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


                                     

                         [H.A.S.C. No. 110-153]
 
                  CHINA: RECENT SECURITY DEVELOPMENTS

                               __________

                      COMMITTEE ON ARMED SERVICES

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD

                             JUNE 25, 2008


                                     
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                   HOUSE COMMITTEE ON ARMED SERVICES
                       One Hundred Tenth Congress

                    IKE SKELTON, Missouri, Chairman
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
SILVESTRE REYES, Texas               ROSCOE G. BARTLETT, Maryland
VIC SNYDER, Arkansas                 HOWARD P. ``BUCK'' McKEON, 
ADAM SMITH, Washington                   California
LORETTA SANCHEZ, California          MAC THORNBERRY, Texas
MIKE McINTYRE, North Carolina        WALTER B. JONES, North Carolina
ELLEN O. TAUSCHER, California        ROBIN HAYES, North Carolina
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 E. UDALL, Colorado              MICHAEL TURNER, Ohio
DAN BOREN, Oklahoma                  JOHN KLINE, Minnesota
BRAD ELLSWORTH, Indiana              PHIL GINGREY, Georgia
NANCY BOYDA, Kansas                  MIKE ROGERS, Alabama
PATRICK J. MURPHY, Pennsylvania      TRENT FRANKS, Arizona
HANK JOHNSON, Georgia                BILL SHUSTER, Pennsylvania
CAROL SHEA-PORTER, New Hampshire     THELMA DRAKE, Virginia
JOE COURTNEY, Connecticut            CATHY McMORRIS RODGERS, Washington
DAVID LOEBSACK, Iowa                 K. MICHAEL CONAWAY, Texas
KIRSTEN E. GILLIBRAND, New York      GEOFF DAVIS, Kentucky
JOE SESTAK, Pennsylvania             DOUG LAMBORN, Colorado
GABRIELLE GIFFORDS, Arizona          ROB WITTMAN, Virginia
NIKI TSONGAS, Massachusetts
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
                    Caterina Dutto, Staff Assistant


                            C O N T E N T S

                              ----------                              

                     CHRONOLOGICAL LIST OF HEARINGS
                                  2008

                                                                   Page

Hearing:

Wednesday, June 25, 2008, China: Recent Security Developments....     1

Appendix:

Wednesday, June 25, 2008.........................................    29
                              ----------                              

                        WEDNESDAY, JUNE 25, 2008
                  CHINA: RECENT SECURITY DEVELOPMENTS
              STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

McHugh, Hon. John M., a Representative from New York, Committee 
  on Armed Services..............................................     2
Skelton, Hon. Ike, a Representative from Missouri, Chairman, 
  Committee on Armed Services....................................     1

                               WITNESSES

Breedlove, Maj. Gen. Philip M., USAF, Vice Director for Strategic 
  Plans and Policy, Joint Chiefs of Staff........................     5
Shinn, Hon. James J., Assistant Secretary of Defense for Asian 
  and Pacific Security Affairs...................................     3

                                APPENDIX

Prepared Statements:

    Shinn, Hon. James J., joint with Maj. Gen. Philip M. 
      Breedlove..................................................    33

Documents Submitted for the Record:

    [There were no Documents submitted.]

Witness Responses to Questions Asked During the Hearing:

    [There were no Questions submitted during the hearing.]

Questions Submitted by Members Post Hearing:

    Mr. Larsen...................................................    43
                  CHINA: RECENT SECURITY DEVELOPMENTS

                              ----------                              

                          House of Representatives,
                               Committee on Armed Services,
                          Washington, DC, Wednesday, June 25, 2008.
    The committee met, pursuant to call, at 10:10 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. Today we have in front of us Assistant 
Secretary of Defense Mr. Shinn, Assistant Secretary for Asian 
and Pacific Security Affairs; Major General Breedlove, Vice 
Director for Strategic Plans and Policy, with Joint Chiefs of 
Staff.
    And we welcome both of you gentlemen for being with us, and 
we appreciate your testifying today on recent security 
developments involving China.
    Now, I have stressed for some time the critical 
significance of developments in China. And while our military 
resources have been heavily focusing on Iraq, China's influence 
has grown in Asia and, of course, beyond. To address this 
reality, we must proactively and effectively engage with China 
on multiple fronts.
    While there are many positive steps to note in this last 
year, progress is still to be achieved. And Secretary Gates and 
Admiral Tim Keating have pursued two major initiatives. These 
are high-level policy dialogue with China, seeking clarity on 
its intentions and strategy in the security arena, and 
military-to-military contacts.
    Although some progress has been made, China has still not 
adequately revealed its full defense spending, military 
modernization efforts, or its strategic intentions.
    And I should add at this point that I had the pleasure of 
visiting China, along with my friend Randy Forbes, with a 
delegation last summer to explore these very issues. I very 
much appreciate the hospitality that was extended to us then. 
And I was honored, along with Mr. Forbes and our delegation, to 
plant a tree at the memorial in Kunming in memory of the 
American airmen and their Chinese allies who flew ``The Hump'' 
en route from Burma to China and also the American Flying 
Tigers who defended China.
    We also received a briefing at the headquarters of China's 
2nd Artillery Corps, which commands their nuclear and missile 
forces, a visit that has been previously made only by Secretary 
Rumsfeld. This was an encouraging sign of increased openness, 
and it was an excellent opportunity for us to learn more about 
China's strategic intentions. It was an excellent, excellent 
briefing.
    I am encouraged by China's agreement to begin submitting an 
annual report to the United Nations on its military 
expenditures. This is positive but, frankly, not enough. China 
announced its military budget for 2008. It is about $58.8 
billion, continuing a trend of double-digit increases for the 
last decade. Our country continues to assess the real budget as 
two to three times greater than that.
    The Department of Defense's 2008 report on China's military 
power also notes that China continues its missile buildup 
across from Taiwan, and its power projection capabilities are 
steadily increasing. Secretary Gates has called on China to 
increase its security cooperation with the United States in the 
areas of common interest, ranging from counterterrorism and 
nonproliferation to energy security.
    Admiral Keating has also made significant progress in 
arranging for meaningful military-to-military contacts between 
the two countries in compliance with the guidance on such 
contacts established by this committee in law.
    In addition, the United States-China defense hotline is now 
operational. There is dialogue with China on nuclear strategy 
and policy. There is continuing U.S.-China cooperation on the 
denuclearization of North Korea. And China recently supported 
additional sanctions against Iran for its suspected nuclear 
activities. There is also a new United States-China agreement 
on Korean War prisoner-of-war, missing-in-action (MIA) matters.
    And I continue to believe that China is not necessarily 
destined to be a threat to the United States. There are trends 
and ambiguities that do concern us. And today's sharing should 
help us better understand China's military development efforts. 
But we must also acknowledge China's limitations and recognize 
that China's choices may well be shaped by our own actions.
    There are also unique opportunities for progress with China 
on security matters this year, given the 2008 summer Olympics 
in Beijing, new leadership in Taiwan, recent movement by Taiwan 
and the mainland toward an easing of tensions across the Taiwan 
Strait.
    So, gentlemen, we thank you for being here. We are very 
interested to hear your assessment of recent security 
developments.
    And let me turn to my friend John McHugh, the gentleman 
from New York.

  STATEMENT OF HON. JOHN M. MCHUGH, A REPRESENTATIVE FROM NEW 
               YORK, COMMITTEE ON ARMED SERVICES

    Mr. McHugh. Thank you very much, Mr. Chairman.
    Mr. Chairman, as you know, the distinguished ranking 
member, Mr. Hunter, is a bit delayed.
    I would say to our witnesses, like all of us here, we 
extend to you a welcome and words of appreciation, Mr. 
Secretary, General. We look forward very much to your comments.
    Mr. Chairman, I would ask that the ranking member's 
statement be entered in its entirety into the record.
    [The information referred to was not available at the time 
of printing.]
    Mr. McHugh. And, with that, just let me say a few words, 
particularly to you, Mr. Chairman, in appreciation for holding 
these hearings.
    These reports over the past seven years have been a 
critically important component of our Nation's ability to judge 
the emerging Chinese circumstance. As the chairman noted, all 
of us are excited and, by and large, optimistic about the 
opportunity to work with China in partnership on issues that 
are of mutual concern to both nations.
    The Chinese people, as we are all hopeful they demonstrate 
very clearly in the upcoming Olympics, are an important part of 
world development. And their partnership, as the chairman 
noted, in such things as the six-party talks and other areas, 
are absolutely essential.
    However, their military ambition still remains clouded. I 
and, I know, others on this committee, as well as many others 
across the globe, are concerned about their intentions and as 
much about what we don't know as what we do know. And, of 
course, this report is very helpful in helping us fill in with 
some of those blanks.
    So with that word of appreciation and in anticipation of 
your comments, gentlemen, again, welcome.
    Mr. Chairman, I will yield back.
    The Chairman. Thank you so much.
    Without further ado, Mr. Shinn, we will begin with you, 
sir.

   STATEMENT OF HON. JAMES J. SHINN, ASSISTANT SECRETARY OF 
         DEFENSE FOR ASIAN AND PACIFIC SECURITY AFFAIRS

    Secretary Shinn. Mr. Chairman and distinguished members, 
General Breedlove and I thank you for giving us the opportunity 
to appear before you today.
    We submitted some written remarks, Mr. Chairman. We would 
appreciate it if they could be submitted for the record.
    The Chairman. Without objection.
    Secretary Shinn. And if I may, what I would like to do is 
just briefly summarize those written remarks with around three 
of the key questions which concern us and which I am sure 
concern this committee regarding China's security developments.
    I think the first question is, what are the Chinese doing 
in terms of their modernization and their buildup? The second 
question is, what does it mean? What does it mean for us and 
for our allies from the region? And the third, for a practical 
question, is, what is the Defense Department, in particular, 
and the U.S. Government, more broadly, doing to react and deal 
with this buildup?
    With regard to the first question, as Congressman McHugh 
noted, we have submitted the China Military Power Report, of 
which we are quite proud. And we hope that the Members found it 
useful and to fulfill the mandate. I think there are four key 
points about the facts of the buildup that were highlighted in 
the report.
    The first, as you know, is that the Chinese have engaged in 
a sustained, very sizable increase in their expenditure, and 
they have done so over quite a few years. The official budget 
is about $60 billion. Our estimates suggests it is perhaps 
twice that, but we don't really know. And that goes to previous 
comments about the importance of transparency.
    The second major observation about the buildup is that it 
is across all their services. It is comprehensive in the sea, 
land and air forces of the People's Liberation Army (PLA). And 
it is also particularly significant that it includes the 
nuclear, as well as the conventional forces.
    The third point is that, if you will, the Chinese are 
investing heavily in what you might call the software of the 
PLA, as well as the hardware assets. In other words, in 
personnel recruiting, in training, in the logistics, and their 
command and control apparatus. We think this was so 
significantly important that there is a special topic session 
in this year's power report to try and get to the importance of 
this software investment.
    And the fourth and final observation about the military 
buildup, as you know, it reflects what appears to be a 
deliberate and well-thought-through Chinese strategy to invest 
in asymmetric warfare, cyber warfare, counter-space capability, 
their very sophisticated ballistic and cruise missile program, 
and, of course, undersea warfare. We tried to lay this out in 
chapter three of the report, because we think it is so 
important.
    If I may move to the second question, what does this mean? 
What does this buildup mean for us and for our allies in the 
region?
    I think the first inclusion is that the cross-strait 
military balance continues to shift in the mainland's favor as 
a result of this buildup. There is an annex at the end of the 
military power report that lays out, in a couple of tables, the 
results of the mainland Chinese military buildup, and on the 
other column, it has the Chinese forces. And it is a pretty 
graphic piece of evidence for the shift in the military balance 
across the straits.
    The second observation about what it means is that it 
increasingly puts U.S. forces in the region and the forces of 
our allies in the region at risk. Again, as the members know, 
the Chinese have invested heavily in what they call anti-access 
or area-denial capabilities; in particular, the sophisticated 
command, control, communications, computers, intelligence, 
surveillance, and reconnaissance (C4ISR) required to track, for 
example, U.S. missiles at long distance and the anti-ship 
cruise missiles to threaten those forces once they are under 
way.
    I think the third and final observation about what this 
means, what this buildup means for us, is that this increasing 
capability may alter their intent. In other words, the 
increasing capacity of the PLA may present the Chinese 
leadership with more options. And, as the chairman mentioned in 
his comments, this goes right to the heart of the issue: What 
is the intent of this buildup?
    For example, we don't know as the Chinese nuclear forces 
increase in their size, in their survivability and in their 
precision, we are not sure if this is going to alter, for 
example, their no-first-use policy.
    We are very careful about inferring intent based solely on 
expanding capability, but as the members of this committee 
know, in particular, in the military, in the absence of 
transparency, one is forced to plan for the worst case. And 
that is part of the reason for the deep seriousness with which 
we view the military buildup.
    Mr. Chairman and members, if I could finish very briefly on 
the third question, which is, what is the Department of Defense 
(DOD) and the U.S. Government, with the direction and support 
of the Congress, doing about this Chinese threat? I think, 
again, there are probably four principal lines of operation in 
response to it.
    The first and, in some respects, the most pressing is to 
continue in the intelligence collection and analysis, so we 
understand as much as possible, not just about the contours of 
the force buildup, but also as much as possible trying to 
divine the intent. What does the leadership, what does the PLA 
leadership, what does the party leadership intend to do with 
its increasing capability?
    The second line of operation, obviously, is to continue to 
train, equip and posture our forces in the Pacific, under the 
command of Admiral Keating, and to do so in a way that responds 
to the shifting capabilities of the PLA.
    The third observation--and it is consistent, complementary 
to the second--is to work very closely with our alliance 
partners in the region to build their capacity and to make sure 
that these alliances are also modified over time to deal with 
enhanced Chinese capability.
    And finally, the final area of focus is to engage the 
Chinese government and the PLA at a number of levels, both at 
the top level with the secretary, the mil-to-mil contact that 
the chairman made reference to, junior officers, mid-grade 
noncommissioned officers (NCOs), and to keep going a couple of 
functional committees, for example, on cooperating on disaster 
relief.
    I think the rationale for this is, number one, as you 
engage in this contact with the PLA and the Chinese leadership, 
you learn more about them. We can also signal our resolve in 
the Pacific, which reduces the chances of miscalculation on the 
other side. And we can build both the confidence and the 
communication links, such as the defense telephone link that 
was referred to earlier, if things go badly.
    So, in conclusion, Mr. Chairman and members, China's rise 
certainly presents us with a variety of opportunities and 
challenges. As the chairman said just a few moments ago, the 
Chinese are definitely not destined--they are not destined--to 
be an adversary. China has a lot of choices to make, and we 
have some capability to shape those choices. As my secretary 
said a few weeks ago, we do not see China as a strategic 
adversary. It is a competitor in some respects and a partner in 
others.
    Thank you, Mr. Chairman.
    [The joint prepared statement of Secretary Shinn and 
General Breedlove can be found in the Appendix on page 33.]
    The Chairman. Thank you so much, Mr. Shinn.
    General Breedlove, please.

STATEMENT OF MAJ. GEN. PHILIP M. BREEDLOVE, USAF, VICE DIRECTOR 
     FOR STRATEGIC PLANS AND POLICY, JOINT CHIEFS OF STAFF

    General Breedlove. Good morning, Mr. Chairman, 
distinguished members. I would like to thank you for the 
opportunity to appear today before you to discuss these 
developments that we have already been briefing on.
    It has been just a little over a year since I have had the 
last opportunity to talk about this important topic with you. 
And while many of the same concerns about China remain from 
that discussion, we have also seen some reasons for 
encouragement, especially in regards to our relationship with 
the People's Liberation Army, the PLA.
    Mr. Chairman, as you mentioned we have had a series of 
bilateral dialogues on nuclear strategy and doctrine, and we 
have established the phone link. Beyond that, we have also--in 
other engagements, our delegations have seen a modest increase 
in exposure to PLA facilities, as you mentioned about your 
trip, Mr. Chairman.
    We continue to see progress and cooperation in areas of 
common interest, like humanitarian assistance, disaster relief, 
and military environmental protection. Another encouraging sign 
was China's reception of relief supplies delivered by our 
military aircraft to the needy Chinese during this past 
winter's storms and the most recent earthquake.
    Unfortunately, as you mentioned, many or some of our 
concerns still remain. It comes as no surprise that China is 
modernizing its military. We have to expect that from a nation 
experiencing such impressive economic growth. However, how much 
of the PLA's modernization program remains opaque to us and to 
China's neighbors.
    We continue to communicate to China that our desire for 
greater transparency and openness is to gain a better 
understanding of their strategic intent, as the Secretary has 
mentioned. We believe this is clearly in the interest of all 
concerned in order to avoid any misunderstanding or 
miscalculation.
    We continue to watch the situation closely and respond in a 
manner that benefits peace and stability in this most important 
region.
    Thank you again, Mr. Chairman. I greatly look forward to 
your questions this afternoon.
    [The joint prepared statement of General Breedlove and 
Secretary Shinn can be found in the Appendix on page 33.]
    The Chairman. General, thank you very much.
    Let me ask one question before I ask Mr. McHugh.
    The Taiwan Straits has been considered a very dangerous 
spot on our planet. Is it as dangerous today as it was two to 
three years ago?
    Secretary Shinn. In terms of the danger associated with 
military balance across the straits, Mr. Chairman, I think we 
would have to conclude that, as the balance has shifted toward 
the mainland, that has materially increased the danger across 
the straits.
    On the other hand, as you know, there have been some recent 
political developments across the straits. In particular, after 
the election of Ma Ying-jeou, apparently the two sides have 
engaged in some discussions that have reduced, at least it 
appears to have reduced, the threat and the probability of the 
use of force.
    I am not sure, if you add these two together, what the net 
effect is, but there has definitely been some change.
    The Chairman. General.
    General Breedlove. Sir, if I could add, I would agree with 
the secretary, and I would say, from a purely uniform military 
perspective, clearly there are two sides to the answer I would 
pose. First of all, as you are well aware, sir, that the 
military capability that China has to put upon the strait in 
the form of increased air defense and other capabilities, which 
might be better discussed in our closed session later, make it 
militarily a more challenging area.
    I would also add, however, sir, as we mentioned in the 
opening remarks, we have had increased dialogue, and we now 
have better forms of communication with our military 
counterparts, which would hope to be, in some manner, a 
diffusing capability to possible incidents across the strait.
    The Chairman. Mr. McHugh.
    Mr. McHugh. Thank you, Mr. Chairman.
    Gentlemen, as I briefly mentioned in my opening comments, 
that the concern is as much about what we don't know as what we 
know.
    Mr. Secretary, you commented, and it is a matter of record, 
that our estimates project that the actual military spending by 
the Chinese may be at least two times what they publicly state. 
I don't know what you can say in open session; I don't know 
what you can say about what you don't know. It is a rather 
difficult challenge.
    But I am just curious, do we have any estimates on where we 
are concerned they might be making these undeclared 
expenditures? What kind of programs? Is this where the anti-
cyber is coming from? Or what are the kinds of things we are 
trying to find out?
    Secretary Shinn. As you know from your previous comments, 
there is a lot of black areas in their military expenditure 
that we just don't have much insight into.
    To answer your question more specifically, you know, they 
don't appear to include in the formal announced budget their 
weapons acquisitions from abroad, for example, a lot of these 
big-ticket purchases from the Russians.
    We really don't know where the research and development 
(R&D) for the nuclear program falls. In fact, we have very 
little visibility at all into their nuclear expenditure, either 
the missiles, the warheads, the fissile material.
    And I think, third, we don't know generally, we have very 
little visibility generally into the R&D, the real underlying 
R&D, particularly the dual-use R&D that may arise as a 
byproduct of the rapid economic industrialization that General 
Breedlove referred to earlier and which many of the Members 
have observed firsthand on your trips, for example. So we have 
very little visibility into that.
    Mr. McHugh. General, I don't know if you want to add. I saw 
you nodding your head.
    General Breedlove. No, sir. I just agree with what the 
Secretary said.
    Mr. McHugh. Then let me just ask a follow-up, and then I 
would be happy to yield to my colleagues.
    Mr. Secretary, you mentioned foreign acquisitions. And the 
report shows very clearly we are concerned about, as you know, 
the big-ticket items, particularly Sunburn ballistic missiles, 
a great threat to our ships, et cetera, et cetera.
    And yet we have data coming out of Stockholm Peace 
Institute that suggests, in fact, it said that China's 
purchases on these items, types of items from Russia last year, 
actually dropped 70 percent.
    How do we reconcile that? I am a little pressed to make a 
lot of sense out of those two conflicting data points.
    Secretary Shinn. I am not sure we could reconcile them with 
a great deal of granularity, Congressman. But I think one of 
the likely explanations is that the Chinese may well have 
either bought all of the initial systems that they wanted to, 
and that is just, sort of, a function of their acquisition 
profile over time, or they may have made more progress earlier 
on in terms of creating an indigenous capability. It is clear, 
as you know, that they never intended to become dependent upon 
foreign suppliers for a long time. And there was always a big 
technology-transfer component of these deals with the Russians 
and elsewhere.
    Mr. McHugh. Yeah, that is what I was afraid of. So they may 
have figured it out for themselves and are relying less upon 
those kinds of purchases and can do them indigenously.
    We don't see any diplomatic parting of the ways between the 
Russian and Chinese partnership, do we? No surface rift we can 
see? It is just a purchase change; is that correct?
    Secretary Shinn. I think that is correct, sir. As you know, 
there have been some joint exercises; the Russians and Chinese 
cooperate in some areas. They have somewhat brittle 
relationships than others. It is hard to make out a distinct 
pattern that explains the track record for the decline in 
weapons purchases.
    Mr. McHugh. Thank you, gentlemen.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Solomon Ortiz from Texas.
    Mr. Ortiz. Thank you, Mr. Chairman.
    Thank you so much for appearing before our committee this 
morning.
    I know there are people who might not have the opportunity 
to go to China, but my first trip was back in 1983. And now you 
go to China and you see the investment that China has made. It 
takes years to build and to construct, but it only takes one 
crazy minute to destroy all that we have built. So I am glad to 
see the engagement between the United States and China, the 
proposal by Secretary Gates.
    About six years ago, there was a delegation from this 
committee that went to China. And we asked to see if we could 
meet with their war college to talk to the students there, and 
we were told that we couldn't do that. Anyway, we went there, 
and we asked, and they were able to accommodate us, and we met 
with the students, most of them lieutenant colonels and 
colonels. It was right after 9/11. We broke into groups, and we 
had a very, very constructive discussion.
    So, I am elated that now we are reaching out. And this is 
very, very important, because I think that when we communicate 
with one another, there is hope and that nothing crazy will 
happen.
    I see where I think that China has agreed to make a report 
to the United Nations about their doing the buildup, they have 
become more transparent. Is this something that we have not 
seen before, the transparency that China now is offering?
    Secretary Shinn. Certainly, there has been some progress, 
Mr. Ortiz. And the report to the U.N., although it obviously 
glides over some important details, it is certainly a step in 
the right direction.
    With regard to your initial comment about the fact that it 
takes a long time to build up these capabilities but they can 
be used very quickly, this is one of the reasons--this has 
animated the nuclear dialogue. Any time you deal with the 
question of nuclear weapons, you have to take a deep breath and 
step back.
    In fact, the nuclear dialogue is an area where we have made 
steady progress since, as you know, Secretary Rumsfeld visited 
China in 2005. And I believe Chairman Skelton had one of the 
very first visits to the 2nd Artillery, which is the nuclear 
force part of the PLA, which was a significant breakthrough. 
That was a significant breakthrough and accelerated this 
dialogue.
    So, before turning to General Breedlove for any comments he 
would wish to add, we very much appreciate the continued 
engagement of the Chinese on the part of the members of this 
committee and Congress. We owe, I think, some of the progress 
on the defense telephone link, for example, to some persistent 
advocacy by members of this committee in their discussions with 
the Chinese, and it has been very helpful.
    General Breedlove. And, sir, just to add, in fact, I am a 
product of those exchanges which you talked about. In my 
National War College experience, in the mid-1990's, I was one 
the delegations received during a tumultuous period where it 
was year by year whether it was going or not because of that 
one moment of disagreement between our nations during the time. 
But I was able to go and was afforded an in-depth and unique 
experience with the PLA for almost 17 days.
    In the military sense, this continues at a very brisk 
level, and I think you would be encouraged by that. Later this 
year, our vice chairman will entertain the Guang-Jo military 
region commander and the commander of the PLA Air Force. We 
have a robust connection even below the war college level; our 
command and staff college levels are now meeting and talking.
    And, most recently, we see quite an improvement or an 
increase in the number of what we would call functional 
exchanges--exchanges on humanitarian assistance, disaster 
relief, some pretty intricate meetings on pandemic influenza 
and disease, maritime safety and military law. In fact, it was 
most fortuitous that one of our last engagements on 
humanitarian assistance was just before their recent disaster, 
and we had a good insight into what their plans were and how 
they planned to respond to that and how we might couple to 
that.
    So I don't want to take up too much of your time, sir, but 
I would say that we continue a brisk interaction in the 
military-to-military arena.
    Mr. Ortiz. Just one last question, if I may. You know, the 
Olympics are coming up in less than a month, the first week, if 
I am not mistaken, of August.
    Do you think that, by working together, we are prepared? 
Because I know terrorism is everywhere. What insight can you 
give me as far as being ready for the Olympics? Because we are 
going to have our athletes there, as well, athletes from around 
the world. Could you elaborate a little bit about that?
    Secretary Shinn. We would be glad to talk about this a bit 
more in the closed session, if we may. I think for this, the 
open session, we are working with the Chinese principally in 
areas to provide, as you suggested, for the safety and security 
of our U.S. spectators and athletes. The Chinese have not 
requested a great deal or very much assistance at all, in sharp 
contrast to, for example, the security that we have offered in 
previous Olympics.
    General Breedlove. Sir, if I could add, too, I would echo 
that we would be happy to talk a little bit about U.S. Pacific 
Command (PACOM)'s plans in the closed session.
    We do have some insight into China's preparation. As the 
secretary said, they have made very little, if almost no, 
requests from us. However, we have been briefed and had some 
insight into their preparation: over 100,000 police officers 
dedicated, 600,000 police volunteers, 300,000 surveillance 
cameras. They have, sort of, laid out some of the extent of 
their preparation to us.
    And again, sir, we would be happy to talk a little bit more 
about PACOM's plans when we go to closed session.
    Mr. Ortiz. Thank you so much.
    Thank you, Mr. Chairman.
    The Chairman. You will note the five-minute lights or 
clocks are not working, so do your best to stay within time 
limits as you see them.
    Mr. Bartlett.
    Mr. Bartlett. Thank you.
    Mr. Secretary, you mentioned the Chinese emphasis on 
asymmetric warfare. Of course, the most asymmetric attack on 
our country would be a countrywide, robust electromagnetic 
pulse (EMP) laydown. Whether or not the Chinese are 
anticipating this might be divined from what they are 
personally doing.
    Are their weapons systems EMP-hardened? Do they have 
national plans--which we do not have, by the way--for dealing 
with the eventuality of an EMP laydown over their country?
    Of course, they are much less dependent than we are on an 
infrastructure powered by electricity.
    What do we know of their weapons systems and their EMP 
hardening and of any national plans for responding to a 
potential EMP laydown over their country?
    Secretary Shinn. Thank you, Congressman.
    We don't know a great deal about this subject. We would be 
glad to share with you what we do know in a closed session and 
in more detail. But it is extraordinarily important that you 
bring it up, because it is one of several examples of 
asymmetric warfare that we need to deal with.
    You, I think, referred to it in your remarks; the 
consequence of EMP is that you destroy the communications 
network. And we are, as you know and as the Chinese also know, 
heavily dependent upon sophisticated communications, satellite 
communications, in the conduct of our forces. And so, whether 
it is from an EMP or it is some kind of a coordinated 
Affordable Sensor Technology for Aerial Targeting (ASTAT) 
effort, we could be in a very bad place if the Chinese enhanced 
their capability in this area.
    Mr. Bartlett. You mentioned satellites. They, of course, 
are the weakest link in communications, unless they are 
hardened. And we have very few hardened. I think about 97 
percent of all of our military communications move over non-
hardened satellite links, so this is an enormous vulnerability.
    The Chinese are aggressively scouring the world and buying 
oil. We are not doing that. And I suspect we are not doing that 
because, in today's world, it makes no difference who owns the 
oil. He who comes with the dollars at the auction block buys 
the oil. So why would China be buying oil? And they are very 
aggressively buying oil. And not just buying oil, they are 
buying good will. Would you like a soccer field? Hospitals? 
Maybe roads?
    At the same time they are doing that, they are very 
aggressively building a blue-water navy and emphasizing 
submarines. And last year--and I get various numbers--but they 
launched from several to many times as many submarines as we 
launched last year. That would be necessary, of course, to 
protect the sea lanes if you were going to claim your oil and 
not share it with the rest of the world.
    Do you think that these two actions on the part of the 
Chinese are linked, their aggressively buying oil around the 
world and their aggressive pursuit of a blue-water navy?
    Secretary Shinn. They may be linked, although we don't 
know. This comes to the capability and intent question in a 
pretty profound way.
    I mean, your observations, obviously, are correct on both 
counts, in the sense that the Chinese government has pursued 
energy properties, oil and gas, with an emphasis on direct 
investment and attempted control over those resources to a 
fairly sustained degree, and, again, in quite contrast to our 
reliance upon fungible global markets.
    Mr. Bartlett. Thank you, Mr. Chairman.
    The Chairman. Thank you.
    As I mentioned a few moments ago, the clocks in front of us 
are not working. The one I have up here is not working 
accurately. So I am doing my best to guess at five minutes 
without a clock.
    Mr. Taylor.
    Mr. Taylor. Thank you, Mr. Chairman.
    Mr. Shinn, are you a political appointee? Are you a Bush 
Administration appointee?
    Secretary Shinn. Yes, sir.
    Mr. Taylor. I am curious, what is the Bush Administration's 
interpretation of our commitments to the nation of Taiwan to 
defend it against a cross-strait invasion, should there be one? 
Has that policy ever been articulated by the Bush 
Administration?
    Secretary Shinn. I believe it has been articulated on a 
couple of cases by our Secretary and, most recently, I think, 
publicly by Deputy Secretary of State Negroponte.
    Mr. Taylor. Okay. And what did he say?
    Secretary Shinn. Which is that we will fulfill our 
obligations to Taiwan under the terms of the Taiwan Relations 
Act.
    Mr. Taylor. Okay. How about a clarification for the 
American public? What is that obligation?
    Secretary Shinn. Our obligation, as I understand the Taiwan 
Relations Act, sir, is to provide the Taiwanese with such 
weapon systems as may be required to provide them with 
defensive capabilities in the face of the threat from the 
mainland.
    Mr. Taylor. Is that a commitment of American troops? 
American ships? American aircraft? Or is that a commitment of 
equipment?
    And this all, really, going into the what-if category. What 
if April Gillespie had told Saddam Hussein the Bush 
Administration will defend the Kuwaitis?
    So, a very clear reason for this question. So, let's be 
real precise in your answer, sir.
    Secretary Shinn. To be very precise and to be very clear, 
Congressman, there has been no change on the part of this 
Administration.
    Mr. Taylor. No, but for the benefit of the American people, 
then, what is this Administration's interpretation of a 
longstanding commitment or lack of commitment? What exactly 
does it mean?
    Secretary Shinn. Our policy, to be very precise, sir, is 
based upon, as you know, the One-China policy, the three 
communiques with China, and the Taiwan Relations Act. And we 
continue with that policy, sir.
    Mr. Taylor. No, but for the sake of the American people, 
because there is a lot of confusion out there, so why don't you 
articulate it as you understand it?
    Secretary Shinn. The policy, as articulated by figures much 
more senior in the chain of command than me, sir, including the 
Secretary of State and Secretary of Defense, has been that our 
policy toward the defense of Taiwan has not changed, that we 
continue to fulfill our obligations under the Taiwan Relations 
Act, that we oppose efforts by parties on either side to change 
the status quo as we define it.
    Mr. Taylor. But is it a commitment of materiel? Is it a 
commitment of American war ships? Is it a commitment of 
American troops? What is it, sir?
    Secretary Shinn. We have committed to, as obliged by the 
Taiwan Relations Act, to provide the Taiwanese with such 
weapons systems as may be required to oppose military coercion 
by the Chinese and by the PLA.
    Mr. Taylor. So you are talking equipment, not people?
    Secretary Shinn. The Taiwan Relations Act is principally 
focused on equipment, yes, sir.
    Mr. Taylor. I thank you very much for that answer.
    Thank you, Mr. Chairman.
    The Chairman. Mr. Secretary, you made that perfectly 
unclear.
    I am trying to go back in history, and you are going to 
have to refresh my recollection. Did we not, at one time, have 
our 7th Fleet stationed, or at least partially stationed, in 
the Taiwan Straits?
    Secretary Shinn. As the chairman knows, yes, sir, 
historically.
    The Chairman. When did that end?
    Secretary Shinn. I don't actually remember when it ended, 
sir.
    The Chairman. Can you ask somebody behind you when that 
ended?
    Secretary Shinn. Do you remember?
    The Chairman. Anybody?
    Secretary Shinn. I think we are huddling, sir, to 
compensate for our lack of historical memory.
    The Chairman. This is not medieval history; this was just 
yesterday. When did that end? When did the 7th Fleet stop 
patrolling the Taiwan Straits?
    Secretary Shinn. I think, Mr. Chairman--and I would be glad 
to come back with a more----
    The Chairman. Let's get that before the hearing ends, 
please.
    Secretary Shinn. Yes, sir.
    I believe, Mr. Chairman, that this all happened around 
1979, when we abrogated the treaty with Taiwan and entered into 
these relations with the People's Republic of China (PRC), with 
reasonable confidence, but----
    The Chairman. Well, let's get that for us.
    Mr. Jones.
    Mr. Jones. Mr. Chairman, thank you very much.
    Secretary Shinn, how much does the fact that we borrow 
billions of dollars from the Chinese government to pay our 
bills, how much does this, in your opinion professionally and 
as an American citizen--this has to somehow damage whatever 
leverage we have with the Chinese, simply because we owe them 
over $447 billion. And they are smart people. We have a trade 
deficit with China of over $250 billion.
    I cannot believe--and I am not a professional in anything, 
but when you are trying to--at one time the strongest economic 
nation in the world, I am talking about America, and now we are 
having to borrow money from the Chinese, I have to believe that 
this does somehow put us at a disadvantage when we are trying 
to build relationships with the Chinese military.
    Am I right or wrong?
    Secretary Shinn. Congressman, I am a little bit outside my 
lane on the balance of payments and the Chinese accumulation of 
surpluses area. And we would defer to the Treasury Department.
    But you are clearly right that China's sustained economic 
growth has provided the wherewithal for this impressive 
military buildup that I referred to in my opening remarks.
    Mr. Jones. So, as long as we are a debtor nation, then, 
because of that weakness in our economy, our government then, 
for people like yourself, the negotiators of the future, both 
military and nonmilitary, we are not going to be seen as an 
equal to the Chinese. I mean, am I reading this correctly?
    If you answered that, Mr. Chairman, I will yield back.
    But I just don't know how, unless we can somehow show the 
world that we can get back on our economic feet, that we are 
going to be in a position where we can do no more than just 
talk to the Chinese and hope they will work with us.
    Any response from the General or you on that?
    General Breedlove. Sir, I would be out of my lane, too, to 
speak to the economic piece.
    Mr. Jones. Well, Mr. Chairman, I am going to close by 
making this one statement. I don't think you--this is just, to 
me, very simple. Because the Chinese are not fearful of America 
because we are too dependent on them to pay our bills. And I, 
Mr. Chairman, regret that and hope that we, as a Congress of 
the future, will do something about it.
    Thank you.
    The Chairman. I thank the gentleman.
    Mr. Larsen, to be followed by Mr. Forbes. And we are doing 
our best to keep some kind of track of the time.
    Mr. Larsen.
    Mr. Larsen. Thank you, Mr. Chairman.
    I, for one, think your answer on Taiwan was perfectly 
adequate and appropriate.
    Secretary Shinn. Thank you, sir.
    Mr. Larsen. A little bit of ambiguity isn't a bad thing.
    The question, though, if you can give us your thoughts, or 
if the DOD has some thoughts, on President Ma's approach to 
mainland China and if that changes our calculus at all.
    In other words, we can control things that we do, but we 
can't necessarily control some things that either mainland 
China does or the Taiwanese government does to enhance their 
own relationship.
    How is that effort that Ma is undertaking to reach out to 
the PRC government changing any sort of calculus?
    Secretary Shinn. As I think I responded to the chairman's 
observation on this point, it certainly has been a positive 
political development that the Taiwanese are engaged in what 
appears to be constructive discussions or negotiations with 
Beijing.
    From what I do for a living, from strictly in the military/
defense side of the picture, it doesn't alter our focus on our 
job, with respect to both deterring coercion in that part of 
the world and responding to possible changes in Chinese 
political intent over the longer run.
    I was not trying to be evasive to Congressman Taylor's 
question. There is some built-in ambiguity in our security 
relationship in Taiwan that does serve a useful buffering 
function.
    Mr. Larsen. General Breedlove.
    General Breedlove. Sir, I would just add that, as you saw 
before the elections, there was an increase in, sort of, what I 
would call more bellicose exercising on the part of the Chinese 
along the coast opposite Taiwan. And, clearly, since we have 
come to governments now that are a little less at tension, 
those exercises have tamped down and calmed down a little bit.
    And this is good. As the chairman and others have 
mentioned, this transparency and understanding and dialogue is 
important in order that we don't have a miscalculation of a 
military manner that is more likely because of an exercise that 
is going on.
    Mr. Larsen. Thanks.
    I think in terms of the communication aspects, too, that 
the establishment of the defense telephone link has been an 
important step. It is one small tactical step but part of a 
larger picture of engagement.
    And a term I picked up in Japan--we were there visiting in 
January on a trip--and this was from some reporter, a Japanese 
reporter, is a term they use is ``hedge and integrate,'' which 
I thought might be an appropriate set of terms for us to use in 
our relationship with China. That is, we want to help China 
integrate into the international system, be the responsible 
stakeholder that Mr. Zoellick talked about, but we need to 
hedge our own bets so long as there is this opaqueness to 
intention and military modernization on the part of China. Its 
government may not like that response, but that is a very 
rational response for us to have.
    And speaking of Japan, today, Japanese destroyers are 
visiting a Chinese port for the first time since World War II. 
And I think it underscores that, although it is always all 
about us--that is, we see a bilateral relationship--there is 
also a set of multilateral relationships that we are merely a 
part of in that region.
    Can you talk about the Japan-China relationship relative to 
the United States?
    And I see the lights are working. The yellow light is on, 
so time is running short.
    Secretary Shinn. I think we would agree entirely with your 
observation that the Japanese are a critical piece of this 
puzzle. And, in particular, the alliance relationship with the 
Japanese is a key part of this, as you described it, hedge and 
integrate. I am not sure we would use exactly the same phrase, 
but the policy of trying to shape Chinese choices but being 
prepared to deal with the consequences if they make choices we 
don't like. And the Japanese are a critical part of that.
    It is why we spend so much time on the--as I said earlier, 
on trying to adjust that alliance over time, to deal with a 
rising China in East Asia.
    The Chairman. You will notice the light is working again.
    Did you finish, Mr. Larsen?
    Mr. Larsen. You banged the gavel, so I am finished.
    The Chairman. All right.
    Mr. Forbes.
    Mr. Forbes. Thank you, Mr. Chairman.
    And, gentlemen, thank you for being here.
    I am going to talk quick, since the light is back on. But I 
want to tell you there are some good things going on. First of 
all, your testimony today, we appreciate. We appreciate the 
good work Admiral Keating is doing.
    Mr. Shinn, you mentioned the chairman's visit to the 2nd 
Artillery unit. We can't understate the importance of that. He 
was the second American leader, after Secretary Rumsfeld, to go 
in that unit. And I watched the discussions he had with their 
leadership. They were very, very good, very productive. And I 
think that was incredibly important.
    My concern, though, is we have been wrong a lot in the 
past. We were wrong on their carrier program. We were wrong on 
their sub program. We consistently underestimated their 
capabilities. And we have only recently really talked about a 
lot of their asymmetrical programs.
    You mentioned the fact that they had a deliberate and well 
thought-out asymmetrical warfare plan. My concern is to make 
sure we have one that is at least looking at that and defending 
it.
    And I know it is difficult. When we go to China, we know 
that even when we are in the hotel rooms, they are filming 
everything we do. I have no question everything we are 
discussing today, they have footage, they have everything else, 
to know exactly what we talked about. We don't have the same 
luxury back there.
    But we know from their public documents that they have a 
strategy based on asymmetrical threats. They have talked about 
Assassin's Mace publicly. We know also their efforts are well-
developed.
    And I have three outlines of concern.
    One, their anti-access for naval ships. We know that, 
according to our annual military power report, China has 
developed and deployed 8 of their last 12 diesel subs with 
Sizzler and Thai ship missiles.
    We also note from the media they have an underwater sound 
surveillance system that has been talked about publicly that 
helps them get fixed sensors and pinpoint where our U.S. 
submarines are.
    We know that they also, according to public documents, have 
long-range radar sites that are over-the-horizon capabilities. 
So this helps them to know where our vessels are at any 
particular time.
    I am a little concerned about their anti-access space 
programs. We know the PLA's ability to attack satellites 
operating in low earth orbit; their ability to jam, blind or 
otherwise disable our satellites was in the annual military 
power report. All of this impacts our navigation capabilities. 
And finally, we have talked about many times their cyber 
capabilities to conduct military and industrial espionage. We 
know that their doctrine is to support cyber warfare against 
both civilian and military networks. We know that they have got 
an ongoing program from inside the PRC. And so my question is, 
based on all this, just two. One, can we be confident today in 
telling the American people that, based on all these 
asymmetrical threats and where they have developed, that the 
American people today, as well as our American children who are 
growing up in the next decade, are going to have a country that 
is safe from these threats?
    And if not, what recommendations do you have for Congress 
or the secretary of defense to address these threats? But then 
the second question is this: How do we ensure the needed 
investment and the ability to make decisions on these 
challenges, when so much of what we have to deal with is of a 
classified nature, and yet it is important for us to have a 
public discussion and build public coalitions to put these kind 
of investments there? Thank you, and I just throw those two 
questions to you.
    Secretary Shinn. Thank you for highlighting the cyber 
issue, Congressman Forbes. This is a serious one. And it is for 
that reason that we devoted a significant portion of the China 
military power report to that. Chapter three, in both the 
classified and the unclassified sections, spends a lot of time 
outlining just the contours of that challenge. And we would be 
glad to discuss this in some more detail in a closed session. 
We will also have at the closed session my former colleague, 
John Landry, General Landry, the national intelligence officer 
(NIO) for military affairs, and we would be able to get into 
some more detail on your other point about which ones, which 
aspects of Chinese military modernization we correctly 
estimated, which ones we fell short, and which ones we were 
long, actually.
    General Breedlove. Sir, if I could just add, it looks like 
the light just went off. We talked last year about airplanes 
and their ability to use them and the need to--sorry, sir. I 
will save that for later.
    The Chairman. Go ahead and finish either the question or 
the answer.
    General Breedlove. All right, sir. We talked a little last 
year about their purchase of aircraft, advance aircraft, and 
what we said was it definitely represents a capability that we 
need to be concerned about, but they still need to be able to 
train and have the tactics and techniques and procedures and 
experiences to use them. I think the same sort of answer would 
come on the navy. I think your concern is absolutely valid, and 
they are purchasing a navy that will be very threatening at 
some point in the future. But large portions of that now, you 
don't bring a navy to the water like our navy without 300 years 
of that kind of experience.
    So I think that your concern is very valid. And that our 
concern about their naval capability will grow over time. But 
right now they are still in sort of the baby step stages in 
some of these capabilities.
    The Chairman. The gentlelady from Guam, Ms. Bordallo.
    Ms. Bordallo. Thank you, Mr. Chairman. I just have a single 
question here. I am curious about the last year China denied 
U.S. port calls in Hong Kong. Has that been resolved?
    General Breedlove. Yes, ma'am. It wasn't resolved. It has 
been resolved. The sad news is that the particular visit of the 
carrier was not resolved in time for it to make that visit and 
meet our families. We are very concerned about that and the 
humanitarian aspect of what happened to our families. I would 
add though, that probably more concerning in that episode was 
that two of our smaller ships were denied safe port in that 
very same storm, just after that visit. And this is very 
concerning because this is a law of the sea and humanity 
concern, that we should be able to afford safe harbor to our 
ships when they need it, as we would if the Chinese fleet was 
sailing around America. And the good news is we have entered 
into very specific discussions to address those concerns in the 
future.
    Ms. Bordallo. Thank you, Mr. Chairman.
    The Chairman. Thank you. Mr. Franks, please.
    Mr. Franks. Well, thank you, Mr. Chairman. Mr. Chairman, I 
am always glad when General Breedlove visits the committee. I 
have had a long, close friendship with this man. He is the only 
one that has ever had me in an F-16 in a 360-degree loop over 
the Goldwater range, and I am so glad that he was at the 
controls, or we might neither one be here. But I appreciate him 
very much. The Air Force is privileged to have such an officer. 
And I understand he is up for another star here pretty soon. 
So, thank you for being here, General.
    You know, I think that I would first like to take up where 
my friend, Mr. Taylor, left off. I understand, Secretary Shinn, 
that you are really in an impossible situation to fully express 
either your own views or even official views on some of the 
questions he was asking, but I think they were extremely well 
taken, and that strategic ambiguity, I believe, is a very 
dangerous thing, ultimately. I understand that there are times 
that we can't, you know, show our cards completely. But I think 
our experience and again, using his example, in Iraq, where 
Saddam Hussein was approached and it was a little unclear. You 
know, we said all options were on the table when it came to 
defending Kuwait. But we were a little ambiguous in our 
declaration, and it is my opinion--I could be completely 
wrong--but that if Mr.--or if Saddam Hussein had known what was 
going to follow, and that he would be defeated in that 
situation, that he probably may have found a way to prevent him 
from going into Kuwait.
    With that said, for all the reasons that Mr. Forbes, 
including those reasons, pointed out, I believe that long term, 
China represents one of the greatest challenges that we have. 
Over a short-term, it might be the coincidence of jihadist 
terrorism and nuclear proliferation. But in terms of this 
clarity and again, not to put you in too awkward a spot, 
Secretary Shinn, but do you think that there is going to be a 
time in the near future when we will clarify exactly what our 
commitment is, both to the American people and to the world, in 
terms of preventing an attack by the PRC on Taiwan? It seems to 
me that lack of clarity only increases that miscalculation the 
general spoke of, and that transparency that he spoke of is 
critically important. And I think that applies to what our own 
actions would be, even under our treaty. Do you think that such 
a clarity is forthcoming?
    Secretary Shinn. It would be difficult for me to predict 
what, if any, successive Administration to this one would alter 
our policy toward China and Taiwan, or under what 
circumstances. We do take very seriously--and you are right, 
deterrence is a delicate and complicated business. And it is 
for that reason that I noted, under the question of what are we 
doing about it, what are we doing about modernization of the 
Chinese army, armed forces, that we continue to put such an 
emphasis on training, equipping and posturing our forces in the 
Pacific in response to emerging capabilities there, that we 
continue to strengthen our alliances, including with the 
Japanese and the South Koreans, with our eyes wide open.
    Mr. Franks. Mr. Chairman, would the general care to expand 
on that at all?
    General Breedlove. Sir, just very quickly, I am unqualified 
to speak to what the political, or what our policy may be in 
relation to the political outlook, but I do know that, as a 
military man, what I do understand is the direction from every 
Administration I have served under is that the policy is that 
the question or any resolution of the Taiwan question has to be 
by peaceful means, and that the United States would oppose any 
non-peaceful resolution of the Taiwan issue.
    The Chairman. Thank you. Ms. Sanchez.
    Ms. Sanchez. Thank you, Mr. Chairman, and thank you, 
gentlemen, for your service to our country and for being before 
our committee. I think most of the questions that I have are 
really more of a classified type, so I will wait for that. And 
the largest one that I have is the one that deals with how we 
legitimately do assess China's military capability, since I 
think that is probably within the context of the next hearing. 
So, I will pass at this point and yield back my time.
    The Chairman. Thank the gentlelady. Mrs. Drake, please.
    Mrs. Drake. Thank you, Mr. Chairman. I would also like to 
thank you for being here today, Mr. Shinn and General. And Mr. 
Shinn, I really like the way you started, that you just laid it 
out, you know, what are the Chinese doing and what does that 
mean to us. And one of my questions is: Can we tell to what 
extent they appear to be focused on domestic security and 
stability for China itself, as opposed to regional and more 
global security concerns, because I agree with the General; I 
don't think it is unusual for a country like China to want to 
modernize their fleet. They are creating jobs in a country that 
has tremendous need. So, I am wondering how we look at that. 
And as I said, the way you started out: What are they doing and 
what does it mean to us? So, that would be my first question, 
is: Do we know if this is domestic, or do we know if this is 
more global in scope?
    Secretary Shinn. That is a good question. And I think it is 
difficult to infer anything about Chinese political intent 
without factoring into the equation how they view domestic 
unrest and challenges to their legitimacy from within their own 
borders. To get into more detail, as you know, and there is 
some discussion of this in the military power report, the 
principal elements, military elements that are used for 
domestic maintenance of order, as they say, is the People's 
Armed Police, which has been separated now for some years from 
the PLA.
    But it is undoubtedly true that the enhanced capabilities 
of the PLA, in terms of their logistics, their mobility, and 
their command and control, has probably given the leadership 
more confidence that they can react to domestic problems more, 
perhaps more quickly and more comprehensively. Whether, to what 
degree that is a motivator of the broader military buildup, it 
is very hard to say, which is your question--the domestic focus 
or the international focus.
    Mrs. Drake. General.
    General Breedlove. I would just say that the secretary has 
it exactly right. It is not mutually exclusive. All of the 
improvement that they make in their military capability 
reflects directly back over into their capability to handle 
internal concerns. And I think that was reflected well in their 
response to the earthquake, in which they actually did pretty 
well, and part of that response was specifically due to the 
capability of their military and the pre-planning of their 
military to respond. So, I believe that the military 
improvement is clearly a part of their domestic agenda.
    Mrs. Drake. And one second question, and then I will yield 
back. But on my trip to China, in every meeting that I was in, 
I asked the same question, and I knew they knew to be prepared 
for it, and in every meeting I didn't get an answer. And the 
question was: Could they comment on the status of the contracts 
that China has entered into with Cuba for both natural gas and 
oil in Cuban waters? And they wouldn't answer that. And I know 
Congressman Bartlett has asked the question about oil. But I 
also wonder: What is driving a lot of what China is doing? And 
if the need for energy in the future, with the growth of their 
country, isn't going to be a key component that we would need 
to look at in the future and all the more reason for America to 
develop our own resources, to not be caught in that.
    Secretary Shinn. It is an important point, one we don't 
have, I think, a particularly good answer to, which is to say: 
To what degree is China's long-term intent about the use of its 
military associated in some way with their growing demand for 
energy? It is not clear to us.
    Mrs. Drake. General.
    General Breedlove. Ma'am, just like we built our navy, 
hundreds of years ago, to keep the sea lines open, I believe 
there is a direct correlation to what you are seeing now. I 
think a lot of the things you see happen is China's plan to 
maintain access to energy. Like the chairman, I have seen, 
myself, soccer fields in Africa, in my deployment to the Darfur 
region, and the way that the Chinese get into these doors. And 
their military capability and their navy, I think, directly 
relates to their ability to maintain access to energy.
    Mrs. Drake. Thank you. Thank you both. I yield back, Mr. 
Chairman.
    The Chairman. The gentlelady from Kansas, Mrs. Boyda.
    Mrs. Boyda. Thank you, and thank you again for your service 
and coming in. This is certainly a timely and important topic. 
It is on everyone's mind, I think. Just following up on Mr. 
Forbes question, when you were talking about the cyber defense 
and cyber warfare, cyber terrorism. I think the clock went off 
before you were able, actually, to get into that area. What do 
we know about the cyber terrorism or the cyber warfare? 
Certainly, our computers have been hacked into. What are we 
doing about that? If you could just expound on that, I would 
appreciate it.
    Secretary Shinn. It is an important topic, a really 
important topic. We would be glad to discuss as much of that as 
we can in the closed session just because of the sensitivity, 
the sensitivity of the information, as well as the importance 
of this issue, as Congressman Forbes pointed out.
    Mrs. Boyda. I yield back.
    The Chairman. Thank you very much. Mr. Wilson, please.
    Mr. Wilson. Thank you, Mr. Chairman. And thank both of you 
for being here today. And General Breedlove, I particularly 
appreciate seeing your Air Force uniform. My association with 
China is that my dad served in the 14th Air Force, the Flying 
Tigers, during World War II. It was life-changing for him. He 
truly appreciated and developed an affection for the people of 
China. Additionally, I had the extraordinary opportunity of 
visiting with President Jiang Zemin with Congressman Ortiz. 
When it was mentioned that I was the son of a Flying Tiger, he 
interrupted everything and announced that the American military 
is revered in China.
    Additionally, I had the opportunity to lead a delegation 
for the 60th anniversary of V-J Day, where there were public 
celebrations, the erection of monuments. There were television 
programs and all types of exercises, recognizing that it was 
the American Air Force that provided the security that saved 
millions of lives of the people of China.
    And President Hu, when I met him again, as the son of a 
Flying Tiger, he immediately recognized the appreciation that 
the people of China have for the American military. And so I 
share the view of Secretary Shinn that, indeed, China is a 
competitor. I don't, it is a challenger, but I don't believe it 
should be a threat or an enemy. In fact, I have seen firsthand 
the integration of our economies. It is mutually beneficial.
    In my home state of South Carolina, recently, we have had a 
number of manufacturing facilities being developed, creating 
jobs in South Carolina with investment coming from, of all 
places, the People's Republic of China. And so, putting that in 
perspective, though, I am concerned. China, as the second 
largest energy consumer, following the United States, in the 
world, and the third largest importer of oil--has this 
dependency affected their defense policy and planning for the 
future? And has China used the sale of military technologies as 
incentives to secure energy deals? For either one of you.
    General Breedlove. Sir, I will answer to the extent that 
this forum will allow. I think, certainly, it has. I think we 
see China making friends around the world in peaceful ways like 
soccer stadiums, but also through arms sales, maybe not even 
sophisticated arms sales, but less sophisticated arms sale. But 
they are making friends in many of the emerging areas of the 
world where energy is going to be big, the Gulf of any and 
other places, as an example. And as we were talking before, 
sir, I think clearly their need and their vision to say that we 
are going to have to have clear naval lines of communications 
to transport this energy translates into the development that 
we see in their navy.
    Mr. Wilson. Another concern I have, when you mentioned 
about arms sales, with the U.N. resolution 1747 and 1803--is 
China living up to the obligations of showing restraint for the 
sale of heavy arms and missile technology to Iran?
    General Breedlove. Sir, we are struggling because we don't 
know what we can say in this forum. Can we talk about that 
later this afternoon?
    Mr. Wilson. That would be fine. Additionally, it is my view 
that China, as a modern nation now, from my visits to Beijing 
and Shanghai, that they should have, and they should know that 
we have a shared threat of terrorists who are against 
modernism. Is China being as helpful as they can be in the 
global war on terror?
    Secretary Shinn. Again, I think maybe we should go into the 
closed session on that. I think generally speaking, though, we 
have broad and shared interests with the Chinese, with regard 
to terrorism. They have exhibited considerable anxiety, as you 
know, about not just the possible exposure of the Olympics to 
terrorism, but its involvement more generally in some of their 
border areas. So, that is an area where we are, as the 
secretary has said, partners and not competitors.
    Mr. Wilson. And particularly with the terrorist activity in 
the western provinces, it would seem like so clear that they 
should be working with us. And so thank you. And I yield the 
balance of my time.
    The Chairman. Mr. Johnson from Georgia.
    Mr. Johnson. Thank you, Mr. Chairman. Gentlemen, thank you 
for serving your country. I would like to know whether or not 
there have been any upticks in Chinese investment in defense 
capability or military capability that can be linked to the 
invasion by this country of the sovereign nation of Iraq.
    Secretary Shinn. Mr. Johnson, I don't know of any evidence 
that there has been a connection between those two. I do know 
that the Chinese have studied U.S. military activity in the 
Gulf over many years and have tried to emulate much of our 
military doctrine in their own training. And I believe we 
discussed this a little bit in the China military power report.
    General Breedlove. Sir, if I could pile on that. I would 
not tie it--your question was very specific about Iraq. What I 
would say is that China has watched every war or skirmish that 
we have fought in the last 18 years and studied it. And they 
have developed their own approach to warfare, which they call 
fighting under informatization. That word doesn't make good 
sense to us. But what it means to them is netcentric, highly 
informed intelligence, ISR, in other words, all the things that 
we excel in in America, trying to tie all of those together 
into an ability to fight. And so while I wouldn't say it is 
tied directly to Iraq, it is tied to every military endeavor we 
have had in the last, say, 15 to 18 years. They are trying to 
emulate our ability to work this kind of warfare, and they are 
investing heavily in trying to build their own capability to 
conduct that kind of warfare.
    Mr. Johnson. Is there a suggestion that if we had not been 
engaged in any conflicts around the world then they would not 
respond in the way that they have?
    Secretary Shinn. I don't think so. I don't think we can 
draw that connection, Congressman. We do know that the Chinese 
are vitally concerned about their energy supply, as has been 
noted by a few other Members in their comments here. And they 
do keep their eyes on the gulf.
    Mr. Johnson. Do you believe that the actions of Iraq, I 
mean, excuse me, of China in enhancing its military 
capabilities, particularly the development of its blue water 
navy, is purely defensive, or does it have some, or are you 
concerned that perhaps there may be some offensive mindset 
about taking over the world or dominating some area of the 
world through military power? What is your thinking on that?
    Secretary Shinn. I would like General Breedlove to answer 
that as well. We have observed a definite trend, long-term 
trend of Chinese investment in naval expansion, and not just 
quantity, but sophistication and quality. It remains unclear to 
us what the long-term intent of the use of that naval force 
would be. We do not know if they intend, or they might intend 
to use it in some way to assure themselves of energy security. 
That is a possibility, but we just don't know.
    General Breedlove. Sir, in the little bit of time we have 
left, I would say that it would be hard to construe an aircraft 
carrier as being a purely defensive weapon. I believe that some 
of the things we see China doing, like pursuing an aircraft 
carrier, pursuing some of the other longer range capabilities 
that they have, conventional capabilities, clearly indicate 
that they have aspirations beyond the shores of Taiwan. I 
wouldn't use the terms that you did about the entire world. I 
think they are very pragmatic and are looking at their economic 
zone that they consider.
    Mr. Johnson. Thank you.
    The Chairman. Thank the gentleman. We have three members 
who have not asked questions. And we will call on Mr. Hunter 
now. We will go immediately into the classified session when we 
have finished all those that wish to ask questions. Mr. Hunter.
    Mr. Hunter. Thank you, Mr. Chairman. And thank you for 
holding this important hearing. And gentlemen, thanks for being 
with us. If you look at the fast-moving scenario with respect 
to China's military capability, they are outbuilding us now 3.4 
to 1 in subs. If you add the purchases from the Russians, it 
goes to over five to one. We see an American plan on attack 
boats that takes us down to less than 40 at the low ebb. You 
see the purchase of the sovereign mini class missile 
destroyers, which were designed by the Russians for one reason, 
and that was to kill American aircraft carriers.
    And the proliferation of medium range intercontinental 
ballistic missiles (ICBMs), or ballistic missiles, and the 
development of anti-ship capable ballistic missiles. Now, that 
shows, I think, a military blueprint which is pretty 
aggressive. And it also hints, at least, that the Chinese don't 
intend to be forced to build a navy that can compete with our 
Navy, but rather to stand the U.S. battle force off hundreds of 
miles, before it gets to the straits, by using their strong 
suit, which will be land-based ballistic missiles with anti-
ship guidance systems.
    Now, against that backdrop, and against the backdrop that 
you have mentioned, and as manifested in this book or in the 
report, the 2008 report to Congress on China's military 
capability, the United States really hasn't changed our defense 
planning, our procurement, our R&D, and our own force structure 
in a way to meet what is a pretty rapidly moving train here.
    So, General Breedlove, in your position as--on the joint 
chiefs, shouldn't we be undertaking a shift and an acceleration 
in a number of programs, as a result of what we see over the 
horizon with at least a potentially much more capable Chinese 
military?
    Why is it business as unusual in our plans as this 
expansion takes place?
    General Breedlove. Sir, I share your concern, and I join 
your remarks about the clear expansion campaign of the Chinese 
forces and, obviously, the fact that our force is not growing. 
What I would feel uncomfortable trying to articulate is what is 
the need and the plan for that need as we listen to our 
combatant commanders (COCOMs)--Admiral Keating and others, sir, 
who articulate requirements--and as we hear our services 
articulating their requirements for recapitalization of the 
force, it is clear that we have some tough decisions to make 
about both of those needs for our military services. And I 
think that that is quite the subject of our current budget 
discussions inside our department. And I think, sir, that is 
about as far as I feel qualified to speak to at this moment.
    Mr. Hunter. Well, let me just say this, General. This 
Congress, while we have had great differences on policy with 
respect to the warfighting theaters we are engaged in right 
now, we have written some pretty large checks. If you come 
forth with a required need to expand in given areas, such as 
attack submarines, and Lord knows you don't need to go into 
classified material--we have got, on the record, the U.S. Navy 
reporting that we failed to meet in excess of 30 percent of 
high priority missions, existent missions for attack boats, 
because we didn't have enough submarines.
    Now, that's with a force that's over 50. We get down to 40, 
we are obviously going to expand that number dramatically. And 
yet there has been no leadership that I have seen in the 
Pentagon saying that we need to expand that submarine force. We 
have tried to move a few puts and takes around on that 
committee to get a few more boats into the pipeline at an 
earlier time. But I think your position should be, in telling 
us what we need to deploy, to build, develop, and deploy to 
defend this Nation. Then, if we have to make cuts, at least we 
do it in an informed manner. And we can undertake the 
priorities. And I see this trend that we have turned the 
Quadrennial Defense Review (QDR) into, rather than what do we 
need to defend America, what do we think Congress is going to 
give us? And we build the box, and then we say this is what we 
need, and we tend to cut back on what should be major 
priorities, because you simply don't think the money is going 
to be there.
    So, my question to you is, don't you think that we need to 
make some substantial changes in our planning and procurement 
of major systems to meet what is obviously an emerging 
challenge with respect to China's military capability? 
Personally, what are your thoughts on this?
    General Breedlove. Sir, I think that I would answer in two 
ways. First of all, we have articulated capabilities. We see a 
threat as capability and intent. And I think that clearly, you 
have made very wise and correct statements about the increase 
in their capability. I think part of what we need to do now is 
being much better and have a much better understanding of what 
their intent is for that capability. And then we would be able 
to ascertain what the threat might be in order to shape our 
forces for that. As we have discussed a little in the session 
today, the capability of the Chinese to project their power is 
still somewhat limited. It is clearly increasing, as you have 
articulated.
    And I think that without getting outside of bounds of this 
discussion, I think Admiral Keating and his capability in the 
Pacific right now is well positioned and capable to meet the 
current threat. But I think the discussion is clearly about 
what this capability intent and, therefore, threat might be in 
the future. And that, I think, sir, is what you are really 
driving at.
    Mr. Hunter. That is right. Just to finish, and I will close 
down so other members can have their opportunity to ask 
questions. But my point is, Admiral, this thing is moving 
pretty quickly. I mean, the steel, the increase in steel 
production for China last year was greater than our entire 
steel production which is existent. You have got a very rapidly 
changing and evolving build-up, which is in some dimensions 
very sophisticated, and you folks, from my view, are not 
weighing in and saying, ``Let's look over the horizon, and 
let's start doing some things now,'' because, as you know, our 
programs are no longer one- and two-years programs. When we 
ascertain intent as you said, and if you are going to try to 
ascertain the intent of China, I would highly commend the 
letters and the recommendations and the analysis we did just 
before about a million Chinese came into the Korean theater 
when our experts were absolutely certain that they would not 
engage. So, you have to meet capability with the understanding 
that intent can change very quickly and that there are many 
voices in China. And you don't know which voice is going to 
dominate at a particular time. But I think you folks need to 
weigh into this over-the-horizon challenge that we are going to 
meet and start putting together some new programs. And we will 
be able to talk about those in a closed session. Thank you, Mr. 
Chairman.
    The Chairman. Thank you, Mr. Hunter. Mr. Courtney, please.
    Mr. Courtney. Thank you, Mr. Chairman. Just to follow up on 
Mr. Hunter's questions, general, again, you have, a number of 
times this morning talked about how the navy, the Chinese navy 
has limited capability because it is somewhat in its infancy, I 
guess would be the best way to characterize it. The 
Congressional Research Service (CRS) report which came out this 
month by Mr. O'Rourke, described the 2006 incident with the 
Kitty Hawk where, again, a Chinese submarine, undetected, 
surfaced right near one of our aircraft carriers and actually 
got away undetected. I am just going to read a very short 
excerpt. The ease with which the submarine maneuvered 
undetected into Japanese waters and evaded U.S. and Japan's 
self-defense force submarine sensors suggests that China's 
large submarine fleet engages in far more sea patrols than the 
U.S. has any hope of tracking. I mean, that seems to suggest a 
capability that is a little bit more advanced.
    I mean, we heard a lot from Mr. Hunter about the size of 
the fleet growing, which I completely concur and agree with 
him. But it sounds like they are also learning how to drive 
these boats in a way that certainly caught us by surprise. 
Again, an event which Mr. Forbes described has happened to us a 
lot lately. So, I just wonder if you could comment on that 
incident in terms of your own analysis of their capability.
    General Breedlove. Sir, I would agree with you fully in the 
fact that that was a surprise to us. And I believe we, as a 
military, learned a lot more about where the Chinese military 
is in their capability through that incident. And I would not 
argue in any way, shape, or form that that is not a huge 
concern to us, and we have to adapt our tactics, techniques, 
and procedures to meet the fact that we now understand they may 
have this capability. If I--I hope I have not overstated the 
fact that they have no capability. They do. They have some very 
sophisticated weaponry, and I think that what I was trying to 
relate is that this is a military that has not gotten near the 
capability it can with its current equipment and processes. 
When it gets to a level closer to ours of tactics, training, 
procedure and experience, it will be a very formidable force. 
And I think that was the comparison I was trying to draw.
    Mr. Courtney. Thank you. And I guess I would just echo Mr. 
Hunter's observation that the timeline for us to be able to 
have a fleet that is even close to the size of the Chinese navy 
is going to take some planning. And last year this committee 
led the way in terms of advance procurement in the Virginia 
class program--moved the building schedule, as you know, up a 
year. We would like to actually keep the momentum going, and 
our defense authorization bill certainly heads down that path. 
And we look forward to getting the support of the top level of 
the navy and the Pentagon to hit that goal.
    Quickly, the election of the new Taiwanese president 
apparently put into abeyance the purchase of weapons systems by 
the Taiwanese government, including diesel submarines. And I 
was wondering, Secretary, if you could sort of comment on the 
status of that issue. We appeared to have some movement from 
the Taiwanese Parliament last year, in terms of stepping up and 
appropriating for that effort. And where do you see that right 
now, given the--I guess they pretty much called a time out, in 
the wake of the election.
    Secretary Shinn. If you will pardon me if I consult my 
notes very carefully, since anything regarding Taiwan gets 
parsed very, very carefully not just here, but abroad. It is 
true that for a couple of years, Taiwanese defense expenditures 
actually decreased, in the face of what, in our view, was a 
significantly expanding PLA force. It appears that that has 
reversed, that we have a, that the Taiwanese national assembly 
has passed this budget, and they are going to be engaged in a, 
I think, long overdue uptick in acquiring some additional 
systems.
    Mr. Courtney. So, the recent decision to sort of put this 
on hold is temporary? Is that your view?
    Secretary Shinn. Actually, I don't believe that we made a 
decision to put things in abeyance. This was driven, as far as 
I understand, by Taiwanese domestic politics.
    The Chairman. Ms. Shea-Porter.
    Ms. Shea-Porter. Thank you. Mr. Shinn, the question I have 
has to do with the economic development that we are seeing in 
China right now. When I was there last summer, there were signs 
of it all around. And I would like to ask you, are some of our 
trade policies and some of our economic decisions, including 
our borrowing, helping them to build up their forces and build 
up their security and at risk to our security? And are you 
addressing that in any way? Is this a conversation that you are 
having not simply with other people in your particular realm, 
but with people who are responsible for economic decisions in 
this country?
    Secretary Shinn. Again, that is a little bit out of my 
lane, since we do, we do military stuff.
    Ms. Shea-Porter. But I think maybe we should have the 
conversation where we talk about the impact that borrowing has 
and the impact that trade policies have and the ability for 
China to receive the money, in order to build up their defense. 
So, I think we should be connecting the dots.
    Secretary Shinn. We are acutely aware of the relationship. 
However, between Chinese industrialization, much of which is 
driven by the private sector, or at least the semi-private 
sector, and their ability to engage in the sustained 
programmatic buildup, and not just the money to fund these 
programs, but also the technical transfer from, for example, 
``civilian'' in quotes unquotes, ``civilian'' shipbuilding in 
China and their ability to ramp up the PLAM with the speed and 
sophistication that they have.
    Ms. Shea-Porter. Well, every administration does have a 
responsibility. It is not just under the role of the private 
sector. Last summer, I was talking to the Chinese about steel 
dumping, and I had heard from both the president of U.S. Steel 
and the union that we had a problem there. And so it is not 
simply the private sector. There is a role.
    And again, I will ask you, is there a place where these two 
intersect--the questions about our trade policy and the 
inadvertent impact of building up China to the point where 
they, if they chose to be, could build a military that could 
threaten us?
    Secretary Shinn. It is a very good question, congresswoman, 
for which I don't have a good answer because of what, you know, 
the world that I work in.
    Ms. Shea-Porter. Okay. Let me change it to personal. Do you 
make the connection, stepping aside from your own professional 
role here? I mean, is this something Americans should be 
talking about? I will tell you that you may not be talking 
about it, but they are talking about it in Main Street in my 
town.
    Secretary Shinn. I agree with you. And back home where I 
come from, I believe there is a clear impression among my 
neighbors and my relatives that China's economic growth has 
clearly powered their military expansion, and that the two are 
linked in some respect.
    Ms. Shea-Porter. Thank you. I yield back.
    The Chairman. I thank the gentlelady. If there are no 
further questions for open session, except Mr. Ambassador, Mr. 
Shinn, would you tell us what you learned in the meantime about 
the 7th Fleet and the Taiwan Straits, please?
    Secretary Shinn. The gentleman behind me assures me that we 
will get you the detailed answer, sir. If we do it in between 
this and the next session, I would be glad to.
    The Chairman. I hate to lecture the expert, but you should 
know these things. That is not ancient history. There is a big 
difference as to where our fleet is at any particular time.
    Secretary Shinn. I admit to ignorance on many counts, Mr. 
Chairman. I am just told by Dave Helvey here, that in February 
1953, two years after I was born, 1953, that President 
Eisenhower lifted the 7th Fleet blockade on the Taiwan Straits.
    The Chairman. Has it been back since? Why don't you find 
that out? That is a good start. That is a good start. Thank you 
very much. And we will go into the classified session now. 
Thank you so much.
    [Whereupon, at 12:00 p.m., the committee proceeded in 
closed session.]
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                             June 25, 2008

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              QUESTIONS SUBMITTED BY MEMBERS POST HEARING

                             June 25, 2008

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                   QUESTIONS SUBMITTED BY MR. LARSEN

    Mr. Larsen. What is your assessment of China's counterspace 
efforts? Did U.S. and international reaction to China's anti-satellite 
missile test modify China's approach to counterspace?
    General Breedlove. [The information referred to is classified.]
    Mr. Larsen. How will the election of Taiwan's new President Mr. Ma 
Ying-jeou and Taiwan's new legislative leaders of the KMT Party impact 
U.S.-Taiwan defense relations?
    General Breedlove. After 8 years of cross-Strait tensions, the 
decisive 2008 Taiwan election victories by the Nationalist (KMT) party 
in the Legislative Yuan (LY) and KMT Presidential candidate Ma Ying-
jeou have provided a major opportunity to improve relations between 
China and Taiwan. The Chinese Communist Party welcomed Ma's victory as 
reducing the threat of Taiwan independence and creating an atmosphere 
for resumed dialogue and closer ties. Recognizing that final resolution 
of Taiwan's status will not be decided under Ma's Administration, 
leaders on both sides have raised the possibility of negotiating a 
peace agreement that might stabilize the cross-Strait situation as well 
as creating confidence building measures (CBM); however, neither side 
has put forth any concrete terms. If successful, an agreement and/or 
CBMs might greatly reduce the chance of a crisis that could draw the 
United States and China into a military conflict.
    U.S.-Taiwan defense relations are extremely robust and USPACOM's 
military-to-military engagement is at its highest point. Ma's 
Administration highly values the U.S.-Taiwan defense relationship and 
is very unlikely to change. President Ma has reiterated from his 
campaign statements his ``three no's'' policy: no negotiation of 
unification, no independence, no use of force; however for President 
Ma, he will need to maintain a strong defense capability in order to 
negotiate from a position of strength and to deter Chinese military 
aggression. President Ma has stated he will maintain at least a 3 
percent of GDP defense budget and is committed to Foreign Military 
Sales procurement from the United States.
    From a policy perspective in the near- and long-terms, I do not see 
any change in our defense relations with Taiwan. Our relationship 
remains strong and vibrant with healthy military engagements. It is in 
our U.S. national interest for Taiwan to have a strong self-defense 
capability in order to maintain peace in the Taiwan Strait.
    Mr. Larsen. Can you elaborate on any specific upcoming U.S.-China 
military exercises or other contacts? How important are U.S.-China 
military contacts to increasing transparency of China's strategic 
intentions and capabilities, positively influencing future PLA leaders, 
promoting cooperation and avoiding miscalculations between the two 
sides? What are the prospects for further progress in this area and 
what challenges still exist?
    General Breedlove. Due to China's request, we have not had many 
significant military contacts in recent months because of China's focus 
on the Olympics and Paralympics. We do anticipate a few significant 
military contacts before the end of the calendar year. I anticipate the 
highlight will be a platoon exchange focused on Humanitarian 
Assistance/Disaster Relief that we hope will occur in the autumn. This 
exchange will expand a program in an area that we have already 
established a solid base for future cooperation. At China's invitation, 
we will also be sending one of our General Officers to join other 
foreign military dignitaries to observe a PLA military exercise. We 
also anticipate a few other high-level visits to China and expect to 
see one of their Vice Chairmen of the Central Military Commission visit 
the United States before the year is out.
    These and other military contacts serve many functions that benefit 
the United States. They provide opportunities for cooperation and 
confidence building, but perhaps more importantly, they provide venues 
in which we communicate our satisfaction and issues of concern--a 
street that goes both ways. At the same time, we are exposing and 
educating future leaders on both sides of the Pacific that we 
anticipate will reduce future misunderstanding and miscalculation.
    Finally, our bilateral relationship with the PLA provides an 
example to our friends and allies in the Asia-Pacific that the United 
States is committed to positive engagement in the region.
    Overall, we have seen a modest increase in the transparency of 
strategic intent and capabilities this year. Most noteworthy, was the 
initiation of the bilateral dialogue on nuclear strategy. The defense 
telephone link that was established this year gives us a potential tool 
for avoiding miscalculation between the two sides.
    We have no illusions that any of these efforts will immediately 
meet our goals for transparency or enhanced communication. While we are 
not where we want to be in either of these areas, we are in better 
shape than we were last year. I fully expect to be able to make the 
same statement about our progress next year.
    Mr. Larsen. DOD reports that in 2007, U.S.-China military contacts 
achieved measured progress on DOD priority initiatives, such as 
advancing dialogue on nuclear policy and strategy and establishing a 
``defense hotline''. Please elaborate on developments in U.S. China 
dialogue on nuclear policy and strategy. Please also elaborate on the 
benefits we hope to achieve with the ``defense hotline''. What is the 
potential for this hotline to enhance communication and avoid 
miscalculations between the U.S. and China?
    General Breedlove. [The information referred to is classified.]
    Mr. Larsen. How would you assess China's progress on 
nonproliferation efforts, including export controls? What specifically 
is DOD doing to encourage China's participation in the Proliferation 
Security Initiative?
    General Breedlove. China has improved its non-proliferation posture 
by promulgating export control laws and regulations, strengthening its 
oversight mechanisms, and committing to respect multilateral arms 
export control lists.
    China is now a party to the Nuclear Nonproliferation Treaty, the 
Biological and Toxin Weapons Convention, the Chemical Weapons 
Convention, and is a member of the Nuclear Suppliers Group and the 
Zangger Committee. It has adopted export controls similar to the 
Australia Group control lists on chemical and biological related items, 
and has enacted missile-related export controls. China has also 
cooperated with the international community in supporting a series on 
UN Security Council Resolutions to impose sanctions on Iran and North 
Korea over both countries' nuclear developments.
    We also have bilateral cooperative activities, including the State 
Department's Export Control and Related Border Security Program, which 
has supported training for PRC licensing enforcement officials, the 
Department of Homeland Security's Container Security Initiative, and 
the Department of Energy's Megaports Initiative.
    However, we continue to have serious concerns about the activities 
of a number of PRC entities who continue to supply items and 
technologies useful in weapons of mass destruction, their means of 
delivery, and advanced conventional weapons to regimes of concern.
    In regards to the PSI, China has a tremendous stake in ensuring its 
vessels are less susceptible to proliferators. China operates one of 
the largest commercial shipping registries in the world, so Chinese 
participation in PSI would be a great benefit to the PRC and the PSI 
partner nations. We have invited China to participate in PSI, but our 
offers so far have been declined. We will continue to engage China to 
revisit their decision on this.

                                  
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