[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]



                         [H.A.S.C. No. 110-61]
                  CHINA: RECENT SECURITY DEVELOPMENTS

                               __________

                      COMMITTEE ON ARMED SERVICES

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD

                             JUNE 13, 2007


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                   HOUSE COMMITTEE ON ARMED SERVICES
                       One Hundred Tenth Congress

                         IKE SKELTON, Missouri
JOHN SPRATT, South Carolina          DUNCAN HUNTER, California
SOLOMON P. ORTIZ, Texas              JIM SAXTON, New Jersey
GENE TAYLOR, Mississippi             JOHN M. McHUGH, New York
NEIL ABERCROMBIE, Hawaii             TERRY EVERETT, Alabama
MARTY MEEHAN, Massachusetts          ROSCOE G. BARTLETT, Maryland
SILVESTRE REYES, Texas               HOWARD P. ``BUCK'' McKEON, 
VIC SNYDER, Arkansas                     California
ADAM SMITH, Washington               MAC THORNBERRY, Texas
LORETTA SANCHEZ, California          WALTER B. JONES, North Carolina
MIKE McINTYRE, North Carolina        ROBIN HAYES, North Carolina
ELLEN O. TAUSCHER, California        JO ANN DAVIS, Virginia
ROBERT A. BRADY, Pennsylvania        W. TODD AKIN, Missouri
ROBERT ANDREWS, New Jersey           J. RANDY FORBES, Virginia
SUSAN A. DAVIS, California           JEFF MILLER, Florida
RICK LARSEN, Washington              JOE WILSON, South Carolina
JIM COOPER, Tennessee                FRANK A. LoBIONDO, New Jersey
JIM MARSHALL, Georgia                TOM COLE, Oklahoma
MADELEINE Z. BORDALLO, Guam          ROB BISHOP, Utah
MARK UDALL, Colorado                 MICHAEL TURNER, Ohio
DAN BOREN, Oklahoma                  JOHN KLINE, Minnesota
BRAD ELLSWORTH, Indiana              CANDICE S. MILLER, Michigan
NANCY BOYDA, Kansas                  PHIL GINGREY, Georgia
PATRICK J. MURPHY, Pennsylvania      MIKE ROGERS, Alabama
HANK JOHNSON, Georgia                TRENT FRANKS, Arizona
CAROL SHEA-PORTER, New Hampshire     BILL SHUSTER, Pennsylvania
JOE COURTNEY, Connecticut            THELMA DRAKE, Virginia
DAVID LOEBSACK, Iowa                 CATHY McMORRIS RODGERS, Washington
KIRSTEN GILLIBRAND, New York         K. MICHAEL CONAWAY, Texas
JOE SESTAK, Pennsylvania             GEOFF DAVIS, Kentucky
GABRIELLE GIFFORDS, Arizona          BRIAN P. BILBRAY, California
ELIJAH E. CUMMINGS, Maryland
KENDRICK B. MEEK, Florida
KATHY CASTOR, Florida
                    Erin C. Conaton, Staff Director
                Julie Unmacht, Professional Staff Member
              Aileen Alexander, Professional Staff Member
                   Margee Meckstroth, Staff Assistant




















                            C O N T E N T S

                              ----------                              

                     CHRONOLOGICAL LIST OF HEARINGS
                                  2007

                                                                   Page

Hearing:

Wednesday, June 13, 2007, China: Recent Security Developments....     1

Appendix:

Wednesday, June 13, 2007.........................................    37
                              ----------                              

                        WEDNESDAY, JUNE 13, 2007
                  CHINA: RECENT SECURITY DEVELOPMENTS
              STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Hunter, Hon. Duncan, a Representative from California, Ranking 
  Member, Committee on Armed Services............................     2
Skelton, Hon. Ike, a Representative from Missouri, Chairman, 
  Committee on Armed Services....................................     1

                               WITNESSES

Lawless, Hon. Richard P., Deputy Under Secretary of Defense for 
  Asian and Pacific Security Affairs, Department of Defense......     4

                                APPENDIX

Prepared Statements:

    Hunter, Hon. Duncan..........................................    41
    Lawless, Hon. Richard P......................................    48

Documents Submitted for the Record:
    [There were no Documents submitted.]

Questions and Answers Submitted for the Record:

    Mr. Forbes...................................................    59




 
                 CHINA: RECENT SECURITY DEVELOPMENTS

                              ----------                              

                          House of Representatives,
                               Committee on Armed Services,
                          Washington, DC, Wednesday, June 13, 2007.
    The committee met, pursuant to call, at 10:08 a.m., in room 
2118, Rayburn House Office Building, Hon. Ike Skelton (chairman 
of the committee) presiding.

 OPENING STATEMENT OF HON. IKE SKELTON, A REPRESENTATIVE FROM 
        MISSOURI, CHAIRMAN, COMMITTEE ON ARMED SERVICES

    The Chairman. Our hearing will come to order. Before I 
welcome our witnesses--we are very appreciative, of course, to 
have them--I wish to inform our members I was keenly 
disappointed that the testimony was not furnished to us 48 
hours, per our custom and per our rule. It was furnished to us 
last night at 7:30. And I am told the hangup was at Office of 
Management and Budget (OMB). And I think it went well past our 
witnesses that this happened.
    I will make an inquiry as to why that happened, and, 
frankly, it is of deep concern, because those of us on the 
committee take a great interest in looking at the testimony 
ahead of time. And we will make proper inquiry, and I don't 
want that to happen again.
    So welcome, Mr. Lawless, Major General Breedlove. We thank 
you for being here today to testify on recent security 
developments involving China. We look forward to your 
testimony. It is a very, very important subject. It has been 
for some time the critical significance of development in that 
country to our national security. While our military resources 
are heavily focused in Iraq, China's influence has grown in 
Asia, as well as beyond.
    To address this reality, we must proactively and 
effectively engage with China on multiple fronts. There are 
positive steps in the last year, but progress still has to be 
achieved.
    I am encouraged by the recent agreement between our country 
and China for a defense hotline to handle security emergencies. 
I am also encouraged by recent efforts by Secretary Gates, 
Pacific Command (PACOM) Commander Admiral Keating, and former 
Commander Bill Fallon to pursue more robust U.S-to-China 
military contacts. That is a major step in the right direction. 
Such contacts increase our understanding of China's strategic 
intentions and capabilities, and can hopefully avoid 
miscalculations between the two sides. And I share the views of 
Secretary Gates and the admirals on this.
    I am also glad to see Secretary Gates calling on China to 
increase its security cooperation with the U.S. in areas of 
common interest, ranging from counterterrorism and non-
proliferation to energy security. There are unique 
opportunities for progress on these issues. This year the 
preparations are accelerating for the 2008 Summer Olympics in 
Beijing, and both sides want to ensure there is necessary 
security for that event. In addition, China's leading the 
Working Group on the Denuclearization of North Korea, and could 
potentially play a constructive role with the Iranian nuclear 
situation.
    Moreover, China's approach to Taiwan has recently been 
constructive but, given Taiwan's upcoming elections, this will 
remain a significant challenge. This year's Department of 
Defense (DOD) report on China's military power notes a modest 
improvement in China's transparency in regards to defense 
policy and spending. This is positive. Yet China is still not 
adequately revealing its full defense spending, military, and 
modernization efforts, or strategic intentions.
    China's official defense budget for 2007 is about $45 
billion. However, the real budget is between $85 to $125 
billion, continuing a trend of double-digit increases. China 
also conducted a successful antisatellite missile test back in 
January, leaving dangerous debris in orbit for years. China 
continues its missile buildup across from Taiwan, and its power 
projection capabilities are steadily increasing.
    I continue to believe that China's not necessarily destined 
to be a threat to the United States. There are trends and 
ambiguities that concern us, and hearings like today's should 
help us understand where China is in terms of investing in 
advanced military technology and advancing their military 
doctrine as well as tactics. There are also Chinese limitations 
to acknowledge, and those should be addressed today as well. We 
must also recognize that China's choices may well be shaped by 
our own actions.
    So, gentlemen, I am interested in hearing your assessment 
of most significant recent security developments involving 
China.
    However, before we begin our testimony, I turn to my 
friend, my colleague from California, Duncan Hunter, for any 
statement he may wish to make.

    STATEMENT OF HON. DUNCAN HUNTER, A REPRESENTATIVE FROM 
    CALIFORNIA, RANKING MEMBER, COMMITTEE ON ARMED SERVICES

    Mr. Hunter. Thank you, Mr. Chairman, and let me join with 
you in welcoming our witnesses.
    You know, today as we look at China's military capacity, 
the pace and the scope of its military modernization and 
China's near- and longer-term strategic aspirations in the 
region and around the world, the Pentagon's 2006 Quadrennial 
Defense Review report noted that China is at a strategic 
crossroads with the, quote, ``Greatest potential to compete 
militarily with the United States.''
    So while much of our attention right now is focused on the 
warfighting theaters in Iraq and Afghanistan, I want to 
congratulate you, Mr. Chairman, for looking over the horizon, 
because clearly China is over the horizon; that is, it is in a 
period of expansion and achieving new military capabilities, 
and we must be on top of this situation in terms of 
understanding where China is going militarily and assuring that 
we maintain American security interests while this expansion is 
underway and well into the future.
    You know, two events happened, Mr. Chairman, that I think 
we are all aware of, that I thought were particularly important 
for the American people to understand. One was the emergence of 
that SHANG-class submarine. I believe it was October 26th of 
last year about 80 miles east of Okinawa where the submarine 
emerged, SHANG-class submarine emerged near the Kitty Hawk. 
Now, it didn't represent an immediate threat to the United 
States. There were several reasons, as I understand, and 
without going into classified detail with respect to why it was 
able to be fairly close without being observed or located by 
the American naval forces, but I thought it was important for 
the American people to focus on that SHANG-class submarine 
emerging near the Kitty Hawk, because it showed the American 
people what China is purchasing and building with American 
trade dollars.
    As we move several hundreds of billions of dollars more to 
them each year than they move to us, they are clearly using 
some of that money, some of that American cash, to buy military 
equipment. They have purchased the SOVREMMENNY-class missile 
destroyers from the Russians, which were designed to kill 
American aircraft carriers. They now have a tactical fighter 
production program. They are building and fielding between 750 
and 1,000 short-range ballistic missiles each year. And so 
China is moving to, in my estimation, step into the superpower 
shoes that have been vacated by the Soviet Union with respect 
to military power.
    Now, the other event that I thought was a remarkable event, 
and one which heralded a new era of military competition 
between China and the United States, was the shootdown of a 
satellite in January by China. Presumably nobody practices 
shooting down their own satellites. So while the practice shot 
was indeed at an aging weather satellite that China owned, this 
heralded, in my estimation, a new competition in space, whether 
we want it or not, between the United States and China. Now, 
because a large portion of America's industrial base is now 
moving to China, including part of the industrial base that we 
rely on for security, for the American security apparatus, I 
think this is a particularly crucial hearing to hold.
    So Mr. Chairman, I would ask that my written statement be 
accepted into the record, if you might, and I share your 
concern that the United States focus appropriately on the 
emergence of China's modern military capability.
    And I know that our witnesses will speak to that 
capability, and I look forward to the hearing. Thank you for 
holding this hearing, Mr. Chairman. Very important, while we 
are concentrated on Iraq and Afghanistan, to look over the 
horizon. And this hearing fits that requirement. Thank you.
    The Chairman. Thank you so much, Mr. Hunter.
    [The prepared statement of Mr. Hunter can be found in the 
Appendix on page 41.]
    The Chairman. We welcome our witnesses. Secretary Lawless, 
a special thanks to you for your service, and we wish you well 
in the days ahead, sir. And General Breedlove, it is good for 
you to be with us, and we look forward to your testimony.
    Secretary Lawless.

STATEMENT OF HON. RICHARD P. LAWLESS, DEPUTY UNDER SECRETARY OF 
 DEFENSE FOR ASIAN AND PACIFIC SECURITY AFFAIRS, DEPARTMENT OF 
                            DEFENSE

    Secretary Lawless. Yes, Mr. Chairman. I think before I 
begin my oral statement I would like to take note of and 
apologize for the tardy arrival of the written testimony. We 
will look into it and make sure it doesn't happen again, and 
get back with your staff and explain what we discovered as to 
why it would have arrived so late.
    Mr. Chairman, I would like to thank you for the opportunity 
to appear today before this committee and speak about recent 
security developments related to the People's Republic of 
China. This is a very timely hearing, the substance of which 
holds great significance to U.S. defense and security policy.
    Last month the Department of Defense submitted its annual 
report on the Military Power of the People's Republic of China 
to Congress. Although this report is tasked to the Department 
of Defense and signed out to you and the other Members of 
Congress by the Secretary of Defense, it is a product of 
intensive interagency coordination. Our report, therefore, 
reflects views and concerns held broadly across the United 
States Government over China's rapidly expanding military 
capabilities.
    This year's report comes against the backdrop of an overall 
U.S.-China relationship that continues to improve from the low 
point of the April 2001 EP-3 incident. The President has stated 
his satisfaction that the United States and China have 
developed a good constructive relationship. The U.S. policy 
encourages China to conduct itself as a responsible 
international stakeholder by participating in multilateral 
organizations, upholding international law, and supporting 
economic integration and global stability. China benefits 
substantially from the existing international system, and we 
encourage it to take on a greater share of responsibility for 
the health and success of that system.
    We continue to see some positive examples of cooperation, 
most notably in the Six-Party Talks, Ambassador Negroponte's 
Senior Dialogue, and the Strategic Economic Dialogue led by 
Secretary Paulson. We have also seen improvements in the 
military-to-military relationship, where we are moving forward 
with an expanded set of exchanges among senior defense 
officials, naval ship visits, military academy exchanges, and 
other interactions among mid-grade and junior officers.
    We are also making progress, we believe, in cooperation to 
address transnational and non-traditional security challenges, 
including humanitarian assistance and disaster relief. We have 
received positive signals that the People's Liberation Army 
(PLA) is now ready to move forward on the defense telephone 
link, as earlier mentioned, which we first proposed in 2004. We 
believe these exchanges and mechanisms have the potential to 
improve mutual understanding, reduce miscalculation, and 
contribute over time to the demystification of the two parties 
involved.
    In conducting our defense interactions, consistent with 
section 1201 of the National Defense Authorization Act for 
Fiscal Year 2000, we do nothing in our contacts that could 
knowingly enhance the military capabilities of the China PLA. 
Some have argued that these limitations, the congressionally 
imposed limitations, should be changed or revised. We do not 
believe that is the case. There are many areas in which we can 
expand our exchanges with China that will not require, would 
not require revisions of the existing statute. Our approach to 
these defense interactions is not only a matter of law, it 
makes for sound defense policy on the part of the United 
States.
    So overall, while we have seen some progress in China's 
willingness to cooperate on international issues of concern, we 
do have questions over China's commitment to these 
developments. There remains more for China to do to curtail 
proliferation. We remain concerned with China's efforts to 
limit United States presence and influence through the 
development of exclusionary regional forum and frameworks that 
stand against the trend of greater regional cooperation in 
Asia. China's use of its influence in the Shanghai Cooperation 
Organization, the SCO, to call for a U.S. withdrawal from 
regional bases, runs counter to our efforts on the war on 
terrorism.
    In the bilateral military relationship, we are troubled by 
what appears to be an unwillingness to reciprocate the openness 
and transparency we have shown to visiting People's Republic of 
China (PRC)-PLA representatives. And while we are encouraged by 
President Hu's stated interests in opening a dialogue with us 
on nuclear strategy, policy, and doctrine, we are concerned by 
an apparent reluctance on the part of the PRC Government to 
discuss transparently these important issues. And we have been 
unable to schedule a date for this dialogue.
    Both the United States and China approach this relationship 
realistically. Both sides are aware of the potential for 
conflict, particularly in the Taiwan Strait. And as we move 
forward, we remain mindful of the uncertainty inherent in 
China's future. That future, to a large extent, will be 
determined by choices that the Chinese leaders make. These 
choices span a range of issues, not the least of which, we 
would suggest, is China's growing military power.
    In the Department of Defense, it is our responsibility to 
monitor the development of that power. It is our job to 
maintain deterrence of conflict. At present, China's ability to 
sustain power at a distance remains limited. However, as the 
2006 Quadrennial Defense Review (QDR) report notes, looking 
into the future, quote, ``China has the greatest potential to 
compete militarily with the United States and field disruptive 
military technologies that could, over time, offset traditional 
U.S. military advantages.''
    Our report, this year's China Military Power Report, 
attempts to present the analysis in a factual, descriptive, and 
analytical way. It discusses the strides that China has made, 
as well as the weaknesses we have identified in its military. 
It seeks to assess China's future military potential without 
exaggerating that potential. As our report shows, the Chinese 
PLA is pursuing an ambitious, comprehensive, and long-term 
military modernization program, emphasizing preparations to 
fight and win short-duration, high-intensity conflicts along 
its periphery.
    The near-term focus for the PLA appears to be on preparing 
for military contingencies in the Taiwan Strait. Long-term 
trends, however, suggest that Beijing is generating 
capabilities to employ military force for other regional 
contingencies, such as conflict over resources or territory. 
China's officially disclosed defense budget has steadily 
increased over the past 15 years. In March, China announced 
that its defense budget for 2007 would increase some 17.8 
percent over the previous year, to approximately $45 billion. 
However, we and others believe that significant expenditures 
related to China's military are not included in that official 
budget. Our best estimate is China's actual 2007 defense 
expenditures could fall in the range of $85 billion to $125 
billion. While there may be differences in estimative models 
inside and outside the Department of Defense, the near 
universal conclusion is that the official PRC military budget 
significantly underreports China's military expenditures. This 
discrepancy between the official budget and what China actually 
spends is emblematic of our fundamental concerns over a lack of 
transparency in China's military and security affairs.
    The issue is often raised by PRC scholars and foreign 
experts of Chinese security affairs who are inclined to explain 
the PRC's sensitivities over budget transparency; that it is 
for China to decide the appropriate level of disclosure and 
discourse on this separate issue--on this sensitive issue. 
While that may well be the case, in the absence of adequate 
explanation for the capabilities which are growing 
dramatically, both in pace and in scope, we, the Department of 
Defense, and more broadly the United States Government, are put 
in a position of having to assume the most dangerous intent a 
capability offers.
    With that context, I would like to summarize briefly some 
of the specific and notable developments in this year's report. 
We see in China at least 10 varieties of ballistic missiles 
either deployed or in development. Ongoing deployments include 
over 900 short-range ballistic missiles in garrison opposite 
Taiwan. The PLA is establishing new missile bases outfitted 
with conventional theater-range missiles that could support a 
variety of contingencies across China's periphery. China has 
made substantial progress in fielding the road-mobile solid-
propellant DF-31 intercontinental range ballistic missile 
(ICBM) with the deployed missile force. We expect that China 
will make considerable progress in fielding the longer-range 
version of this missile, the DF-31A, beginning this year.
    China continues to upgrade and qualitatively modernize 
older versions of its ICBM-class missiles, and it continues to 
modernize its sea-based deterrent with the JL-2 submarine-
launched ballistic missile for deployment aboard a new class of 
ballistic submarines, the Type-094. These changes are 
important. They will bring greater range, mobility, accuracy, 
and survivability to China's strategic forces, capable of 
striking many areas of the world, including the continental 
United States.
    China is building and testing second-generation nuclear-
powered submarines. In addition to the JIN-class ship, 
submersible, ballistic, nuclear submarine (SSBN), the PLA Navy 
is also performing sea trials on a new nuclear attack 
submarine, the Type-093 or SHANG-class. China accepted delivery 
last year of the first of two of an eight-hull purchase--excuse 
me, I am sorry, I correct it--the final two of an eight-hull 
purchase of Russian KILO-class diesel electric submarines, 
bringing the total number of KILOs in the Chinese inventory to 
12. China is investing in new surface combatants to improve the 
PLA Navy's capacity for anti-surface and anti-air warfare.
    We also see continuing interest on the part of the PLA Navy 
in developing an indigenous aircraft carrier capability. Modern 
aircraft, such as the Russian Su-27s and the Su-30's, and 
China's own F-10 fighter make up a growing percentage of that 
Air Force. Increasingly sophisticated armaments and development 
of aerial refueling capability have improved China's offensive 
air capabilities. China is improving also its precision strike 
capability, with at least two land-attack attack cruise missile 
programs underway, and the acquisition of advanced anti-ship 
cruise missiles, including the Russian-made SS-N-22/SUNBURN, 
SOVREMMENNYS, and the SS-N-27B/SIZZLER for its newest KILO-
class submarines, as provided by Russia.
    The PLA is making significant strides in cyber warfare, 
moving from solely defending PRC networks from attack to 
offensive operations against adversary networks. Finally, we 
are seeing China's emergence as a growing international space 
power. It is investing heavily in a broad range of military and 
dual-use space programs, including reconnaissance, navigation 
and timing, and communications satellites, as well as its 
manned space program. At the same time, as we witnessed last 
January, China is developing the ability to deny others access 
to space through a robust and multi-dimensional counterspace 
program, featuring direct ascent anti-satellite weapons, 
ground-based lasers and satellite communication jamming 
systems.
    Many of these developments are relevant to a Taiwan 
contingency. In this context, we continue to see China's 
military advances as tilting the military balance in the 
Mainland's favor. However, some of these developments pose 
long-term concerns well beyond the Taiwan Strait. These 
concerns are not just those of the United States. Many aspects 
of China's military programs lead other nations, both within 
East Asia and globally, to question China's intentions and to 
adjust their own behavior.
    The United States, as Secretary Gates observed in his 
recent presentation in Singapore, is a Pacific power. Our 
interests and network of alliances and friendships constitute a 
vital interest that we will defend. But the Asia-Pacific region 
is not a zero-sum game. A China that is a responsible 
stakeholder in the international system and an engine of 
economic growth is an enormously positive prospect. China's 
continued development and integration into the international 
system as a responsible stakeholder has long been, and remains, 
a central tenet of our China policy and a core U.S. interest. 
In that context, we have submitted this year to you, in May, 
our annual China Military Power Report. Thank you, sir.
    The Chairman. Mr. Secretary, thank you very much.
    [The prepared statement of Secretary Lawless can be found 
in the Appendix on page 48.]
    The Chairman. As I understand it, General Breedlove, you do 
not have a statement. Am I correct?
    General Breedlove. That is correct, Mr. Chairman. I will 
join the Secretary's statement.
    The Chairman. Thank you. And you will be available for 
questions?
    General Breedlove. Yes, sir.
    The Chairman. Okay. Thank you very much.
    Let me ask just one question before I call on my 
colleagues. You made reference, Mr. Secretary, to the military-
to-military, and as I understand it there have been some 
military-to-military war college-level exchanges. Would an 
increase in that or full attendance at respective war colleges 
be of benefit to our country? Should we pursue that more fully?
    Secretary Lawless. Sir, this has probably been one of the 
most successful areas of exchanging communication. The answer 
to your question is ``yes.'' In every case that offer has been 
on the table, and in every case what we have attempted to do is 
make absolutely sure that it wasn't a one-way street, and that 
any advantage that accrues to the People's Republic of China 
also accrues to us.
    In other words, we would like to have not only normally 
transparency, but we need to have reciprocity. So one of the 
issues has been getting opportunities to attend their teaching 
institutions, military teaching institutions, as we have 
offered them access to ours.
    The Chairman. Is there a major problem within our military, 
as well as within our student body, to speak their language?
    Secretary Lawless. I do not believe there is. We have some 
very specific information on that, on language capabilities, to 
offer to you. Heretofore, there has not been a problem. The 
people attending our institutions generally come reasonably 
well prepared in the English language, and I think we take 
great care to make sure that the folks that we put into their 
institutions have some level of Mandarin, including discussions 
beforehand.
    The Chairman. Thank you very much. Mr. Jones.
    Mr. Jones. Mr. Chairman, thank you.
    Mr. Secretary, I want to pick up on the line of what 
Ranking Member Hunter was--over here, sir.
    Secretary Lawless. I am sorry.
    Mr. Jones. I am to the left, but on most issues I am to the 
right. But anyway, the trade deficit with China seems to be 
that we are every month and every year more and more in a hole 
as it relates to the trade deficit.
    From your comments, and I tried to listen very carefully, 
it does appear that China is taking advantage of our economic 
woes and our trade policies of sending more jobs overseas and 
more dollars overseas. With the report you gave, it sounded 
like to me that the Chinese are obviously putting major bucks 
into investing in their military equipment needs.
    At what point would you say--do we have 4, 5 years; do we 
have 10 years; do we have less?--that China is going to be 
where they are equal to this country as it relates to their 
ability with their Navy and Air Force?
    Secretary Lawless. I think first of all, the one 
overarching concern that we have is that this is not the same 
type, qualitatively or quantitatively, at this point of 
challenge that we faced with the former Soviet Union. China, as 
a consequence of its economic growth, is developing a very 
broad, very successful, very advanced defense industrial base. 
That industrial base allows them to do many things at the same 
time. It not only provides a cash flow, but it provides a 
capability that is multitiered, and allows them to undertake 
several programs at the same time.
    So a concern that exists here is that as China continues to 
grow economically, it will not only have more resources to 
allocate to the purchase of equipment, the underlying 
industrial base will consequently become much more 
sophisticated and be capable of generating the quality of 
product that is required for military modernization.
    Additionally, as the trade imbalance continues and the 
Chinese foreign exchange reserves continue to build, they have 
more cash to spend with the direct purchase of sophisticated 
systems and technology. The acquisitions from Russia represent 
multibillion-dollar purchases year after year. And these are 
very important that we track.
    Coming back, finally, to your question to us, as to when we 
think we will be challenged, I believe that in some areas we 
already sense that that challenge is already in front of us, 
particularly in some of the capabilities we have seen to 
develop.
    The other issue is that we think China has done a very good 
job of assessing where it can develop asymmetric capabilities. 
In other words, this is not a head-to-head situation. China is 
not necessarily interested in the ability to stand toe to toe 
and go into a major conflict with the United States. That said, 
they can obviously see that we have security commitments that 
require us to be in certain locations and have certain 
sustained capabilities. Against that requirement that we have 
to defend our interests and the interests of our allies and 
partners, they are very capable of judging where asymmetric 
opportunities exist, and concentrating themselves on asymmetric 
opportunities. I think this year's China Military Power Report 
addresses that issue. And it is an issue that we will continue 
to follow in the coming years.
    Mr. Jones. Mr. Chairman, just one other point, if I have 
time. Has my time expired?
    The Chairman. No, you are good.
    Mr. Jones. I think you are the expert, and this is where 
many people, including myself--and I represent the Third 
District, Camp Lejeune, Seymour Johnson Air Force Base--that 
the Chinese are not going to be confronting us probably 
militarily, but if they continue to grow and expand their 
military power, then they can dominate Asia, Southeast Asia.
    The suggestion I want to fully understand is that at some 
point do you believe that this country is going to have to make 
a decision that this is of such importance that we not show 
military weakness, that we are going to have to really ramp up 
the investments? And the reason I mention that is because we 
had Secretary Wynne before this committee a few weeks ago, and 
I forgot the general that was there with him, but talking about 
the fact that they are having to reprioritize some of their 
programs and move some up, move some around; and because of 
this budget situation and this policing the world, that we 
really are not giving the full commitment that maybe this 
country needs to give, to say that we cannot continue to allow 
China to continue to grow and expand. And we would be put at a 
disadvantage that we might not be able to catch up.
    Do you see--would you recommend to the Congress that 
sometime, sooner rather than later, that we need to understand 
that we cannot continue to fall back and become weaker in the 
eyes of the Chinese?
    Secretary Lawless. I think that my response would have 
really two components to it. The first is I think we have done 
a really good job of tracking and predicting where they are 
headed capability-wise. The broader those capabilities grow, 
and the more sophisticated those capabilities become vis-a-vis 
the systems we have already deployed, the challenge for 
predicting intent and the use of those capabilities becomes 
exponentially more difficult. You just simply have a more 
difficult time predicting how a given capability is going to be 
used, or, for that matter, why that capability was deemed 
essential by the Chinese leadership to spend money on and bring 
it into their inventory. This goes to the issue of 
transparency.
    I think if we had a better dialogue with them, a true 
dialogue of depth, coming back again to my remarks on the 
strategic nuclear dialogue, where we have several times 
proposed to them this is an essential area of discussion, and 
really gotten quite an uneven response, if we had the quality 
of dialogue that we are seeking with them we might be able to 
constrain and put some of those issues of intent to bed. Not 
being able to, we must plan and prepare for the worst.
    I think our services, reference the comments that you just 
referred to, are making an attempt to anticipate the net result 
of the capabilities the Chinese are attempting to put in place. 
But I think it is an area of intense concern, and we are giving 
it due attention from the highest levels of the Department of 
Defense and the interagency discussion.
    I want to make one more point. In my oral testimony I 
mentioned the fact that the China Military Power Report had 
been coordinated across many elements of the United States 
Government, particularly the intelligence services and other 
policymaking elements of the government. There is a process now 
underway to assess, not just within the Department of Defense, 
but much more broadly within the entire executive branch, where 
we stand with China on these security issues.
    So this is something that not just the Department of 
Defense is seized with, but all elements of the government, 
including the White House. And so we are giving it sufficient 
attention, and I believe the U.S. Government as a whole is 
abreast of the problem and attempting to make decisions based 
on our assessment of where this is headed.
    Mr. Jones. Thank you, Mr. Chairman.
    The Chairman. Before I call on Dr. Snyder, let me ask you 
regarding your comments of asymmetric preparation that China is 
making. You said there are special forces. Could you give us a 
short, short version of what they are doing?
    Secretary Lawless. Yes. I think that both of you gentlemen 
have mentioned, others have mentioned the January direct ascent 
anti-satellite (ASAT) test. Space and counterspace is obviously 
an area in which China perceives the ability to establish 
itself with an asymmetric capability. And it does so for the 
simple reason that it is obvious that we are very dependent on 
our space-based resources, communications, intelligence 
resources that we have in space.
    Again, I think that China correctly perceives that this is 
an area where asymmetric capabilities will give it the ability 
to disrupt and delay and frustrate our abilities to operate. It 
is a major issue for us, and one that is getting a lot of 
attention.
    The Chairman. Dr. Snyder.
    Dr. Snyder. Thank you, Mr. Chairman. Gentlemen, thank you 
for being here.
    Mr. Secretary, I had several questions. First, with regard 
to the direction that China seems to be going both economically 
and militarily, they clearly are a competitor of ours, 
economically, that is not going to go away. Is that a fair 
statement?
    Secretary Lawless. Certainly not going to go away, yes.
    Dr. Snyder. They have hundreds of millions of people that 
are still in poverty, that are very envious of what is going on 
in their coasts. And so somehow I think if we as a Congress 
think that we can present to the American people we have a 
simple plan to take us back to the bygone days when China was a 
weakened Third World country, those days are gone and past. And 
in my lifetime I think we will see the Chinese economy pass 
ours in terms of gross domestic product.
    So the second part of the question I wanted to ask you, you 
have a very impressive career and background. I suspect you do 
this as an exercise. If you put yourself at the position of 
working in the civilian side of the Chinese military, are they 
doing anything that you would not recommend to the Chinese 
leadership that they do? That they would be doing?
    Secretary Lawless. That is a good question. To the extent 
that we understand what it is that they are doing----
    Dr. Snyder. Right.
    Secretary Lawless [continuing]. I think that they are doing 
an incredible amount of things right. And I think that comes 
back to my earlier comment about the sophistication of the 
strategies and the scope of the modernization and 
transformation that is taking place. All too often I think we 
focus too much on raw capabilities, be it an anti-satellite 
ballistic missile, be it anti-access systems, when in fact we 
should be focusing much more broadly. We have a situation that 
is now in probably its tenth year of comprehensive 
transformation of the entire national security and military 
structure. That means doctrine, that means manpower levies----
    Dr. Snyder. Which, as an experienced CIA and military 
person, you have known for some time that they have needed 
desperately to do in terms of their modernization.
    Secretary Lawless. That is right. But once the reckoning 
was made, what we are seeing is a very sophisticated wholesale 
transformation of their military.
    Dr. Snyder. Right.
    I want to ask one very specific question. I quickly read 
your statement here which we received this morning, and it 
seems to be a very thoughtful and balanced discussion. I 
appreciate the depth of thought in it. What role does the--I 
think it is called the U.S. China and Economic Review--Security 
and Economic Review Commission play? Are you familiar with that 
body----
    Secretary Lawless. We are.
    Dr. Snyder [continuing]. That the Congress set up? I have 
always been very skeptical. I don't think we have gotten a 
presentation from them that would reflect the kind of 
thoughtfulness that you have presented this morning. Do they 
help shape policy for the Administration?
    Secretary Lawless. Sir, I don't believe they shape policy 
as much as they perhaps inform it. We have had a pretty robust 
relationship with this particular body over the past several 
years. I have testified in front of it. In fact, I believe this 
Friday one of my China team chiefs will be testifying on the 
energy issue. As you know, their mandate is much broader than 
just pure security and defense issues. But I have actually been 
quite impressed by the quality of the questions that are put to 
us and the quality of the published material that they issue 
under the imprimatur, I believe, of Congress. And that material 
is actually pretty widely read, including by our Chinese 
friends.
    So our interaction with that particular group has been 
quite positive, and we find them quite incisive in the 
questions they ask us. They task us a lot.
    Dr. Snyder. You have had a different experience than I 
have. I want to ask about the Internet. You talked about the 
need for more transparency in their military. Two aspects of 
the Internet. First of all, they are abysmally not transparent 
with regard to their own population in terms of the great 
restrictions on the Internet. How do you see that going ahead 
in the future? How can a country modernize, as you pointed out, 
quite dramatically in a lot of different ways, how can they do 
that and have such repressive policies with respect to access, 
to things internationally?
    And the second component I don't think you mentioned in 
your written statement. You mentioned asymmetric attacks. You 
are an Internet guy. Where do you see the Chinese capability 
with regard to cyber attacks or potential?
    Secretary Lawless. Thank you. Turning to the last question 
first, because I think it is relevant to both pieces of what 
you have asked about, whatever their internal Internet control 
practices may be, they have developed a very sophisticated, 
broadly based capability to degrade and attack and degrade our 
computer systems and our Internet systems. I mean the fact that 
computer access warfare and the things that that allows you--
disruptive things that that allows you to do to an opponent are 
well appreciated by the Chinese. And they spend a lot of time 
figuring out how to disrupt our networks, how to both penetrate 
networks in terms of gleaning or gaining information that is 
protected, as well as computer network attack programs which 
would allow them to shut down critical systems at times of 
contingency. So first of all, the capability is there. They are 
growing it. They see it as a major component of their 
asymmetric warfare capability.
    Coming to the first question you asked, I believe that 
while it may not be possible for them to totally control 
Internet activity in China, it seems to me they are doing a 
very good job. And we have not really seen that that capability 
to control the Internet within China has really resulted in any 
net loss of capability. If anything, their determination to 
familiarize themselves and dominate to some degree the Internet 
capabilities not only of China and the region, but the world, 
provide them with a growing and very impressive capability that 
we are very mindful of and are spending a lot of time watching.
    General Breedlove. Sir, I would just add, without being 
redundant, that the Secretary mentioned that they are very keen 
on their asymmetric ability to address our military power. And 
this is one of those areas that they talk about, specifically 
in their white papers and others, when they talk about warfare 
in an environment of informatization. That is a word hard for 
me to pronounce, but obviously it means something to them. And 
so I would see this as a key area where they would look to see 
our vulnerability, since we are so netcentric in our warfare. 
And it is a concern to us.
    The Chairman. Mr. Hunter.
    Mr. Hunter. Thank you, Mr. Chairman. And again thank you 
for holding the hearing. And gentlemen, excuse me for having to 
step out during a part of your opening statement.
    But it is fairly clear that China is transforming their 
military, Mr. Secretary, as you have just stated. In your 
opinion, what should we be doing with our own military 
capability to adapt to a transformed Chinese military?
    Secretary Lawless. I think that our ability to plan and 
adjust ourselves to that evolving capability in the first 
instance results or leads us back to good intelligence. I am 
concerned that perhaps we don't have the quality and the 
breadth of intelligence focused on this issue that we perhaps 
have had in the past. It certainly doesn't meet the standards 
of what we were able to apply to the Soviet Union as it 
emerged.
    And I think that additionally we need, I think, to adopt a 
much more comprehensive approach within the Department of 
Defense concerning our management of this particular issue. 
Again, this is a dynamic problem. It is a problem in which--it 
is an issue where we continue to be surprised from time to time 
with regard to the speed with which a given system is deployed. 
And therefore, I think there is a real incumbent burden on us 
to be very fast on our feet and be able to adjust to the 
capabilities that we see that are being fielded.
    Mr. Hunter. Let me get to some specific systems here. You 
have a lot of short-range ballistic missiles being produced, an 
inventory of between, as I understand, 750 and 1,000 in place. 
A lot of them are across from the Taiwan Straits. Do you see 
any changes we need to make or any emphasis we need to make 
with respect to missile defense as a result of China's emerging 
missile program?
    Secretary Lawless. I think that is an ongoing calculation. 
In fact, I specifically mentioned, I believe, that we can count 
no fewer than ten systems either deployed or under development. 
The emphasis there is on the word at least. I think that these 
are challenges that are being presented to our ballistic 
missile programs. I think some of those challenges were 
addressed by the director of that program in some recent 
testimony and interaction with Congress. It is an issue that I 
defer to our Missile Defense Agency to address.
    But suffice to say on the policy side of the equation, we 
are doing a lot of discussion within the region with our 
partners and allies about the threat that those missiles pose. 
And I would suggest that this year's Military Power Report 
discusses not only the threat vis-a-vis Taiwan and how we 
believe that is changing the status quo and is creating a new 
dynamic there, we also address the growing capabilities of the 
regional--that is, the medium-range ballistic missile (MRBM) 
and the intermediate-range ballistic missile (IRBM) deployments 
that are being made, a subject of course that is addressed in 
much greater detail in the classified annex to the report.
    Mr. Hunter. Let me ask you just one last question, Mr. 
Chairman. You know, China is cheating on trade right now. They 
are devaluing their currency by some 40 percent. That has been 
the subject of legislation by myself and Mr. Ryan and a number 
of members, in fact 178 members of the House last year. They 
are buying ships and planes and military equipment with 
American trade dollars. And a large portion of the American 
defense industrial base is moving to China. Do you see a 
problem there?
    Secretary Lawless. Sir, I think we see a huge issue here. 
Again, some comments that were perhaps made while you were out 
of the room, the underlying defense industrial capacity that 
China is building gives it terrific surge capability. When you 
are able to build a particular combatant not in one shipyard, 
but in four or five, and you are capable of undertaking--again, 
sophisticated industrial base--many programs, parallel programs 
at the same time, you have great flexibility to surge that 
capacity. And I think that is an issue that we are all deeply 
concerned with. And this comes to the heart of the economic 
modernization of China.
    Mr. Hunter. And I think that the ability of the Chinese to 
translate this massive commercial industrial capability, 
especially the ship construction capability of China, to 
translate that into a warship construction capability with 
respect to surface vessels and submarines would very much 
threaten our ability to maintain a Naval dominance in the 
region simply in terms of platforms that they can produce, and 
with the new sophistication that attends many of their 
programs. I think you see the American shipbuilding programs 
being quickly outstripped by China simply by translating or 
transferring their domestic capabilities into a military 
production capability. Do you agree with that?
    Secretary Lawless. I do. As a matter of fact, we were just 
in the Far East last week. One of the interesting commentaries 
that was then being discussed was the fact that Japan and the 
Republic of Korea, which lead the world in shipbuilding 
capacity and capability, are now readjusting their projections, 
believing that instead of China being a full head-to-head 
competitor, top-ranked competitor vis-a-vis those two 
shipbuilding powers, instead of it being 15 years out it is 
more like to 5 to 6 years out. So you have the ability of China 
to introduce and, frankly, deploy capabilities on the 
commercial side of the equation, shipbuilding being a perfect 
example, which even their competitors had heretofore 
underestimated or misestimated. So I think that goes to the 
heart of your question.
    Mr. Hunter. Okay. And just to close, Mr. Chairman, I think 
it is incumbent upon us to ensure that China stops cheating on 
trade. This 40 percent devaluation is dealing a death blow to 
large portions of our industrial base, and motivating many 
corporations and many businesses to move their production to 
China. And in the end, the United States may end up seeing 
massive pieces of the U.S. industrial base turn to making 
equipment that is used against us in some type of a conflict in 
the future.
    I think it is important for us, as Armed Services members, 
to in this case really concentrate and really focus on this 
problem of this transfer of the U.S. industrial base to 
mainland China. Thank you, Mr. Chairman.
    The Chairman. Thank you. Ms. Davis.
    Mrs. Davis of California. Thank you, Mr. Chairman. 
Secretary, nice to have you here. Thank you, General, as well.
    I want to take perhaps the flip side of that discussion and 
just bring your attention to the article in Atlantic Monthly. I 
don't know if you saw that.
    Secretary Lawless. I did. The James Fallows article?
    Mrs. Davis of California. The ``Superiority Complex.'' 
actually, this one is by Keir Lieber and Daryl Press.
    Secretary Lawless. Oh, I am sorry. Okay.
    Mrs. Davis of California. Perhaps that is different. It's 
called ``Superiority Complex,'' and it discusses why America's 
growing nuclear capabilities may make war with China more 
likely. According to the authors, a future conflict over Taiwan 
could become the starting point of a nuclear war between China 
and the U.S. And it goes on to discuss the nuclear imbalance 
and a number of the steps that the U.S. has taken of late. 
Perhaps if you haven't read it, then I don't want to ask you to 
fairly respond to it. But it suggests that some of the 
imbalance would play out across the globe as well. And I 
wondered if you have any insights into China's view of this new 
reality.
    Secretary Lawless. Well, that is an interesting comment in 
that, as I mentioned briefly, we have had on the table an offer 
at the highest levels, this is a Presidential discussion, this 
is a Secretary--that Secretary Rumsfeld had when he was in 
China in October of 2005. We have consistently told the 
People's Republic of China that we think it is appropriate that 
we begin a dialogue on nuclear strategies and better understand 
why they are doing what they are doing. Because what is really 
happening here is, while the United States capabilities are 
remaining essentially constant, we have a significant 
improvement in China's ability to target the United States or 
to target us regionally, but specifically the continental 
United States.
    This opens a whole range of issues for us. And so what we 
have said to them is we really need to sit down and talk about 
that. The welcome mat is out, the invitation has been made, and 
here we are two-plus years later since we began this dialogue, 
waiting for them to answer the mail. We are going to continue 
to press at every level for this dialogue to begin for the very 
reasons that you state. I think such a dialogue is critical. 
This is not an arms control regime that we are attempting to 
put in place, it is a discussion. Because we need to understand 
why they are doing what they are doing, which creates an 
inherently more or greater instability, we believe, in the 
nuclear relationship between the United States and the People's 
Republic of China. So again, it is a dialogue.
    Mrs. Davis of California. Do you acknowledge, though, and 
accept the fact that perhaps there are steps that we are taking 
as well that would make them more nervous on this front?
    Secretary Lawless. If that is true, they need to tell us 
that. The absence of a dialogue cripples any discussion and 
knocks it over to a track two or track three exchange; for 
example, the types of exchanges that you are talking about in 
Atlantic Monthly. We would rather have that discussion behind 
closed doors, face to face with the people that are most 
concerned, in this case the military strategic planners and the 
military leadership of China. To date, they have not taken us 
up on that invitation. If they would, I think both countries 
would be far better off.
    Mrs. Davis of California. General, did you want to comment?
    General Breedlove. I would say this is another example of 
what the Secretary talked about earlier, a place where 
opaqueness doesn't help. We watched the Chinese developing 
their road-mobile ICBMs. We watched them continue to upgrade 
their static ICBMs. Now we see them in a sea-launch ballistic 
missile program. So we see indications of intent and other 
things, but we continue to try to engage, as the Secretary has 
said, in dialogue at a very high level, and our offers go 
unanswered.
    Mrs. Davis of California. I certainly appreciate that. I 
think what is important sometimes is when articles like this 
are out in the public's face, it is important in some ways to 
acknowledge that those issues are out there. It is a fairly, I 
guess, intense article in that regard, and I was interested in 
giving you that opportunity to respond. And I appreciate that.
    Thank you, Mr. Chairman. I wanted to turn, and I think my 
time is about up, but perhaps someone else may speak about the 
interests of Members of Congress, certainly, sending a letter 
to the Chinese Government regarding the concerns and atrocities 
in Darfur. And perhaps you will be able to speak about that as 
well, and what in fact we are doing to try and mitigate that 
situation as well, in cooperation with them. Thank you very 
much.
    The Chairman. Thank the gentlelady. The gentleman from 
North Carolina, Mr. Hayes.
    Mr. Hayes. Thank you, Mr. Chairman, and thank you very much 
for your interest in and knowledge of the China situation. And 
thank the witnesses for being here today.
    Two questions in particular. General Breedlove, first a 
tactical question, and then I would like to come back to you, 
Secretary Lawless, for a trade follow-up.
    In your testimony there is a lot of discussion about the 
capabilities of the Chinese Air Force, particularly combined 
with the Flanker and the Sukhoi and their own production. How 
would you assess our response or our own development, given 
stealth, given other capabilities? Do we need to maybe think a 
little bit more--again looking at your testimony as a whole--
toward missile defense as a protection against China just in a 
general sense?
    General Breedlove. Sir, I will try to track two answers in 
what you have asked.
    Mr. Hayes. I don't see much air-to-air coming.
    General Breedlove. Yes, sir. Clearly, we share the concern 
that Mr. Jones talked about earlier, about the ambitious 
programs to develop these capabilities such as the aircraft and 
others. And another indicator along those lines is you can have 
the more sophisticated weaponry, but we need to be watching 
their training, because they have to train to get the 
capabilities. And, unfortunately, now we do begin to see more 
sophisticated training in their capabilities, which might lend 
some intent to the more ambitious and the better equipment that 
they are buying.
    As far as missile capability, sir, I would have to defer to 
what the Secretary said earlier. I am a little ill-prepared to 
answer and would defer to our missile defense folks as far as 
that tack goes.
    Mr. Hayes. The $45 billion significant increase in the 
Chinese defense budget, based on your comments you just made, 
would you say that a lot of that is going into more intensive, 
more extensive training, particularly for pilots and other 
members of their military?
    General Breedlove. Sir, I can't comment on the amount of 
money that is being spent on training, but what we do see is 
more sophisticated training, trying to train in a joined 
environment, trying to address the kind of skills to share 
information and to be more netcentric and combined in their 
arms approach; and those are clearly indications of a more 
sophisticated approach to training, as opposed to a very 
disparate army, navy, air force-type training which has been 
their past.
    Mr. Hayes. Thank you.
    Secretary Lawless, Congressman Hunter referred to trade 
issues, and the Berry Amendment for some 42 years has been a 
trade defense mechanism. Looking forward, obviously, the 
Chinese are a tremendous customer of us and other folks in the 
West. By the same token, we are a much larger customer of them. 
Do you see this balance tipping and at what point?
    You talk about the ship-building industry--it went from 15 
years to 5--the dynamic changes if we allow our industrial 
defense base--and you referred to the importance of theirs--to 
deteriorate to the point where it generates jobs and dollars so 
that we can compete financially with them. If you can comment 
on that and also on how important it is again to maintain the 
equity in the trade agreements, which has not been the case so 
far.
    Secretary Lawless. I think what I would like to do is 
answer that by coming back to the issue of the industrial base. 
And it is true that many of our exports to China comprise--
although while there are some components of agricultural 
products or non-finished products, a huge portion of what we 
sell to China is, of course, in very high-quality, finished 
goods. Airliners, for example, or commercial aircraft.
    China has made a decision to develop a competitive aircraft 
industry. Airbus, in a recent agreement with them in return for 
their agreement to buy some of the Airbus aircraft, has agreed 
to establish a full production facility in Tianjin, I believe; 
and that is supposed to be up cranking out A320-level aircraft 
within three or four years.
    Obviously, there is going to be a transfer of technology 
and a transfer of that knowledge base to China as a direct 
consequence of that decision by Airbus to invest that facility 
in China and operate that facility in China. So I am concerned 
that China, in taking a very long look and a very long 
perspective on everything that is being done, has decided that 
it will acquire every single piece of advanced manufacturing 
and the full range and compete with us across the full range of 
all products, no matter how sophisticated.
    Mr. Hayes. Quick question--thank you--if I may, Mr. 
Chairman.
    Just speak very briefly about China's competitiveness in 
the petroleum market and how that affects us in Nigeria and 
other places.
    Secretary Lawless. I think, in the first instance, it is 
broader than just petroleum. It is the entire energy market and 
China's requirement and its ability to look down the road and 
recognize how incredibly dependent China will become--is 
becoming already--on imported energy and on imported raw 
materials.
    This isn't just about oil. It is about uranium to fuel all 
of the reactors that they are going to build for commercial 
power. It is about access to raw materials, be it coking coal, 
be it iron ore.
    Mr. Hayes. Thank you very much. I don't want to impose on 
the chairman's kind nature here.
    The Chairman. Mr. Larsen.
    Mr. Larsen. Secretary Lawless, General Breedlove, thank you 
for coming to help us out this morning.
    First off, I would like to ask, Mr. Secretary, if you can 
make some folks available for us maybe next month before we go 
into recess. A few of us are heading to China later August; and 
if we are able to get the benefit of some of your expertise 
from some of your staff before we headed over there, we would 
very much appreciate that on a variety of issues.
    I won't put you on the spot to answer now but certainly 
want to look forward to that.
    It is interesting, that point you made earlier about. I 
think you said that the need for the Department of Defense--a 
more comprehensive approach to the management of issues related 
to China. Secretary Paulson has been assigned the strategic 
economic dialogue. Secretary Negroponte for the State 
Department is coordinating the diplomatic side of things; and I 
have always been a little bit struck by DOD's approach to 
China, which sometimes is not in contradiction but is different 
than even within DOD, getting different messages as well about 
China. So I would encourage you to follow up on if that was 
just an idea thinking out loud about the DOD taking a more 
comprehensive approach and sort of sorting out the policy.
    The reason I ask and I want to--this is a prelude. Because 
there are some questions that come up about missile defense and 
whether or not we need to be concerned about China and missile 
defense, and it is interesting. Because Secretary Gates at the 
Shangri-La conference, in an answer to a question about China 
missile defense and Japan and missile defense and Moscow and 
Russia, was asked whether we have considered a similar offer of 
cooperation of missile defense to the Chinese. He said, ``I 
haven't thought about it. I think if the Chinese had expressed 
an interest in it, we would take it seriously.''
    That is on line--on page two of four of the transcript from 
the Shangri-La conference.
    And, again, I don't know if he was thinking out loud or 
not. But if we are--you know, if we are headed that way or we 
are open to that, it runs counter to some of the questions that 
we have been asked here about missile defense in China. So it 
would be nice for everyone to get on the same page on that 
issue.
    I think that as well trying to understand what you all 
think the appropriate balance between--in this relationship, 
especially the military relationship, would be important for 
us; and I would like to have your opinion if you think China is 
all about us, that is, China does things because of what the 
U.S. does and we seem to be--we seem to take an approach here 
that if China is investing in X, Y or Z then we necessarily 
need to invest in X, Y or Z, and this will get to China's 
intentions.
    Do you think the PLA is more concerned about the U.S. any 
more than they are with their own presence in the Asia Pacific 
region? Do they get up in the morning and say what is the U.S. 
doing and how do we counteract that? Or are they looking more 
regionally and then, as a result, we need to then have a policy 
that responds more to how they see their region vis-a-vis how 
we see the region.
    I know it is a complex question, but it seems to be very at 
the crux of how we approach China on a military-to-military, 
defense-to-defense relationship.
    Secretary Lawless. I think I understand the nature of the 
question.
    You asked, is China all about us? I think China is all 
about China. And that means that China is all about what it has 
to do in a whole range of relationships: its relationship with 
Japan, its future relationship with the Korean Peninsula, its 
relationship with southeast Asia, the Strait of Malacca. These 
are issues which China is dealing with and spending a lot of 
time thinking about.
    We have security commitments in the region. We have many 
bilateral commitments, be it with Australia, be it with the 
Philippines, treaty relationships. And we have partnerships. We 
have strategic a framework agreement that has been put in 
place, recently, with Singapore.
    I think what we have to do is figure out where China is 
coming from and how they are going at each of these individual 
relationships, because each of these partners turns to us and 
says what are we going to do about this or how are we going to 
adjust ourselves to compensate for this situation that has 
evolved.
    One of the issues that I forgot to mention earlier, which 
really underlines what we had to do----
    Mr. Larsen. If I could, it seems in my mind it makes the 
case then for reacting appropriately and not overreacting and 
engaging China on any number of these issues.
    Secretary Lawless. Yes, sir. That is correct.
    The Chairman. Thank the gentleman.
    Mr. Randy Forbes.
    Mr. Forbes. Mr. Chairman, thank you for your willingness to 
hold this hearing; and, gentlemen, thank you for being here 
today. I only have five minutes. I have a couple of comments 
and want to give you a few questions to give us an answer back 
for the record in one answer today.
    First of all, we know that China has a huge checkbook that 
they have shown a willingness to use in the United States to 
affect our policies, and they have been very effective in this.
    I was glad to hear you and agree with you when you talked 
about them developing asymmetric opportunities. Many of the 
witnesses we have had over the last several years have ignored 
the asymmetrical direction they are going. Also, your comments 
about they are being competitive with us in several areas.
    The one I disagree with you, though, is our ability in 
tracking and predicting where their capabilities are going. 
Over the years, as we have read reports from DOD and we have 
had testimony, we have underestimated their capabilities and 
their ultimate goals time and again. We missed them on subs; we 
missed them on carriers; we missed them on blue-water navy. 
When we look at negotiations, we are losing those negotiations 
in intellectual property rights, human rights, currency issue, 
access for our business, trade deficits. They are the number 
one espionage problem we have in the country, according to the 
Attorney General.
    Three questions I would like to throw out for you to 
respond to us at some date is this:
    Given what we know with our history, what would be the 
value to the United States of working with the Chinese to 
develop an aircraft carrier, as Admiral Keating has previously 
suggested, which would clearly extend to PRC's capabilities 
beyond just regional affairs?
    It baffles me. I hope with you can give us some answers on 
it.
    Second, the attorney general has testified on two occasions 
before Congress that China represents the number one espionage 
threat against the United States. As you know, Chinese military 
strategy strongly emphasizes deception at the strategic, 
operational, technical levels. How responsive can we really 
expect the Chinese to be when we call for transparency with 
regard to their military modernization?
    Third thing is how rapidly and how effectively are they 
using modeling and simulation to improve their training and to 
bring about jointness in their operations and between their 
services and also with their allies?
    And then the question if you could answer for me today is 
this one: We talked about their cybercapabilities. But to what 
extent are the Chinese cyberwarfare units attacking computer 
systems in the United States currently?
    Secretary Lawless. Well, first of all, I commend you on 
your overall presentation. There is not much there that I am 
going to disagree with, even when you get the response to the 
questions.
    I would suggest, however, that in the response to the 
questions you are probably going to have much more clarity on 
what it was that Admiral Keating said and did not say.
    Mr. Forbes. That is what we are looking for. We only see 
what we get in print. We are going to meet with him. That is 
why I asked--why it said.
    Secretary Lawless. Past masters at spinning comments. That 
is the Chinese, not Admiral Keating.
    I think that what we really want to do is we would love to 
have that discussion about cyberwarfare. There is a major 
treatment of that issue in the classified annex this year. It 
is probably an area where we, because of the nature of things 
that we know and understand with some degree of detail, I would 
rather defer a discussion to a classified venue. It is a very 
important area, and I cannot stress how diligently we are 
following this and attempting to understand what the 
capabilities are and the intent is. But it is a very important 
discussion, and we would love to have that with you in a 
classified.
    Mr. Forbes. We look forward to doing that.
    The last thing I would suggest for your review in looking 
at is this modeling and simulation aspect of it.
    We have seen some very sophisticated programs that they are 
coming out with; and, as you know, one of the weaknesses we 
have seen with them has been their jointness and their ability 
to bring that about. It looks like to us they may be using some 
sophisticated modeling simulators the same way we have to try 
to bring about that jointness and jointness with allies and 
hope you can give us some feedback on that in a written form.
    Mr. Chairman, thank you, and I yield back.
    The Chairman. The gentleman from Georgia, Mr. Johnson.
    Mr. Johnson. Thank you, Mr. Chairman.
    It seems certainly that dialogue with China to try to 
minimize misunderstandings and misapprehensions, if there might 
be any, would be appropriate; and it take two to tango. So it 
seems like we have been reaching out and we have not been 
getting the kind of feedback or response back that we would--
that we would like; and, meanwhile, the continued investment of 
China in its military infrastructure continues to escalate.
    So the question becomes what does the United States of 
America do in response? And it can certainly embark--certainly 
intelligence is important in our ability to respond 
appropriately. But respond we must.
    So I am concerned--in your statement, Secretary Lawless, 
you say that, on page three, at present, China's ability to 
sustain power at a distance remains limited. So I am concerned 
about our--I am concerned about, you know, helping China 
acquire aircraft carriers. I am concerned. I wonder why would 
that be a topic of discussion? Why would we think that that 
would be appropriate to do that? What kind of strategy are we--
I mean, what underlies the strategy for that proposal? I wonder 
about that.
    And I am also wanting to know from you a little bit more 
about the aircraft carriers that China has now. I thought I saw 
something in the statement and heard you say something, but I 
can't find it. So if you would tell me a little bit about that, 
I would appreciate it.
    Secretary Lawless. Obviously, in the one request for a 
written response, we will be discussing the aircraft carriers 
exchange that Admiral Keating recently had. It was not a 
proposal by Admiral Keating to assist them in any regard with 
relation to aircraft carriers. It was an observation on his 
part the way we have gone back and deconstructed it with him. 
It was an observation on his part that if that is your 
intention to build a blue-water navy and to have a carrier 
battle group and have a carrier as the center of that battle 
group, you may be underestimating by a long shot your ability 
to do that and you are underestimating the complexity required 
to field such a capability.
    I think it was more of a suggestion that they needed to 
understand what it is they were taking on and how complicated 
and costly and what an actual challenge that would be to them. 
That is my understanding of the dialogue.
    To me, it makes absolutely no sense whatsoever to have a 
discussion with the Chinese beyond that, except that if they 
are going to build such a capability we would like to 
understand what the intent of it is. Is the intent to project 
power? Is the intent to----
    Mr. Johnson. What could be the intent other than to project 
power in the long range?
    Secretary Lawless. There is a number of explanations for 
that aircraft carrier being used or being modernized or 
whatever use they put to that particular ship that has been the 
focus of a lot of attention to the Viog. That was, as I 
believe, it was a Kuznetsov class carrier in the Russian navy--
excuse me, in the navy of the former Soviet Union. So it was 
really the peak of the Soviet Union's building program to equip 
themselves with a true aircraft carrier. So there is a huge 
amount of attention focused on that.
    I think the Chinese could actually be looking at that ship 
for purposes of developing the ability to target U.S. aircraft 
carriers. It is a very reasonable and logical conclusion as to 
why they are spending so much time and attention on that vessel 
as they are.
    As a closing comment, let me just say in every recent 
interaction that our people have had, senior military leaders 
and civilian officials, it is very clear that the Chinese 
intend--it is their intention over the long term to build a 
blue-water navy and to have at the center of that blue-water 
navy a carrier battle group just as we have.
    So they definitely are moving in that direction, and they 
have made it pretty clear to us that is where they are going. 
We need to think about that, and we need to think hard about 
that.
    The Chairman. Thank the gentleman.
    Mr. Franks.
    Mr. Franks. Thank you, Mr. Chairman.
    Mr. Chairman, I have a friend here with me this morning. 
General Philip Breedlove is a precious, beloved friend and also 
the former commander of Luke Air Force Base; and he happens to 
be pretty unique in another way. I have only been in a full 
360-degree loop in an F-16 one time, and he was at the 
controls. So there is a just a lot of respect and admiration 
for this man. I believe him to be a true champion of human 
freedom; and I think as long as we have generals, officers like 
him in our Air Force that there is still a lot of hope for the 
future for mankind.
    So I hope I have put that the right way, but I really 
wanted to welcome you, General, to be here, and I can't even 
begin to apologize for missing your opening comments and the 
Secretary's here this morning. It was unavoidable, to say the 
least.
    But I, again, welcome both of you here.
    I know that we have had a lot of discussion related to 
China's asymmetric capability, especially some of their 
adventures in ASAT in the space directions. I will tell you, 
not to involve you in the interesting political machinations of 
this committee, but we just came through the process of the DOD 
authorization bill, and we debated here in this committee this 
Space Test Bed, and, unfortunately, that has been zeroed out 
for the time being, and I am very concerned about that.
    And without involving you in the political machinations any 
more than is necessary, given China's superior numbers and 
their military computer technology or technologists, as it 
were, and people that work on their military computer 
capability, it seems like that could be a fairly vulnerable 
area for us, and that has been suggested already here.
    General, could I ask you to--I know that is a little out of 
your lane, but could I ask you to address it first and then the 
Secretary?
    General Breedlove. Well, sir, thank you for your kind 
remarks. It was as much fun for me as it was for you, I think, 
the flying.
    Mr. Franks. I think it was more fun for you, General.
    General Breedlove. Sir, we clearly are a military, as has 
been mentioned by several members, that is dependent on joint 
warfare. Joint warfare means netcentric warfare sharing 
information, and I believe this goes back to the discussion we 
have had several times today that the Chinese look for those 
asymmetric ways to dig into our capabilities and they have seen 
and watched. They watched the Desert Storm. They have watched 
every war we have done since that time and how our information 
capability to target and to see and perceive our enemy is key 
our warfighting capability.
    I think it is pretty clear to know that they are going to 
go after our ability to do that; and, as has been mentioned, we 
see that as a unique opportunity for them to attack us 
asymmetrically.
    Mr. Franks. Spoken like a general of the Air Force.
    Secretary, do you have anything to add to that?
    Secretary Lawless. Actually, no. I am going to enlist 
General Breedlove on the policy side of the equation. That was 
a very comprehensive response on that.
    No, not really.
    Mr. Franks. This committee a year and a half or two ago was 
briefed by the Electromagnetic Pulse (EMP) Commission; and up 
until that time, a lot of us, including myself, had relegated 
the EMP threat as more like an asteroid hitting the earth. It 
would be really bad if it happened, but the chances of it 
happening are pretty low.
    But I have to tell you a lot of us, including myself, 
became much more concerned as we looked at the Chinese 
development of EMP, especially as it relates to protecting or 
being--having an offensive capability and our inability to 
protect Taiwan against such a weapon if it were deployed. It 
might be something that would neutralize our fleet there pretty 
dramatically.
    Do you think that we are--if we can answer it in a non-
classified setting, are we addressing that in a capable way 
from your position?
    And, General, I direct the question to you first again.
    General Breedlove. Yes, sir. I would--I am unprepared to 
address specific EMP. I would just say that maybe we would need 
to conduct dialogue with Taiwan as far as their internal 
efforts first and their defense spending and the trend in their 
defense spending and then address this specific problem with 
them in those discussions.
    I will defer to the Secretary further on that.
    Secretary Lawless. I believe, sir--to come back to your 
question, I believe that we really would be able to give you a 
very comprehensive answer in a more secure venue than the one 
we have here today, in a classified briefing.
    That said, taking note of Taiwan's vulnerability and indeed 
anyone that is dependent on an information society as we all 
are, one of the things that we have stressed to the folks in 
Taiwan is their requirement to harden their infrastructure and 
the fact that their infrastructure or the infrastructure of any 
advanced country is, obviously, very vulnerable to disruption.
    So it is part of an ongoing dialogue about defensive 
measures to harden and back up their infrastructure because of 
the threat that we see growing very significantly to that 
infrastructure.
    Mr. Franks. I am sorry. We are out of time.
    Mr. Chairman, thank you very much.
    The Chairman. Mr. Courtney.
    Mr. Courtney. Thank you very much. I want to thank the 
witnesses for their helpful testimony.
    I want to ask a specific question, Secretary Lawless. There 
were press reports last October that the Kitty Hawk had a 
surprise visitor. A Chinese submarine surfaced within firing 
range, and it seemed like that would have been a pretty stiff 
test of the military-to-military relationship between our two 
countries in terms of whether or not there was any follow-up or 
communication in the wake of that incident. And I was wondering 
if you have had any comments about whether or not we can 
decipher any intent also from that incident?
    Secretary Lawless. A very appropriate observation and 
question, I might suggest.
    We have been in a process--and, again, we mentioned this in 
our report again this year--a process with China, I believe, 
for over 20 years attempting to have an agreement, an military 
maritime consultation agreement (MMCA) agreement which really 
talks about safety at sea, talks about communications 
protocols, talks about how you preempt any conflict at sea or 
misunderstanding at sea; and that dialogue and the desire to 
reach agreement with China, as we have every other seafaring 
nation in the world, has been a very frustrating experience.
    The reason it has been a frustrating experience is because, 
until very recently, China overlaid that dialogue with a policy 
issue. That is the 200-mile exclusive economic zone (EEZ) 
economic zone issue and different interpretations as to their 
rights within their own EEZ. I will tell you this: We recently 
reached agreement with China that we would take the policy 
component of that out and put it to the side so that we could 
actually have a discussion about MMCA and about these types of 
issues.
    The surfacing of that Song-class submarine in the proximity 
of the Kitty Hawk underlined and reinforced our entire 20 years 
of discussion with the Chinese as to why we need mechanisms to 
be able to deconflict, and that very easily could have 
developed into an ugly situation for the simple reason that we 
didn't have those procedures in place and still don't today.
    So we have an incremental improvement in the MMCA area that 
is mentioned in the annual report, but we are a long way from 
having the type of dialogue to prevent situations like that at 
sea.
    And one last point, as China reaches out and fields a blue-
water capability and surges those submarines and those other 
ships out into areas where they are going to encounter large 
U.S. battle groups or whatever, we are going to see that issue 
repeated time and time again. So it is essential that China 
understand the requirement to deconflict and have these 
understandings in places. Right now, we don't have that 
agreement with them.
    Mr. Courtney. Any speculation about what was going on 
there? Was it somebody sort of hot-dogging or was it just an 
accidental coincidence?
    General Breedlove. I think--I hate to interrupt, but I 
think there is one positive to take away from this.
    From our incident in 2001 with the EP-3 and the fighter, we 
saw what some have characterized as some undisciplined actions 
by the pilot which resulted in the loss of a fighter in this 
instance. While I am not a naval man, in the air we have 
certain rules of the road. In the water, there are also rules 
of the road. And our naval folks tell us that the one positive 
of the incident is that the sub commander surfaced 
appropriately in accordance with peacetime signals for a 
peaceful surfacing.
    So at least we take away that there was responsible action 
on the part of the sub commander, not addressing the military 
piece but at least the rules of engagement.
    Mr. Courtney. Again, I just want to actually quickly follow 
up with Congresswoman Davis' question that she couldn't ask, 
which is about our efforts to try and change China's policy 
toward the Sudanese government regarding military transfers and 
their lack of response to the terrible genocide happening in 
Darfur.
    Secretary Lawless. My comment would be, in the first 
instance, of course, this is a State Department issue, but it 
is hard to ignore the fact that obviously China places a 
premium on its relationship with Sudan and obviously is trying 
to develop a very, very close relationship in the area of 
energy. And part and parcel of that is China's supplying Sudan 
with weapons.
    One of the issues that I think there is some agreement on 
is they will attempt to deconflict that weapons program with 
the Darfur activities. That said, I am not very sure how much 
ground we have gained with the Chinese in making them 
appreciate the other issues we have with Sudan, and I think it 
is a very good example of China's determination--or 
inclination, excuse me, to put energy as a priority in their 
national component over the interests of other issues that we 
might find important, particularly in the case of Sudan. It is 
really the poster child for that whole issue.
    The Chairman. The gentleman from South Carolina, Mr. 
Wilson.
    Mr. Wilson. Thank you, Mr. Chairman; and, General and Mr. 
Secretary, thank you very much for being here today.
    I am very interested in our relationship with China and how 
we are working together to combat terrorism and proliferation 
of weapons of mass destruction.
    On my visits to Beijing, I have actually been impressed to 
find out there is a realization we have a common enemy there. 
That is, terrorists who want to destroy modern civilization. 
Could you tell us what progress has been made, what challenges 
exist and what more can be done to work together?
    Secretary Lawless. I actually think there has been progress 
in this area; and I think the progress is manifested by their 
eagerness to cooperate on the anti-terrorism frontier, sharing 
information and whatever.
    I think the sharper interest we have relates to 
proliferation and particularly in our dialogue with the Chinese 
related to nuclear ballistic missile proliferation and to the 
extent to which China may be enabling other countries that 
would perhaps fall into the category of rogue states to 
proliferate and build systems that are destabilizing.
    So I think while there has been some level of improvement 
on the counterterrorism front, there are still other 
initiatives where China has been invited to the table but has 
elected not to show up, particularly the Proliferation Security 
Initiative (PSI).
    The Proliferation Security Initiative, as you know, is an 
ad hoc arrangement whereby the stated purpose of it is to 
cooperate, to deny or preempt the ability of people to ship 
weapons of mass destruction or components or enablers thereof. 
We would have liked to see China show up at PSI and 
participate.
    On the other side of the equation, they are involved in the 
container initiative, and I think there is a pretty robust or 
decent dialogue with regards to that particular initiative. So 
it is a mixed message where there is room for a huge amount of 
improvement.
    General Breedlove. Yes, sir. I wouldn't want to alter what 
the Secretary has said, but I would just like to harken back to 
something he did mention before.
    One of the areas we would like to see some improvement on 
has sort of been the international relations piece. As he 
mentioned, the Shanghai Corporation Organization did work to 
block our U.S. basing in Kyrgyzstan; and that was not helpful 
to our war on the terror. So there are places, as the Secretary 
has said, where we have a mixed record; and we would like to 
address those areas.
    Mr. Wilson. I appreciate you pointing that out. Because it 
would appear that we should be working together more closely, 
but specifically Kyrgyzstan needed to be raised.
    Additionally, I have had the extraordinary opportunity to 
visit North Korea and South Korea with the Six-Party Talks. It 
always has struck me that it is in China's interest of 
denuclearization of the Korean Peninsula and the stability of 
the Korean Peninsula that they would benefit most, but they 
also are the superior and only, virtually, benefactor of the 
Democratic People's Republic of Korea (DPRK).
    How effective are they currently in the Six-Party Talks?
    Secretary Lawless. That is--I think the record is mixed.
    By and large, we give the Chinese due credit for enabling 
the entire process, hosting the entire process, convincing the 
North Koreans to show up when there is a meeting; and China has 
delivered on that aspect of the program, that is, as a host or 
moderator or enabler for the overall discussions.
    I personally believe, having sat through every single Six-
Party session, that China needs to be a little bit more 
declaratory with regard to its concerns.
    And, in that regard, you are correct that China remains the 
single most important, the overwhelming supplier, enabler of 
North Korea. So, in that regard, one would think that China has 
leverage it has not elected to use to date. And I think that is 
a consensus position, and I think that is what is our--our goal 
is that China becomes more active vis-a-vis North Korea, given 
the inherent leverage they possess in the issue.
    Mr. Wilson. In conclusion, I want to thank you for your 
efforts; and I just can't reiterate enough that it seems like, 
to me, mutually beneficial to China, the United States and so 
on, the entire Korean Peninsula that there be a real effort to, 
even without regime change, to have the countries that work 
together.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Mr. Taylor, the gentleman from Mississippi.
    Mr. Taylor. Thank you, Mr. Chairman.
    Mr. Secretary, thank you for being here.
    Mr. Secretary, in your remarks, you quote the 2006 QDR that 
says, ``China has the greatest potential to compete militarily 
with the United States; and field destructive military 
technologies that could over time alter traditional U.S. 
military advantages.''
    Now that is a document that comes from the Bush 
Administration, a report to Congress. Given that the Bush 
Administration is saying this, how would you explain that the 
President's remarks seem to have almost tunnel vision toward 
Iran and al Qaeda? If the threat is China, why doesn't the Bush 
Administration say why don't we have free trade with China 
instead of focusing on Iran and al Qaeda?
    To the best of my knowledge, al Qaeda doesn't have an 
aircraft feet, doesn't have a naval fleet, doesn't have mass 
armies, doesn't have nuclear weapons. The Chinese have all of 
these things. The Bush Administration QDR is the one that says 
they are the threat, and yet the President seems to be focused 
over here when this document says maybe we ought to be looking 
over there.
    Secretary Lawless. I think the QDR, as presented, did 
address the priority of combating international terrorism. The 
particular portion of the QDR that we are referring to here 
discusses the emergence of strategic competitors, and it 
doesn't make any judgment with regard to where China will 
eventually go. It simply says that we have identified China, 
given the industrial base we have discussed here today and a 
number of other issues, has the potential--and I think I would 
underline that piece in the QDR--to field disruptive 
technologies. That is a fact. The potential is there.
    Similarly, in that same document, we talk about China as a 
potential peer competitor; and the reason we are doing that is 
we are saying that there are a number of choices in front of 
the Chinese leadership that they have to make, we only have 
limited control over those choices, and that it will happen 
over a multi-generational process as China continues to develop 
its capabilities and its economic power.
    We are acknowledging China as a possible peer competitor. 
It certainly is a peer competitor of the United States in many 
economic fields today, and it will be in the future in more 
areas, and eventually it will be a peer competitor in the field 
of national security and military technology and its 
capabilities.
    I think in the QDR, taken as a whole, puts China in the 
position of emerging peer competitor. It makes no judgments as 
to whether attending that issue is more important than dealing 
with al Qaeda or international terrorism; and, actually, it is 
quite balanced in that it says we are not prepared to make a 
judgment as to where China may end up on that spectrum of 
possibilities.
    So the QDR as a whole, that language is very carefully 
chosen within the context of a nation state peer competitor, as 
opposed to international terrorism.
    I can't give you a better answer than that, other than to 
say I think the QDR is very balanced.
    Mr. Taylor. Walk me through something.
    I have been in China maybe four hours, but Shanghai looked 
a lot more modern than New York. It is my understanding it is a 
secular society that actually goes out of their way to 
downgrade pollution. It is a society where they have forced 
abortions. Strikes me as something that is the antithesis of a 
fundamentalist Muslim. How is it that they have dodged the 
wrath of al Qaeda?
    Secretary Lawless. It would be very difficult for me to 
give you a definitive answer on that. I don't believe there is 
a large Muslim population with which they have to deal. There 
is a Muslim population there. They have had their problems in 
the far west of the country where there is a Muslim majority. 
There is actually an organization out there that I believe we 
have designated that has been universally designated as a 
terrorist organization, I believe.
    So it isn't that they have dodged altogether the bullet. I 
think that the problems they have internally with regard to 
terrorism are very contained geographically and that they have 
just simply found a way to manage that threat over the years.
    But I don't think that they are ready to rest on their 
laurels. They appear to be very concerned about the threat of 
terrorism; and they have got the Olympics coming up, as you 
know, where there is a venue there for international terrorism 
to manifest itself.
    So China has a problem. The problem is at least under 
control, I believe. But they have a problem.
    Mr. Taylor. Thank you, Mr. Chair. Thank you, Mr. Secretary.
    The Chairman. Thank you.
    Mr. Akin.
    Mr. Akin. Thank you, Mr. Chairman.
    A couple of quick questions here.
    The first thing is we have had some briefs from the Navy, 
particularly as it relates to the situation with China and the 
importance of network-centric warfare and that being the future 
where we need to be going with our forces.
    Is there any program to develop that that is parallel to 
the future combat systems, parallel to that in the Army, or is 
the thinking that maybe some of that software and that 
communications discipline could be cross-supplied to the 
Marines or the Navy as well?
    General Breedlove. Sir, I will take a stab.
    I think I understood your question, and let me just quickly 
rephrase it to make sure I don't answer it incorrectly. Are you 
asking are we taking a look at the progress they are making in 
netcentric warfare and applying it to our military?
    Mr. Akin. Yes. And my question was, do you have your own 
parallel effort going on toward network-centric warfare in the 
Navy, or are you waiting to say maybe we can cross-apply it and 
just take some of the software or maybe something else?
    I guess maybe my question is, what is your action to move 
us into more of a network-centric force in the Navy relative to 
this situation in China?
    General Breedlove. Sir, I would give you my assessment. I 
am an Air Force officer, so that limits my visibility into the 
Navy a little bit.
    I would tell you that, as an Air Force officer, especially 
dealing in the aero warfare piece, the Navy is absolutely net 
warfare centric, and they are lashed in completely with both 
Army air defense and U.S. Air Force netcentric warfare. In 
fact, the Aegis cruiser is an incredible example of netcentric 
warfare and the capability to control and communicate across 
nets.
    So my exposure to the Navy and netcentric warfare is they 
are extremely good; and my appraisal of the Chinese effort, 
especially as it pertains to their army, navy, and air force, 
is they are decades behind us at this point in netcentric 
warfare.
    If we have an asymmetric advantage, that would be the 
asymmetric advantage.
    Mr. Secretary, any----
    Secretary Lawless. No. I agree with that comment, but I 
think it is important to stress that in every instance where we 
have a disadvantage China has done a very good job of assessing 
exactly where they stand vis-a-vis the United States and has 
embarked upon a very aggressive program of becoming that 
centric, understanding it, and integrating their forces.
    This is a big issue for them. They are spending a lot of 
time and money on it. My prediction would be, given the 
underlying strength of the telecommunications and the Internet 
activity and computer technology in China, they are going to be 
able to close that perhaps multi-generational gap very quickly; 
and that is our concern.
    Mr. Akin. Thank you.
    Another aspect of what China's interest has been in doing 
is, in various ways, is to deny us access to certain regions, 
particularly around Taiwan, is my understanding; and they have 
different techniques for doing that. One of them, of course, is 
asymmetric threats just in general on computers, I suppose. 
Another one is the Sunburn missile. Do we have a response to 
that at this point? Is that still a significant threat or can 
we stop those at this point or is that classified?
    Secretary Lawless. It is classified, but just let me say 
one of the elements of this year's China military power per the 
unclassified version is not just a discussion of Sunburn. It is 
a discussion of Sizzler as well, which is the submarine-
launched anti-ship cruise missile, plus a whole range of land-
based and aircraft-based anti-ship missile.
    So this is an area in which the Chinese, as you have 
observed, are spending a huge amount of effort as part of the 
area of denial or access-denial programs.
    I think we would be able to treat your question very 
effectively in a closed session.
    General Breedlove. Sir, just to add a small piece.
    In the report, the unclassified report, there are clearly 
depictions of not only these missiles but the air defense 
missiles and all of these systems overlapping in an area of 
denial, access denial mode that reaches clearly to Taiwan; and 
that is concerning to us as it is, obviously, to you, sir.
    Mr. Akin. And then I guess the next piece of it is the 
submarine component.
    I understand--I have to leave that question for another 
day.
    Thank you, Mr. Chairman.
    The Chairman. Thank you very much.
    Before I ask Ms. Bordallo, Mr. Secretary, let me ask you in 
general, regarding the P-3 incident, which I believe was 2001, 
the USS Kitty Hawk incident on October 26th, 2006, and the 
Chinese successful anti-satellite test January 11 of 2007, can 
you, in your understanding and study of China, ascribe any 
general intent to send any type of messages to the rest of the 
world within those three incidents?
    Secretary Lawless. If that was the intent, we certainly 
have not found a common thread.
    I would suggest, rather than carefully calculated intent, 
what we saw in each of those three cases was a demonstration of 
capability.
    In each case--not in the EP-3 incident in which an aircraft 
rammed our plane by challenging it in what was called the so-
called EEG zone of China, but particularly in the other two 
areas, the Kitty Hawk incident and the direct ascent anti-
satellite missile test, what you have is a China that is 
developing very impressive either anti-access in the case of 
the submarine or particularly asymmetric capabilities in the 
case of the anti-satellite test, developing very impressive 
capabilities and being willing, if not eager, to demonstrate 
those capabilities both to us and to their own people.
    There is an issue here also of being confident about their 
own capabilities, and the level of confidence that the Chinese 
have in their growing capabilities is another issue of 
significant concern to us.
    The Chairman. Thank you very much.
    Ms. Bordallo.
    Ms. Bordallo. Thank you very much, Mr. Chairman. And thank 
you, Secretary Lawless. It is good to see you again. And I want 
to thank you for your very important role in the transferring 
of the Marines from Okinawa to Guam. And to you, General, 
welcome.
    The efforts on the People's Republic of China to improve 
its military capabilities, particularly its ability to project 
force in the Pacific, are of particular concern, naturally, to 
me and my constituents. As you well know, Guam is located just 
over 1,000 miles from the Chinese mainland, and the recent 
report from the Department of Defense on China's military power 
has attracted a significant amount of attention back home. I am 
also the co-chair of the Congressional China Caucus, along with 
my colleague from Virginia, Mr. Forbes, so I am very interested 
in the military capabilities in China.
    So my question to you, Mr. Secretary, is this. As you know, 
the military buildup on Guam is moving forward, particularly 
with the announcement of Japan's authorizing of $6 million in 
funding for the buildup. The recent DOD report highlights the 
increased military spending by the Chinese. So to what extent 
does the increased Chinese military spending impact the 
military buildup on Guam?
    Secretary Lawless. I think that as we have discussed with 
you in your office, and as we have discussed in our 
interactions on Guam, and with the Governor and his people and 
the Senate on Guam, the changes that we are making to Guam is 
part and parcel of the process that began in 2002 with global 
basing and our reassessment of our global basing requirements. 
The idea of devoting much more attention to Guam, again, is 
part of a reposturing that we believed was necessary in the 
Western Pacific. It has to do not only with the relocation of 
certain capabilities from Okinawa and a broader distribution of 
those capabilities that is the Marine force, it also has to do 
with some very important buildup, as you know, of U.S. Air 
Force and U.S. Naval capabilities on Guam. We believe that we 
need to balance our forces a little bit more carefully in the 
Pacific.
    That is part of the Guam buildup. But we also need--Guam is 
United States territory, and it is very appropriate that if we 
are going to expand our capabilities in the Western Pacific and 
demonstrate to our allies, to our partners, and to other 
interested parties that we are a Pacific power, and we are 
determined to stay in Asia, Guam is a very good place for us to 
do that from. It is U.S. territory, it is ours, and we are in 
Asia to stay.
    So I would suggest there is both a military aspect to the 
buildup on Guam, a very necessary military aspect. There is 
also a psychological issue with our commitment to Guam and 
Guam's role in the greater U.S. posture in Asia and the 
Pacific. So we certainly appreciate the fine hospitality and 
the great relations that we enjoy with the people of Guam.
    Ms. Bordallo. Thank you very much, Mr. Secretary, and I do 
want you to know that we are looking forward to this buildup.
    The next question I have is the U.S. Navy recently 
announced that the USS Buffalo, a Los Angeles-class fast attack 
submarine, will be home ported in Guam. This will replace the 
other one where there was an accident. There have also been 
discussions about utilizing new piers at the Naval Base Guam 
for maintenance and resupply of aircraft carriers. Are there 
additional military capabilities that are being considered for 
placement on Guam that would provide additional security to 
counter the increased Chinese military buildup that you know 
of?
    Secretary Lawless. Yes. We are very much aware of the 
dynamics of the range rings that are in that book and where 
Guam sits within those range rings of different Chinese 
ballistic missile capabilities. Obviously, the buildup on Guam 
is multifaceted, it is a dynamic and ongoing process, and I 
think we will continue to assess what the needs of Guam are in 
defending our presence there and defending the people of Guam.
    So you can be sure that we literally meet once every two 
weeks at a steering committee within the Pentagon to decide how 
the Guam buildup is moving forward and what we need to do 
differently. So rest assured that we have this issue in hand 
and we are very mindful of the requirements of Guam.
    Ms. Bordallo. And I do have just a second part of that 
question. The lack of transparency in China's accounting for 
military spending. It seems that the Department of Defense is 
taking a new tack in its talks with China and ramped down the 
rhetoric about transparency in China's reports. Can you 
elaborate on the rationale for the change in tactics?
    Secretary Lawless. We really don't see that it is a 
change--we don't see this as a change in tactics. I think that 
the same themes that appeared and were consistent with previous 
reporting, previous China Military Power Reports, are all still 
there. I think this is our seventh year in generating a report, 
or at least our sixth year in generating a report. Those themes 
remain pretty constant. The rhetoric regarding the military 
budget, frankly speaking, has become so routine, and we have 
thumped that drum so much that we thought that we simply didn't 
need to spend that much time in this report beating on that 
drum, and that is the only thing that I can attribute it to.
    Ms. Bordallo. Thank you. Thank you very much, Mr. 
Secretary.
    The Chairman. Thank you. Mr. Cummings, the gentleman from 
Maryland.
    Mr. Cummings. Thank you very much, Mr. Chairman. Mr. 
Lawless, you stated in your testimony that while Beijing has 
improved its non-proliferation posture by promulgating export 
controls and regulations, strengthening its oversight 
mechanisms, and committing to respect multilateral arms export 
control lists, at the same time China has participated in the 
ongoing transfer of conventional weapons to nations such as 
Iran, Sudan, Burma, Zimbabwe, and Cuba. Is China fulfilling its 
obligations under the U.N. Security Council Resolution 1747, 
which calls for the restraint in the sale of heavy arms and 
missile technology to Iran? And what are your key concerns?
    Secretary Lawless. In the implementation dialogue on 1747, 
I think that we are satisfied--and again, I have to be careful 
here, because I am not speaking on behalf of the State 
Department, and this is their lead--I think we are satisfied 
that they are making a real intention--they have the intention 
of following through on 1747 sanctions. The issue is not so 
much the letter of the law in China, it is China's ability and 
willingness to implement the law and to constrain or restrain 
individual companies that in a very freewheeling way have for a 
number of years dealt with proliferators and supplied them with 
a wide range of components, materials, and systems, subsystems. 
And the issue for us is one of getting the Chinese, let me say, 
to enforce the laws that they already have on the books with a 
fairly robust enforcement mechanism, which heretofore has not 
really existed.
    They are doing a much better job than they have done in the 
past. They are trying to enforce their own laws in this regard. 
But a lot of important things continue to slip through, and we 
get very disturbed when important things slip through, because 
it means that China is the only supplier of a given system or 
subsystem that enables a proliferator such as Iran to build a 
complete system.
    So you can understand the frustration. The laws are on the 
books. They are making a good faith attempt to put the 
legislation down. The issue is their willingness and ability to 
enforce the laws they already have. And I am sorry if that is--
--
    Mr. Cummings. No, no.
    Secretary Lawless [continuing]. A lengthy answer.
    Mr. Cummings. That is fine. While Mr. Negroponte testified 
before the House Committee on Foreign Affairs on May 1, 2007, 
that China has a mixed record on efforts to stem the 
proliferation of weapons, especially those relating to missile 
technology, and this is a follow-up on what you just said, 
notably China needs to implement effectively its export control 
regulations and to rein in proliferation activities of its 
companies.
    Mr. Lawless, you also noted in your submitted testimony 
that China should do more to curtail proliferation. Has China 
begun to improve its export regulations as to deter private 
entities from engaging in weapons proliferation? And I take it 
that--does that fall under the same category that you just 
stated?
    Secretary Lawless. Exactly.
    Mr. Cummings. In other words, the law is there, and it is 
just not adhering to them? And what can we do? I mean are our 
hands tied behind our backs on this?
    Secretary Lawless. No, not at all. In fact, sir, I would 
suggest that it is probably not so much an act of commission on 
their part as it is an act of omission. When you simply don't 
enforce, and either because you don't have the mechanisms in 
place to catch a given shipment--you know who your 
proliferators typically are, you know what companies are 
involved in these activities, because only certain companies 
have the ability to ship these products. I think it is a 
question of the laws are on the books by and large, it is 
enforcement, and in particular enforcement at a local level. 
Their regulatory and enforcement authorities may be in some 
regards lacking. And so perhaps we are not giving them 
sufficient credit for the things they are able to do given 
their situation. But they have had enough time now, and these 
proliferating companies are well known to them.
    And you ask if there is anything we can do. There is 
something we can do, and we do it routinely. We list the 
companies as proliferators, and basically ban anyone from doing 
business with them. In certain cases this has resulted in a 
very negative reaction from the Chinese government, because you 
have no choice but to sanction a large corporation. That 
corporation may have a division over here which it does not 
control that is proliferating, and we have no choice but to 
sanction the entire corporation, which has happened a number of 
times. So this is a very sensitive issue between the two 
governments. But that mechanism does exist if we choose to use 
it.
    Mr. Cummings. Thank you, Mr. Chairman.
    The Chairman. Thank you. Let me, before I call on Mr. 
Larsen, Mr. Secretary, if I may ask you how we, our country is 
engaging with China to combat terrorism as well as 
proliferation of weapons of mass destruction. How are we 
engaging with them? What are they doing? What are we doing? If 
anything?
    Secretary Lawless. I actually think we are doing a lot. 
There are fora and activities which China for one reason or 
another have elected not to participate in, which is a 
disappointment; for example, the Proliferation Security 
Initiative. There are other mechanisms that have been 
established by the United Nations--the gentleman has just 
mentioned United Nations Resolution 1747--in which we see every 
indication that China is willing to play a proactive and 
aggressive role. We have a number of interactions, all 
organized and led--mostly organized and led by the State 
Department, or in the case of financial issues, led by 
Treasury. So you know, there is a very aggressive engagement 
going on with the Chinese across several areas. They get it, 
particularly on the very high value issues like nuclear 
materials control. In other areas, there seems to be a 
reluctance or an inability to recognize the proliferation 
potential of a lot of the smaller companies. And so I think 
there is a lot of room for improvement, and that is all going 
to be an issue of willingness on the part of the Chinese 
government to step up and just do it.
    So that is sort of where we are with them. A mixed record. 
Getting better, but significant challenges remain, as 
Ambassador Negroponte in a very carefully worded statement has 
noted.
    The Chairman. Thank you. Mr. Larsen.
    Mr. Larsen. Thank you, Mr. Chairman. Again, Secretary 
Lawless and General Breedlove. Secretary Lawless, earlier in 
your testimony you mentioned the defense telephone link (DTL). 
And your testimony in particular says U.S. and Chinese 
officials will meet in September, 2007 to finalize details of 
the link. I know there has been some technical issues, like 
defining who would actually answer the phone in China. But I 
wanted to ask what specifically is left to discuss, to finalize 
the DTL?
    Secretary Lawless. I think there is a lot left to finalize 
it. In fact, all we really have at this point is the comments 
by Lt. Gen. Zhang in Singapore at the Shanghai Forum, on I 
believe it was the 2nd of June, where he said we have made a 
decision to accept the U.S. proposal, or something of that 
nature. It was somewhat vague. So the first question that will 
be before us in the DCTs in September is we would like to hear 
that across the table formally, if not before.
    Mr. Larsen. You need to hear that from General Guo or 
from----
    Secretary Lawless. No, I think we need to hear it in a 
formal session from General Zhang. And the other thing that has 
to happen is we have had teams discussing this with them, 
visiting with them. I think there needs to be a much more 
concrete demonstration that they are willing to throw the 
switch on the telephone. And the devil is in the details. But 
we would intend that by the time we meet in September that this 
thing be locked up with an agreement on all the specifics of 
the defense telephone link. It is very important to put that in 
place. We have been waiting for four years to do it.
    Mr. Larsen. Last--I forget if it was December or January, 
it was either late December or early January we were there, and 
in a conversation with the Minister of Defense Cao we--I 
actually had the opportunity to directly ask him for an 
invitation as an observer to the next joint China-Russia 
exercise----
    Secretary Lawless. Yes.
    Mr. Larsen [continuing]. Which I recall the response being 
something about the weather. In other words, it just sort of 
landed and we moved on. But I was curious about whether or not 
that is still something we would like to ask again, if an 
opportunity arose to ask again for observer status at a joint 
China-Russia exercise?
    Secretary Lawless. If you get observer status could you get 
us observer status?
    Mr. Larsen. I may have better luck? Is that it?
    Secretary Lawless. I am serious, because as you know, we 
have requested observer status.
    Mr. Larsen. I know. I know.
    Secretary Lawless. And we have been told by each party that 
it is the fault of the other party not wanting us there. So it 
is sort of like a double uninvite to the event.
    Mr. Larsen. Right. Okay. I got it. So I will put that on my 
to do list then. Related to that is generally the East Asia 
Security Summit and the EAS and whether or not--do we still see 
that as something that we want to try to be a part of, or after 
a couple of times they have met there doesn't seem to be much 
that has come out of it? Do we see that as all that important, 
as important as SCO, as important as any joint exercise between 
Russia and China? Where does EAS fit in all this?
    Secretary Lawless. Well, I think it fits into there is a 
whole matrix of regional fora, security-related fora that is 
being addressed.
    Mr. Larsen. The ASEAN (Association of Southeast Asian 
Nations) Regional Forum (ARF).
    Secretary Lawless. You have the ARF, and other fora, all of 
which we show up at if we are invited to come. The issue for us 
has been we want any fora that is created--any forum, excuse 
me, that is created to be all-inclusive. China has in the past 
not been helpful in this regard, in that it would actually like 
to promote venues and fora that are non-inclusive, meaning that 
the United States is not part of that presentation. Other 
parties that are there very much would like us to be there as 
well.
    Mr. Larsen. Right.
    Secretary Lawless. So I think we will continue to seek out 
every opportunity in every fora that presents itself to be 
there, either as an observer or as a full participant. We want 
to be involved. And to the degree that others don't want us to 
be involved, we do not believe that is helpful.
    Mr. Larsen. And a final thing is one quick question, does 
the Department have any plan or desire or is there a role to 
cooperate with China on security matters for the 2008 Olympics 
in Beijing? And if so, what specifically would you like that 
plan to be or is there a plan?
    Secretary Lawless. There really is no plan. And that is 
mainly attributable to the fact that China has really never 
requested any assistance. And in fact, when we have broached 
the subject, the response has been we got it, we will let you 
know if we need any help, but we are pretty confident we can 
handle it, thank you very much.
    Mr. Larsen. Enjoy the basketball.
    Secretary Lawless. Yes.
    Mr. Larsen. Just quickly, Mr. Chairman, if you haven't 
picked up Rising Star by Bates Gill, I commend it to your staff 
as a great airplane read.
    Secretary Lawless. Thank you.
    Mr. Larsen. Sure.
    The Chairman. Before I thank you, let me make a reference 
to the upcoming 2008 Summer Olympics in Beijing. My judgment is 
that all the stops are being pulled for the security for those 
games. You have any comment on that whatsoever?
    Secretary Lawless. No. Not other than to say that we 
believe that China is assigning a very prominent role to 
physical security and broader security to the games. It appears 
to be taken on board by them in all of their planning. At this 
time they seem very confident that they have a good handle on 
it. And we will continue to offer I think across the entire 
breadth of the United States Government our support and our 
willingness to help them. But right now it is an offer that has 
not been taken by the Chinese. And frankly speaking, I don't 
think they will take it up. I think they are very confident 
about what they are able to do.
    The Chairman. Gentlemen, thank you very much. This has been 
an excellent hearing, and I received compliments on your 
testimony from other members as they were passing. We 
appreciate it. And Mr. Secretary, good luck to you in your days 
ahead. And General, it is good to see you.
    [Whereupon, at 12:18 p.m., the committee was adjourned.]
?

      
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                            A P P E N D I X

                             June 13, 2007

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              PREPARED STATEMENTS SUBMITTED FOR THE RECORD

                             June 13, 2007

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[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

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             QUESTIONS AND ANSWERS SUBMITTED FOR THE RECORD

                             June 13, 2007

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                   QUESTIONS SUBMITTED BY MR. FORBES

    Mr. Forbes. In the preface of the Office of Naval Intelligence 
report on China's Naval Modernization, William E. Tarry, director of 
ONI's Naval Analysis Directorate wrote, ``By acquiring some of the 
world's most impressive naval technologies from abroad while 
simultaneously building advanced indigenous submarines, combatants and 
naval aircraft, China is positioning itself to play a growing role in 
regional and transregional affairs.'' What would be the value to the 
United States of working with the Chinese to develop an aircraft 
carrier as ADM Keating has previously suggested, which would clearly 
extend the PRC's capabilities beyond just regional affairs?

    Secretary Lawless and General Breedlove. [The information referred 
to is classified and retained in the committee files.]
    Mr. Forbes. The DoD PRC Power Report states that ``China's actions 
in certain areas increasingly appear inconsistent with its declaratory 
policies.'' The Attorney General has testified on two separate 
occasions before Congress that China represents the number one 
espionage threat against the United States. As you know, Chinese 
military strategy strongly emphasizes deception at the strategic, 
operational, and tactical levels. How responsive can we really expect 
the Chinese to be when we call for transparency with regard to their 
military modernization?

    Secretary Lawless and General Breedlove. [The information referred 
to is classified and retained in the committee files.]
    Mr. Forbes. PLA (People's Liberation Army) doctrine considers 
computer network operations as a force multiplier in the event of a 
confrontation with the United States or any other potential adversary. 
To what extent are Chinese cyberwarfare units attacking computer 
systems in the United States?

    Secretary Lawless and General Breedlove. [The information referred 
to is classified and retained in the committee files.]
    Mr. Forbes. I understand that the PLA has developed training 
systems using modeling and simulation technologies, both for individual 
proficiency and to increase joint capabilities. To what extent are 
these training systems being used to train the PLA and how does this 
factor into the DoD assessment of the PRC's military modernization?

    Secretary Lawless and General Breedlove. [The information referred 
to is classified and retained in the committee files.]

                                  
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