[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]




                         [H.A.S.C. No. 111-114]

                  CHINA: RECENT SECURITY DEVELOPMENTS

                               __________

                      COMMITTEE ON ARMED SERVICES

                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD

                            JANUARY 13, 2010


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                   HOUSE COMMITTEE ON ARMED SERVICES
                     One Hundred Eleventh Congress

                    IKE SKELTON, Missouri, Chairman
JOHN SPRATT, South Carolina          HOWARD P. ``BUCK'' McKEON, 
SOLOMON P. ORTIZ, Texas                  California
GENE TAYLOR, Mississippi             ROSCOE G. BARTLETT, Maryland
NEIL ABERCROMBIE, Hawaii             MAC THORNBERRY, Texas
SILVESTRE REYES, Texas               WALTER B. JONES, North Carolina
VIC SNYDER, Arkansas                 W. TODD AKIN, Missouri
ADAM SMITH, Washington               J. RANDY FORBES, Virginia
LORETTA SANCHEZ, California          JEFF MILLER, Florida
MIKE McINTYRE, North Carolina        JOE WILSON, South Carolina
ROBERT A. BRADY, Pennsylvania        FRANK A. LoBIONDO, New Jersey
ROBERT ANDREWS, New Jersey           ROB BISHOP, Utah
SUSAN A. DAVIS, California           MICHAEL TURNER, Ohio
JAMES R. LANGEVIN, Rhode Island      JOHN KLINE, Minnesota
RICK LARSEN, Washington              MIKE ROGERS, Alabama
JIM COOPER, Tennessee                TRENT FRANKS, Arizona
JIM MARSHALL, Georgia                BILL SHUSTER, Pennsylvania
MADELEINE Z. BORDALLO, Guam          CATHY McMORRIS RODGERS, Washington
BRAD ELLSWORTH, Indiana              K. MICHAEL CONAWAY, Texas
PATRICK J. MURPHY, Pennsylvania      DOUG LAMBORN, Colorado
HANK JOHNSON, Georgia                ROB WITTMAN, Virginia
CAROL SHEA-PORTER, New Hampshire     MARY FALLIN, Oklahoma
JOE COURTNEY, Connecticut            DUNCAN HUNTER, California
DAVID LOEBSACK, Iowa                 JOHN C. FLEMING, Louisiana
JOE SESTAK, Pennsylvania             MIKE COFFMAN, Colorado
GABRIELLE GIFFORDS, Arizona          THOMAS J. ROONEY, Florida
NIKI TSONGAS, Massachusetts          TODD RUSSELL PLATTS, Pennsylvania
GLENN NYE, Virginia
CHELLIE PINGREE, Maine
LARRY KISSELL, North Carolina
MARTIN HEINRICH, New Mexico
FRANK M. KRATOVIL, Jr., Maryland
ERIC J.J. MASSA, New York
BOBBY BRIGHT, Alabama
SCOTT MURPHY, New York
DAN BOREN, Oklahoma
                    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
                                  2010

                                                                   Page

Hearing:

Wednesday, January 13, 2010, China: Recent Security Developments.     1

Appendix:

Wednesday, January 13, 2010......................................    35
                              ----------                              

                      WEDNESDAY, JANUARY 13, 2010
 
                  CHINA: RECENT SECURITY DEVELOPMENTS
              STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

McKeon, Hon. Howard P. ``Buck,'' a Representative from 
  California, Ranking Member, Committee on Armed Services........     2
Skelton, Hon. Ike, a Representative from Missouri, Chairman, 
  Committee on Armed Services....................................     1

                               WITNESSES

Gregson, Hon. Wallace C., Assistant Secretary of Defense for 
  Asian and Pacific Security Affairs, U.S. Department of Defense.     6
Shear, David B., Deputy Assistant Secretary for East Asian and 
  Pacific Affairs, U.S. Department of State......................     8
Willard, Adm. Robert F., USN, Commander, U.S. Pacific Command....     5

                                APPENDIX

Prepared Statements:

    Gregson, Hon. Wallace C......................................    58
    Larsen, Hon. Rick, a Representative from Washington, 
      Committee on Armed Services................................    44
    McKeon, Hon. Howard P. ``Buck''..............................    41
    Shear, David B...............................................    74
    Skelton, Hon. Ike............................................    39
    Willard, Adm. Robert F.......................................    46

Documents Submitted for the Record:

    [There were no Documents submitted.]

Witness Responses to Questions Asked During the Hearing:

    Mr. Coffman..................................................    84
    Mr. Forbes...................................................    83
    Mr. Skelton..................................................    83

Questions Submitted by Members Post Hearing:

    Mr. Bishop...................................................    88
    Mr. Coffman..................................................    88
    Mr. Forbes...................................................    87
    Mrs. McMorris Rodgers........................................    88
    Mr. Ortiz....................................................    87
                  CHINA: RECENT SECURITY DEVELOPMENTS

                              ----------                              

                          House of Representatives,
                               Committee on Armed Services,
                       Washington, DC, Wednesday, January 13, 2010.
    The committee met, pursuant to call, at 10:00 a.m., in room 
210, Capitol Visitor Center, 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. Good morning. Today we have with us Admiral 
Robert Willard, Commander of the United States Pacific Command, 
the Honorable ``Chip'' Gregson, Assistant Secretary of Defense 
for Asian and Pacific Security Affairs, and David Shear, Deputy 
Assistant Secretary of State for East Asian and Pacific 
Affairs. And we welcome you gentlemen to the first hearing 
before this committee.
    We are pleased that you could join us today and testify on 
recent security developments involving the country of China.
    Also I wish to welcome Admiral Willard's wife, Donna, who 
is seated behind the good Admiral, and we welcome you. If the 
Admiral missteps a bit, why you just whisper in his ear and 
help him out. Welcome.
    This is a very important and a very timely hearing. It is 
interesting to note that just this morning, press reports 
indicate that Google is contemplating pulling out of China, 
which we may discuss a bit in our hearing.
    Now, I have stressed for some time the significance of 
developments in China to our national security. In recent 
years, while we have been heavily focused on events in the 
Middle East and South Asia, China's influence has grown in Asia 
as well as beyond.
    I am pleased that the Obama Administration has prioritized 
the United States-China security relationship and was 
encouraged by the joint statement that resulted from the 
President's recent visit to China. I welcome the 
Administration's efforts to increase U.S.-China's relations and 
cooperation in areas of common interests ranging from 
counterterrorism and nonproliferation to energy security.
    We must work together with China for the settlement of 
conflicts and reduction of tensions that contribute to global 
and regional instability including denuclearization of the 
Korean peninsula, the Iranian nuclear issue, and the situation 
in South Asia.
    I particularly welcome the administration's support for 
increasing military-to-military contacts. I have long viewed 
such contacts as essential. It builds trust, it promotes 
understanding, it prevents conflicts and it fosters 
cooperation. And given my own visits to China in recent years, 
I know how important these relationships are.
    Looking back at U.S.-China security cooperation under the 
previous Administration, there are some positive steps, but 
there is still much progress to be achieved. In the new 
Administration, we will continue to face plenty of challenges, 
and I remain concerned by trends and ambiguities regarding 
China's military modernization, including China's missile 
buildup across from Taiwan and the steady increase of China's 
power projection capabilities.
    Moreover, China's military budget continues a trend of 
double-digit increases at a time when China provides more and 
more of the loans that support the American economy.
    China's transparency on defense issues is still limited, 
and questions remain regarding China's strategic intentions. 
This was highlighted just days ago following China's concerning 
missile intercept event.
    At the same time the reduction of tensions across Taiwan's 
state is a positive development, and I hope to see further 
progress in that area, including meaningful action by China to 
reduce its military presence directly opposite to Taiwan.
    I am also encouraged by China's recent involvement in the 
counterpiracy operations in the Gulf of Aden. This demonstrates 
responsible use of Chinese military power in line with its 
international responsibilities, of which I hope we can see 
more.
    I continue to believe China is not necessarily destined to 
be a threat to our country, but there are trends and 
ambiguities that do concern us. I continue to believe that the 
United States must demonstrate our own interests in the Asia-
Pacific region including our ability to project power 
effectively there. At the same time we must also acknowledge 
China's limitations and recognize that China's choices may well 
be shaped by our own actions.
    So I look forward to hearing from our witnesses about the 
actions that the Department of Defense (DOD) and the Department 
of State (DOS) are undertaking, and I hope they will help us 
better understand recent security developments involving that 
nation.
    I also look forward to receiving a 2010 Department of 
Defense annual report on this subject which is due to this 
committee in the month of March.
    Before we begin I turn to my friend from California, the 
Ranking Member Buck McKeon.
    [The prepared statement of Mr. Skelton can be found in the 
Appendix on page 39.]

 STATEMENT OF HON. HOWARD P. ``BUCK'' MCKEON, A REPRESENTATIVE 
  FROM CALIFORNIA, RANKING MEMBER, COMMITTEE ON ARMED SERVICES

    Mr. McKeon. Thank you, Mr. Chairman. Thank you for holding 
today's hearing on recent security developments involving the 
People's Republic of China. Today is our first opportunity to 
examine the Administration's policy toward China and how such a 
policy is aligned with our overall approach to the region.
    This hearing also gives us a form to better understand 
China's military buildup and activities where they are 
expanding their areas of influence around the globe, all of 
which have serious implications for the strategic posture of 
the United States.
    I would also like to welcome our witnesses the Chairman 
recognized, and thank you all for being here today. I look 
forward to hearing your testimony and our discussion.
    As I review our policy toward China, it is my understanding 
that President Obama's team may follow an approach of strategic 
assurance as put forward by Deputy Secretary of State James 
Steinberg. This strategy is based on the belief that China 
cannot be contained and therefore we, America and the 
international community, must accept its rise to power. In 
return we seek China's reassurance that its stature will not 
come at the expense or security of other nations.
    For example, strategic assurance may be demonstrated in 
part via China's cooperation with the United States and other 
nations on matters of shared interest. In particular within the 
last year, we worked together in our handling of the global 
financial crisis, countering piracy off the east coast of 
Africa, and isolating North Korea for its persistent and 
aggressive nuclear and missile tests.
    While these are positive steps in our relationship, we 
cannot ignore the reality that China still falls short in the 
column of reassurance. Actions speak louder than words. Here 
are but a few of the examples.
    First, on Monday China demonstrated its resolve to expand 
its strategic capabilities with a missile defense test. As of 
yesterday, we heard from the Pentagon that this test was 
conducted without advance notification to the United States. 
What are China's intentions for employing a missile intercept 
system? Once again we are left in the dark to question China's 
commitment to transparency and cooperation. More concerning, 
this test comes at a time of tension over our arms sales to 
Taiwan. Is this test intended as an aggressive signal?
    Second, according to the latest U.S.-China Economic and 
Security Commission report, I quote: ``There has been a marked 
increase in cyber intrusions originating in China and targeting 
U.S. Government and defense-related computer systems, an 
activity that could potentially disrupt U.S. commercial and 
banking systems, as well as compromise sensitive defense and 
military data.'' And the Chairman remarked about Google and the 
problem that they are having and where we are moving in that 
direction.
    Third, in March 2009, a Chinese naval vessel behaved in an 
aggressive manner toward the United States Naval Ship (USNS) 
Impeccable. Despite China's assertion of its rights within its 
maritime exclusive economic zone (EEZ), this incident 
illustrates its willingness to violate international law and 
reflects increasing risks of China's expanding military 
operations in areas where U.S. forces routinely operate.
    Independently, these examples are a cause of concern, but 
more so when seen under an umbrella of marked uncertainty 
surrounding China's future course in terms of its military and 
security ambitions.
    I would like to now turn to the neighborhood in which China 
resides. This brings me to the President's recent trip to Asia. 
While some see the U.S.-China joint statement as a significant 
accomplishment, from my view we are merely left with a laundry 
list of issues that need to be worked out. Furthermore, I am 
deeply concerned with the message we sent to our partners in 
the region. From Australia to India, the trip raised questions 
about who has the upper hand in the U.S.-China relationship. At 
a time when we should be focused on reaffirming our commitment 
to the region, we left many doubting the depth and breadth of 
American power and influence.
    For example, in its 2009 Defense White Paper, the 
Government of Australia states, ``We also need to consider the 
circumstances of a more dramatic and, in defense planning 
terms, sudden deterioration in our strategic outlook. While 
currently unlikely, a transformation of major power relations 
in the U.S.-Pacific region would have a profound effect on our 
strategic circumstances. Of particular concern would be any 
diminution of the willingness or capacity of the United States 
to act as a stabilizing force.''
    I hope each of you will give concrete examples of what we 
are doing to alleviate these doubts.
    Finally, in just a few weeks the Department of Defense will 
submit its 2010 Quadrennial Defense Review (QDR) to Congress. 
Shortly afterwards we will receive the Nuclear Posture Review 
(NPR). In the 2006 QDR, the Pentagon noted that China was at a 
strategic crossroads and that it had the greatest potential to 
compete militarily with the United States.
    In its 2009 Annual Report to Congress on China's Military 
Power, the Department maintained that the pace and scope of 
China's military transformation continued to increase, fueled 
by the acquisition of advanced foreign weapons. Also similar to 
years past, it noted that China continues to develop and field 
disruptive technologies, including those for anti-access and 
area denial as well as for nuclear, cyber, and space warfare.
    When we receive the QDR, I will be looking closely at any 
changes to the Department's assessment of China. My fear is 
that we will downgrade the China threat in an attempt to 
justify last year's and future cuts to key defense programs. If 
the conclusion is the same as it was in 2006, then I expect the 
President's budget to invest in the necessary capabilities to 
execute our contingency plans in Asia. This is the type of 
strategic reassurance our allies need, and is the key to 
stability in Asia.
    With respect to the NPR, we must be cognizant that any 
additional reductions in our strategic capabilities will only 
invite China to seek strategic parity with the United States.
    In closing, today we will hear about the need for candid 
dialogue and improved engagement with China. As you know, we 
made changes to the Pentagon's Annual Report on China's 
Military Power in this year's defense bill to focus on those 
areas. While I believe that coming to the table is vital to 
avoiding misunderstanding and miscalculation, we must be 
mindful that it takes two to make a relationship work and that 
our priority focus must always be on protecting America's 
national security interest.
    This is truly a timely hearing and we appreciate your 
appearance here this morning. Thank you, Mr. Chairman.
    [The prepared statement of Mr. McKeon can be found in the 
Appendix on page 41.]
    The Chairman. I thank the gentleman.
    A word to the members. We will be back in our old haunts, 
the committee room, around the first of next month. So it will 
be much more convenient for us, and it is going to look very, 
very good. I am very pleased with what I saw yesterday.
    Each of the witnesses today, as I understand it, have 
statements to make. And we will call on Admiral Willard first. 
Admiral.

   STATEMENT OF ADM. ROBERT F. WILLARD, USN, COMMANDER, U.S. 
                        PACIFIC COMMAND

    Admiral Willard. Thank you, Chairman Skelton, 
Representative McKeon, and members of this committee. Chairman, 
thank you very much for introducing my wife Donna who joins me 
today. She has been a military spouse for 36 years, in addition 
to being a mom and a grandmother. And she is now very much a 
joint spouse at Pacific Command (PACOM), with oversight of the 
needs of Army, Navy, Air Force, Marine Corps, and Coast Guard 
families, as well as families of our civilian workers within 
PACOM. I am pleased to have her here as well. Thank you, sir.
    I have now been in command of the United States Pacific 
Command for about three months. And although I may be new to 
PACOM, I have commanded extensively in the Asia-Pacific region. 
Subsequently, during my 36 years of service, I have developed a 
great respect for this part of the world. In that time, I have 
come to believe that now more than ever it is vital to our 
Nation's security interests and economic prosperity.
    In previous tours, as now, the emergence of China and its 
military has been a routine topic of discussion in my 
interactions with regional leaders. Of concern to most, 
reconciling China's declared desire for a peaceful and stable 
environment for economic development with a new military 
capability and capacity that appear designed to challenge 
international freedoms of action and potentially enforce 
influence over regional nations.
    Reconciliation of these two divergent positions can only 
occur through continuous frank conversations and mutual actions 
within a strong and mature military-to-military relationship, a 
relationship that does not yet exist between the United States 
military and the People's Liberation Army (PLA). And until it 
does, and it is determined that China's intent is indeed 
benign, it is critical that we maintain the readiness of our 
forward-deployed forces, continually reinforce our commitment 
to our allies and partners in the region, and meet each 
challenge by the People's Republic of China (PRC) in a 
professional manner that is consistent with international law. 
It is clearly in both nations' interest and the Asia-Pacific 
region's interest to manage these complexities and to develop a 
relationship with China that is constructive in every way.
    At U.S. Pacific Command, our goal is to support this 
relationship by identifying opportunities that allow us to work 
more closely with China while also encouraging her to reconcile 
strategic intent with increasingly sophisticated combat 
capabilities. Congress can assist by maintaining a focus not 
only on China but on the growing importance of the Asia-Pacific 
region to our Nation and to our global partners.
    Our messages during engagements with Chinese leadership, 
both in Beijing and during their visits to Washington, D.C., 
must be consistent, resolute, and invoke the Nation's 
principles and values. I offer my staff's direct support to you 
during your travels to the region and invite you to stop in 
Honolulu and visit U.S. Pacific Command on your way to or from 
this area of responsibility (AOR).
    Finally, I would like to thank this committee for the 
strong support you provide to the men and women of our United 
States military. Despite being involved in two wars, our 
retention and recruiting rates remain very strong, which is a 
direct reflection of the quality of life initiative supported 
by you and by the American people.
    On behalf of more than 300,000 men and women of U.S. 
Pacific Command, please accept my sincere appreciation for the 
work that you do for us and for this great Nation. Thank you, 
and I look forward to answering your questions.
    The Chairman. Thank you Admiral.
    [The prepared statement of Admiral Willard can be found in 
the Appendix on page 46.]
    The Chairman. Secretary Gregson.

 STATEMENT OF HON. WALLACE C. GREGSON, ASSISTANT SECRETARY OF 
DEFENSE FOR ASIAN AND PACIFIC SECURITY AFFAIRS, U.S. DEPARTMENT 
                           OF DEFENSE

    Secretary Gregson. Mr. Chairman, members of the committee, 
thank you very much for this opportunity to appear today to 
discuss recent military and security developments in the 
People's Republic of China. I am pleased to be joined by old 
friends and colleagues, Admiral Willard and Mr. David Shear.
    China's rapid rise as a regional political and economic 
power with growing global influence has significant 
implications for the Asia-Pacific region, the United States, 
and the world. These developments occur in a dynamic 
environment with little historical precedent.
    As Secretary Gates said, during the past three decades an 
enormous swath of Asia has changed almost beyond recognition. 
Hundreds of millions have emerged from poverty to higher living 
standards as a result of cooperation, openness, and mutual 
security. New and reemerging centers of power alike are 
realizing extraordinary growth and development. From India to 
Indonesia, China to Russia, and Australia to Japan, millions 
have moved from poverty to prosperity. China's rapid 
development helps drive this extraordinary and dynamic growth.
    In turn, China gains greatly from Asia's growth. The United 
States welcomes a strong, prosperous, and successful China. As 
President Obama stated, the relationship between the United 
States and China will shape the 21st century, which makes it as 
important as any bilateral relationship in the world.
    But this development occurs as new challenges emerge. Our 
new security issues cover a very wide range. These include 
economics, regional areas of tension, terrorism, proliferation, 
energy supplies, piracy, the effects of climate change and 
disasters, both manmade and natural. Our increasingly 
interconnected world and common demands for resources require 
cooperation and integrated solutions.
    Since the committee's last hearing on this topic, we have 
seen several significant developments, some positive, others 
troubling. Many are documented in the Secretary of Defense's 
Annual Report on the Military Power of the People's Republic of 
China.
    On one hand, we have several positive examples of China's 
contribution to international peace and stability. We are 
encouraged by China's support for the United Nations Security 
Council Resolution (UNSCR) 1874 and its efforts to support the 
denuclearization of the Korean peninsula.
    China is also developing emergency military capabilities 
that are allowing it to contribute cooperatively in the 
delivery of public goods from peacekeeping and counterpiracy to 
humanitarian assistance and disaster relief. We appreciate the 
positive experience of our two navies working in concert with 
the international community to combat piracy in the Gulf of 
Aden, and we are looking forward to building on these 
experiences.
    But we have concerns about the pace, scope, and lack of 
transparency in China's military modernization. The People's 
Liberation Army is changing from a mass army, designed for 
protracted wars of attrition on its own territory, to one 
developed for winning short-duration, high-intensity conflicts 
on its periphery against high-tech adversaries. Weapons and 
material to support this are being procured from both foreign 
sources and an increasingly capable industrial and technical 
base.
    Organizational and doctrinal changes are also evident, as 
are disruptive technologies designed for anti-acess in aerial 
denial, nuclear space, and cyberspace arenas.
    Modernization and expansion of military capabilities across 
the Taiwan Strait continues, with the addition of more 
missiles, enhanced air, surface, and undersea capabilities. 
Over the past several years, China developed and articulated 
roles and missions for the PLA that go beyond immediate 
territorial interest.
    We will continue to use military engagement with the PRC to 
demonstrate U.S. commitment to the Asia-Pacific region and act 
as a partner in addressing common security challenges. We will 
maintain and enhance our presence and alliances in Asia and 
clearly demonstrate U.S. resolve. Our interests lie, as they 
have for the decades of Asia's rise, in constructive engagement 
with China, combined with a strong network of alliances and 
partnerships throughout the region.
    Thank you and I appreciate the opportunity to be here, and 
I look forward to your questions.
    The Chairman. Thank you Mr. Secretary.
    [The prepared statement of Secretary Gregson can be found 
in the Appendix on page 58.]
    The Chairman. Secretary Shear.

  STATEMENT OF DAVID B. SHEAR, DEPUTY ASSISTANT SECRETARY FOR 
    EAST ASIAN AND PACIFIC AFFAIRS, U.S. DEPARTMENT OF STATE

    Mr. Shear. Thank you, Mr. Chairman, Mr. McKeon. I 
appreciate the opportunity to appear before you today. My 
colleagues from the Department of Defense have already 
addressed our military-to-military relations with China, so my 
remarks will focus on the President's November trip to Asia as 
well as our broader security goals regarding China and the 
region.
    Since coming to office, President Obama has repeatedly 
stated that the United States welcomes the emergence of China, 
and that in an interconnected world power does not need to be a 
zero-sum gain. We welcome an international world for China in 
which its growing economy is joined by growing responsibility. 
And I would reiterate our desire that as the Chinese economy 
grows, they become a responsible member of the international 
community.
    President Obama's trip to Asia in November 2009, with stops 
in Japan, Singapore, China, and South Korea, was intended to 
demonstrate the U.S. commitment to the region, build trust, 
articulate our values on issues such as human rights, and 
strengthen and expand our cooperation with China. The trip was 
productive in this regard.
    During his first-ever visit to China, the President 
deepened his acquaintance with his Chinese counterparts and 
demonstrated to them the importance we place on cooperating on 
such issues as Iran, North Korea, and Afghanistan. The 
President set the stage for further cooperation with China in 
preparation for the Copenhagen conference on climate change. He 
discussed exchange rates in trade, clean energy, military-to-
military exchanges, human rights, and stopping the spread of 
nuclear weapons. We outlined the key accomplishments of the 
visit in a joint statement issued by President Obama and 
President Hu Jintao on November 17th.
    It has been said before that in order to get China right, 
you have to get the region right. The United States is a vital 
contributor to Asian security and economic prosperity. Our 
active presence in Asia helps promote regional security and 
stability. We intend to deepen our engagement and strengthen 
our leadership in the region by strengthening our complements 
to allies and partners and enhancing our involvement in 
regional institutions. And the Secretary addressed these issues 
as well as our presence in the region in an important speech in 
Honolulu yesterday.
    The President's trip to China and the region demonstrated 
the importance we place on East Asia, which remains vital to 
U.S. security and prosperity. In the November joint statement, 
the Chinese recognized the positive role the United States 
plays in East Asia by stating that China welcomes the United 
States as an Asia-Pacific nation that contributes to peace, 
stability, and prosperity in the region.
    The trip was also a continuation of our efforts to build a 
positive, cooperative, and comprehensive relationship between 
the United States and China. As President Obama has said, the 
ability of the United States and China to partner with each 
other is a prerequisite for progress on some of the most 
important issues of our times. Those issues include several 
important security challenges. Issues such as North Korea and 
Iran cannot be successfully addressed without intensive and 
sustained involvement by China. To date we have been encouraged 
by China's willingness to cooperate with these areas, although 
there is a lot of work to be done.
    We obviously do not see eye to eye with the Chinese on 
every issue. For example, on Taiwan, the United States remains 
committed to our one-China policy based on the three joint 
communiques and the Taiwan Relations Act (TRA). We believe that 
this policy has contributed greatly to the peace and stability 
of the past several decades, and we remain committed to that 
framework. We welcome the improvement in cross-Strait relations 
over the past year. At the same time we have voiced our 
concerns about China's rapid military modernization program as 
it relates to Taiwan.
    China's continued military buildup across the Taiwan 
Strait, despite improvements in cross-Strait relations, raises 
many questions about Beijing's commitment to a peaceful 
solution to the cross-Strait issue.
    Similarly, the United States and China have differences on 
the issue of human rights. The promotion of human rights 
remains an essential element of American foreign policy. As the 
President has said, it is a part of who we are as a people. 
President Obama has stated that the rise of a strong prosperous 
China can be a source of strength for the community of nations.
    This summer, we will hold another meeting of the U.S.-China 
Strategic and Economic Dialogue that we initiated last July. We 
will use this and other forms to continue building our 
relationship with China and to seek pragmatic cooperation on 
issues of mutual concern. At the same time, we will remain 
engaged and active throughout the region, supporting our allies 
and expanding our leadership in this vitally important part of 
the world.
    Thank you for the opportunity to make these remarks, sir. 
And, Mr. Chairman, if you don't mind, I would like to say a 
little something on the subject of Google. As you all may know, 
Google made a statement yesterday about a cyber attack on its 
facilities allegedly originating from China. And Secretary 
Clinton made a strong statement on this yesterday, which I 
would like to repeat for you all. She said: We have been 
briefed by Google on these allegations which raise very serious 
concerns and questions. We look to the Chinese Government for 
an explanation. The ability to operate with confidence in 
cyberspace is critical in a modern society and economy.
    The Secretary also said that she will be giving an address 
next week on the centrality of Internet freedom in the 21st 
century, and we will have further comment on this matter as the 
facts become clear. The Secretary will deliver a speech on 
Internet freedom next Thursday that was scheduled before 
Google's announcement. She has been very engaged on the issue 
of Internet freedom and anticipated the need to stake out clear 
policy ground on this subject.
    The Secretary had dinner with ten executives of leading 
high-tech companies last week and discussed Internet freedom 
during that dinner. She has been actively listening and 
learning from those assembled executives, including Google's 
Chief Executive Officer (CEO) Schmidt . She takes this issue 
very, very seriously. And we have been in touch with Google 
subsequent to their contact with Secretary Clinton, and we have 
been in contact with all of the agencies dealing with cyber 
security on this issue, and we will be happy to remain in touch 
with you on this subject.
    The Chairman. Thank you very much Secretary Shear.
    [The prepared statement of Mr. Shear can be found in the 
Appendix on page 74.]
    The Chairman. A question to Admiral Willard and Secretary 
Gregson. What is the major security challenge our country has 
with China? And to Secretary Shear, what is the major 
nonsecurity challenge we have with China? Admiral.
    Admiral Willard. Chairman Skelton, I think the major 
security challenge is the level of uncertainty that exists in 
attempting to reconcile the public statements that China makes 
regarding its long-term intent, which is generally that it 
characterizes its military capabilities and capacities as 
defensive only and seeks a peaceful and harmonious environment 
in which to grow its economy and prosper, with a military 
capability that is not necessarily consistent with that 
characterization of the future in that the power projection 
capabilities, the capabilities' capacities, both in asymmetric 
areas and conventional areas, tend to exceed that description. 
That ambiguity that currently exists and our attempts to 
reconcile that are the security issue that we hope to tackle in 
a military-to-military dialogue with our PRC counterparts.
    The Chairman. Secretary Gregson.
    Secretary Gregson. I would only add to the Admiral's 
remarks that we remain particularly concerned about their 
ongoing developments in the nuclear arena, cyberspace--as 
Secretary Shear eloquently discussed--and space capabilities. 
Their development in the air and maritime realms also fit in 
there, but particularly nuclear, cyberspace, and space 
capabilities constitute a potential asymmetrical threat to our 
ways of doing business. We watch all this very carefully.
    The Chairman. Thank you. Secretary Shear.
    Mr. Shear. Let me discuss the major nonsecurity challenges 
by sharing with you our priorities for our nonsecurity 
relationship with China. The number one priority is 
coordinating with China on the global financial crisis. 
Economic recovery is President Obama's number one priority. And 
economic recovery and how we coordinate with the Chinese on 
this subject is the number one issue on our agenda with the 
Chinese.
    We want the Chinese to rebalance their economy as we 
rebalance ours. The Chinese people will need to save less and 
consume more. We would like to see the Chinese economy shift 
away from its emphasis on heavy industry export-oriented 
industry. We seek the Chinese pursuit of a market-oriented 
flexible exchange rate. All of these issues came up in the 
President's meetings in Beijing with its Chinese counterparts.
    A second priority is cooperation with China on 
international security issues such as Iran and North Korea.
    And the third priority is coordination with the Chinese on 
the subject of climate change. And I think on climate change, 
we achieved some progress both with the Chinese and the 
international community in the context of the Copenhagen 
conference several weeks ago.
    The Chairman. Mr. McKeon.
    Mr. McKeon. Thank you, Mr. Chairman. In my opening 
statement, I highlighted some of the concerns when it comes to 
our policy approach toward China. From what I can gather from 
last year's annual report to Congress, you share some of the 
same concerns regarding China: a shift in strategic priorities 
and behavior, especially as it expands its need for access to 
more markets and natural resources; expanding and improving 
disruptive military technologies in areas such as space and 
cyber space; a lack of transparency when it comes to military 
budget intentions and decision-making; and its increasing 
leverage in the region and around the world.
    Gentlemen, what precisely is the President's China policy, 
how is it different from his predecessor, and how will it seek 
to address these shared concerns? I want to start with you, 
Admiral.
    Admiral Willard. Thank you sir. I think from the military 
standpoint, our approach to China is very much two-fold. It is 
first and foremost to seek to grow a relationship with China 
that encourages their constructive contributions to the 
security issues in the Asia-Pacific region. It is the purpose 
behind a military-to-military dialogue. It is the reason for 
our emphasis to the Chinese on the need for continuity, some 
constancy. In terms of that dialogue, we think that it is 
lagging behind the other engagements between our Nation and the 
People's Republic of China.
    Secondarily, on the issue of the ambiguities that currently 
exist, the inconsistencies that we deal with in the Asia-
Pacific region, we bear the responsibility to ensure our 
forward presence and the readiness of our forces in the region, 
to assure our allies and partners in the region and to continue 
to grow those relationships, as Secretary Gregson described in 
his opening comments, so as to maintain a security in the 
region that we have frankly been responsible for, for the past 
150 years.
    So we will maintain our presence in the region as robustly 
as we have in the past as we continue to engage the Chinese in 
dialogue, and hopefully foster an improved relationship and get 
to some of the ambiguities that have been discussed thus far 
this morning.
    Mr. McKeon. Thank you. Secretary Gregson.
    Secretary Gregson. In the President's words stated to the 
Chinese at the Security and Economic Dialogue as well as in 
Beijing, we seek a positive cooperative and comprehensive 
relationship with China. Secretary Gates' interpretation or his 
characterization of our policy is that China is not a strategic 
adversary; it is a partner in some respects, but a competitor 
in others.
    Our Defense Strategy released in 2008 states, as you 
mentioned, a Chinese potential for competing with the United 
States. And that U.S. interaction will have to be long-term, 
multi-dimensional, and involve peacetime engagement between our 
defense establishments as much as it involves field and 
military capabilities. It is impossible to separate our 
engagement with China from our engagement with the region. Our 
consistent and increased engagement with the region are 
enhancements of our alliances and partnerships there, not only 
in the East Asian region but increasingly through the Indian 
Ocean area, will be essential to us shaping the environment 
that will allow us to also shape or develop cooperative 
comprehensive relationships with the Chinese.
    Mr. McKeon. Secretary Shear.
    Mr. Shear. In order to build a positive, cooperative, and 
comprehensive relationship, we are engaging with the Chinese to 
seek out common interests and devise ways of pursuing those 
common interests together. This is not an easy task. It can be 
very challenging. While we share common interests, our 
interests are not always identical. And our bilateral 
relationship with China, our approach to the region as a whole, 
as well as to maintaining our military strength in the region, 
are all part of a comprehensive approach to developing a 
relationship with China.
    Mr. McKeon. Thank you.
    China, they are shifting away from labor-intensive 
relations and they are moving toward increasing production of 
high-technology goods. They have matured as a manufacturer and 
assembler of advanced technology products. They have created an 
attractive environment for foreign companies to make 
investments with increased subsidies, tax incentives, and 
preferential loans.
    At the same time, we are hearing concerns from industry 
that defense policy changes emerging from the QDR, coupled with 
recent anticipated cuts in DOD spending, will force U.S. 
industry to divest itself of certain capabilities, reduce our 
production lines, and inhibit innovation.
    Gentlemen, as the President develops his China policy, to 
what extent does U.S. industrial policy enter into his 
decisionmaking?
    I am concerned about our workforce. Do you share my concern 
that the United States industrial base may be unable to sustain 
the technological innovation that has been the hallmark of U.S. 
military, given the current physical environment? And can you 
provide specific examples of how the President's China policy 
seeks to address China's unfair trade policies and ensure that 
the U.S. military continues to have access to the manufacturing 
capacity, technological capacity, and strategic materials 
necessary to equip our warfighters in the future?
    Mr. Shear. If I may start, Congressman, with regard to 
China's unfair trade practices. We have a multipronged approach 
towards trade with China that includes pursuing cases in the 
World Trade Organization (WTO) on Chinese unfair trade 
practices. And we achieved several successes last year in this 
regard, particularly with the protection of intellectual 
property rights. We are also enforcing our laws and regulations 
on trade, and the President's decision on the 421 case on tires 
is a case in point.
    Again, we are also vigorously pursuing the Chinese on the 
enforcement of intellectual property rights. Overall, as we 
pursue economic recovery, I think attention to our 
technological capabilities will be central to the 
Administration's approach to both the economy as a whole and to 
our economic relationship with China.
    Mr. McKeon. Admiral.
    Admiral Willard. Representative McKeon, while trade is not 
in my lane, certainly the industrial base and the production of 
our military capacities is. And I would only offer that the 
work that you do as a committee to help to strengthen the 
United States industrial base on behalf of its military, the 
attention that you pay that--and I know that Secretary Gates' 
emphasis on doing what we can to strengthen the U.S. industrial 
base in support of our Armed Forces is of critical importance. 
And I would offer, one, my thanks to you for our efforts in 
this particular area, and again offer my emphasis on the 
criticality of an industrial base that can support this 
military not in the near term, but in the long term.
    Mr. McKeon. Thank you very much.
    Secretary Gregson. Mr. McKeon, it is clear that China is 
developing an increasingly capable technical and industrial 
base. It is also clear that they are able to procure certain 
items of foreign military goods and technology and reverse-
engineer it to suit their needs.
    At the same time, industrial espionage is not unknown. Our 
intelligence agencies and our technology control agencies 
exercise as vigorous a control as possible to ensure that we 
not only prohibit unauthorized American transfers of 
technologies to China, but also that our other partners around 
the world obey our tech control restrictions.
    Behind the industrial base, of course, is also the American 
educational base. And I think that we need to make sure that 
that base, the colleges and universities, the quality of the 
graduates that we are producing, is maintained. We have the 
advantage of qualified students from all over the world that 
want to come to the United States to go to our schools, and we 
are enriched by that process, as is our entire educational and 
then on into the industrial and technical base. We need to make 
sure we maintain that as a priority so that we can meet the 
goal that you set out that we maintain our advantages.
    Mr. McKeon. Thank you very much, Mr. Chairman.
    The Chairman. I thank the gentleman. Dr. Snyder.
    Dr. Snyder. Thank you, Mr. Chairman. I appreciate you all 
being here.
    Secretary Gregson, it is hard to believe it has been about 
40 years since your Vietnam days. We appreciate your service 
there as a marine, a young marine in Vietnam.
    Mr. Shear, I am going to direct my questions to you just 
because of our limitations on time, but Admiral and Secretary, 
feel free to join in if you want to augment what Mr. Shear has 
to say. Mr. Shear, what do you see, what does the Chinese 
Government perceive as their greatest existential threat?
    Mr. Shear. I think Chinese security goals--the Chinese 
pursue a variety of security goals. I think the number one goal 
is the preservation of the Chinese Communist Party (CCP). I 
think the Chinese Communist Party is very concerned about the 
prospects for social stability in China. I think they spend a 
lot of time and resources trying to ensure that the vast social 
and economic changes they are undergoing do not shake their 
rule of China.
    Dr. Snyder. So as the Chinese Government is sitting there 
looking ahead, they see their greatest existential threat not 
the United States, not Taiwan, not the Japanese or any other 
foreign entity, they see their greatest existential threat as 
being something happening internally. Is that a fair summary of 
what you said?
    Mr. Shear. Yes. I think the Chinese pay a lot of attention 
to internal security and internal social stability, and that is 
a number one goal for them.
    Dr. Snyder. Would you--I forget the length of time it has 
been since we had that devastating earthquake in China that I 
think caught the world's attention probably longer than some of 
these tragedies do because of what happened to the school 
buildings. And I was surprised by the level of cracking down 
the Chinese Government exerted on parents trying to find out 
what happened.
    As you look back at that, how do you analyze what occurred 
with regard to the internal discussions, internal 
investigations, that occurred around the destruction of the 
school houses?
    Mr. Shear. I agree, the destruction of the school houses, 
the loss of lives, as well as the overall destruction in 
Sichuan province was very tragic. We did everything we could to 
help the Chinese recover from that.
    Dr. Snyder. I am interested in stifling the investigation 
internally about what occurred, the building codes at school 
buildings.
    Mr. Shear. My belief is that the Chinese Government has 
conducted an investigation and that that they have concluded 
that they need to improve building codes. They have not been 
particularly transparent in the extent to which they have 
conducted this investigation. They have, as you say, repressed 
dissent on this subject. It was very interesting watching the 
Chinese public's reaction to the earthquake, however. There was 
a great deal of spontaneous interaction on the Internet; 
voluntary groups arose spontaneously through communication on 
the Internet, and a lot of Chinese simply up and volunteered to 
go to Sichuan to help things out. So you have a very 
complicated situation.
    Dr. Snyder. Going back to what you said about the number 
one threat they perceive as internal stability, if you 
aggressively repress and stifle the efforts of parents to find 
out why their children died because of bad local government 
policies in terms of approval of building codes, isn't that an 
indication of evidence for your first statement? I mean, I 
don't know how to look at it other than they were apprehensive 
that somehow a local effort to figure out what happened with 
local building codes could turn into some kind of a national 
movement. Because if there were bad policies in those school 
buildings, I suspect it could have occurred anywhere. Is that a 
fair analysis?
    Mr. Shear. I agree.
    Dr. Snyder. I want to ask, too, you are a linguist and have 
lengthy State Department experience, where are we with regard 
to the development of Chinese languages skills amongst our 
folks here that aspire to be both part of the military, part of 
Admiral Willard's group, but also State Department? Where are 
we at with regard to Chinese language skills?
    Mr. Shear. The State Department itself has an extensive 
language product conducted both in Washington, in Taipei, and 
in Beijing. I myself was one of the first--was the first 
foreign service officer (FSO) to study Chinese in mainland 
China after 1949. I went to the Johns Hopkins Center in 
Nanjing.
    Dr. Snyder. The fact that we have an aggressive State 
Department program is an indication that we don't have language 
skills within the American public at large. Where do you see 
that in terms of as we move ahead?
    Mr. Shear. I agree that we need more Chinese language 
skills developed within the American public at large. We have 
seen great growth in Chinese language teaching in high schools 
and at the university level. And in this regard the President 
announced a very strong initiative during his trip to increase 
the number of American students in China to 100,000 over the 
next 4 years, and we will be working to implement that in the 
coming weeks and months.
    Dr. Snyder. Thank you all for your service.
    The Chairman. I thank the gentleman. Mr. Bartlett.
    Mr. Bartlett. Relevant to Dr. Snyder's question, I would 
like to suggest that China has two concerns that largely 
illuminate their very aggressive military buildup. The first is 
Taiwan, a tiny island the size of Maryland, three-fourths of 
which is truly uninhabitable, 20-some million people, versus a 
homeland of 1,300,000,000 people. Why the big concern? I think 
they see if Taiwan can declare its independence, so can a lot 
of other regions, like Tibet, for instance, and they see their 
empire unraveling if Taiwan can do this.
    So I hope that we can resolve this concern diplomatically 
because I think China will do anything necessary militarily to 
keep Taiwan from declaring its independence.
    The second major concern they have--and, Admiral, you 
mentioned that in the eighth page of your prepared testimony--
energy. I led a congressional delegation (CODEL) of nine 
Members to China three years ago to talk about energy, and they 
began their discussion of energy by talking about post-oil.
    We in the Congress have a lot of trouble seeing beyond the 
next election, and our business community is primarily focused 
on the next quarterly report. The Chinese are looking ahead 
decades and generations, and there will indeed be a post-oil 
world. The Chinese are now aggressively buying up oil all over 
the world and buying goodwill.
    And, Mr. Secretary, I ask the State Department, why would 
they buy up oil when in today's world it makes no difference 
who owns oil? Who comes to that, what is in effect a global 
auction, with the dollars buys the oil. So who owns the oil 
makes no difference. They told me the Chinese were buying oil 
because they didn't understand the marketplace. I think they 
understand the marketplace very well. And I think that in the 
future, the Chinese will tell us, ``Gee, guys, I am sorry, but 
we own the oil and we cannot share it with the world.''
    To make that a reality they have to have a blue water navy 
big enough spread globally across the world far enough to 
protect all of the sea lanes for the passage of this oil. To 
the extent that we continue to use a fourth of the world's oil, 
that we have done nothing to reduce our demand for foreign oil, 
I think we hasten the day that the Chinese will tell us we are 
not going to share our oil with the world.
    What should be our policy relative to energy, because I 
think it is an overarching issue. Oil is now $80 a barrel. The 
world will never ever again have sustained good times until we 
do something meaningful about alternative energy. And so far, 
we the world and we the United States have done nothing 
meaningful about aggressive conservation or alternative energy. 
What ought we be doing to avoid this real potential threat from 
the Chinese to deny us access to oil because they own it?
    Mr. Shear. Congressman, we are pursuing intensive dialogue 
with the Chinese on the subject of energy security, in which we 
have raised our concerns about Chinese efforts to lock up oil 
reserves with long-term contracts, and will continue to engage 
them on this subject at very senior levels.
    Mr. Bartlett. But, sir, engaging them on the subject is 
quite irrelevant. As long as we continue to be largely 
dependent and increasingly dependent on foreign oil, we have no 
meaningful program of conservation or development of 
alternative energy to wean us from oil. Oil is an incredible 
energy source. The quantity and quality of energy and oil is 
unmatched anywhere in liquid fuels. And to the extent that this 
1 person in 22 uses a fourth of the world's oil, to the extent 
that this continues, do we not make inevitable this 
confrontation with China over energy?
    Mr. Shear. We share your concerns on this subject, 
Congressman, and our energy security dialogue with the Chinese 
is aimed at avoiding conflict over the search for oil.
    Mr. Bartlett. I would like to see shared concerns matched 
by some meaningful leadership action. Sir, I just don't see 
that. Do you see it?
    Mr. Shear. We have worked with the Chinese to increase 
their cooperation with the International Atomic Energy Agency 
(IAEA). We have seen some progress there. The Chinese are 
building an oil reserve, an emergency oil reserve, which we 
welcome. We are going to keep pursuing this issue with the 
Chinese.
    Mr. Bartlett. Thank you.
    To China envisioning a post-oil world, I think we in no way 
believe that there will be a post-oil world. I would suggest 
that we ought to confer more with the Chinese so that 
collectively we do not precipitate huge international crises 
over energy. Thank you.
    The Chairman. I thank the gentleman.
    Mrs. Davis.
    Mrs. Davis. Thank you, Mr. Chairman.
    Thank you to all of you and thank you for your service as 
well.
    If I could follow up on my colleague's question, I guess, 
how would you characterize China's energy dependency as 
influencing its defense policy? Would you say that to a great 
extent, or if you would like to characterize that for us? And 
how has it used the sale of military technologies to secure 
energy deals? Is that, again, a large part of their policy, or 
to a greater, less extent, and what should we be doing about 
that?
    Mr. Shear. I will defer to my Defense Department colleagues 
on this subject.
    Secretary Gregson. Thank you.
    We see China increasingly developing the ability to get, to 
move beyond concerns of territorial defense and moving around 
the world in large part to protect their access to energy 
sources and to protect the lines of communication. It would 
suggest it drives not only defense policy for China to an 
extent, but it also drives a lot of their foreign policy.
    We tend to focus on the development of the Chinese navy, 
thinking of the lines of communication from the Persian Gulf. 
Saudi Arabia is their biggest supplier of oil. Angola is the 
second. But there is also, the Chinese are also concerned with 
energy extraction, mineral extraction in Central Asia and other 
areas, so it is a definite driver of their policy.
    Sale of military technology is a concern, particularly to 
states that are of keen interest to us, such as Sudan and 
others, where arms deals have been negotiated and executed. One 
can derive a conclusion that if they are importing oil from 
there, that there is a connection between the arms deals. 
Nevertheless, while we suspect a connection, we are concerned 
about Sudan. And any arms transfers to Sudan, of course, are of 
concern. Yes, we see that, too.
    Mrs. Davis. In our discussions, and I might turn to Admiral 
Willard in terms of the transparency and the relationships, the 
military relationships. In that regard, in terms of energy, is 
that an issue that has some transparency in discussion, or 
would you say, again, that that is of great concern to us but 
one that we are not able to impact greatly?
    Admiral Willard. I think the Chinese have actually been 
quite vocal regarding their concerns over their sea lines of 
communication (SLOCs) in particular, as it relates to the 
movement of all their commerce, to include their trade but as 
well energy and other natural resources.
    They refer to, in particular, the Malacca problem, which is 
their choke point, all of our choke point, at the Strait of 
Malacca, and the strategic value of that Strait and the 
importance of protecting and securing those sea lines to 
include the various choke points that exist between the sources 
of those natural resources and commerce and China itself.
    Secretary Gregson, I think, said it well. The expansion in 
their naval capacity and their Air Forces certainly has a 
dimension to it that has to do with securing their regional 
commercial interests. How far that will extend beyond the Asia-
Pacific region, the South China region, and East China Sea into 
the Indian Ocean region remains to be seen. But they are 
demonstrating the capability to operate at longer ranges by 
virtue of their assistance to the international counter-piracy 
issue in Gulf of Aden now and their ability to sustain their 
operations there.
    Mrs. Davis. Secretary Shear, would you say that in the 
development of our relationships, then, and that we are working 
with that in a more cooperative way or, again, not having quite 
the ability to have that at a level of discussion that we are 
seeking, and what are we doing about that?
    Mr. Shear. At the same time, we are discussing with the 
Chinese energy security and regional security issues. At the 
same time, we are seeking more transparency from the Chinese in 
their defense and security policies.
    We are also strengthening our relationships throughout the 
region, particularly in Southeast Asia. Secretary Clinton has 
visited Southeast Asia three times last year. She is in the 
region again as we speak. And remaining in contact with our 
friends and allies throughout the region, particularly in 
Southeast Asia, will play an important role in our addressing 
this.
    Secretary Gregson. If I may touch very briefly on one 
aspect of your question about transparency, it is not strictly 
a defense equity, but there is active engagement in the 
scientific and educational communities on development of 
renewable energy between China and the United States. Usually 
it occurs in conferences and efforts under the cognizance of 
the Department of Energy (DOE) or the Department of Interior 
(DOI). So that is one encouraging sign that there is some 
thought to life beyond oil.
    Mrs. Davis. Thank you.
    The Chairman. I thank the gentlelady.
    The gentleman from Virginia, Mr. Forbes.
    Mr. Forbes. Thank you, Mr. Chairman.
    Mr. Chairman, I want to begin by thanking you for not just 
this hearing but for asking a lot of tough questions about 
China and the United States' relationships before many Members 
of Congress did that. I appreciate your leadership on that.
    Also, Admiral, thank you so much for your service and for 
your wife's service. I know that is a partnership team.
    For all of your staff, I know the heavy work that they have 
to do just to come to a hearing like this.
    Mr. Secretary, this year we appreciate so much all of you 
being here.
    I am going to try to ask my questions so that they can have 
short and succinct answers, not because I want to cut you off, 
because I would love for you to extrapolate any way you want in 
the record; just because I only have five minutes, and this 
microphone goes dead.
    But, Admiral, I looked at your testimony, and as I read 
that testimony, China currently has 290 ships in their navy. Am 
I accurate in that assessment?
    Admiral Willard. Roughly, yes, sir.
    Mr. Forbes. Roughly. That number doesn't exist in a vacuum. 
Isn't it significant that we try to extrapolate or actually get 
some idea of what their shipbuilding plan actually is so we 
know how many ships they are going to be building over the next 
several months if we want to try to project our strength 
against theirs?
    Admiral Willard. Of course.
    Mr. Forbes. Is that a significant component to our 
evaluation?
    Admiral Willard. It is part of a broad evaluation of 
China's future.
    Mr. Forbes. If we look, according to the 2009 Military 
Power of People's Republic of China Report to Congress produced 
by the Pentagon just a few months ago, the estimate was that 
they had 260 ships; is that correct?
    Admiral Willard. I would have to go back and seek that 
number.
    Mr. Forbes. Let me just tell you, for the record, it was, 
so we missed it by about 30 ships. How many ships do we 
currently have, roughly, in our Navy now?
    Admiral Willard. In the Pacific Command, I have access to 
about 180 ships.
    Mr. Forbes. Overall in the Navy, any idea?
    Admiral Willard. About 283.
    Mr. Forbes. We have 283. According to the report that was 
given us a few months ago, they had 260 ships. Again, just as 
one component, fewer ships than we did. According to your 
testimony, they have 290. That is more ships than we do.
    Again, I know that is just one component to look at, but it 
shows the importance, I think, and the significance of having 
some idea of what kind of shipbuilding plan they are 
undertaking so we know whether that 260 ships were accurate or 
the 290 ships were accurate.
    Mr. Secretary, I would like to ask you if the United States 
currently has a shipbuilding plan, not whether it is being 
modified, not whether you like it, not to even ask you to tell 
me what it is, but do we currently have a shipbuilding plan for 
the United States of America as you know it from the Department 
of Defense?
    Secretary Gregson. There is a plan, as delineated in the 
program and in the President's budget, yes.
    Mr. Forbes. So it exists?
    Secretary Gregson. Yes, sir.
    Mr. Forbes. Now, are you aware that, by law, the Department 
of Defense was supposed to give the United States Congress that 
shipbuilding plan when they submitted the budget, so that we 
would know and could make the same kind of comparisons that the 
Admiral talked about were significant in knowing about the 
ships that the Chinese had, that we were supposed to have that 
by law submitted to us at the time the budget was submitted?
    Secretary Gregson. It is not our intention to ever ignore 
any requirements from Congress.
    Mr. Forbes. Just asking you whether you knew that that was 
the law or not?
    Secretary Gregson. No, I did not.
    Mr. Forbes. The question I would ask you, Mr. Secretary, if 
you could supply for the record at some particular point, if 
that shipbuilding plan existed, I would just submit to you, 
one, the law required that we get a copy so we could make that 
same kind of comparison.
    Secondly, this committee unanimously had a congressional 
inquiry demanding that you comply with the law, the Department 
of Defense, and give it to us. To date, we still haven't had 
it. I would just ask you to submit to the record for us the 
legal justification of why you refused or the Department of 
Defense refused to give the United States Congress their 
shipbuilding plan.
    Then I would also ask you if you want to submit for the 
record, because I won't have time to have you in my minute and 
15 left, how we can legitimately talk about a lack of 
transparency with China when we won't submit our own 
shipbuilding plan to the United States Congress?
    Mr. Shear, I would just ask you, again, shortly for your 
testimony, if you could submit to us for the record, I was 
excited to hear about the victories that we have had in wins 
with intellectual property rights and the economy with China, 
and we want to get those publicized because I don't hear them, 
you know, anywhere that I look or study.
    If you would submit a list of those victories that we have 
had this year for the record, both with intellectual property 
rights and the Chinese economically for the record, we would 
love to have them so we can talk about them and get them out.
    [The information referred to can be found in the Appendix 
beginning on page 83.]
    Mr. Forbes. With that, gentlemen, thank you so much for 
your service and for being here.
    Mr. Chairman, I yield back.
    The Chairman. Thank you very much.
    Admiral, I might point out that one of those most memorable 
congressional moments was when, along with Mr. Forbes, we 
planted the tree at Kunming in memory of the American fliers 
who flew the hump and those who were part of the Flying Tigers 
during the Second World War. I certainly hope that you will be 
able to revisit that place for us and give us an update on the 
tree that we planted.
    Admiral Willard. I will do that.
    The Chairman. Mr. Marshall.
    Mr. Marshall. Thank you, Mr. Chairman.
    I would like to yield my time to the chairman of the 
Seapower Subcommittee, the gentleman from Mississippi, Mr. 
Taylor.
    Mr. Taylor. Thank you, Mr. Chairman.
    Thank you, Mr. Marshall.
    Admiral, you know, in my life, I never guessed as a kid we 
would be at war in Panama or Afghanistan or Bosnia. You know, 
we always thought it would be the war against the Russians, and 
thank goodness that did not happen.
    With that in mind, the things we don't expect to happen 
often do happen. One scenario that concerns me is that, you 
know, our carriers can go about 15 years from here to there on 
the fuel that is built into that vessel. But the vessels that 
defend those carriers have to refuel every three to five days.
    A logical assumption is that the weak link, then, in our 
carrier task force is the oiler that supplies that destroyer or 
cruiser that protects the carrier. If I am a potential enemy of 
the United States, I am not going to hit us where we are 
strong; I am going to hit us where we are weak. It is my 
understanding that we have a limited number of oilers in the 
Pacific, somewhere between 8 and 12.
    And so the logical question would be, you know, since our 
enemies have been pretty good at finding our weaknesses and 
exploiting them, and thus the improved explosive device (IED) 
in Iraq, what steps is the Navy taking should some scenario 
develop in the Pacific where a potential enemy's first step is 
to take out those 8 or 12 oilers? Does the fleet then fail to 
sail? Because one of the things really that Congressman 
Bartlett impressed on me is our need for energy independence in 
the long term.
    One of the ways that we can achieve that, as we know, is 
with nuclear-powered surface combatants. Each one of those can 
save about ten million gallons of fuel per ship per year, plus 
you don't need that oiler. You lose that weak link.
    Now, Congress has passed language that says our next 
generation of surface combatants is going to be nuclear-
powered. We have passed legislation that says the next 
generation of large-deck amphibs is going to be nuclear power.
    But what I don't see is the Navy taking any steps to 
implement that. That is one thing.
    The second thing is, in the short-term, if you have only 
got 8 or 12 of this thing that is vital, what steps does the 
Navy have as a backup should a clever foe decide that round one 
is to take out the oilers? What is your backup plan, and what 
are we doing in the short-term to increase those numbers so 
that that worst-case scenario doesn't happen?
    Admiral Willard. Thank you, Representative Taylor.
    I think you bring up some provocative issues, and that is 
how we handle some of the tactical level risks to our force 
complement when we conduct major-scale operations. And 
certainly the protection of our tanking assets at sea is a 
major factor in our planning and in the way in which we attempt 
to mitigate potential vulnerabilities.
    I think, to your point regarding nuclear power, we gain 
great flexibilities with our aircraft carriers and our 
submarines being nuclear-powered. As you suggest, our surface 
ships do rely on refueling. I would offer that we refuel at 
sea. We also refuel in port. When we are operating in the 
western Pacific, the approach is to complete both of those.
    We also have the capability, though it is exercised rather 
rarely, to refuel our surface ships from our carriers 
themselves. Our big deck ships have the opportunity to conduct 
refueling of our smaller escort ships.
    Between protection operations around them and the various 
ways in which we can take advantage of geography and the force 
complement to conduct refueling, we manage this problem, and 
our naval commanders are tasked with planning around it and 
managing it very carefully.
    I take your point that refueling of our ships is keenly an 
area that we have to focus on, and the adequacy of our tanker 
fleet to be able to ensure that we have the freedom of actions 
that we require in our operations is very important.
    Mr. Taylor. Admiral, if I may, the chairman is going to 
gavel this thing in 20 seconds. I have laid out my concerns. 
Would you have someone from your office, at your convenience 
but hopefully in the very near future, come visit with me with 
a more detailed and in-depth answer than you are able to give 
in public?
    Admiral Willard. Be happy to. Thank you.
    Mr. Taylor. Thank you, sir.
    The Chairman. Thank you.
    The gentleman from Minnesota Mr. Kline.
    Mr. Kline. Thank you, Mr. Chairman.
    Thank you, gentlemen, for your service and for being here 
today.
    It seems like forever that we have been concerned with, 
worrying about China's role in a couple of places. I would like 
for you to touch on briefly some of which you already have. One 
is, of course, when General Gregson and I were lieutenants, we 
were worried about Taiwan, the Straits and China and what 
China's actions may be. And in that case, we were probably 
mostly worried about what the Taiwanese government might do 
that might precipitate military action on the part of China.
    It seems we are sitting here today, and we still have some 
of those concerns. President Ma in Taiwan and some new folks 
there may have changed some of that dynamic, and I would be 
interested in your discussing where you think we are and what 
the level, if you will, of tension is now in China-Taiwan 
relations.
    Then the other one that never goes away and we have been 
discussing in our lifetime, we have had U.S. forces in Korea 
since before Mr. Gregson and I were lieutenants and certainly 
before you were an ensign, Admiral. And we still have troops 
there. And the question here is China's role in being able to 
influence actions in North Korea, particularly with their 
nuclear and missile activities.
    We have 3 minutes and 22 seconds. If any of you or all of 
you can address both of those and how you see China, where 
China is now in both of those issues, relationship with Taiwan, 
the potential for military action there and how China is doing 
in helping us get back to the Six-Party Talks, and what is 
going on in North Korea?
    Secretary Gregson. Thank you for those questions. I will go 
very quickly, so my colleagues can jump in.
    Since the election of President Ma Ying-jeou, Taiwan and 
China have undertaken a series of reciprocal actions that we 
find very favorable. Direct flights, visitations to offshore 
islands, business ties, all the sinews of normal peace-time 
engagement that we think contributes to a decrease in tension 
and operates in support of our objective of a peaceful 
settlement of issues across the Taiwan Strait.
    It has been mentioned more than a few times before, we 
remained concern about the buildup of PRC military capabilities 
across the Strait. We watch very carefully not only the amount 
of that buildup but the types of systems that they are 
developing to make sure that we maintain the ability to fulfill 
our obligations under the Taiwan Relations Act (TRA).
    On North Korea, we are encouraged by China's support of 
United Nations (U.N.) Security Council Resolution 1874, very 
important to prevent North Korea from profiting from their 
nuclear-related technology, their missile-related technology. 
It is very important to keep North Korea from exporting any 
type of weapon systems that are prohibited under 1874.
    China's support is essential to maintain an international 
consensus to keep 1874 a viable resolution, and we are very 
positively encouraged, as I said, about their development on 
that.
    In the meantime, we continue to ask China to exert their 
influence to work on their neighbor to convince them of the 
wisdom of complete, verifiable and irreversible 
denuclearization, which remains our goal with North Korea.
    Mr. Kline. And are you getting a good response from the 
Chinese in that effort? I mean, that is what we are getting 
down to. We have said for a long time that we cannot have 
success with the denuclearization and the demilitarization or 
missilization, I guess, if that is a word, of North Korea 
without China's active participation because of the enormous 
influence that China has with North Korea.
    Are we seeing that influence, or is it sort of quiet now?
    Secretary Gregson. We are seeing influence. We would like 
to see more influence for our part. We have made it quite clear 
that we intend to fulfill all of our obligations to our allies 
and that we will, to the extent that we are not successful in 
achieving complete, verifiable, and irreversible 
denuclearization in North Korea, we will enhance those 
alliances, and we will enhance our ability to enforce our 
alliance obligations, and that that is a condition that 
contributes as much to instability in Northeast Asia as any 
other scenario that China could be worried about.
    Mr. Kline. Thank you.
    I see my time has expired, so I will yield back the two 
seconds.
    Thank you, Mr. Chairman.
    The Chairman. I thank the gentleman. The gentleman from 
Washington, Mr. Larsen.
    Mr. Larsen. Thank you, Mr. Chairman.
    Gentlemen, thank you for coming today.
    Secretary Gregson, with regard to Monday's missile test, 
how would you characterize the notification China gave to the 
international community compared to what the U.S. does when we 
conduct a missile test or even when Russia conducts a missile 
test?
    Secretary Gregson. I am not aware that we received any 
notification until after the test.
    Mr. Larsen. How would that differ, then, how would that 
differ largely with a ballistic missile test process that the 
U.S. undertakes or that Russia undertakes? Do we provide 
notification?
    Secretary Gregson. Traditionally, through notice to 
mariners, notice to airmen, closure areas, various things, yes.
    Mr. Larsen. So there was no indication at all or, not 
indication; there was no communication with the international 
community about the missile test and its reasons and so on, at 
least as far as we know from China?
    Secretary Gregson. I am looking at my colleagues. I am 
personally not aware of any.
    Mr. Larsen. Secretary Shear, do you have any thought on 
that?
    Mr. Shear. We are not aware of any prior notification of 
the test. We have spoken with the Chinese since the test. We 
have asked them for more information. We have asked them to be 
more transparent with regard to this test and their testing in 
general.
    The Chinese have only responded so far that this particular 
test was defensive in nature. It was not aimed at any specific 
countries and that no orbital debris was created by this test.
    Mr. Larsen. Something we could all read in the paper 
ourselves but not actually helpful. That is my comment. You 
don't have to comment on that.
    Mr. Chairman, before we move forward, I have a statement 
for the record. I would like unanimous consent to enter that.
    The Chairman. Without objection.
    [The prepared statement of Mr. Larsen can be found in the 
Appendix on page 44.]
    Mr. Larsen. Thank you.
    For Secretary Shear and Secretary Gregson, China may be our 
most important dialogue in Asia right now, but Japan clearly 
remains our most important ally in the region. This reports, 
obviously, with the new Japanese government trying to seek or 
create or develop in concept an East Asia security group 
between Japan, China, and South Korea--recent statements 
indicate that maybe Japan all along was intending to include 
the United States.
    How would you discuss the steps that the U.S. has taken to 
strengthen the U.S.-Japanese relationship while we are also 
pursuing a various set of relationships with China? I mean, 
Secretary Shear can start there, and Secretary Gregson can 
follow.
    Mr. Shear. We are working very closely with the Japanese to 
strengthen the alliance. Secretary Clinton met with Foreign 
Minister Okada in Honolulu yesterday. They celebrated the 50th 
anniversary of the U.S.-Japan Security Treaty. They recommitted 
to strengthening the alliance. I think it was a very good 
meeting.
    Mr. Larsen. Secretary Gregson.
    Secretary Gregson. We have been undergoing for some time a 
transformation and realignment of U.S. forces and Japanese 
forces within Japan. Pending is the continuation of the 
realignment with the buildup of U.S. forces in Guam. The Guam 
program also includes near continuous presence of Japanese 
aviation and ground forces in Guam and their training. We look 
forward to rapid implementation of that as a way to adapt and 
transform the military and security aspects of our alliance for 
the new century.
    Mr. Larsen. Thanks.
    Back to the missile test, and this may be for Admiral 
Willard or for Secretary Gregson, given the recent Taiwan arms 
sales going through and in the context of this missile test, do 
we see this as a tit-for-tat, and do we anticipate something 
else happening because of the Taiwan arms sales, which I think 
most of us, all stand four-square behind?
    For instance, when they were announced in 2008, China 
suspended any further military-to-military discussions, 
including the consultative talks, but those started up again 
last month, I think.
    Are we anticipating another tit-for-tat because of the arms 
sales, Admiral Willard?
    Admiral Willard. Well, if history bears out at such time as 
arms sales would be announced or their consultation with our 
Congress would take place, the PRC has typically reacted very 
vocally, and our military-to-military engagement has 
historically been suspended. Whether or not that is the case 
this time or not will remain to be seen.
    I would offer that in the discussions that General Xu had 
with the Secretary and with me on his way back to Beijing, we 
emphasized the need for constancy in that military-to-military 
dialogue. We were explaining the mutual benefit of maintaining 
it, whether or not differences erupt between our governments or 
not.
    Again, I think we will be testing the maturity of that 
military-to-military relationship in the future, not just over 
our legal obligation to conduct Taiwan arms sales, but over 
other issues between our governments as well.
    Mr. Larsen. Thank you.
    I see my time is up.
    The Chairman. Mr. Coffman.
    Mr. Coffman. Thank you, Mr. Chairman.
    I would like to ask the panel to address what I believe has 
become a very serious emerging national security threat as it 
relates to China. It has to do with industrial base supply 
issues controlled by China and not any specific military 
threat, but I am hoping, given your background and your current 
positions focusing on Pacific Rim nations, to garner the 
benefit of your thoughts and comments. Worldwide demand for 
rare earth elements are escalating rapidly.
    Rare earths are used in a number of applications, including 
emerging green technologies, and many of us on this dais have 
concerns as to what that means for American innovation and 
domestic job growth. But the fact that so many national 
security and defense systems require these materials to 
function and operate is of greater concern to us here at this 
hearing.
    Ninety-five percent of worldwide rare earth reserves being 
accessed today are located in China or controlled by Chinese-
led interests. Today, there are no rare earth elements or 
production sites of significance taking place in North America 
or anywhere outside of China.
    China's domestic demand for rare earth elements could 
easily equal Chinese production as early as 2012. Furthermore, 
in October of 2009, an internal report by China's Ministry of 
Industry and Information Technology disclosed proposals to ban 
the export of five rare earth elements and restrict supplies of 
the remaining metals as early as next year.
    I ask the witnesses to comment on these developments and 
address their entity's situational awareness of the reliance on 
these rare earth elements, what they feel are the strategic 
implications, and how they plan to develop an appropriate 
policy to mitigate this impending supply crisis as it relates 
to national security and defense?
    Mr. Shear. Sir, I would like to take that question for the 
record and get back to you as soon as we can.
    [The information referred to can be found in the Appendix 
beginning on page 84.]
    Mr. Coffman. I appreciate that.
    Very well, anyone else care to respond?
    Secretary Gregson. Likewise.
    Mr. Coffman. A second question. About four or five years 
ago, I believe that since we don't have formal relations with 
Taiwan in terms of an ambassador here, I think general counsel 
might be the term--I am not sure what the term is for their 
diplomatic representative in Washington--I was at a dinner 
seated next to him and asked him what the most significant 
national security issue was to Taiwan. At that time he said a 
recession in China.
    I asked him why that was the case. He said because then he 
felt that the leadership of the People's Republic of China, the 
PRC, will look outward as to threats to deflect the attention 
of the people of China on their own domestic problems, and that 
is where he felt that Taiwan would be the most vulnerable.
    I wonder if any of you could comment on that?
    Secretary Gregson. That has, the relationship of economic 
development, national development, to the authority, legitimacy 
of the leadership has been often discussed as a matter of 
speculation. A connection has been drawn, and as a matter of 
fact, it has often been stated that eight percent per year 
growth or better is necessary to maintain domestic tranquility 
within China.
    While we watch that from the defense side, we also watch 
the development of capabilities. We try and make sure that we 
have done everything we can to counter the capabilities we see 
on the other side of the Strait. Relying on the fact that we 
can't read minds and read intentions with clarity, we can draw 
inferences and we can get ideas. But we are not relying on the 
conditions of prosperity to be a guarantee that nothing bad 
will happen.
    We are taking all appropriate precautions to make sure we 
can react if the situation worsens, regardless of what the 
prosperity situation is across the Strait.
    I understand the points of your dinner companion, and I 
think it is an interesting observation, a very interesting 
observation, particularly from their side. But on the defense 
side, we remain oriented on the capabilities.
    Mr. Shear. The Chinese Government certainly appeals to 
Chinese nationalistic sentiment frequently, but we don't see an 
uptick in that or an effort to blame Chinese domestic problems 
on foreign sources as a result of the economic downturn. It 
looks to us like the Chinese economy is turning around. They 
had eight percent growth last year. I think they may have eight 
to nine percent growth this year. We are not seeing that 
phenomenon happen right now.
    Mr. Coffman. Thank you, Mr. Chairman.
    The Chairman. I thank the gentleman.
    Mr. Kissell.
    Mr. Kissell. Thank you, Mr. Chairman, and welcome 
gentlemen.
    Admiral Willard, thank you for being here, and thank you 
for the service that you render to your nation.
    I am going to go back a little bit. As we know, China is an 
ancient kingdom many thousands of years old, and I am going to 
go back 2,000 to 3,000 years.
    Sometimes when we study history, we tend to separate our 
time lines and forget that history moves at the same time 
period. In the time period while Europe was in the Middle Ages 
and before, China was a prospering kingdom and arguably could 
have made some of the same decisions that Europe later made in 
terms of conquest, expansion, exploration, and did not. And if 
the history book that I taught from was correct, it was a 
decision that this was not a pursuit that they wanted 
nationally to evolve to. And while Europe later came to 
dominate the world, China in many ways chose not to do that.
    And if you look at the history since then, of course, the 
time period where the European nations tended to dominate 
China, that China has never pursued that course of what you 
maybe call aggression or expansion or looking overseas and 
other places for, you know, their national prospects.
    I am trying to get an idea in my mind what is the mindset 
of the Chinese now. How much has that changed, or has it 
changed? We have talked about all the ambiguities that exist 
among what China may be doing. For our two secretaries, if you 
had to narrow it down, what is the Chinese mind set? Is it 
aggressive? Is it defensive? Is it, we want to be equal to, we 
want respect? What is the mindset of the Chinese now?
    Mr. Shear. We are familiar with your view of Chinese 
history. From our historical experience, we see rising powers 
as a potential challenge to the international community. We 
hope to avoid that in China's case by engaging intensively----
    Mr. Kissell. And I don't mean to interrupt, but what is the 
Chinese mindset? I understand how we view it, but what do you 
think that they, long-term, how are they trying to position 
themselves, and why?
    Mr. Shear. I think the Chinese want to express themselves 
as a major global power. I think they have done that mostly 
economically so far. I think that remains a lower priority on 
their list after securing communist power, communist party 
stability in power, and after domestic economic development.
    Secretary Gregson. I would concur with that.
    I might add that I think a lot of Chinese attitude consists 
of the fact that world trends are working in their direction 
now and that it is time for them to enjoy some of the largesse 
and the benefits of being a world power that they were not able 
to do for the last couple of centuries.
    Mr. Kissell. One other question, going in a different 
direction, I had read recently where water would be a great 
limitation towards China and its ability to continue its 
economic expansion. I just wonder what your thoughts are, how 
that may anything figure in, how much it figures in, and what 
that might mean long term?
    Secretary Gregson. At conservative population growth 
estimations and conservative economic growth observations, 
there is the potential out there in the future that resource 
allocation of precious liquids--oil, water--will become an item 
that is going to require vigorous, active, and cooperative 
management.
    The Mekong River Initiative right now is one way to try and 
manage water and related items, like fresh water fish, recent 
things. The Mekong starts in China and, of course, goes through 
Southeast Asia. Any time somebody puts a dam at one point on 
the river, it affects everybody downstream, those obvious 
things. Yes, this is going to be an item of major concern.
    Mr. Kissell. Thank you, gentlemen.
    I yield back my time.
    The Chairman. I thank the gentleman.
    The gentleman from Louisiana, Mr. Fleming.
    Mr. Fleming. Thank you, Mr. Chairman.
    My question is for Admiral Willard. As you know, sir, our 
aircraft carriers are a platform that we use to project power 
around the world. This is certainly relevant to some of the 
issues brought up about oil and energy in general.
    It is my understanding that the Chinese have a mid-range 
ballistic missile that can travel up to 2,000 kilometers, can 
easily attack an aircraft carrier, and that we really don't 
have any antidote for that. Hopefully it is still under 
development and not fully capable.
    So what is our Navy's plan to protect our aircraft carriers 
given this potential shift in power and certainly our ability 
to project our Navy and the Naval Air Forces closer to the 
perimeters of China itself?
    Admiral Willard. As you suggest, as one element of the 
anti-access strategy by China, there has been development of a 
ballistic missile capability that we believe is intended to 
target surface ships to include our aircraft carriers, and it 
is an issue of major concern.
    We, within our programs, are developing capabilities to 
protect, you know, obviously, protect our surface ships to 
include our aircraft carriers. From that, the details, 
obviously, we would need to discuss at some future opportunity 
in a closed session.
    Mr. Fleming. Would you agree, sir, that this may put even 
more emphasis on the need for the next-generation bomber, which 
is an air platform that, again, is a standoff type of defense 
mechanism or attack mechanism, if you will, that, you know, we 
have sort of laid that aside here recently, and I am wondering 
if maybe we need to take a stronger look at that in view of 
what we are seeing here?
    Admiral Willard. I think when we approach the anti-access 
capabilities that are being developed here that we have to look 
broadly at all of the capabilities that provide us 
opportunities to continue to operate with freedom of action 
inside the envelopes of that capability. Certainly our bomber 
force and any recapitalization of our bomber force, extended 
range weapons, as well as our ability to penetrate with our 
surface ships and not give up access where we require it are 
all parts of the defense strategy to accomplish that.
    Mr. Fleming. Thank you, sir.
    Thank you to the panel, and thank you for your service.
    I yield back.
    The Chairman. I thank the gentleman.
    The gentleman from Mississippi, Mr. Taylor.
    Mr. Taylor. Mr. Chairman, I am going to yield to the only 
member of the Ranger Hall of Fame that is a Member of Congress, 
Mr. Marshall.
    Mr. Marshall. Thank you, Mr. Taylor, I appreciate that.
    I am curious about the extent to which we can expect that 
China at some point might be more helpful to us where terrorism 
is concerned and specifically the efforts in Iraq and 
Afghanistan and our worries about Pakistan and India and 
possible conflicts there.
    A couple of Chinese colonels published a book called 
``Unrestricted Warfare'' in the mid-1990s. Probably most of you 
have already read that or at least read an executive summary of 
it. And that piece, that book, explores ways in which China can 
engage in conflicts with the United States, in essence, 
asymmetrically, and publication of the book was authorized and 
approved by the Chinese government. Not so many years have 
passed since the publication of the book.
    Among the things that these two colonels observe, and this 
book's publication precedes 9/11, is that the close 
relationship between America's political elite and the 
military-industrial state combined with America's military 
expeditionary capacity means that it is only a matter of time 
before America gets itself involved in conflicts that bankrupt 
it.
    If there is an ongoing attitude in China that it is good 
for China to see the American economy weakened, then it seems 
to me that China might be holding back in assisting us with 
regard to Iraq, Afghanistan, and terrorism generally because 
this is something that is costing us an awful lot of money.
    I would just like general comments about Pakistan, India, 
the flash points there, nuclear power, you know, controlled by 
both, and any thought that China is at some point here going to 
join this effort against terrorism which, if you think about 
it, given the nature of their evolving economy, they are going 
to be a target also eventually.
    Mr. Shear. Congressman, with regard to China's approach to 
American economic health, I think the Chinese have recognized 
that we are interdependent economically and that our economic 
relationship benefits both sides.
    On the subject of terrorism, we engage the Chinese on this 
subject, both at senior levels and at the working level through 
a counterterrorism working group, which has met recently.
    In general, our cooperation on counterterrorism issues with 
the Chinese is at a fairly basic level, but we are working on 
it. On the subject of Afghanistan and South Asia generally, I 
think the Chinese share our interest in peace and stability in 
South Asia, particularly in Afghanistan. It is right on China's 
border.
    We have engaged the Chinese fairly intensively on the 
subject of Afghanistan. Special Envoy Holbrooke has been to 
Beijing twice to discuss this subject with them. They have 
expressed an interest in cooperating, but we are still at the 
early stages.
    Mr. Marshall. So we haven't seen anything concrete?
    Mr. Shear. Not yet, no.
    Mr. Marshall. And where terrorism is concerned, have we 
seen anything concrete there?
    Mr. Shear. We conducted exchanges with the Chinese, 
particularly in the run-up to the Olympics. We are continuing 
those exchanges, but I would say we are at a very basic level.
    Mr. Marshall. What have we proposed that they do with 
regard to terrorism or stability in Afghanistan, Pakistan, 
India, et cetera? What are we proposing that they are just not 
willing to do?
    Mr. Shear. We think, we think, as I say, the Chinese have 
expressed an interest, a general interest in cooperation. We 
conducted a working-level meeting with the Chinese to discuss 
specific ways in which we can work together on the ground in 
Afghanistan before the President's visit in November. I think 
they are thinking this through right now.
    We have proposed such avenues, things they can do to help 
Afghanistan in agricultural infrastructure, infrastructure 
generally, capacity-building and areas like that. But we are 
still just beginning. We are pressing the Chinese on this.
    Mr. Marshall. What about assistance from China? I know we 
are looking at different ways to get materials into 
Afghanistan. Is there any movement where that is concerned?
    Secretary Gregson. We are developing alternative lines of 
communication to avoid overdependence on the lines of 
communication (LOCs) through Pakistan. Generally they involve 
the Northern Distribution Network. We don't know of an 
opportunity yet for China to contribute.
    Mr. Marshall. Thank you, Mr. Chairman.
    The Chairman. I thank the gentleman.
    Mr. Franks.
    Mr. Franks. Thank you, Mr. Chairman.
    Thank you, Admiral Willard. I want to direct my first 
question to you, thank you just for your lifetime commitment to 
the cause of human freedom and all the things people like us up 
here talk a lot about the importance of protecting freedom. 
People like you personify it, and we are really grateful to 
have you here today.
    I was encouraged about your discussion related to 
protecting some of our battle groups from emerging Chinese 
missile technology. As you are probably very aware in the 
Perry-Schlesinger report, it said that we had to be careful 
with long-range defenses because it could upset the strategic 
balance between the U.S. and China, and the U.S. and Russia.
    But in light of some of the recent reports in the media 
that China is working to perfect or develop a mid-range and 
long-range missile defense capability, they don't seem quite as 
concerned about that strategic balance as maybe we are.
    I guess my question to you, can you talk to us a little bit 
about the Chinese missile defense technology advances and 
specifically their medium- to long-range capabilities?
    Admiral Willard. I would only offer that, in terms of their 
missile defense capabilities, that they are by and large still 
in the research and development (R&D) stages, that this is a 
subject actually of inquiry regarding the most recent missile-
to-missile engagement that has been witnessed and that the 
Chinese, as we have discussed earlier, reported on over the 
past several days.
    These developments and other developments we would continue 
to watch, but in terms of levels of detail and so forth, 
obviously, in a closed session to discuss.
    Mr. Franks. Well, let me, if I could, then, switch--thank 
you, Admiral--to Secretary Gregson.
    Can you tell us about China's space program? Have there 
been any advances in technology, or have they continued 
pursuing space as a military venue since their 2007 anti-
satellite (ASAT) test? The question is predicated on the notion 
that, you know, China has, with their ASAT capability, has 
pursued, in a phrase, weaponizing space, and it seems it is 
pretty clear to me that has already happened. But can you tell 
us, have they continued pursuing space as a military venue 
since their last ASAT test in 2007?
    Secretary Gregson. The Chinese have stated that they oppose 
the militarization of space. Their actions seem to indicate a 
contrary intention. We continue to press the Chinese for 
explanation, and we would be happy to provide details in a 
closed session.
    Mr. Franks. Well, Mr. Chairman, I guess I make the point 
all too often here that I think it is important as a country to 
maintain our missile defense capability. We seem to be moving 
into a dynamic, militarily and otherwise, in the future that 
that will be a critical consideration for us, and I think that 
we have a moral responsibility to the citizens to be able to 
defend the U.S. from any missile launched from anywhere on the 
globe, at least that is the goal.
    I know that Mr. Reagan contemplated and hoped for that, and 
we have come probably further than even he contemplated at one 
point. But I think the ultimate concern should still be to be 
able to defend ourselves in that situation because in a world 
where radical rogue nations are potentially going to be a part 
of that equation, I think it is vital that we continue in the 
direction of developing that.
    And I thank all of you for your efforts in that regard.
    I yield back, Mr. Chairman. Thank you.
    The Chairman. I thank the gentleman.
    Ms. Bordallo, the gentlelady from Guam.
    Ms. Bordallo. Thank you very much, Mr. Chairman.
    Secretary Gregson, I appreciate working with you on the 
Guam issues and look forward to your answers today.
    Mr. Shear, thank you for appearing before the committee.
    Finally, Admiral Willard, thank you, and I look forward to 
working with you as our new PACOM commander.
    As you all may know, I co-chair the China Caucus with my 
colleague, Congressman Forbes, and I have several questions 
regarding recent security developments in China and how it 
affects our posture in the Asia-Pacific region.
    Secretary Gregson, it seems that China wants to continue 
becoming a global power that has serious force projection 
capabilities. On his most recent Asia trip, President Obama 
stated that the United States is and will remain a Pacific 
power. In that vein, how does the realignment of military 
forces in Japan and to Guam play in the balance of power in the 
Pacific? If we are to remain a Pacific power, what other 
enhancements of our current military and civilian capabilities 
are needed to maintain a robust posture in the Asia Pacific 
area?
    Secretary Gregson. Thank you for the question.
    Secretary Gates has remarked often that there is sovereign 
U.S. territory in the Pacific, Alaska, Hawaii and Guam, and 
with the help, vital help, from Japan, we are increasing, as 
you know, our air, naval, and marine presence in Guam. This 
will also enable the continuous or near-continuous presence of 
Japanese and other allied and friendly forces for training with 
the United States and better position us for continued 
engagement, not only throughout Southeast Asia and the Indian 
Ocean but also into the area involving the compact states and 
our other territories in the mid-Pacific. I think this will 
allow us to continue to develop capabilities and to continue to 
develop relationships across a region that will contribute to 
peace, stability, and prosperity throughout the area.
    Ms. Bordallo. Thank you.
    My final question is for Admiral Willard.
    The 2009 report to Congress from the U.S.-China Economic 
and Security Review Commission made a very intriguing and a 
stark finding, and that is China's development of anti-ship 
cruise missiles. The report states that, ``According to the 
U.S. Department of Defense, this missile will have a likely 
range of 1,500 kilometers, be armed with maneuverable warheads, 
and is intended to deny regional access to surface ships of the 
opposing side. When combined with appropriate surveillance and 
targeting systems, this missile could have the potential to 
destroy or disable aircraft carriers and their associated 
battle groups while in transit.''
    Now I am concerned by this finding and would like to 
explore our deterrent capabilities in the Pacific to respond to 
this growing tactical threat by the Chinese. What types of 
deterrents are in place on our surface fleet to combat this 
tactical weapon? What impact would this weapon system have on 
our ability to project our naval power in China, such as port 
visits to Hong Kong?
    Admiral Willard. Thank you, ma'am, for the question.
    I would offer that the Chinese have developed a ballistic 
missile with extended-range capabilities that we believe is 
intended to counter surface ships. They have also developed 
extended-range cruise missiles, as you suggest, for launch from 
their surface ships and from their submarines as part of a 
broader anti-access strategy.
    All of these developments, capability developments, and the 
capacities that they are fielding, have led to concerns both on 
the part of the United States and on the part of the region 
with regard to what they are there for and their intended use.
    In the case of--you bring up deterrents, there is a 
responsibility that we bear to the region, writ large, to 
extend deterrence throughout the region to prevent wars from 
happening, to prevent future contingencies from occurring. We 
have been very successful, I would offer, for many decades now 
in accomplishing that.
    That is by and large accomplished through our presence and 
posture in the region, and that is unchanged. Regardless of 
these developments, capabilities, developments that you 
describe, we maintain a presence on the waters in the region as 
we have for a century and a half, and we intend to stay.
    We think that the extended deterrence that the United 
States offers to our allies and partners in the region, our 
presence to ensure security in the sea lines of communication 
and air lines of communication in this part of the world, are 
vital to our Nation's security as well as to our Nation's 
economy and the economies of our partners and allies.
    Ms. Bordallo. Thank you, Admiral.
    And I yield back. I thank the chairman.
    The Chairman. I thank the gentlelady.
    Mr. McIntyre.
    Mr. McIntyre. Thank you, Mr. Chairman.
    Thank you, gentlemen, for being here today. Because I was 
tied up in another matter, I got here a little bit later. I 
want to ask about something just for clarification.
    I know in December of a year ago, China began to provide 
its naval vessels to protect the commercial ships navigating in 
the Gulf of Aden from the Somali pirate attacks. Do you 
characterize this as a positive development with regard to 
U.S.-Chinese cooperation? And are they willing and are 
currently working with the United States in cooperation vis-a-
vis dealing with these pirates?
    Admiral Willard. I would, from the PACOM perspective, we 
view it as a very positive development. It is a demonstration 
of the PRC's willingness to utilize their military capability 
in a way that is contributing to other nations, to the 
international betterment of security in that particular region 
of the world.
    They began those operations operating outside of the 
international regime that was put in place to coordinate the 
efforts by the many nations that are contributing to the anti-
piracy effort over the years. Now that this has been occurring, 
I would offer that the PRC has grown closer to those regimes 
and to the extent that there is a line of communication that 
has been developed and a level of information sharing that is 
both contributing to their operations and also contributing to 
the operations of the combined task force that is engaged in 
counter-piracy.
    To both your questions, yes, it is positive. And yes, they 
have grown closer to cooperating, not just with the United 
States, but with the international effort that is often 
foreign-led in the Gulf of Aden.
    Secretary Gregson. I concur completely with the Admiral.
    The freedom of navigation, freedom of the seas, freedom of 
navigation, freedom of innocent commerce, freedom of innocent 
passage is vitally important to both the United States and 
China as well as the rest of the world, particularly 
considering the Gulf of Aden and where it sits across the lines 
of communication that are vital to energy supplies moving 
around the world.
    The Chinese over time, as the Admiral stated, are 
increasingly coming to understand and to appreciate the norms 
of cooperation that have been established in an international 
task force out there. While they still cannot for their own 
political reasons join the international task force, they are 
operating ``in cooperation with'' the task force. And informal 
lines of communication and cooperation are growing, and we see 
this as overall a very positive development.
    Mr. McIntyre. Thank you.
    With the very limited time, let me change to another 
subject.
    Admiral, do you believe that we are building enough ships 
to counter the continual buildup of ships by the Chinese in 
their naval fleet in the Pacific? Do you feel like we are 
keeping the pace as we need to, or that there needs to be a 
stronger buildup of the American fleet?
    Admiral Willard. I would speak for Pacific Command and our 
ability to contend with the security issues within my area of 
responsibility, and I believe I can do that. I think that the 
importance of maintaining our industrial base and continuing to 
recapitalize our surface fleet in the Navy is critically 
important and that, as the Pacific commander, it is critically 
important to me that my naval component contribute the level of 
combat power that I require for the joint operations that we 
conduct.
    Mr. McIntyre. The question is, do we have enough ships to 
do that? Or do you feel like we are on course to maintain the 
level of the number of ships we need to do that?
    Admiral Willard. I am satisfied with the current budget and 
shipbuilding level of effort that we are pursuing in the United 
States Navy to produce the ships that I require to accomplish 
my mission in the Pacific.
    Mr. McIntyre. Beyond the number of ships, do you feel like, 
or if in fact there becomes a problem with the number of ships, 
do you feel like we still have the capability otherwise to 
effectively counter the Chinese buildup?
    Admiral Willard. The short answer is yes. Currently, the 
U.S. Pacific Command is contributing nearly 30,000 troops to 
the Middle East, and certainly force structure to the two wars 
that are currently ongoing in our Nation. And as we determine 
our abilities to meet our obligations throughout the Pacific to 
include the potential for future contingencies in the Western 
Pacific, I have to evaluate the associated risks with that 
force structure commitment to our two wars and what mitigations 
I am obligated to put into place to ensure that I can perform 
my mission. And, yes, I believe I can do that.
    Mr. McIntyre. We want to support you in that. Thank you, 
Mr. Chairman.
    The Chairman. I thank the gentleman from North Carolina.
    The last question I would address to Secretary Gregson. In 
light of the Google news this morning and other recent attacks 
against American Government sites, how are we addressing the 
increase in the cyber attacks from China?
    Secretary Gregson. I think it is not only increased cyber 
attacks from China that the United States faces, but increased 
cyber attacks from a number of places, including nonstate 
actors, everybody with access to the necessary----
    The Chairman. I understand that. I am asking about China.
    Secretary Gregson. Among other things, we are standing up a 
Cyber Command as a sub-unified command of Strategic Command 
(STRATCOM). We have a number of security procedures that have 
been put in place over the years throughout the Department of 
Defense to protect our proprietary networks. And we continue to 
research ways where we can enhance our defenses in the future. 
This is an ever-evolving threat and we take it very seriously.
    The Chairman. Secretary Shear, do you have any comments?
    Mr. Shear. Cyber security is a national priority for this 
Administration. Shortly after taking office, the President 
directed that the National Security Council and the National 
Homeland Security Council conduct a top-to-bottom review of our 
cyber security efforts. The results of that review were 
published in May. We are in the process of implementing those. 
We are particularly concerned, particularly after the Google 
affair, about Chinese efforts. We will be raising this with the 
Chinese, and we take it very seriously.
    The Chairman. Secretary Gregson, in open session can you 
tell us what the jurisdiction of the Cyber Command is?
    Secretary Gregson. I would like to take that for the 
record, Mr. Chairman.
    [The information referred to can be found in the Appendix 
beginning on page 83.]
    The Chairman. Thank you very much.
    I certainly thank the witnesses today. I think this is the 
first hearing on China per se that we have had in this 
Congress, and you have done very, very well.
    Admiral Willard, thank you, Secretary Gregson, Secretary 
Shear. It is certainly good for you to be with us, and look 
forward to seeing you again. The very best to you.
    [Whereupon, at 12:03 p.m., the committee was adjourned.]



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                            A P P E N D I X

                            January 13, 2010

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              PREPARED STATEMENTS SUBMITTED FOR THE RECORD

                            January 13, 2010

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[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

=======================================================================


              WITNESS RESPONSES TO QUESTIONS ASKED DURING

                              THE HEARING

                            January 13, 2010

=======================================================================

      
             RESPONSE TO QUESTION SUBMITTED BY MR. SKELTON

    Secretary Gregson. The mission statement for U.S. Cyber Command, 
which is to be a sub-unified command under U.S. Strategic Command, 
states that: USCYBERCOM plans, coordinates, integrates, synchronizes 
and conducts activities to: direct the operations and defense of the 
specified DOD information networks; prepare to, and when directed, 
conduct full-spectrum military cyberspace operations in and through 
cyberspace in order to enable actions in all domains, ensure U.S./
Allied freedom of action in cyberspace and deny the same to our 
adversaries. The DOD will support, when requested and directed to, U.S. 
Government agency requests for assistance. [See page 34.]
                                 ______
                                 
              RESPONSE TO QUESTION SUBMITTED BY MR. FORBES
    Mr. Shear. The United States advanced its trade agenda with China 
on a number of fronts in 2009. The U.S. won two major cases on 
intellectual property rights at the WTO as well as a key WTO case on 
auto parts tariffs and subsidies. In addition, President Obama 
announced a decision to impose three-year ad valorem tariffs on Chinese 
tire imports to stop a harmful surge of imports of Chinese tires. 
Finally, China agreed to open its markets in several key areas in the 
most recent U.S.-China Joint Commission on Commerce and Trade (JCCT).

    World Trade Organization

    On December 21, 2009 the World Trade Organization Appellate Body 
rejected China's appeal and confirmed important panel findings that 
Chinese restrictions on the importation and distribution of certain 
copyright-intensive products, such as theatrical films, DVDs, music, 
books and journals, are inconsistent with China's WTO obligations. The 
WTO ruling is critical to guaranteeing that legitimate, high-quality 
American entertainment products have full access to the Chinese market. 
Getting these products into China's markets promptly is a vital tool in 
the fight against rampant intellectual property piracy in China.
    In another dispute brought by the United States, a WTO panel ruled 
that certain Chinese intellectual property protection and enforcement 
rules were inconsistent with China's WTO obligations. The panel found 
that China's denial of copyright protection to works that do not meet 
China's ``content review'' standards is impermissible. It also found it 
impermissible for China to provide for simple removal of an infringing 
trademark as the only precondition for the sale at public auction of 
counterfeit goods seized by authorities. Finally, the panel clarified 
China's obligation to provide for criminal procedures and penalties to 
be applied to willful trademark counterfeiting and copyright piracy on 
a commercial scale. In keeping with the ruling, China has committed to 
correct these problems by spring 2010, affording American rights 
holders new opportunity to protect and profit from their goods, 
services, and ideas.
    In December 2009, the Obama administration announced an agreement 
between the United States and China confirming China's termination of 
many dozens of subsidies most of which had been supporting the export 
of ``famous brands'' of Chinese merchandise. The agreement will ensure 
a level playing field for American workers in every manufacturing and 
export sector, including household electronic appliances, textiles and 
apparel, light manufacturing industries, agricultural and food 
products, metal and chemical products, medicines, and health products.
    As a consequence of WTO litigation, China in September 2009 
eliminated discriminatory charges on imported auto parts, creating 
increased market opportunities for American manufacturers.

    Section 421 Tire Case

    In September, the President announced a decision to impose three-
year ad valorem tariffs on Chinese tire imports to stop a harmful surge 
of imports of Chinese tires. This decision was consistent with China's 
WTO accession protocol, which allows WTO members to take such action 
when an import surge from China disrupts the market.

    U.S.-China Joint Commission on Commerce and Trade

    Through this year's JCCT, the U.S. negotiated increased market 
access in China for American businesses and workers in a variety of 
sectors:
      China agreed to improve access for U.S. energy companies 
by removing local content requirements on wind turbines. This agreement 
will enable more American companies to take advantage of the fast 
growth of China's wind energy sector.
      China agreed to accept medical devices that had received 
prior approval by a foreign country. According to industry, China's 
prior approval requirement could have affected over $350 million in 
U.S. products.
      China gave assurances that it will impose maximum 
administrative penalties on individuals that used the Internet to 
infringe on intellectual property rights and began a four-month 
campaign to clamp down on Internet piracy. This agreement will help to 
ensure that U.S. copyright holders continue to benefit from their 
products as internet use expands across China.
      China agreed to strengthen oversight and enforcement 
regarding counterfeit pharmaceuticals.
      China gave assurances that it was in the process of 
liberalizing its licensing procedures for certain types of direct 
selling services companies. One U.S. company has already received its 
license. [See page 20.]
                                 ______
                                 
             RESPONSE TO QUESTION SUBMITTED BY MR. COFFMAN
    Mr. Shear. The Department of State takes very seriously reports 
that China is seeking to limit exports of rare earth elements. We are 
working closely with other agencies to review the consistency of 
China's rare earth export restrictions with its WTO commitments. In 
November 2009, the United States requested the establishment of a WTO 
dispute settlement panel regarding China's export restraints on nine 
raw materials that are key inputs for numerous downstream products in 
the steel, aluminum, and chemical sectors. Although China is the source 
of most of the world's supplies of rare earth metals, widespread and 
substantial reserves of these metals exist elsewhere. [See page 25.]
?

      
=======================================================================


              QUESTIONS SUBMITTED BY MEMBERS POST HEARING

                            January 13, 2010

=======================================================================

      
                    QUESTIONS SUBMITTED BY MR. ORTIZ

    Mr. Ortiz. What is the impact of China's military modernization on 
the DOD's efforts to transform U.S. military capabilities and the U.S. 
approach to the Asia-Pacific region? Has thought been given to a 
greater U.S. Naval presence in PACOM AOR, in addition to the buildup in 
Guam?
    Secretary Gregson. The Department of Defense takes seriously the 
potential challenge posed by China's military modernization program. 
The QDR discusses this in the context of how we will deal with 
increasingly sophisticated anti-access capabilities, such as those 
China is fielding and developing in large numbers and across all 
domains--air, sea, land, space, and cyber. The QDR outlines several 
operational concepts and capabilities to counter anti-access 
challenges: developing air-sea battle concepts, expanding long-range 
strike capabilities, exploiting undersea advantages, increasing the 
resiliency and dispersal of U.S. forward posture and base 
infrastructure, assuring access to space and the use of space assets, 
enhancing the robustness of C4ISR capabilities, defeating enemy sensors 
and engagement systems, and increasing joint and combined training 
capacity in the West Pacific. All of these have potential applications 
within the Asia-Pacific region.
    As noted in the QDR report, we are transforming the U.S. sovereign 
territory of Guam into a hub for security activities in the region. We 
continue to review our Asia-Pacific posture with an emphasis on 
maintaining a credible deterrence and assuring allies and partners. As 
part of this posture review, we are examining whether positioning 
additional naval forces within the PACOM AOR is necessary.
    Mr. Ortiz. With the increase of the PLA Navy, and all the demands 
being asked of PACOM, what does the Pacific Command need to effectively 
deal with the broad range of security concerns in the Area of 
Responsibility?
    Admiral Willard. USPACOM has a requirement for a forward military 
presence. This presence is a combination of U.S. Forces stationed in 
Japan, the Republic of Korea, Singapore, and Guam along with the 
rotational forces that deploy and transit through the Western Pacific. 
Additionally, USPACOM needs increased intelligence, surveillance and 
reconnaissance (ISR) assets, to provide timely indications and 
warnings. It is important that these forces and assets remain in the 
Pacific and are available. USPACOM along with the Department of State, 
and the whole of government needs to assure access to bases and support 
areas. This access is most critical in dealing with the broad range of 
security concerns in the Pacific.
                                 ______
                                 
                   QUESTIONS SUBMITTED BY MR. FORBES
    Mr. Forbes. Please submit the legal justification used by the 
Department of Defense that supports the Department's refusal to submit 
the Fiscal Year 2010 Navy Shipbuilding Plan as required by section 231 
of title 10, United States Code.
    Secretary Gregson. Given that the National Security Strategy (NSS) 
was due for release soon after the FY 2010 budget, the impact of the 
NSS on force structure could not be accounted for in a FY 2010 
Shipbuilding Plan.
    In addition to the National Security Strategy, the statutory 
guidelines require that the report reflect the Quadrennial Defense 
Review (QDR). The latest QDR is being developed in parallel with the 
NSS. Additionally, the Nuclear Posture Review, which has direct bearing 
on the numbers of strategic ballistic missile submarines, remains 
underway in conjunction with the QDR. All of these efforts have 
substantive impacts on the Navy's force structure requirements.
    Therefore, the Department considered it prudent to defer the FY 
2010 Report and submit its next report concurrent with the President's 
Fiscal Year 2011 budget.
    The Annual Long-Range Plan for Construction of Naval vessels for FY 
2011 will be delivered to Congress on 1 February 2010.
    Mr. Forbes. Please explain how the United States can claim to have 
a level of transparency with the People's Republic of China (PRC) with 
regards to military matters when the Department of Defense cannot 
provide a legally required shipbuilding plan to the United States 
Congress.
    Secretary Gregson. The transparency we see from China's military is 
improving, but still has a long way to go, and this requirement is 
something we raise with the PLA quite frequently and at all levels. 
With respect to the U.S. Navy's shipbuilding plan, I understand the 
Department of the Navy is putting the finishing touches on the Annual 
Long-Range Plan for Construction of Naval Vessels for FY2011 and should 
be submitting it to the appropriate oversight committees shortly.
                                 ______
                                 
                   QUESTIONS SUBMITTED BY MR. BISHOP
    Mr. Bishop. As China's ballistic missile technology and programs 
continue to mature, their emerging capability makes it even more urgent 
for the Department of Defense to invest in a comprehensive, multi-
layered missile defense system. In the FY10 Defense Appropriations 
Conference report, Congress approved additional money for Standard 
Missile-3 Block 1A interceptors. How soon does PACOM need this proven 
defensive capability in order to increase the ability of the U.S. to 
provide additional protection for the Allies of the PACOM theatre?
    Admiral Willard. [The information referred to is classified and 
retained in the committee files.]
    Mr. Bishop. The Department of Defense has asked China to be more 
transparent in their long-range missile testing by providing missile 
notifications, and we hear of more and more Chinese missile technology 
advances. Do recent Chinese missile technology advances provide the 
United States with an increased urgent operational requirement for the 
Standard Missile-3 Block 1A technology at an accelerated pace?
    Admiral Willard. [The information referred to is classified and 
retained in the committee files.]
                                 ______
                                 
              QUESTION SUBMITTED BY MRS. MCMORRIS RODGERS
    Mrs. McMorris Rodgers. Secretary Gregson, Mr. Shear, and Admiral 
Willard, I'd like to thank each of you and offer my appreciation for 
the service you are performing to our nation. Your work in the defense 
of our country and its citizens does not go unnoticed. Thank you. Does 
the Department of Defense feel threatened at any level from a cyber 
attack emanating from China? And have we had any indications of a 
threat of a cyber attack from China? In December 2009, President Obama 
named a Cyber Security Chief to the White House. With the increased 
importance the White House is placing on cyber defense, and with the 
ever-increasing number of cyber attacks we are seeing, does the 
Department of Defense feel the need to increase staff to manage this 
increased threat? Also, is the DOD coordinating efforts with other 
countries to share intelligence gathered? What can the DOD report to 
Congress on this endeavor?
    Secretary Gregson. With the difficulty in attributing cyber 
activities to a specific actor, let alone a specific government, DOD 
defends its networks round the clock from a variety of threats 
regardless of source. Over the past ten years, the frequency and 
sophistication of cyber intrusions and probes into DOD networks have 
increased exponentially. More than 100 foreign intelligence 
organizations are trying to hack into U.S. systems. Foreign militaries 
are developing cyber capabilities. And some governments already have 
the capacity to disrupt elements of the U.S. information 
infrastructure.
    To address this growing and pervasive threat, Secretary Gates 
directed the formation of U.S. Cyber Command, a sub-unified command 
under U.S. Strategic Command. As U.S. Cyber Command and the supporting 
Service elements are stood up, DOD will evaluate over time the staff 
size required to accomplish the mission. As with intelligence gathered 
in other areas, DOD is coordinating efforts to share information about 
cyber threats with other countries. The Department has briefed six 
committee staffs, including the HASC, and intends to continue an 
ongoing dialogue with concerned Members and committee staffs on the 
Department's efforts to address cyberspace issues, including the stand-
up of U.S. Cyber Command.
                                 ______
                                 
                   QUESTIONS SUBMITTED BY MR. COFFMAN
    Mr. Coffman. I'd like to ask the panel to address what I believe 
has become a very serious emerging national security threat as it 
relates to China. It has to do with industrial base supply issues 
controlled by China, and not any specific military threat. But I am 
hoping--given your backgrounds and your current positions focusing on 
Pacific Rim nations--to garner the benefits of your thoughts and 
comments. Worldwide demand for rare earth elements is escalating 
rapidly. Rare earths are used in a number of applications including 
emerging green technologies, and many of us on this dais have concerns 
as to what that means for American innovation and domestic job growth. 
But the fact that so many national security and defense systems require 
these materials to function and operate is of greater concern for us 
here at this hearing. Ninety-five percent of worldwide rare earth 
reserves being accessed today are located in China or controlled by 
Chinese-led interests. Today, there is no rare earth element production 
of significance taking place in North America or anywhere outside of 
China, and Chinese domestic demand for rare earth elements could easily 
equal Chinese production as early as 2012. Furthermore, in October 2009 
an internal report by China's Ministry of Industry and Information 
Technology disclosed proposals to ban the export of five rare earths 
and restrict supplies of the remaining metals as early as next year. I 
ask the witnesses to comment on these developments. Please address 
their entities' situational awareness of this reliance, what they feel 
are the strategic implications, and how they plan to develop 
appropriate policy to mitigate this impending supply crisis as it 
relates to national security and defense.
    Secretary Gregson. The Department of Defense is aware of the issues 
concerning the rare earth elements and their importance to U.S. 
industry and national defense. The Office of Industrial Policy has been 
investigating actions involving rare earth resources for many years, 
particularly in the context of potential foreign acquisitions of U.S. 
rare earth deposits. Section 843 of the National Defense Authorization 
Act for Fiscal Year 2010, Public Law 111-84, requires the Comptroller 
General to complete a report on rare earth materials in the Defense 
supply chain. The Office of Industrial Policy, in collaboration with 
other U.S. Government agencies including the U.S. Geological Survey, 
has also initiated a detailed study of the rare earth elements. The 
study is assessing the Department of Defense's use of these materials 
as well as the status and security of domestic and global supply 
chains. The report, to be completed this fiscal year, will address 
vulnerabilities in the supply chain and include recommendations to 
mitigate any potential risks of supply disruption.
    Mr. Coffman. I'd like to ask the panel to address what I believe 
has become a very serious emerging national security threat as it 
relates to China. It has to do with industrial base supply issues 
controlled by China, and not any specific military threat. But I am 
hoping--given your backgrounds and your current positions focusing on 
Pacific Rim nations--to garner the benefits of your thoughts and 
comments. Worldwide demand for rare earth elements is escalating 
rapidly. Rare earths are used in a number of applications including 
emerging green technologies, and many of us on this dais have concerns 
as to what that means for American innovation and domestic job growth. 
But the fact that so many national security and defense systems require 
these materials to function and operate is of greater concern for us 
here at this hearing. Ninety-five percent of worldwide rare earth 
reserves being accessed today are located in China or controlled by 
Chinese-led interests. Today, there is no rare earth element production 
of significance taking place in North America or anywhere outside of 
China, and Chinese domestic demand for rare earth elements could easily 
equal Chinese production as early as 2012. Furthermore, in October 2009 
an internal report by China's Ministry of Industry and Information 
Technology disclosed proposals to ban the export of five rare earths 
and restrict supplies of the remaining metals as early as next year. I 
ask the witnesses to comment on these developments. Please address 
their entities' situational awareness of this reliance, what they feel 
are the strategic implications, and how they plan to develop 
appropriate policy to mitigate this impending supply crisis as it 
relates to national security and defense.
    Admiral Willard. This question highlights not only the importance 
of rare earth elements, but also their long-term strategic value to 
China. Now, with over 50 percent of rare earth ore reserves (the United 
States has about 10 percent) China is not so much reliant but indeed 
looks to corner the global rare earth market. Confident in a long-term 
plan for domestic exploitation, some Chinese have gone so far as to 
advocate banning the sale of rare earth (RE) elements to the United 
States as part of sanctions against U.S. companies for their role in 
recent arms sales to Taiwan.
    That China could control not only prices but access to important RE 
materials is worrisome, as the U.S. Rare Earth Industry and Technology 
Association reports that ``Rare Earth elements are uniquely 
indispensable in many electronic, optical and magnetic applications for 
the U.S. military.'' These systems and subsystems include those vital 
for electronic warfare (jamming), avionics, night vision, and specific 
weapons systems such as the Predator UAV, Tomahawk cruise missile, 
Excalibur Precision Guided Artillery Projectile, the GBU-28 ``Bunker 
Buster,'' and other smart munitions. Our challenge, therefore, is to 
secure an environment in which access to such strategically important 
materials is unimpeded.

                                  
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