calls its strategy for cyber attacks ``Integrated Network Electronic Warfare.'' And I would like to depart from my role as a commissioner for a minute and give you my personal views on this war- fighting doctrine. During the Cold War, the Soviet military planned to start a war with radio electronic combat, a combination of electronic warfare with artillery, aircraft, and missile strikes. The Soviets expected to degrade an enemy's combat capability by 60 percent before a shot was fired. The PLA's Integrated Network Electronic Warfare doctrine is Soviet doctrine on Chinese steroids. INEW added computer network attacks and space attacks on satellites. The commission's report also expresses concerns about some of China's largest telecommunications firms. These firms benefit from a network of state research institutes and government funding and programs that have the sponsorship of the military. Also, Chinese Government research organizations and universities are working on national programs for research on cyber technology. The report notes that the U.S. military's NIPRNET, or Non- Secure Internet Protocol Routing Network, is particularly vulnerable to computer attack and exploitation, and any assistance to Taiwan in a crisis could be disrupted. Finally, the report documents vulnerabilities in the U.S. telecommunications supply chain where backdoors built into hardware or coded into software may give unauthorized access to systems. The U.S. Army ordered a large number of computers from a Chinese company for installation on our NIPRNET-based logistics system. Army officials believe that they can only exclude purchases from foreign firms for equipment controlled on the United States Munitions List, but not for the whole Army. It seems to me that the entire enterprise information architecture of the Department of Defense, if not the whole government, should be a national security concern. If existing legislation cannot be interpreted differently, then new legislation may be required. Congress should consider directing the Executive Branch to maintain a classified list of countries, people, and companies that pose a serious cyber threat to our Government and industry. Such a list should be validated across the intelligence community and vetted by the Foreign Intelligence and Surveillance Court. During the procurement process, cleared government officials should be required to consult that list and to exclude people or companies on the list from introducing hardware or software into government networks. When our security officials can attribute an attack to a foreign person, in a closed Federal court, such as the Foreign Intelligence and Surveillance Court, they should be able to seek a warrant for arrest. And in the case of a foreign company, there should be a statutory prohibition on a company judged to be involved in cyber espionage from doing business in the United States. And we should encourage our allies to do the same. The Australian Government just barred Huawei, a Chinese company, from work on Australia's national infrastructure, cyber infrastructure. The United States also should have a clear policy that it declares that attacks in cyber space are acts of war and a cyber attack may generate a weapons strike and a state of war. Thank you for the opportunity to testify today, and I welcome any questions you may have. [The prepared statement of Mr. Wortzel follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] ---------- Chairman Ros-Lehtinen. Thank you, sir. Dr. Fravel is recognized. STATEMENT OF TAYLOR FRAVEL, PH.D., ASSOCIATE PROFESSOR OF POLITICAL SCIENCE, SECURITY STUDIES PROGRAM, MASSACHUSETTS INSTITUTE OF TECHNOLOGY Mr. Fravel. Madam Chairman, Congressman Berman, and esteemed members of the committee, thank you for inviting me to participate in today's important discussion. I would like to discuss one particular challenge that China poses, its behavior in the territorial and maritime disputes in the South China Sea. Orally, I would like to make four points. My first point, first, between 2007 and 2011, China adopted a much more assertive approach toward the disputes in the South China Sea. During this period, China challenged, and in some cases threatened, foreign oil companies, including American ones, investing in Vietnam's offshore oil and gas blocks, emphasized its own expansive claims in these waters, detained hundreds of Vietnamese fishermen near the Chinese-held Paracels Islands, and harassed Vietnamese and Philippine vessels conducting seismic surveys in waters that Beijing claims. China adopted this more assertive approach for several reasons. First, China was often reacting to efforts by other claimants, especially Vietnam, to strengthen their own position in the South China Sea. As there are some conflicts, territorial disputes are prone to negative spirals of instability because one state's efforts to defend its claims will be viewed by others as a challenge that requires a response. Second, more generally, China's leaders were more willing to assert interest in the region after successfully hosting the Olympics and weathering the financial crisis in 2008. Third, various Chinese maritime agencies competing with each other for greater authority and resources also played a role in China's behavior. The second point: Since June 2011, China has adopted a less-assertive approach in the South China Sea disputes. China has stopped the most confrontational aspects of its assertive approach, especially the frequent detention of Vietnamese fishing vessels and the harassment of oil and gas exploration activities in waters that China claims. In addition, China's new approach has several components, including reaffirming cooperation through joint development, holding summits with leaders from the Philippines and Vietnam, reaching agreements for managing tensions with the association of Southeast Asian nations and with Vietnam, and directly engaging other claimants, for example, by establishing a $70 million Maritime Cooperation Fund. China adopted a less-assertive approach because it realized that it had overreached and overreacted. By threatening other claimants, China tarnished the cooperative image that it had sought to cultivate since 2000, created a common interest among these states encountering China, and created strong incentives for states in the region to improve their ties with the United States. Central to the change in China's behavior was the firmness displayed by both states in the region and the United States, especially when Secretary of State Clinton declared a U.S. national interest in the South China Sea in July 2010. In sum, China's actions had undermined its broader grand strategy, which emphasizes maintaining good relations with both its immediate neighbors and with great powers like the United States. My third point: China's recent behavior in the South China Sea has important implications for understanding China's foreign policy today. In the South China Sea, China's assertiveness has sought to deter other states from acting against Chinese interest and claims. China has not acted to compel states to accede to China's claims, however. The emphasis on deterrence in China's foreign policy is consistent with the emphasis on deterrence in China's military strategy today. Although China is actively modernizing its armed forces, it remains reluctant to use them in many political and military issues. In the South China Sea, for example, China has relied primarily on civilian maritime law enforcement agencies to assert and defend its claims, not the Chinese navy. With 14 neighbors on land and eight at sea, China's foreign policy remains constrained by its external security environment. China has limited room for maneuver and must seek to maintain good relations with neighboring states, especially when faced with resistance to China's policies from its neighbors and from states like the United States. My final point concerns several brief policy recommendations: First, the United States should maintain and consolidate its military and diplomatic presence in East Asia currently being undertaken as part of the rebalancing of American strategic priorities. Second, the United States should continue to underscore its national interest in international norms that are threatened by China's more assertive policies, especially freedom of navigation and the peaceful resolution of disputes. Third, the United States should maintain its longstanding principle of neutrality in territorial disputes of other countries to prevent transforming them into bilateral conflicts between the United States and China. Fourth, the United States should ratify the Convention on the Law of the Sea to increase the effectiveness of U.S. efforts to pursue a rules-based approach to managing and resolving disputes over maritime jurisdiction. Madam Chairman, thank you. [The prepared statement of Mr. Fravel follows:] [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] ---------- Chairman Ros-Lehtinen. Thank you very much. Thank you to all of our panelists for excellent testimony. I would like to ask you gentlemen about China's relations with North Korea and with Iran. I know that we don't have much time. But China's enablement of North Korea's nuclear development program has allowed Pyongyang to become a de facto nuclear power. Does Beijing really desire a nuclear-free Korean peninsula or does China prefer a situation where an erratic and unpredictable North Korea ties down the United States and their East Asian allies while China pursues its own regional ambitions in the South China Sea and elsewhere? And on Iran, news reports of Beijing supplying Tehran with surveillance equipment to spy on Iranian citizens is only the latest example of extensive Chinese/Iranian security links. There have been reports of Chinese military cooperation with Tehran in the upgrade of Iranian fighters, missile technology, and production of speed boats to patrol the Gulf and the Strait. Have the U.N. sanctions against Iran, including an arms embargo, diminished Beijing's supply of weapons and missile technology to Tehran? A former Los Alamos nuclear engineering analyst said that Beijing's nuclear cooperation with Iran ``created the foundation of the Iranian nuclear program today.'' Would you agree with that assessment? So, North Korea and Iran, we will start. Mr. Cheng. It is obviously difficult to determine what China prefers, given the opacity of Chinese decision making. But I would suggest that China prefers neither a nuclear-free North Korean nor necessarily an erratic and unpredictable North Korea. Instead, at the moment, given the leadership transition that is ongoing in China, it would seem most likely that the Chinese would prefer, frankly, that just somebody else deal with the North Korean situation, most likely the United States, while China deals with its internal power shift. Now, in the longer-term, China would most prefer a docile North Korea that it can control and manipulate, which it currently does not necessarily have. Given the unlikelihood of this situation, it would prefer a North Korea that does not precipitate a war on the peninsula, but which would not be reunified with the South, and which would focus American attention elsewhere away from Beijing. Chairman Ros-Lehtinen. Thank you. Mr. Tkacik. One has to remember that North Korea is China's oldest, and I think right now still the only, treaty ally in a military mutual defense treaty. I have watched China/North Korea for 20 years, and I have come to the conclusion that China seems, indeed, to want North Korea to behave the way it does. China has pretty much total control in North Korea, both by virtue of its economic and trade relationship and the military treaty. And it seems evident from the latest succession that China was absolutely critical in giving the benediction to the ascension of Kim Jong Un. In late 2010, a senior American nuclear weapons specialist, Sigfried Hecker, went and visited North Korea and was taken to the uranium enrichment plant in Yongbyon that had just opened up within the previous several months. Hecker said that this was the most modern thing that he had ever seen. Chairman Ros-Lehtinen. Thank you. Let me just give--I have got 1 minute left. Thank you. Mr. Wortzel. Madam Chairman, I see, and have seen, despite the rhetoric out of Beijing, I have seen nothing in Chinese nuclear doctrine writings other than the position that a weaker country threatened by a hegemonic state--and that means the United States--ought to be able to deter aggression with nuclear weapons. So, they have no problems with a nuclear-armed North Korea. They have no problems with nuclear-armed Pakistan. They pretty much encourage that. They left behind the infrastructure that helped Iran with its nuclear program. And I will just conclude with that. Chairman Ros-Lehtinen. Thank you. Mr. Fravel. Very quickly, I will just echo some of the comments that my colleagues have made. I think that China prefers above either a nuclear-free peninsula or erratic DPRK behavior, a divided peninsula in which the DPRK continues to exist as an independent state. I don't think that they are actively encouraging erratic behavior by the DPRK because, ultimately, it causes more problems for them than it solves. Thank you. Chairman Ros-Lehtinen. Thank you very much. Mr. Berman? Mr. Berman. Yes, I would like to get responses to three questions without using all my time to ask the questions. First, to Dr. Fravel, the Director of the National Intelligence sort of confirmed your analysis or shared your analysis regarding China's less-assertive behavior over the last 10 months in the South China Sea. Do you think this was a deep change or a tactical change on the part of China? And how do we turn it into a long-term change in behavior rather than just a shift that shifts back into a reactionary cycle that could lead to open conflict? Second, I would be curious if one of you could address the question of whether, in your opinion, the upgrade program for Taiwan's F-16s is sufficient for Taiwan's self-defense in the near-term as well as the long-term. And finally--and I think, Dr. Wortzel, you touched on this--regarding Iran, it seems to me the odds of our current policy achieving its goal may be very dependent on the extent to which China becomes a cooperating partner in the sanctions leading to a diplomatic resolution strategy that we are now pursuing. What would the likely impact on U.S.-China relations be if Chinese energy companies involved in Iran were to be sanctioned by Washington? While China may not have any naturally-negative view of another country having nuclear weapons to deter a ``hegemonic power,'' us, why wouldn't China's fear of a military confrontation and its impact on its need for reliable and relatively-cheap energy be enough of an incentive to get them to join that? Dr. Fravel, first, as quickly as possible in the 2\1/2\ minutes left. Mr. Fravel. Thank you very much. Very quickly, I would say that China's change in behavior in the South China Sea was initially a tactical shift, but I believe it has a strategic logic and has the potential to endure for a period of time, although it will certainly not resolve the underlying conflicts in the region. It has a strategic logic because, from Beijing's perspective, the goal is to limit sort of states in the region from pursuing deeper security ties with the United States. And the way to do that, from Beijing's perspective again, is to try to address some of the concerns that the states in the region have about China's behavior. So, I think it has some likelihood of enduring for some period of time, but, ultimately, what would be needed is a much longer-term solution that would address the conflicting claims in the region. Thank you. Mr. Berman. Thank you. Taiwan, and then Iran. Mr. Cheng. Sir, on the issue of the Taiwan upgrades, the upgrades are to a series of aircraft that are already 20 years old. Every aircraft that is being upgraded is pulled off the line for an extended period of time, which means the net number of aircraft that Taiwan can put in the air is reduced. The proposed sale of F-16C/Ds would replace aircraft that were designed in the 1950s. Not doing so, basically, means that Taiwan has an air force that, through sheer attrition and age, will be reduced over time without China having to do anything. Mr. Wortzel. Mr. Berman, first of all, I think the upgrade helps, but it is insufficient for Taiwan. On Iran, I think that if energy companies were sanctioned, it would certainly help if Chinese energy companies were sanctioned. They are still very dependent on Iran and very reluctant to do anything to sever that. Obviously, Russia is part of that equation. Mr. Berman. But why wouldn't the fear of the exercise of a military option to set back Iran's nuclear program and the consequences of that on China's energy needs become a more dominant factor? Mr. Wortzel. One would think it would, but, first of all, it hasn't---- Mr. Berman. So far. Mr. Wortzel [continuing]. Obviously, so far. And second, if you are going to conduct surgical strikes on that nuclear program, you really haven't affected the pumping in the ports. It would have to be a completely different form of warfare. And so far, nobody is contemplating that, and they are probably aware of that. Chairman Ros-Lehtinen. Thank you so much. Thank you, Mr. Berman. Mr. Smith is recognized. Mr. Smith. Thank you very much. Dr. Wortzel, tomorrow Carolyn Bartholomew, your fellow commissioner, will testify at our hearing on the impact of China on Africa. But let me ask a question. China's population control has been employed as a weapon of mass destruction imposing a devastating impact on women and death to children, especially the girl children. Last September, in yet another hearing on these crimes against humanity, and a look at possible consequences, two consequences that are grossly, I think, under focused on were brought out during the hearing. There is a book--many of you or all of you may have read it--Valerie Hudson's book called the ``Bare Branches: The Security Implications of Asia's Surplus Male Population.'' In that book--and she testified at our hearing and updated her information--her argument is that the one-child-per-couple policy has not enhanced China's security, but demonstrably weakened it. She points out, as Nick Eberstadt famously phrased it, ``What are the consequences for a society that has chosen to become simultaneously both more gray and more male?'' She points out that, by 2030, the ratio for seniors-to-workers will be 2.5, and 1.6 workers for senior citizens in 2050; and also, that the number of boys, 118 boys for every 100 girl babies, and the ratio may be as high as 122. She points out that these surplus males, as she calls them, and others have called them, the bare branches, a colloquial Chinese expression, will disproportionately be poor and less- educated Chinese young men, and the possibility for destabilizing China itself. Certainly the corresponding propensity or invitation to the Chinese Government to expand, to use international aggression as a safety valve, is laid out both historically in her book and her testimony as something that might happen. And she says, and I will ask you the question then, ``When we look at global aging, China is aging, and the likely economic effects of aging, and combine them with the analysis of the effects of abnormal sex ratios on society, the synergistic effects are likely to be quite dangerous for the Chinese Government.'' And again, she talks about the possibility of war with Japan and certainly Taiwan and others in the crosshairs. Your thoughts? Mr. Wortzel. Mr. Smith, I know Nick's work very well, Nick Eberstadt, and he has documented these problems very well. I don't subscribe to the theory that a surplus of males necessarily leads to a Spartan state. It leads to a lot of problems in getting people in the military, but, I mean, this is an authoritarian country; they will get who they need. And it does lead to potential instability, but not a Spartan state necessarily. Mr. Smith. Well, I wasn't saying Spartan state. I was saying---- Mr. Wortzel. Well, I mean, it doesn't necessarily, when I say a Spartan state, I mean to aggression as a channel. The thing it certainly does lead to is an awful lot of prostitution. It leads to a lot of trade in persons, and women from Southeast Asia and Korea and Mongolia suffer because of that. Mr. Smith. Yes? Mr. Tkacik. No, I agree with that. I think that the demographic challenge of a male population I think does mean that China's military will be, I think, more disciplined. And, No. 2, there will be a tremendous demographic aggression against Chinese neighbors where populations in the periphery are out looking for women to bring into China as wives. It will cause instability. I don't think, if there is a war, China is going to lose it, though. Mr. Smith. I wasn't just saying it would lose it. It is that it would be a safety valve. That is what the thesis of her book, in part, was all about. Mr. Tkacik. Yes. Mr. Smith. And I did ask her whether or not the Pentagon has shown any interest. It ought to be factored into at least their thinking. And she said---- Mr. Tkacik. I have not seen any interest. No, I think people think about this, but when you consider that the main concern of the Chinese Communist Party is economic growth and stability, that sort of aggression reverses that. So, I mean, one thinks they might think that through. Mr. Smith. Yes? Mr. Cheng. Sir, two other considerations. One is in a post- war environment, what happens to the parents and grandparents of the casualties? Since currently they are supported by the children, assuming that China is not able to fight an immaculate war with no casualties, you wind up with political consequences afterwards. The flip side to that is that there is also an inherent public health issue with the growth in prostitution, issues like that. Things like AIDS, et cetera, can spread like wildfire through the Chinese surplus male population. Chairman Ros-Lehtinen. Thank you so much, Mr. Smith. Mr. Connolly? Mr. Connolly. Thank you, Madam Chairman. An observer listening to you all on this panel, and to our byplay with you, could, if you landed from Mars not knowing much about this relationship, conclude all is dark and the relationship is unrelentingly hostile; we are dealing with a growing and powerful adversary in the People's Republic of China from intellectual property issues to military posture, to actually countering U.S. foreign policy issues on nuclear proliferation, North Korea, Syria, their own hegemony in the Pacific Basin and military posture to one-child-per-family policies, to all kinds of things. I wanted to give panelists an opportunity to comment on that because surely there is more to the relationship, though these are very serious issues and cannot be swept under the carpet. But I haven't heard you talk much about how we move forward and what is at stake in trying to work out some kind of--forgive me again, Madam Chairman--modus vivendi with this-- -- Chairman Ros-Lehtinen. You are going to start getting penalized for that. Mr. Connolly. I'm sorry. Dr. Wortzel, do you want to start? Mr. Wortzel. I would be happy to. Thank you for the question, Mr. Connolly. First of all, as our 2011 report on the commission pointed out, things have gotten worse. Mr. Connolly. Worse? Worse? Mr. Wortzel. It may not be dark, but it is pretty cloudy. I think what we have to do is work with friends and allies to reinforce rule of law in China and to reinforce the observation of international common practice by China, because they don't. And we have to work with allies and friends to make sure they do and that they comply with their WTO obligations. They have really backed away from many of them. Mr. Connolly. Let me ask you, if I may, Dr. Wortzel, to expand. What is U.S. leverage and how well do you think we use it? Mr. Wortzel. I think, first of all, our leverage is weakened slightly now by the economic relationship and the need for vestment in Europe from China. So, it is less leverage. But I think the big leverage we have is the fact that we have a strong economy and that the Chinese really do want to take advantage of that for their own exports in the near-term. There are a lot of problems to resolve with respect to that, but that is our primary leverage. Our secondary leverage, well, perhaps as important is, frankly, our ability to prevent a state that sees itself culturally as the center of at least Asia, if not the world, from exercising the coercion against its neighbors that it traditionally has as a regional suzerain surrounded by vassal states. Mr. Fravel. One perspective might be to look at the exchanges between our two countries. I believe the U.S. Embassy in Beijing is now the second-largest diplomatic post after the Embassy in Baghdad. That sort of reflects the fact that in all segments of society there are close relations between many Chinese and many Americans, especially at the person-to-person level, not necessarily the government-to-government level. Just as a quick anecdote, when I started studying Chinese in the fall of 1989 at a small liberal arts college in Vermont, there were seven students in my class. Today at that same small liberal arts college in first-year Chinese there are now 55 or 60 students. And so, I think, despite all the challenges that Larry has laid out and that other panelists have laid that, the fact that there are greater exchanges at the people-to-people level is arguably one source of optimism in the much longer-run. But, again, I certainly recognize and acknowledge the challenges. Thank you. Mr. Tkacik. I would point out that China is a rising power, and that the United States, Europe, Japan are status-quo powers. There is a grave potential for collision as the international systems enter into a power transition phase. I think the University of Chicago's John Mearsheimer pointed out in 2008 that, as history shows, powerful states on the rise often fight wars with other major powers. Now this is a replay of 100 years ago in Europe, 100 years ago in Japan, 50-60 years ago in Central Europe. I have a feeling that what we are looking at is a historical problem, and we have not yet dealt with it. Mr. Connolly. Thank you, Madam Chairman. Chairman Ros-Lehtinen. Thank you, Mr. Connolly. Mr. Connolly. I'm sorry, Mr. Cheng, my time is up. Chairman Ros-Lehtinen. Thank you. Ms. Schmidt? Ms. Schmidt. Thank you. I actually have two questions. I will deliver them both and allow the experts to answer them. The first deals with George Friedman's book, ``The Next 100 Years,'' and his assessment of where we will be militarily in 2050. He believes that we will be engaging more through satellites and space more than with men on the ground. Given that, and given the position of this administration to sell restricted satellite technology, the AsiaSat issue, what risks do you see for the U.S. in doing this, not just now, but in the future? And the second deals with Taiwan. When President Mao was elected in Taiwan, he began a closer relationship and tie with China, especially with the Olympics and getting the ability of people to get in and out of China more easily. That, I believe, has put a seemingly larger presence of China into Taiwan's economy. Given that, and the issue with the waterway issue between China and Taiwan, how real do you see the economic/maritime threat to Taiwan with China? And what resolution would you see for it? Mr. Cheng. On the issue of space warfare, I think it is very important to recognize that PLA writings make very clear that one of the essential aspects to successfully fighting what they term a local war under informationized conditions is the ability to secure space dominance. The Chinese ASAT test in 2007 was the single worst debris-generating event in all of history. People forget that afterwards China conducted another ASAT test in 2010. I would suggest that the current administration's efforts to implement an international space code of conduct in the hope of getting the Chinese to then sign on, when China and other space faring countries have already said that they will not do so, is perhaps the ultimate triumph of hope over experience. And in this regard, I think that the announcement that we are thinking of selling space technology to China, when the administration has repeatedly said that export control reforms, which arguably are necessary, will not affect our controls on China, raises real questions about what direction the administration thinks it is heading in. Mr. Tkacik. I would point out that, Congresswoman Schmidt, you are absolutely correct. The new Taiwan President has adopted a policy of accommodating China. Just in the last several months, we have seen an entire new change in the political posture of Taiwan, which basically agrees that Taiwan is part of China. I think once Taiwan has made that choice, then you are now looking at Taiwan moving out of the column of the Western democracies and the community of democracies in East Asia and moving into the column of the sphere of China's security interests. The thing you have to remember is that Taiwan still has a sophisticated basing structure. It has phased-array radars mounted high up in Taiwan's mountains which used to be or which are designed to scan the Chinese mainland for ballistic missile launches, and now will be turned out into the western Pacific to scan for the U.S. Taiwan's deepwater ports, submarine bases in eastern Taiwan, just a few dozen miles from Japanese territory, which had enabled friendly submarines to slip undetected into one of the deepest maritime trenches in the Pacific, they will likely give Chinese diesel/electric submarines home in the future. There is also a possibility of China and Taiwan cooperation against Japan and the United States in the East China Sea. The importance of the Senkakus for defining East Asia's and Japan's and the United States' maritime depth opposite the new Chinese superpower I think cannot be overstated. And all this may result--I think this is what we are looking at, is that Ma Ying-jeou, the President of Taiwan, now has a very clear China policy. What is also clear is that he does not have an America policy. Mr. Wortzel. I would only say that I fundamentally disagree with Friedman, that until we get space-based weapons or rods from God--and that is not real likely--no part of a maritime domain was ever controlled from space. Space is fundamentally important to our military operations. We have a very powerful Navy, a powerful Air Force, and troops that can go in and put boots on the ground. Chairman Ros-Lehtinen. Thank you, Ms. Schmidt. Mr. Sherman is recognized, unless you would like to have a few minutes. Then, we can go to Mr. Chabot. Mr. Chabot is recognized. Mr. Chabot. Okay. Thank you, Madam Chair. Could I hear the other members of the panel? We had a meeting in back and just got in, but I heard Mr. Tkacik discussing Taiwan. Well, let me go to you first, Mr. Tkacik, again, and then to the others. Is what I just heard you say about Taiwan and the shift under President Ma, the direction that he has gone, do you think that is irreversible at this point? Or what is your opinion there? Mr. Tkacik. Well, I don't think it is irreversible. I think what has happened is that, over the last, I have to admit, the last two administrations, the Bush administration and the Obama administration, basically, we have cut Taiwan loose. Taiwan is now in a phase where they basically feel they have no support in the United States, that the U.S. Government, the U.S. administrations are not supporting a Taiwan that is part of the network of Asian democracies that comprises island Asia as opposed to mainland Asia. When you are faced with that kind of a situation, the Taiwanese voters basically say, ``There's no sense in me voting for any kind of government that is going to challenge China because we are not going to get any support.'' I think that in 2000 they thought they were going to get support, and in 2004 I think the Taiwanese voters thought they were going to have the support of the United States, but no more. Now, if that were to change, I think, yes, it would make a big difference in Taiwan's electoral process. But, right now, the policies that the government in Taipei are adopting are moving inexorably toward the Chinese sphere of security responsibility. Mr. Chabot. Would the other members of the panel like to comment on that? Mr. Cheng or Dr. Wortzel? Mr. Wortzel. I certainly would, and I thank you for the opportunity to do so. I think John, Mr. Tkacik, is right. But the operative word he used is the elections and the voters. So, it is not like Ma Ying-jeou has just come up with this policy that has no support. And the legislature hasn't helped either Taiwan or itself or the United States when they had a good armed sales package. So, part of that is partisan politics on Taiwan. Mr. Chabot. And let me stop you there for a second, Doctor. By that, my recollection is that the United States was trying to get the needed weaponry into their hands. The legislature at that time, for political reasons or whatever, was so divided that they couldn't get their act together enough to approve much of---- Mr. Wortzel. That's exactly right. The legislature was and still is divided. I think much of the populace was divided, and that is reflected in the legislature. And then, finally, in my personal view, Taiwan's military piecemealed a little bit of a whole bunch of good things, instead of going for a major defensive architecture that would have allowed them to engage in cooperative target engagement with all their ships and aircraft and ground systems. So, that was mismanaged, too. Mr. Chabot. Okay. Mr. Cheng? Mr. Cheng. Representative, I think that I am certainly not in any kind of position to give advice on Taiwan because they are a democracy and they make their own choices. All I can say is that, for the United States with regard to Taiwan, and throughout the region, what we need is a consistent strategy and persistent actions, a consistent strategy of defending our interest in standing up for our principles, persistent actions that are consistent with that strategy, whether it is the sale of needed arms under the legal terms of the Taiwan Relations Act, not simply upgrades, as has been inquired about, or whether it is the commitment of American forces on a persistent basis, unlike the vast relation we saw with the George Washington Battle Group back in 2009. Our failure to do so I do believe has political repercussions, including in democracies like Taiwan. Mr. Chabot. Thank you. And I have limited time. So, let me make just a comment real quickly here. I think the fact that the Taiwanese Government has decided to move itself in the direction of the criminalization of politics is unfortunate as well. Their previous President, President Chen, still is behind bars. I think for an administration to come and essentially jail the previous administration is a tragedy, and I think that they ought to deal with that sooner rather than later. I yield back. Chairman Ros-Lehtinen. Thank you so much, Mr. Chabot. Mr. Sherman is recognized. Mr. Sherman. Thank you. I ask anyone on the panel to comment. Is there serious discussion in Taiwan of developing an independent nuclear weapons capacity? And would they have the capacity to do so within a few years? Mr. Tkacik. I think the answer is absolutely no. Taiwan did have a fairly robust nuclear weapons research campaign in the 1970s and again right up until January 1988. Probably, if they had been successful, we wouldn't be discussing this now. But both the major political parties in Taiwan I think are adamant against any such thing now. The ruling party is called the Chinese Nationalist Party, and it supports Taiwan's eventual reunification with China. The opposition party, the Democratic Progressive Party, is adamantly anti-nuclear. So, there is just no---- Mr. Sherman. Thank you. I would like to go on to another question. Mr. Wortzel. Well, I would like to add to that, if I may. Mr. Sherman. But I am sorry, I---- Mr. Wortzel. They don't have the strategic depth to confront China with nuclear weapons. Mr. Sherman. I would like to move on to another question. We have a toxic trade relationship with China, a $300-billion trade deficit. What that means is they send us $300 billion of stuff every year and we send them $300-billion worth of paper. I can understand why Americans like this. It produces huge profits, helps consumers. With this ideology of free trade, we can simply ignore that the Chinese Government controls import decisions, not through tariffs but through other means. And so, it fits our theoretical model of the way the world should work. So, that provides us with an intellectual underpinning to support the huge profits and the wonderful stuff we get. What I don't understand is China. Every year they ship us $300-billion worth of fine things, and they get bonds. Can anyone here explain the bond fetish of the People's Republic of China? Mr. Wortzel. Well, I personally can't. I can say that our commission's reports over a series of about 4 years and a number of hearings that we have held make it pretty clear that the United States treasuries market and bond market remains still the most stable place to park that money and to get it back, and that the undervalued currency and the continued undervaluation of that currency is based on the ownership of those treasuries. Mr. Sherman. Yes, I can understand that, if you are going to save money, U.S. Treasury bonds are a wonderful place to put it. What I don't understand is why a developing country insists upon saving several hundred billion dollars a year rather than importing. Let me move on to another question. Germany has a balanced trade relationship with China. So, we could reach the conclusion that German workers and entrepreneurs are better than their counterparts in the United States or that the foreign policy establishment in Germany is doing a better job for the German people than the foreign policy establishment in our country. How has Germany conditioned access to its market on fair access for its exporters to China? Dr. Wortzel or anyone else may answer. Mr. Wortzel. Well, I don't know the answer to that, but I can tell you, from having dealt with German defense and high- technology firms and their relationships with China, they take a very different approach to transferring technology. They recognize it will be stolen. They don't worry about sales and transfers. But what they do is take already outmoded technology for them and manufacturing and are quite willing to sell it and transfer it with the idea that their research and development is far ahead. Mr. Sherman. Does anyone else have a view as to why Germany is able to have a balanced trade relationship with China? Mr. Tkacik. Well, the Germans have a robust industrial infrastructure. They produce very good---- Mr. Sherman. So do we. Mr. Tkacik. Well, I don't know if we do any more. I think that in the last 10 years I think---- Mr. Sherman. So, you would blame the American worker and manufacturing companies rather than the foreign policy---- Mr. Tkacik. I would blame a political decision in China not to buy American goods. I would point out that, while we have a $300-billion trade deficit with China, China basically, all told, has a $100-billion trade surplus. So, they are using American money to buy other people's goods and other people's resources and commodities. It seems to be a conscious economic decision on the part of China not to buy American. Mr. Sherman. I agree. Chairman Ros-Lehtinen. Thank you. Thank you very much. Mr. Royce is recognized. Mr. Royce. Thank you, Madam Chairman. My subcommittee held a hearing on China's so-called indigenous innovation policy, and indigenous innovation is just basically the concept for the Chinese Government extortion of U.S. technology, in the view of many. For years, American businesses were afraid to speak out on this issue. I think they feared they would be shut out of the Chinese market. But now we have a different attitude. Now, at long last, you see U.S. businesses speaking out long and hard about this indigenous innovation issue. I would like your views on these policies, the forced transfer of U.S. technology over to the government in China. I would just like to underscore that this is some of the most valuable technology that U.S. companies possess. I should add that Mr. Connolly and I have legislation coming out of that hearing that we held that I introduced changing these practices. That is H.R. 2271. But let me just get your thoughts on the record. Mr. Cheng. Representative, I think that it is important to put all this in the context of the Chinese emphasis on comprehensive national policy, the idea that a nation's position is a reflection of science and technology and industry. In this regard, then, the emphasis is on technological development as a means of bringing China up the value chain to get it out of making the low-end items, becoming more of a manufacturing power and a post-industrial set of capabilities. This is consistent with what the Chinese have termed the two bombs/one satellite policies, which also emphasize domestic development, partly a fear that it would be cut off, as it was after the Sino-Soviet split, from foreign technology. But, also, partly the idea that you want to obtain foreign R&D which is, therefore, going to be lower cost, and the creation of state champions to create better. The aspect of indigenous innovation should also be seen in the context of cyber warfare, in the sense of, if I can't get you to invest here, I may be willing to use cyber methods to try to, frankly, steal it from you. Mr. Royce. And some argue that they are not that great at innovation, and that is why they steal. That is why they steal it. But go ahead. Mr. Wortzel. Well, I mean, there are cultural impediments to creating new ideas, and there are structural because of the Communist Party organization, and they recognize that. But I have to say our commission looked at--I haven't seen your legislation, sir, but we looked last year at Mr. Webb's suggestion, Senator Webb's suggestion. We were not able to come to an agreement on it. But I will give you, if I might, the position that I suggested on this issue. That is, you take a look--somehow pharma for me is a decent model. I mean, you don't want to limit the transfer of technologies that may have been developed with government funding and research or taxpayer-funded research and development to China. But, after a while, it doesn't always pay to control it. You know, the M1911A1 pistol was 1911. But pharma for me, because there is this sort of 5-year window, 7-year window, where the patents then go away, and other companies can use it, is a reasonable model to think about. The taxpayers deserve some return and not to lose what they funded certainly for a fixed period of time. But how far that should go, we couldn't agree. Mr. Tkacik. I mean, I would add that the Chinese have gone out of their way to steal America's most advanced technologies. They have done this to Applied Materials. They have done it Cisco Systems. They have done it to Google. They have done it to Microsoft. And just in the last week, we saw a very interesting report from, I guess it was, Business Week, on how the Chinese stole the software and blueprints from American Superconductor, a Massachusetts company, basically, leaving American Superconductor with $700 million in unpaid equipment bills. And the Chinese basically turned around and said, ``That we don't need anymore. We can build this ourselves.'' It was breathtaking. The problem I have, though, is that when the Chinese go and steal this technology from us, after a while they do begin to develop an indigenous research and development capability that---- Mr. Royce. Let me make one last point. Last year, the DoD's annual report on the Chinese military reported an extensive tunnel network underneath China designed to hide its nuclear weapons. It could be 3,000 miles long, as I understand it. That would imply, they say, that the often-cited 300 to 400 weapons may, in fact, be many times that. Yes or no? Mr. Tkacik. The answer is yes. Mr. Royce. Thank you. I yield back, Madam Chair. Chairman Ros-Lehtinen. Thank you so much. Mr. Manzullo is recognized. Mr. Manzullo. I am always intrigued by how Americans try to work with Chinese based upon an American model of thinking. Mr. Cheng, I commend you in your paper for talking about something that most people don't even imagine, and that is the manner in which the Chinese approach something. If I could call your attention to page 5 of your testimony, you make the statement, paragraph 3, line 3, ``The first issue is that the Chinese do not think the way we do.'' Then, you point that out by way of various examples. Also, the same pattern appears in Mr. Tkacik's testimony and, actually, across the board. I was at a remarkable meeting of the U.S.-China Business Council on April 22, 2004. I wrote this down, keep it in my BlackBerry, as quoting Madam Wu Yi, at the time who I guess was the equivalent of the Secretary of Treasury perhaps. She said that China has a ``market-based, managed, unitary floating exchange rate.'' I wrote that down, and I said this can't be. And then, my aide there said, well, this is in the official English translation of what she said in Chinese. What is particularly bothersome is the fact that we tend to deal with the Chinese based upon Western thinking. I just want to throw that out to Mr. Cheng and other members of the panel. I know you agree with me on that, but talk about it and the impact it has on American diplomacy with China. Mr. Cheng. In brief, sir, I would submit the following: That in many ways we tend to think of China as a rising power. We think of ourselves as a status-quo power, which is hardly surprising given that we are happy with where we are after about 250 years of history. I would suggest that China actually thinks of itself as a status-quo power. The problem is how you define the status quo. For us, in our history, China has always been a weak power and only now has been rising over the last, say, 20 years. For China, with its 3-, 4-, 5,000 years of history, it has almost always been the dominant power in Asia and, therefore, the known world for them. China, therefore, is seeking to re-establish itself. This is not Germany in 1900 newly-unified. This is a country that sees itself as returning to the world stage in its proper place. That is a very different perspective. Mr. Manzullo. Anybody else want to comment on that? Dr. Fravel? Mr. Fravel. Well, just a different example would be Chinese negotiating behavior. So, for example, many Chinese negotiations, the Chinese will want to first talk about principles and get agreement upon principles and, then, sort of establish a friendship or reach an agreement; whereas, I think the Americans approach it sort of the opposite. You reach the agreement first and, then, you sort of become friends afterwards. And so, I think it creates a lot of challenges in negotiations with China. I think it is very important to understand what these differences are and how they will affect various aspects of U.S. foreign policy. Mr. Manzullo. Dr. Wortzel? Mr. Wortzel. Well, I think that we want to stick to a Western viewpoint because essentially those are the legal norms and the international norms by which the world conducts itself, conducts warfare and trade. I think the mistake that we sometimes make is to think that Chinese perceptions and policy mirrors our way of looking at it. So, I think it is very important to understand, as Dr. Cheng did, how the Chinese--or Mr. Cheng--how the Chinese think about things. But I don't think we should depart from a Western viewpoint. The goal of our policy in the World Trade Organization is to get them to adopt that or at least live by it. Mr. Manzullo. Mr. Tkacik? Mr. Tkacik. Tkacik. Mr. Manzullo. Tkacik. Mr. Tkacik. I would just say that China is no longer a rule-taker. China is now a rule-maker in the international system. And imagine what the world is going to be like when China makes the rules. Chairman Ros-Lehtinen. Thank you very much. Thank you, Mr. Manzullo. Mr. Rohrabacher is recognized. Mr. Rohrabacher. Thank you very much, Madam Chairman, and thank you for holding this hearing, providing this kind of leadership to focus our attention on some real threats to our prosperity and to our security. Let me just note for the record, Madam Chairman, that when we refer to China, we are not referring to the people of China. We are referring to the regime that controls the people of China and its entourage. But the people themselves are not responsible for the policies that we are talking about because China is the world's largest dictatorship and human rights abuser, to the degree that we are upset by the way the Chinese are setting up the rules on how they relate to us. One can only imagine the horror of having to live under a regime as arrogant and as oppressive as they do in China. So, let us reach out to the Chinese people. What we have seen is the greatest transfer of wealth and power in the history of the world. In the last 30 years, we have seen a transfer of wealth from the United States and other Western countries, but especially the United States, to China, to a China that, as I say, is governed by the world's worst human rights abuser/dictatorship. This transfer of wealth, it should be no surprise. You know, are we really astonished that this has happened? No. We have seen it going on, and it is a result of specific policies that we have had in our Government, policies that we have not been able to change here in Congress because we have a business elite in the United States who are making profit for themselves, for the elite, off this policy, even though it may transfer wealth away from the rest of us, and, of course, a policy that has been also supported by people in the Executive Branch, for whatever their grandiose schemes of trying to make China a more peaceful country, a less dictatorship, because we are going to make them more prosperous. That theory, of course, the what I call a ``hug-a-Nazi/ make-a-liberal theory,'' has not worked. And surprise, surprise, they are still the world's worst human rights abuser, but now they have all of our technology and they are building high-tech weapons based on what we have given them, the wealth as well as the technological capabilities. And, of course, they are the ones responsible, Madam Chairman, for the greatest and just most blatant theft of American technology and the investment that it took to create that technology of anything that any of us have witnessed in our lifetime. And for the record, it has been reported that the head of the EU Space Agency recently met with the Chinese in order to see if it is possible we can permit them to be partners and dock their rockets onto the International Space Station. I was a little late for today's hearing. I was at a meeting of the Science Committee. I will put on the record here as well: The United States should not in any way agree to having Chinese rockets and Chinese participation in the International Space Station. Of course, the rockets are made up of technology that they have stolen from us. Thus, they have no R&D cost, which has drained our money and our resources. To permit them now to participate in the International Space Station would be adding much harm and much insult to already something where there is harm and insult. I noticed that Ambassador Gary Locke, our Ambassador to China, in a recent speech indicated that the Obama administration expects to loosen export controls ``that will enable more high-tech goods to be exported to China.'' There has been a recent, for example, loosening of those export controls by a company called AsiaSat, which now has been given an export license. It is a Hong-Kong-based company. But it has got tremendous and very identifiable roots and contacts and controls by the Beijing regime. And Ambassador Locke disclosed that China has submitted a list of 141 high-tech items that they want from the United States. Madam Chairman, I would request that this committee ask for that list. And Ambassador Locke has indicated that 46 of those items are readily available and could almost go without any controls. I would ask that this committee request---- Chairman Ros-Lehtinen. I will be glad to make that request, and we will put it in writing and make sure that he receives it. Thank you. The gentleman's time is up, if you want to conclude with some---- Mr. Rohrabacher. Thank you, gentlemen. I am sorry, but I needed to put that on the record. Chairman Ros-Lehtinen. Thank you. We will make that request, and thank you so much. Mr. Kelly is recognized. Mr. Kelly. Thank you, Madam Chairman, and I thank the panel for being here. Now China is the world's most active and persistent perpetrator of economic espionage. Every day U.S. businesses are targeted by China for cyber exploitation and theft, resulting in huge losses of valuable intellectual property and sensitive information. So, China has stolen a wealth of IP from companies such as Google, which somebody talked about; Yahoo, Northrop Grumman, as well as a number of smaller companies that are afraid of speaking up, lest they provoke even further attacks from China. U.S. companies have reported an onslaught of Chinese cyber intrusions that steal sensitive information like client lists, merger and acquisition data, pricing information, and the results of research and developmental efforts. This information is used to give Chinese companies an unfair competitive advantage against our American companies from whom it was stolen. Now while these hackers continue to steal intellectual property, they take new high-paying jobs from American workers right along with it. Estimates of this loss and economic espionage are hard to make, but they range anywhere from $2 billion to $400 billion a year. Just as important, many of these same vulnerabilities used to steal intellectual property can also be used to attack the critical infrastructures we depend on every day. My question is, what is your assessment of this administration's actions in light of its solemn duty to protect U.S. businesses and infrastructure from cyber exploitation and theft? In fact, we even have a clearly-defined policy. Any of the folks on the panel? Mr. Wortzel. I think the administration's approach has improved and is improving. I think having a U.S. Cyber Command and I think the great work by the Department of Justice and the Federal Bureau of Investigation in notifying U.S. industry--94 percent of the penetrations of American industry are discovered by agencies of the U.S. Government, not those industries. It is the government that tells them. Unfortunately, sometimes it takes 400 days or so for that to happen. So, they can use more assets. But I think they have a very good effort. If you look at espionage convictions, if you look at convictions for violations of the Arms Export Control Act, the Export Administration Act, and the Industrial Espionage Act, Economic Espionage Act, I think Justice has done an excellent job over the past 6 or 8 years in bringing people to justice. What we lack in the cyber arena are the things that I actually put into my testimony. We don't have a way to take a Chinese company to task or a Chinese actor and prohibit them from entering the U.S. market. I have suggested ways to do that. I think they are practical and reasonable. Our commission held a hearing on this same subject on Monday. We had a couple of very good suggestions from cyber specialists who suggested companies adopt annual audits, in addition to defenses. And that with these annual audits, instead of waiting for the FBI or the Department of Homeland Security to tell them they have been penetrated, they will discover it. General Cartwright, the former vice chairman of the Joint Chiefs of Staff, made an excellent suggestion, in fact, cited times of cooperation when the United States Government found penetrations by China. They went right to the Chinese Government. Mr. Kelly. Well, let me ask, because time is of the essence in all of this. As you said, sometimes it takes 400 days. Mr. Wortzel. Yes. Mr. Kelly. So, what kind of a price are U.S. businesses paying on this and the workers and the rest of the people that are involved in this theft? It just seems to me that, while we may have some policy, we don't have a clearly-defined policy. Where I am from in northwest Pennsylvania, we are losing jobs all the time and people are wondering, what are you going to do to stop this? Mr. Wortzel. Network monitoring is extremely important. Mr. Kelly. But in terms of losses, what do you think we have lost? Mr. Wortzel. Well, again, you have to document it. You have to have a legal mechanism to go after it and get it back. I mean, it is a legal problem. Mr. Tkacik. I would just add one thing, that it was very unsettling to me that the one agency in the entire U.S. Government that knows what it is doing in cyber penetration was not given the lead in America's cyber penetration strategy by the Obama administration. I think NSA has to be in the lead because they are the only ones that know what they are doing. I had one other profound thought, and it slipped my mind. So, I will just---- Chairman Ros-Lehtinen. I have had those senior moments so often. [Laughter.] Mr. Kelly. Thank you, Madam Chair. Chairman Ros-Lehtinen. Thank you very much. Mr. Burton is recognized. Mr. Burton. First of all, I want to apologize for my tardiness. I had another meeting I had to go to. So, I am sorry I missed a lot of your testimony. And if my questions sound redundant, please forgive me. The first thing I want to ask is, when I walked in, I heard you say there is 3,000 miles of tunnels in China that are used to conceal weaponry. First of all, why would they be doing that? I don't understand it. They are a nuclear power. We all know their nuclear capability. They have enough nuclear warheads and delivery systems to annihilate almost everybody on earth. Why in the world would they want to have 3,000 miles of tunnels to conceal more weaponry when they have already got enough? Anybody? Mr. Wortzel. First of all, there probably are about 3,000 miles of tunnels. They are not all storing nuclear weapons. There are underground national command centers, command-and- control equipment. There are military stores. There are civil defense stores in there. So, there are logistics and petroleum and ammunition in there. But all of China's nuclear doctrine, so far as I understand it--and I think I do--is that if they are attacked, and it is unclear whether that would be a conventional or a nuclear attack, but if they suffer a very strong attack, they want their nuclear forces to be able to emerge even 2 to 4 days later and fire a very, very devastating second strike. Mr. Burton. Wow. Mr. Wortzel. So, part of this is denial and deception. Mr. Burton. Maybe I should check and ask the question, what do we have in response to that? Mr. Fravel. One other element to add here is that the building of the tunnels in China began, actually, in the 1960s when China was very worried about whether or not it would have a secure strike capability because many of its missiles were quite vulnerable to first strike. And so, these tunnels have a very long history, primarily, as Larry just mentioned, in terms of ensuring some second-strike capability. And then, they are also used for other purposes in terms of storage of supplies, and so forth. But it is not a new, the point I want to make, it is not a new phenomenon. It is part of a very sort of longstanding practice. Mr. Burton. But it may be, but to build 3,000 miles of tunnels is going to take more than a week anyhow. Mr. Fravel. It has taken about four decades. Mr. Burton. Sure, it took more---- Mr. Tkacik. I would add that a Georgetown study, which I thought was very good, documented that I think at least half of the tunnels had been built since the mid-1990s. The other thing is that we do have a good sense of what China's fissile material production capacity is. They absolutely refuse to discuss fissile material cutoff and any kind of enforcement or inspection. Mr. Burton. Okay. Mr. Tkacik. So, we don't know. Mr. Burton. The other thing I would like to ask--and you may have already answered this question--when Mr. Wang went into our Embassy and was there for some time and he was refused asylum, and he was a real potential source of intelligence information, I would like to get your take on why we would even consider letting him out and letting him be captured by the Chinese. Mr. Tkacik. Well, I think China---- Mr. Burton. Well, just 1 second. And I understand that we had the Vice President of China coming in, and that might be part of it. And the other thing is, I read in my preparation here that there are some instability prospects in China and there is a possibility that there might be some kind of a coup. So, if you could comment on those two things in the remaining time I have, I would appreciate it. Mr. Tkacik. In my days in the State Department, I had to deal with a couple of walk-ins, three separate walk-ins. I have to say that the State Department doesn't really train you in how to deal with these things. You sort of learn about it by experience. I think, by the last one, we figured it out. But in the case of Wang Lijun, who seems to have gone into the American Consulate, I really don't know if the reports that he filled out an application form for asylum are correct. I am not sure that that is---- Mr. Burton. Well, my goodness, he was there for 24 hours. Mr. Tkacik. Well, he was there for---- Mr. Burton. I mean, I can't imagine him just saying, ``I want asylum. I am a high-level person in the Chinese Government. I am here. I want to stay. I have got information for you,'' and we say, ``Oh, we haven't filled out the forms. We are going to keep you.'' Mr. Tkacik. Yes, I don't think that is--I think what had happened is that he actually did fear for his life. My understanding is that he approached the British Consulate in Chongqing first, and this whole mystery surrounding the death of a British citizen in Chongqing last November really heightens this enigma. I think he went to the American Consulate because he thought that was the only place he wouldn't be killed. My hypothesis is that what we had was that he probably was negotiating with the Chinese Government for his life. It is basically up to maybe the committee here or the Intelligence Committee to get a briefing from the State Department on what actually happened. But we just don't have enough information. I mean, I would also add that, if this guy wanted asylum, going to the American Consulate in Chengdu is probably the last place he should have gone. We, I think, believe that if he had really wanted asylum, he knew that he had to get out of China first before he applied for asylum and not apply for it inside. Chairman Ros-Lehtinen. We will make the proper inquiries, Mr. Burton. Thank you for bringing that case up. Mr. Burton. Thank you, Madam Chairman. Chairman Ros-Lehtinen. And our Part II of this China hearing will be on human rights. And so, I am sure that we will consider his case at length. Thank you, gentlemen, for joining us. Thank you to the audience and to the press who is here. Thank you most especially to our members. And with that, the hearing is adjourned. Thank you. [Whereupon, at 11:55 a.m., the committee was adjourned.] A P P E N D I X ---------- Material Submitted for the Hearing Record [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]