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


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

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

                                BRIEFING

                               BEFORE THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                            JANUARY 19, 2011

                               __________

                            Serial No. 112-2

                               __________

        Printed for the use of the Committee on Foreign Affairs


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

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                      COMMITTEE ON FOREIGN AFFAIRS

                 ILEANA ROS-LEHTINEN, Florida, Chairman
CHRISTOPHER H. SMITH, New Jersey     HOWARD L. BERMAN, California
DAN BURTON, Indiana                  GARY L. ACKERMAN, New York
ELTON GALLEGLY, California           ENI F.H. FALEOMAVAEGA, American 
DANA ROHRABACHER, California             Samoa
DONALD A. MANZULLO, Illinois         DONALD M. PAYNE, New Jersey
EDWARD R. ROYCE, California          BRAD SHERMAN, California
STEVE CHABOT, Ohio                   ELIOT L. ENGEL, New York
RON PAUL, Texas                      GREGORY W. MEEKS, New York
MIKE PENCE, Indiana                  RUSS CARNAHAN, Missouri
JOE WILSON, South Carolina           ALBIO SIRES, New Jersey
CONNIE MACK, Florida                 GERALD E. CONNOLLY, Virginia
JEFF FORTENBERRY, Nebraska           THEODORE E. DEUTCH, Florida
MICHAEL T. McCAUL, Texas             DENNIS CARDOZA, California
TED POE, Texas                       BEN CHANDLER, Kentucky
GUS M. BILIRAKIS, Florida            BRIAN HIGGINS, New York
JEAN SCHMIDT, Ohio                   CHRISTOPHER S. MURPHY, Connecticut
BILL JOHNSON, Ohio                   FREDERICA WILSON, Florida
DAVID RIVERA, Florida                KAREN BASS, California
MIKE KELLY, Pennsylvania             WILLIAM KEATING, Massachusetts
TIM GRIFFIN, Arkansas                DAVID CICILLINE, Rhode Island
TOM MARINO, Pennsylvania             VACANT
JEFF DUNCAN, South Carolina
ANN MARIE BUERKLE, New York
RENEE ELLMERS, North Carolina
VACANT
                   Yleem D.S. Poblete, Staff Director
             Richard J. Kessler, Democratic Staff Director


                            C O N T E N T S

                              ----------                              
                                                                   Page

                                BRIEFERS

Mr. Larry Wortzel, commissioner, U.S.-China Economic and Security 
  Review Commission..............................................     7
Mr. Gordon Chang, author of ``The Coming Collapse of China,'' 
  Forbes.com Columnist...........................................    22
Yang Jianli, Ph.D., president, Initiatives for China and Harvard 
  Fellow.........................................................    27
Mr. Robert G. Sutter, visiting professor, School of Foreign 
  Service, Georgetown University.................................    31

         LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE BRIEFING

The Honorable Ileana Ros-Lehtinen, a Representative in Congress 
  from the State of Florida, and chairman, Committee on Foreign 
  Affairs: Prepared statement....................................     3
Mr. Larry Wortzel: Prepared statement............................     9
Mr. Gordon Chang: Prepared statement.............................    24
Yang Jianli, Ph.D.: Prepared statement...........................    29
Mr. Robert G. Sutter: Prepared statement.........................    34

                                APPENDIX

Briefing notice..................................................    64
Briefing minutes.................................................    65


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

                              ----------                              


                      WEDNESDAY, JANUARY 19, 2011

                  House of Representatives,
                              Committee on Foreign Affairs,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:35 a.m., in 
room 2172, Rayburn House Office Building, Hon. Ileana Ros-
Lehtinen (chairman of the committee) presiding.
    Chairman Ros-Lehtinen. The briefing will be called to 
order. Welcome to my fellow members of the committee, our 
distinguished panel of witnesses, honored champions of the 
struggle for human rights in China, who are joining us today, 
ladies and gentlemen. There is an old saying that the Chinese 
invoke when they wish to avoid political discourse with the 
central powers in Beijing; the mountains are high and the 
Emperor is far way.
    Well, ladies and gentlemen, this morning there are no 
mountains to shield us. And China's newest Emperor has just 
landed in Washington and is at the front lawn of the White 
House; yet the pressing issues which separate our countries 
need to be urgently addressed.
    Three of those many issues, which will be the focus of 
today's briefing, include security concerns, human rights, and 
how our trade imbalance and the Chinese currency manipulation 
adversely impacts deg. our U.S. economy.
    When the Cold War ended over two decades ago, many in the 
West assumed that the threat from communism had been buried 
with the rubble of the Berlin Wall. However, while America 
slept, an authoritarian China was on the rise. China became one 
of our biggest mortgage companies, holding over $900 billion of 
our international debt. And in these past two decades Western 
observers forgot that while freedom blossomed in Eastern 
Europe, reform in China failed.
    China was led by a cynical group of leaders who, sobered by 
the Tiananmen massacre and marked by the blood of its victims, 
were determined to go forward with economic but not political 
change. And the China that emerged has fallen far short of the 
benign China of which former Deputy Secretary of State Zoellick 
spoke in the coining of the phrase ``responsible stakeholder.''
    Does a responsible stakeholder, as reported in the Western 
press, allow the transshipment of North Korean missile 
components to Iran via Beijing airport in open defiance of 
those U.N. sanctions, which as a Perm-5 Member State, it is 
duly bound to enforce? Does a responsible stakeholder declare 
that the South China Sea is one of its core interests, in open 
defiance of the navigational and territorial rights of its 
Southeast Asian neighbors? Does a responsible stakeholder 
admonish the U.S. Navy that it cannot operate in the Yellow Sea 
in the very waters where General Douglas MacArthur undertook 
the heroic landing which turned the tide of the Korean War?
    Would a responsible stakeholder refer to the Nobel Peace 
Prize Committee as a ``bunch of clowns'' for awarding an honor 
to a distinguished Chinese human rights advocate? Would a 
responsible stakeholder arrest the wife of a Nobel Peace Prize 
winner as further retaliation for speaking the truth about the 
gross human rights violations in China?
    The United States took a big gamble when it voted for 
permanent normal trade relations for China over a decade ago in 
what some termed as the most important vote since World War II. 
The vote was based upon what I see as a sadly mistaken belief 
that economic openings and a free market reform would lead to 
democracy, respect for the rule of law, and a full array of 
political and human rights for the Chinese people.
    Yet today as we meet here, the Laogai Research Foundation 
estimates that there are close to 7 million people currently in 
Chinese labor camps. It is as if the entire population of 
Switzerland was being held behind barbed wire. Chinese 
authorities' ruthless campaign against Falun Gong 
practitioners, a peaceful organization which promotes truth, 
compassion, and tolerance, has continued unabated for more than 
11 years.
    I was proud to be the sponsor of a resolution in the last 
Congress which received overwhelming bipartisan support 
addressing the persecution of Falun Gong. The brutal denial of 
rights to the people of Tibet and the Uyghur people and the 
forced repatriation of North Korean refugees continue to draw 
the attention of concerned citizens throughout the world.
    And the American people have also borne the brunt of 
China's mercantile trade policies which promote trade surpluses 
through cheap exports based upon an artificial depreciation of 
China's currency. Jobs and American dollars have flown across 
the Pacific to China for the past two decades as the American 
people have suffered high unemployment and a diminished 
standard of living.
    Last fall I was pleased to be able to vote in favor of the 
Currency Reform for Fair Trade Act, which overwhelmingly passed 
the House 348 to 79. We are back with a new energy from our 
newly elected Members who are determined to take back America's 
economy and are committed to a foreign policy that stands with 
our allies and holds accountable those who threaten our 
Nation's security interests.
    And now I am pleased to turn to my distinguished ranking 
member for this committee Mr. Berman for his remarks.
    [The prepared statement of Chairman Ros-Lehtinen follows:]

    
    
    
    
    Mr. Berman. Well, thank you very much, Madam Chairwoman.
    And Chinese President Hu Jintao is in Washington this week 
for a state visit; and as we speak, he and President Obama are 
meeting at the White House. After an often tense year in U.S.-
China relations, the two leaders will try to set the contours 
of the relationship for the immediate future.
    The U.S.-China relationship, one of the most interconnected 
and complex in global affairs, has major implications for the 
future of Asia and the entire world. The challenge for the 
Obama administration is to manage that relationship in a way 
that strengthens our cooperation with Beijing in areas where we 
have shared interests, while at the same time addressing the 
serious concerns we have regarding a number of China's 
policies.
    China is neither an ally nor an enemy. It is both a 
competitor and a partner in foreign affairs, security, and 
economics. A key goal of our China policy must be to prioritize 
our myriad global interests, identify those issues where we are 
most likely to positively change China's position, and then 
find and use our leverage with the Chinese to achieve those 
changes and accomplish our wider foreign policy objectives.
    In my view, our highest priority with China should be Iran. 
Gaining China's acceptance last year for tougher United Nations 
sanctions on Iran was a significant diplomatic achievement for 
the Obama administration. But there is ample evidence that 
Chinese entities continue to invest in Iran's energy sector. 
This helps Tehran avoid the full impact of sanctions and 
facilitates Iran's continued development of nuclear weapons 
capability, which threatens the United States, our allies in 
the Middle East, and China, which is dependent on stable 
sources of oil from the Middle East. We must intensify our 
efforts to ensure China's full participation in the multi-
lateral sanctions regime against Iran.
    The United States and China must also strengthen our 
collaboration to denuclearize the Korean Peninsula. As North 
Korea's economic lifeline, Beijing holds considerable leverage 
over Pyongyang; yet it has been too slow to make it clear to 
the North Korean leadership that security and respect can be 
obtained only by giving up its nuclear weapons and refraining 
from other aggressive behavior.
    The promotion of human rights and political freedom is a 
central goal of American foreign policy. These universal values 
must remain a central focus of our relationship with China, 
whose record in this area remains deplorable. Moreover, those 
values are in China's self-interest. Both its international 
image and its economic growth are dependent on developing a 
society based on the rule of law.
    In the sphere of economics and trade, one area of 
particular concern is China's theft of intellectual property 
and its indigenous innovation policy. In addition to compliance 
with the recent WTO decision, China must do more to stop the 
piracy and counterfeiting that occurs openly on street corners 
and over the Internet and step up its enforcement efforts.
    The crossroads we currently face in the U.S.-China 
relations present less of a choice for the United States and 
more of a choice for China. The Obama administration has 
articulated a pragmatic policy toward China, and in several key 
areas the administration has had some modest success. There is 
no clear indication, however, that China has made a fundamental 
decision to alter its strategic goals of leveraging the 
international community to promote its own policies of economic 
growth, with heightened political control and military 
modernization, with regional and extra regional power 
projection, while at the same time insulating China as much as 
possible from outside influences. As much as the rest of the 
world looks to China to play a constructive role, it is not 
clear China wants to play a positive influence beyond its 
borders.
    I look forward very much to hearing the testimony from all 
of our witnesses today and I yield back.
    Chairman Ros-Lehtinen. Thank you very much, Mr. Berman.
    And now I would like to yield 3 minutes to the chairman-
designate of the Subcommittee on Asia and the Pacific, Mr. 
Manzullo.
    Mr. Manzullo. Thank you, Madam Chairwoman, for calling this 
important briefing concerning China's rise and its impact on 
the United States. I strongly believe that China's new 
assertiveness in foreign and economic relations is one of the 
greatest foreign policy challenges that we must face in this 
century. China's weight in the global economy cannot be 
ignored; that nation's rapid modernization represents both 
opportunity and peril for America.
    As chairman-designate of the Subcommittee on Asia and the 
Pacific, I am keenly aware of the challenges our Nation faces 
when it comes to dealing with China. As experience has shown, 
China's unfair trade practices, including currency 
manipulation, illegal subsidies, and lax enforcement of 
intellectual property law make it very difficult for the 
hardworking people of America to compete at a level playing 
field and benefit from this relationship.
    American manufacturers have been hurt most by this 
unbalanced relationship. Manufacturing is the lifeblood of the 
16th Congressional District of Illinois, which I represent. Our 
congressional district has somewhere between 1,400 and 2,500 
factories--no one is quite sure--supporting more than 51,000 
jobs. In fact, 24 percent of value-added manufacturing in our 
congressional district represents exports. It is one of the 
most dense areas in terms of manufacturing base and one of the 
most exporting congressional districts in the country. These 
hardworking men and women want to know what their government is 
doing to enforce our trade laws with China and preserve 
America's industrial base.
    I hope our distinguished witnesses will focus their remarks 
on what the administration is doing and what more it can do to 
urge the Chinese Government to follow the rules. Very little 
has been done in the past several years.
    My experience with the Chinese Government is that it is in 
fact capable of stopping the violators when they see it is in 
their interests to do so. With so many Americans out of work, 
now is the time for this administration to work with Congress 
to hold China responsible and give American manufacturers a 
chance to compete with China on a level playing field so our 
manufacturers can create jobs.
    Madam Chairwoman, I commend you for giving the American 
people a well-deserved voice when it comes to China. I look 
forward to the testimonies of our witnesses.
    Chairman Ros-Lehtinen. Thank you very much, Mr. Manzullo.
    We would be recognizing the ranking member-designate, Mr. 
Faleomavaega, but he is not present, so we will proceed with 
the testimony.
    We are pleased to have as our witnesses a wonderful panel. 
Thank you. We are pleased to welcome Mr. Larry Wortzel to 
today's briefing. Larry is a commissioner on the U.S.-China 
Economic and Security Review Commission, appointed by Speaker 
Boehner. Among his many qualifications, Mr. Wortzel served two 
tours of duty as a military attache at the American Embassy in 
China and retired from the Army with a rank of colonel. Thank 
you for briefing us today.
    Also with us is Gordon Chang, who is currently a columnist 
at Forbes.com. Mr. Chang practiced law in China and Hong Kong 
for nearly 20 years and has written extensively on China and 
North Korea. We are grateful to have him today, as he is a much 
sought after expert on the future of China's economy.
    Mr. Yang Jianli is the founder and president of Initiatives 
for China. In 2002 Mr. Yang was imprisoned in China. And 
following an outcry by Congress and others for his release, Mr. 
Yang was freed in April 2007. Immediately following his return 
to the United States, Mr. Yang formed Initiatives for China, a 
pro-democracy committee that is committed to peaceful 
transition to democracy in China.
    And lastly, Mr. Robert G. Sutter, who has been a visiting 
professor of Asian studies at the School of Foreign Services in 
Georgetown University since 2001. In addition to his full-time 
position, Mr. Sutter teaches regularly as an adjunct professor 
of Asian studies in the Elliott School of International 
Affairs, George Washington University. Mr. Sutter had an 
extensive government career--an extensive government career in 
Congressional Research Service and other U.S. Federal agencies 
that lasted 33 years.
    So we will begin with Mr. Wortzel. I am sorry that I am not 
so great with the pronunciations, but look at my name. I don't 
get too picky. So I will be rather ruthless with the 5 minutes, 
so please confine yourself to 5 minutes. Larry, you are 
recognized. Thank you.

   STATEMENT OF MR. LARRY WORTZEL, COMMISSIONER, U.S.-CHINA 
            ECONOMIC AND SECURITY REVIEW COMMISSION

    Mr. Wortzel. Chairwoman Ros-Lehtinen, Ranking Member 
Berman, members of the committee, thank you for the opportunity 
to brief you today. The views I present are my own and formed 
by my service in the U.S. Army, on the U.S.-China Economic and 
Security Review Commission, and my own research.
    In late 2004, Chinese Communist Party Chairman Hu Jintao 
set out a new set of missions for the People's Liberation Army, 
or PLA. These new historic missions provide the basis for 
China's future defense research and weapons acquisition plans. 
They also set the stage for a more assertive use of the armed 
forces inside and outside of Asia in pursuit of expanding 
national interests. The PLA's military modernization efforts 
provide the means for the armed forces to fulfill these new 
missions.
    China's military modernization efforts are comprehensive, 
affecting all of the domains of war, including space and cyber 
operations. In recent years, China has acquired advanced 
surface ships and submarines, modern combat aircraft, ballistic 
and cruise missiles, and advance command and control missions 
that tie everything together.
    In addition, as Admiral Willard, the PACOM commander, 
recently stated, China will field an antiship ballistic 
missile, a potential threat against U.S. aircraft carriers in 
the region. The PLA is still the fallback force of repression 
for the Communist Party against the populace.
    The combination of these new missions and the means to 
carry them out has brought about changes in China's military 
operations. Traditionally, the PLA focused on domestic response 
and local contingencies. Now it is a military with a wider 
range of missions and activities. The dispatch of Chinese naval 
vessels in support of antipiracy operations off Africa is one 
example.
    China's national interests are global and the PLA is 
becoming a force capable of acting beyond China's periphery. A 
more capable military accompanies a more assertive Chinese 
foreign policy. This can be seen in China's recent provocative 
activities concerning its disputed territorial claims in the 
South and East China Seas and in the exclusive economic zone.
    China's military capabilities also stoke Beijing's 
confidence. China's officials stridently complained about U.S. 
and allied operations in the Western Pacific. Beijing failed to 
condemn North Korean attacks on South Korea and strongly 
objected to joint military exercises in the region between the 
United States and South Korea.
    In military-to-military relations, Beijing continues to 
circumscribe the range of discussions between China and the 
United States, refusing to address strategic issues such as 
cyber warfare and space operations. I am pleased to see that 
Secretary Gates got to visit the 2nd Artillery Corps and there 
was some discussion of nuclear doctrine during his visit.
    Despite a noticeable improvement in relations across the 
Taiwan Strait, Beijing continues to insist on the right to use 
force should it interpret Taiwan's activities as moves toward 
independence. The cross-Strait military balance increasingly 
favors China, and Beijing has deployed over 1,100 short-range 
ballistic missiles opposite the island. In my view, Taiwan's 
most pressing need is for new or modernized fighter aircraft.
    China continues arms sales in support to international 
pariah states such as North Korea, Burma and Iran. In addition, 
the food and energy and foreign investment that China provides 
to North Korea indirectly enabled Pyongyang to continue its 
nuclear efforts. It showed its economic power by a stoppage of 
the supply of rare Earth minerals to Japan when it was unhappy 
with Japanese policy.
    Madam Chairwoman, members of the committee, thank you for 
the opportunity to address you today. I look forward to your 
questions.
    [The prepared statement of Mr. Wortzel follows:]

    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Chairman Ros-Lehtinen. Thank you so very much, and thank 
you for the time limit.
    Mr. Chang, we appreciate your time. Five minutes, please.

STATEMENT OF MR. GORDON CHANG, AUTHOR OF ``THE COMING COLLAPSE 
                OF CHINA,'' FORBES.COM COLUMNIST

    Mr. Chang. Chairwoman Ros-Lehtinen, Ranking Member Berman, 
distinguished members of the committee, thank you for the 
opportunity to be here today.
    The dominant narrative in the United States and elsewhere 
is that China has the upper hand when it comes to the United 
States, and that is why President Obama is hosting a state 
visit for an autocrat, Chinese President Hu Jintao.
    But does China really have the upper hand? I think that 
most Americans misperceive the economic relationship between 
the United States and China, and today I would like to comment 
on three of those misperceptions.
    First of all, everybody says that China is decreasing its 
dependence on the United States. Well, China has an economy 
that is geared to selling things to us. The Chinese economy is 
dependent on exports, and its export sector is especially 
reliant on sales to the United States. Last year, when all the 
statistics are in, I think that we are going to see that more 
than 140 percent of China's overall trade surplus related to 
sales to the United States. That is up from an already 
stupendous 90.1 percent in 2008. Now, China's trade dependence 
on us gives us enormous leverage, because China is not a free 
trader. China has accumulated its surpluses because of real 
clear violations of its obligations under the World Trade 
Organization.
    Second, everybody says that China's debt provides--our debt 
held in the hands of China--provides a weapon that the Chinese 
can use against us. Since August 2007, the Chinese have talked 
in public about using debt as a weapon, and of course they call 
it, appropriately, ``the nuclear option.'' Well, China hasn't 
used the nuclear option since it first started talking about 
it, and the reason is they know their attack plan won't work. 
Let's think about the worst possible scenario, that the Chinese 
drop all of our debt at one time. Well, we have got to look at 
the way the global markets operate. If the Chinese do that, 
they have got to buy something, which means they have got to 
buy things denominated in pounds, euros and yen. That would 
send those currencies soaring through the ceiling in their 
values, which means that London, Brussels, and Tokyo would have 
to go out into the global markets to rebalance their 
currencies; in other words, to bring their currencies back down 
in value. And the only way they can do that is is 
deg.to buy dollars. There would be turmoil in the global 
markets, but it wouldn't last very long, just a few weeks, 
maybe a calendar quarter at the most. And after this is all 
done, we would have our debt held by our friends rather than a 
potential enemy. I think the global markets are deep and they 
can handle just about everything, and although I don't think 
the United States should be accumulating debt, and certainly I 
don't want the Chinese to hold it, I also don't think it gives 
them a weapon.
    Third, you hear many commentators say that China's currency 
manipulation is not the sole cause of America's trade deficit. 
Well, of course that's right, because there are a number of 
reasons that relate to our trade deficit, but China's currency 
manipulation is an important reason. Due to Beijing's active 
manipulation of its currency--it intervenes in the markets 
every day--the discount value of the renminbi to the U.S. 
dollar is somewhere in the vicinity of 20 to 40 percent. Maybe 
30 percent would be a good estimate for today. A discount of 
that magnitude, of course, is significant.
    When I practiced law in Asia, many of my clients were U.S. 
manufacturers, and I would just watch my clients haggle for 
days over pennies on unit prices. That is how important price 
is.
    So it is counterintuitive to think that a discount of 30 to 
40 percent--and that is what we are talking about--would not 
have an effect on our trade deficit. But you don't have to take 
my word for it. Chinese Premier Wen Jiabao, the top economic 
officer in China, came to the United States last September and 
he said--he talked about the possibility of, 
quote, deg. ``countless Chinese enterprises going bankrupt and 
countless Chinese workers becoming unemployed if the renmimbi 
increased in value.'' Well, if that is what the currency does 
to China's manufacturers and their employees, then what do you 
think it does to ours?
    Nonetheless, many economists say, well, you know, you 
shouldn't do this, this currency bill, H.R. 2378, which passed 
the House. I think that we certainly need to do that. China 
won't change its destructive currency practices if we appeal to 
its self-interest, which is what the Bush administration and 
the Obama administration were doing. I think that we have to 
apply pressure.
    [The prepared statement of Mr. Chang follows:]

    
    
    
    
    
    
    
    

    Chairman Ros-Lehtinen. Thank you Mr. Chang. Thank you so 
much.
    Mr. Yang.

  STATEMENT OF YANG JIANLI, PH.D., PRESIDENT, INITIATIVES FOR 
                    CHINA AND HARVARD FELLOW

    Mr. Yang. Thank you, Your Excellency. Thank you for the 
opportunity for me to testify on a very fundamental matter in 
the relationship between the United States and China that must 
be addressed. It is the matter of how the Chinese Government 
treats its own citizens. China is the country with the most 
prisoners-of-conscience in the world, including a Nobel Peace 
Prize winner. Among thousands, if not tens of thousands of 
prisoners-of-conscience, is Dr. Liu Xiaobo who got the longest 
prison term, life imprisonment. His two children, Song Tung, 
and a daughter Tiana are here with us today.
    In addition to the official prison system, it is 
practically public knowledge that in China there exist hundreds 
of black jails established and run by local governments of 
various levels. These prisons take in numerous innocent 
petitioners arbitrarily.
    Going beyond this prison system, there are three new types 
of measures of control that the Chinese authorities have been 
increasingly using in the past 3 years.
    Number one, direct violence. The direct violence against 
dissidents, human rights activists, and petitioners has 
increased in recent years. The people who have been doing this 
are local policemen or rogues hired by the police. In some 
cases governmental officials are also involved.
    Number two, house arrest. In recent years, house arrest has 
become more and more widely used as a means for limiting 
dissidents and their families. Yuan Weijing and Liu Xia are two 
typical examples. As the wife of the blind human rights lawyer 
Chen Guangcheng, Yuan Weijing was placed under house arrest not 
long after her husband had been arrested. Ever since Chen 
Guangcheng was released after serving 4 years and 3 months in 
prison last September, the entire family has been put under 
house arrest. The Chens, the entire family, has been cut off 
from all contacts with the outside world. Those who tried to 
visit them were badly beaten. Liu Xia, Liu Xiaobo's wife, has 
been put under house arrest ever since last year, when her 
husband won the 2010 Nobel Peace Prize. And her communication 
with the outside world has been completely cut off since 
October 20th, last year.
    Number three, ``made disappearances.'' I also urge you to 
pay attention to the disappearance of Chinese citizens as the 
result of the government's unwarranted actions. The most 
notorious case is Gao Zhisheng. He has not been heard from ever 
since last April, after repeatedly being detained and severely 
tortured. And his wife is with us today here.
    Another important case is Mongolian scholar Hada who was 
arrested in December 1995 for peaceful activities demanding 
more autonomy for the Mongolian region. He was later sentenced 
to 15 years in jail. His prison term was set to end on December 
10th last year, but a few days before that the Chinese 
authorities detained his wife and their son. Hada was never 
seen getting out of prison. And to date, the entire family has 
not been heard from.
    Around the time of the Nobel Peace Ceremony, more than 100 
of Mr. Liu's friends, family members, and supporters, including 
Tiananmen mother Ding Zilin and her husband, were either put 
under house arrest or made missing.
    So coming back to the issue I raised at the outset, the 
question is why should China's treatment of its citizens be an 
important concern for U.S. foreign policy toward China? Pundits 
and laymen can give a slew of analysis on and answers to this 
question, and some people can even denounce this question as 
irrelevant. But I just want to echo Phelim Kine's question from 
his Wall Street Journal article last Monday: Will a rising 
power that fails to honor commitments to its own people act 
responsibly to fulfill its commitments to other nations and 
their peoples?
    [The prepared statement of Mr. Yang follows:]

    
    
    
    
    
    

    Chairman Ros-Lehtinen. Thank you. That is a good question. 
Thank you.
    Mr. Sutter.

 STATEMENT OF MR. ROBERT G. SUTTER, VISITING PROFESSOR, SCHOOL 
           OF FOREIGN SERVICE, GEORGETOWN UNIVERSITY

    Mr. Sutter. Thank you very much, Madam Chairwoman and 
members of the committee.
    The U.S. relationship with the People's Republic of China 
has been troubled throughout its twisted history. Important 
areas of converging interests between the two powers are 
usually accompanied by important areas of differences. The 
relationship has become very broad ranging, multifaceted and 
complicated, and it is the most important bilateral 
relationship in the world today.
    A pattern of seeking to advance common ground while 
managing differences prevailed throughout most of the George W. 
Bush administration. Like President Bush, President Obama 
showed a course with China involving pursuing constructive 
contacts, preserving and protecting American interests, and 
dealing effectively with challenges posed by rising Chinese 
influence and power. A strong theme in President Obama's 
initial foreign policy was to seek cooperation of other world 
powers, including China, to deal with salient international 
concerns. He worked very hard at this, but he found the Chinese 
leaders offered only limited cooperation on issues like climate 
change and others.
    More worrisome were the challenges that the Chinese 
administration posed for the Obama government, and this has 
been well documented by my colleague, Mr. Wortzel, particularly 
about the maritime areas about the periphery of China, but also 
a hard line on the President's arms sales to Taiwan, on his 
meeting with the Dalai Lama, and the U.S. interventions in the 
South China Sea and other issues.
    The Obama government reacted calmly and firmly to what 
Secretary of State Clinton called these tests or manifestations 
of new assertiveness by China. It gave no ground on any of the 
Chinese demands. It also found that Chinese assertiveness with 
the United States in neighboring countries over various issues 
damaged China's efforts to portray a benign image in Asia.
    These Asian governments became more active in working more 
closely with the United States and encouraging an active U.S. 
presence in the Asia Pacific. The overall effect was a decline 
in China's position in the Asia Pacific and a rise in the 
position of the United States.
    Meanwhile, the Obama government made clear to the Chinese 
Government and to the world that the United States is prepared 
to undertake military measures needed to deal with the buildup 
of Chinese forces targeting Americans and American interests in 
the Asia Pacific. It also helped to move China to curb North 
Korea's repeated provocation by warning privately as well as 
publicly that the United States viewed North Korea's nuclear 
weapons development as a direct threat to the United States.
    Over the past few months China has tried to ease 
differences with the United States in the period leading up to 
the current visit of President Hu Jintao. We have done a number 
of different things in calming the situation between the United 
States and China over these various areas of differences. 
Looking out, President Obama wants to pursue closer engagement 
with China as part of his administration's overall reengagement 
with the Asia Pacific. His administration also has made clear 
that it will not give in to Chinese assertiveness or pressure 
and, if needed, will respond to such Chinese actions with 
appropriate military diplomatic or other means.
    Given China's recent assertiveness, it may appear less 
certain that President Hu Jintao shares President Obama's 
interest in reengagement. On the other hand, China's recent 
assertiveness has proven much more costly than beneficial for 
China's broader interest.
    It is against this background it seems likely that 
prevailing circumstances will preserve and reinforce the 
positive equilibrium in U.S.-China relations for three general 
reasons. First, both administrations seek benefit from positive 
engagement in various areas. Second, both administrations see 
that the two powers have become so interdependent that 
emphasizing the negatives in their relationship will hurt the 
other side but also will hurt them. Third, both leaderships are 
preoccupied with a long list of urgent domestic and foreign 
priorities. In this situation one of the last things they would 
seek is a serious confrontation in relations with one another.
    Thank you for your attention. I look forward to responding 
to your questions.
    [The prepared statement of Mr. Sutter follows:]

    
    
    
    
    
    
    Chairman Ros-Lehtinen. Thank you so much to an excellent 
set of panelists. I will be recognizing members for 5 minutes 
of questions and answers in order of seniority, for those who 
were in their seats when the gavel fell, and in order of 
arrival for those who arrived after the briefing began. I would 
like to yield my 5 minutes for questions and answers to 
Congresswoman Buerkle of New York. The Congresswoman is 
recognized for 5 minutes.
    Ms. Buerkle. Thank you, Madam Chairwoman. I will direct my 
question to Colonel Wortzel, but if anyone else on the panel 
would like to comment, I would welcome the answer as well.
    First of all, thank you for your service. According to 
recent news reports, China facilitated the transshipment of 
missile parts from North Korean aircraft to Air Iran cargo 
flight at Beijing's airport. How involved are both the Chinese 
Government officials and Chinese companies in weapons 
procurement for Iran and in the development of Iran's nuclear 
and missile programs?
    Mr. Wortzel. Congresswoman Buerkle, they are pretty heavily 
involved. They accept those transshipments from North Korea 
through China. They facilitate them. Those things don't happen 
without the concurrence of central authorities in the provinces 
and from a national air control system. They have got their own 
customs people, so they are well aware of it and they could 
stop it. They have refused to participate in the Proliferation 
Security Initiative which would have the effect of at least 
helping to control North Korean proliferation. I mean, they 
simply have very different interests in Iran than we do. And I 
would argue that one of their interests is frustrating United 
States policy and creating a second potential military 
competitor that is at least a barb down in that part of the 
world. That limits what we can do. That means we have to be a 
lot more careful in how we act.
    They have sold--everything falls below the limits of the 
missile technology control regime, but they have sold short-
range missiles, they have sold cruise missiles, anti-aircraft 
missiles. So they are not doing a thing to reduce the potential 
level of violence and tension in that region.
    Ms. Buerkle. Thank you very much.
    Chairman Ros-Lehtinen. The gentlelady yields back. I would 
like to recognize the ranking member, Mr. Berman, for 5 
minutes.
    Mr. Berman. Well, thank you very much, Madam Chairwoman. 
And I would like to get Mr. Chang's response and also perhaps 
hear from Mr. Wortzel and Sutter on the very interesting thesis 
that Mr. Chang had, essentially looking at the issue of our 
debt obligations to China and our trade deficit as perhaps more 
our leverage than China's leverage, and to ask you to play that 
out a little longer.
    To what extent are you suggesting we use that leverage and 
whether it is in countervailing duties or in passing the kind 
of legislation that the House passed last year, and for what 
policy purposes should they be restricted to persuading and 
pushing China to live within the WTO ground rules, or should 
they be utilized to achieve broader geopolitical and military 
purposes? So that is one question. I will ask them all right 
now.
    And then the second question, 15, 20 years ago, there was a 
notion that in its heart of hearts, China liked American 
presence in the Western Pacific, that that was a lot better for 
them than Japan reconsidering its traditional military policy, 
thinking about its own nuclear weapons; more recently, what 
South Korea might decide to do. But in a way there was a 
beneficial effect. Is that just out the window now?
    Is the Chinese military modernization so strong now that 
they are not concerned about that, and they are truly seeking 
to have us reverse a position we have had since the end of 
World War II?
    And add to that, if either Robert Sutter or Larry Wortzel 
would do it, this notion that this weekend, that this isn't the 
visit of the most recent Emperor of China, that there is a 
People's Liberation Army out there that is starting to do their 
own things without necessarily under the direct direction of 
the leadership of the Communist Party. Is there anything to a 
couple of those stories that have emerged recently?
    And then finally, if we can get it--I don't know if there 
will be time--Mr. Yang, you were eloquent regarding the issue 
of political disappearances and the families and the abuse and 
what goes on inside China. But what you weren't able to get 
into is how do you think we--what role can we play in affecting 
and changing that? I do worry that there won't be time for that 
last one, but go ahead.
    Mr. Chang. First of all, I would like to thank the 
Congressman for being so polite in his characterization of my 
views. Most people think that I am wrong, and you were very 
nice in saying so, in saying what you just did.
    I think there are a couple of things that we need to do. 
First of all, we need a little bit less diplomacy. We are 
feeding China's self--a sense of self-importance. I think we 
don't need new agreements on economic matters, because everyone 
says when there is a problem with China let's go out and 
negotiate a new deal. We have tons of deals with the Chinese. 
All we need to do is enforce them; and we need to enforce them 
more vigorously, which means that we need to take cases to the 
WTO more quickly. And also because of the real problem that 
China does pose to American manufacturers, as I heard earlier, 
I think we need to do a little bit of self help, which is H.R. 
2378; in other words, imposing penalties at an early stage for 
Chinese subsidies. Of course, currency manipulation is one.
    Mr. Berman. Basically, you want to limit that to the 
economic issues--the currency valuation, the violation of trade 
rules, the subsidies--not to larger geopolitical issues? We 
only have 30 seconds. I would just like to get real quickly 
from Mr. Wortzel and Mr. Sutter.
    Mr. Wortzel. I think the PLA is not an independent actor. 
It is currently under the control of the Politburo Standing 
Committee of the Chinese Communist Party and the Central 
Military Commission. I think China is ambivalent about the U.S. 
presence. It is very happy that extended deterrents restrains 
Japan from becoming a nuclear power but wants a more forceful 
role in the Pacific. And I think Gordon is absolutely correct 
on U.S. treasuries.
    Chairman Ros-Lehtinen. Thank you. We will continue with Mr. 
Sutter at another time.
    Before yielding to Mr. Smith, I would like to recognize, as 
has been pointed out, the presence of Chinese human rights 
dissidents in the audience, representing a cross-section of 
oppressed groups inside China, including representatives of Liu 
Xiaobo, the Falun Gong, the Uyghurs, the wife of Mr. Gao, one 
of several Chinese political prisoners unjustly imprisoned by 
the Chinese regime.
    And now I am pleased to recognize Mr. Smith, the chairman-
designate of the Subcommittee on Africa, Global Health, and 
Human Rights for 5 minutes.
    Mr. Smith. Thank you very much, Madam Chairwoman. Besides 
being the jailer of Liu Xiaobo, the 2010 Nobel Peace Prize 
winner, we have to ask ourselves a very serious question: Who 
is Hu Jintao? Let us not forget that in 1989, just a few months 
before the massive Tiananmen Square, the massacre at Tiananmen 
Square, Hu Jintao was Beijing's iron fist in Tibet, the man who 
ordered the savage beating of Tibetan nuns and monks, even 
children--there are eyewitness accounts of children being 
pummeled to death--and the murder of hundreds of Tibetans.
    Hu Jintao presides over a gulag state, clearly a 
dictatorship. President Hu is directly responsible for the 
systematic detention and torture of millions of peaceful 
Chinese, Tibetans, and Uyghurs. Harry Wu, who is here with us, 
spent almost two decades in the Laogai. He knows what happens 
in those gulags--torture, cattle prods put under the armpits 
and at the genitals. President Hu Jintao presides over that 
sickness and that perversity.
    President Hu's secret police hunts down Christians, Uyghur 
Muslims, Falun Gong, and Tibetan Buddhists and beats them often 
to death, especially the Falun Gong who are massively being 
killed in China today. President Hu is responsible for the 
barbaric, and really the worst violation of women's rights, in 
my opinion, ever: The one-child-per-couple policy, which relies 
on forced abortion to achieve its goals.
    In President Hu's China, brothers and sisters are illegal. 
They are illegal. Anyone in the audience who has a sibling in 
China, you are only allowed one. As a direct result, the 
cumulative effect of this barbaric policy, there are 100 
million missing girls in China. Why haven't the feminists--most 
of them have been silent about this terrible gendercide 
directed against little girls.
    Let me ask Yang Jianli who has been an outspoken leader on 
behalf of Chinese human rights. It seems to me that when a man 
like Hu Jintao comes in, the press give him a free pass. There 
will be a press conference. I would ask the press to ask the 
hard questions, not just the generic questions about human 
rights. Ask specifics about what is happening in the Laogai, 
what is happening to Liu Xiaobo, what is happening to Gao, 
whose wife is with us today, missing, who has been repeatedly 
tortured, and the misuse--and the terrible burden they put on 
the children of the dissidents. Ask the tough questions of the 
press.
    And to President Obama and Secretary Clinton, please be 
very specific in your conversation with Hu Jintao. Just a 
glossing over of we talked about human rights, something on a 
list of talking points simply won't cut it. Be specific and 
press this man who I believe ought to be at The Hague being 
held to account for crimes, rather than being treated with a 
state dinner. So I would ask Mr. Yang Jianli, please.
    Mr. Yang. I agree, Congressman Smith, and I will answer 
Congressman Berman's question also--I think the U.S. Government 
should, at least what the U.S. Government can do and should do 
is to raise the specific occasions in various meetings with 
their counterparts.
    This upcoming--I mean this meeting, for example, if Obama 
really raised the cases like Liu Xia, Liu Xiaobo, it works. It 
worked with my case; it will continue to work with the other 
cases. And look at the practice of the U.S. Government in the 
past 2 years. The government believes that the private talking 
will work more effectively. But look at the record. The U.S. 
Government has not been successful in the past 2 years in 
helping get any of the prisoners out of the prison. So we have 
to do it, we have to apply pressure, raising specific cases, 
both privately and publicly. And that is the least the U.S. 
Government can do and should do.
    And another way to do it is to engage with Chinese 
democracy movements directly. Now we have recognized the 
leadership. Then we have a shared principle that is enshrined 
in China weight. As the democracy movement is viable in China, 
so engagement with China contains a part that is engaged with 
the people, with the China's democracy movement. Thank you.
    Mr. Smith. Thank you. And you emphasized the word 
``publicly,'' not just private conversations.
    Mr. Yang. Yes, also public.
    Mr. Smith. Conversations with President Obama must be very 
public.
    Chairman Ros-Lehtinen. Thank you. The gentleman's time is 
expired.
    I am pleased to recognize Mr. Payne, the ranking member-
designate of the Subcommittee on Africa, Global Health, and 
Human Rights for 5 minutes.
    Mr. Payne. Thank you very much for yielding, Ms. 
Chairperson. I would like to focus my line of questioning on 
China's economic interest in Africa and impact and implications 
of China's engagement with African nations for governance, 
economic growth, and human rights across the continent.
    The expansion of China's investment in Africa that we 
witness today began in the 1990s. In that decade alone, China's 
investment grew by an impressive 700 percent. Accompanying this 
economic expansion was the wave of Chinese migrants, some 
750,000 in 2007, who live in Africa now, mainly construction, 
mining workers, and oil workers and private traders, but not an 
expansion of the Africa middle class that would normally 
accompany infrastructure development.
    There has been complex and varied reactions among analysts 
regarding the implications of China's engagement in Africa. 
These range from enthusiasm and guarded optimism to concern 
over potential Chinese strategy and economic threats to Western 
or African interests.
    So I would like to get your thoughts on the overall scope 
of China's growing ties with Africa. What are the main 
political and economic goals? What are the main potential 
benefits and drawbacks for Africa of these ties? Also, in what 
way would you say China's relations with African governments 
have a negative impact on human rights in Africa? And what are 
the potential opportunities for U.S.-China cooperation on 
political humanitarian development priorities in China?
    They have had a meeting where 43 countries were invited to 
China; 42 showed up, heads of states in Africa. On the one 
hand, they have opened fire on workers who protested about poor 
working conditions in Zambia. Chinese soldiers just fired on 
them and wounded 11 or 12 of them. But on the other hand, they 
give 4,000 scholarships a year to African students, and that 
may be to indoctrinate them as to China. So maybe Mr. Wortzel 
or Mr. Sutter would like to take that.
    Mr. Sutter. Thank you very much, Congressman. This is a 
very complicated and important issue. Keep in mind that China--
I think the driving force of China's high profile in Africa is 
somewhat desperate in a way. They need resources. And so what 
you find is a highly competitive environment where companies of 
China are in Africa getting these resources. In a way, the 
government is sort of lagging behind these companies as they 
search and get these resources.
    The intensity of the Chinese economic development is such 
that for the Chinese to improve their GDP they have to use four 
times the level of resources that are used in the United States 
for the same amount of improvement. They need stuff. And so 
they are all over Africa trying to get the material that they 
really need to promote their economic development.
    At the same time, China is full of competitive companies 
that are looking to sell things, and the Chinese administration 
wants to have a balanced trade with Africa. And they have one 
because all these Chinese enterprises, very competitive with 
one another, are building things throughout Africa, selling 
things. And as you say, these migrants have gone to Africa to 
sell these sorts of things. It is a very understandable way to 
keep a balanced type of relationship that the Chinese seek with 
Africa.
    So if you understand it this way, you can see the driving 
force isn't really to control Africa; it is really to get the 
stuff and to make money at the same time. And there are several 
good books on this. Deborah Brautigam of American University 
has done an excellent book on this if you are interested in 
this topic. I am sure as you are interested. And so the upshot 
of Chinese behavior vis-a-vis the United States and so forth, 
it is secondary. They are out to get the material. And as a 
result there is collateral damage, if you will, there is a 
variety of things that aren't very good.
    Just a small point. I am not sure the PLA were the people 
that shot these people in Zambia; I think it may have been 
guards of some sort.
    Mr. Wortzel. Congressman, thank you for the question. I 
agree with Mr. Sutter. I do not believe there are PLA soldiers 
in Africa. I believe they are people out of the PLA working for 
government-controlled security companies. And we have done a 
lot of work on that in our committee.
    Mr. Payne. In Ethiopia in the Ogadan region they were 
soldiers that actually were killed by the OLF. They are in the 
Ogadan region.
    Mr. Wortzel. I think they were U.N. peacekeepers, United 
Nations peacekeepers, but I will look at that.
    Mr. Payne. All right. No, they were there protecting the 
oil reserves in Ethiopia.
    Mr. Wortzel. I will have to look at that. I may be 
incorrect. China is interested in the extraction of resources. 
They don't care about human rights in those countries, and they 
bring in their own labor and transfer no jobs whatsoever to the 
African citizens. And that is the major dissatisfaction in 
Africa.
    Chairman Ros-Lehtinen. The gentleman's time has expired. I 
recognize Mr. Rohrabacher, the chairman-designate of the 
Subcommittee on Oversight and Investigations, for 5 minutes.
    Mr. Rohrabacher. Thank you very much, Madam Chairwoman. And 
also I would like to thank you for having this hearing at this 
moment, because we have to understand that as we speak, our 
country is officially welcoming President Hu as if he had the 
same stature and acceptability here as a democratic leader. And 
we welcome him the same as we do countries that are democratic 
and respect their human rights. This is wrong. We should not be 
granting monstrous regimes that are engaged with massive human 
rights abuses. And, in this case, the world's worst human 
rights abuser is being welcomed to our White House, with 
respect. Now, what does that do to those people in China who 
are our only hope for a peaceful future with that large chunk 
of humanity? The people of China are America's greatest allies. 
The people of China who want democracy, the people of China who 
want to respect human rights, and are looking forward to a more 
humane system at peace with the world, those are our allies. 
What do we do to them when we welcome their oppressor, their 
murderer, the one who is murdering their children, here to the 
United States with such respect?
    And as we look to this visit with President Hu, if our 
government, if our President follows suit the way our former 
Presidents have as well--this isn't just President Obama--we 
are doing a great disservice not only to the people of China 
and to our future, the cause of peace, but we are doing a great 
disservice to the American people. Because what is happening? 
We have for three decades leaned over backwards for this 
regime. We have permitted the regime in China, a monstrously 
human rights abusing regime, to have trade benefits that we 
wouldn't give to democratic countries. We have built them with 
technological transfers, with investments. We have let them get 
away with murder, economically as well as human rights--in the 
area of human rights.
    Well, these are things we have got to call them to task for 
or our situation will continue to deteriorate. We are now 
vulnerable to a regime that was weak 30 or 40 years ago. We are 
vulnerable to them. If we do not change our way of dealing with 
that regime, they will destroy the peace of the world and we 
will be to blame for that, not only the repression of their own 
people.
    So I would like to ask Mr. Wortzel in particular, China 
now, not only does it have a more peaceful stand to the rest of 
the world, we see claims, slowly but surely, more land claims 
and sea claims coming out. China is making claims in the 
Pacific that threaten Korea, Japan, the Philippines, and 
commerce throughout that area. We see claims against India and 
Vietnam. And, frankly, let me just say, our Russian friends 
someday are going to wake up and find out that they have now 
become partners with a country that means them great harm and 
is willing to take away their territory. Do these Russian--do 
you see any major threat to the peace of the world in the 
expanding territorial claims of China?
    Mr. Wortzel. Mr. Rohrabacher, first of all, I think it is 
ironic that while China is brutally repressing the Falun Gong, 
the Chinese Government is flooding the United States with 
Confucius institutes, that are universities that are supposedly 
spreading this peaceful Chinese culture.
    With respect to their security claims, as they get stronger 
militarily, they are simply becoming more forceful in the 
region and they are expanding their claims. And that affects 
all the countries in Southeast Asia and all the countries on 
their periphery.
    For that reason, I think it was very important that both 
Secretary Clinton and Secretary Gates took pretty forceful 
stands on ensuring the peaceful resolution of these disputed 
claims in the South China Sea and East China Sea. And I think 
it is very important that our military works with and backs up 
Japan, even though we don't take a position on the disputed 
claims, because it is a threat to peace and stability.
    Mr. Rohrabacher. Let me just note that this government 
which we have bolstered with policies that we knew would make 
that country stronger under the idea if it was more prosperous 
it would be more peaceful, that strategy hasn't worked. And 
this country now is the head of an alliance of rogue nations 
that threaten the peace and freedom of the entire world.
    Chairman Ros-Lehtinen. The gentleman's time is expired.
    I would like to recognize Mr. Sires of New Jersey for 5 
minutes.
    Mr. Sires. Thank you, Madam Chair.
    You know, as I read the newspaper, some of the accounts, I 
am always fascinated by the statement that the Chinese simply 
have different interests in many parts of the world than we do. 
I think that that hides an awful lot.
    I do think that the Chinese have a hidden agenda. And their 
agenda, in my eyes, is more like world domination. Somehow they 
want to go back to 2,000 years ago, and I think they never lost 
that. But we seem to help them in their goals. They just fill 
the void wherever we are not.
    Take North Korea, for example. They do nothing. They do 
nothing, and they use North Korea to their benefit.
    The relationship with Iran. All they do is just boost Iran. 
And everywhere we seem to have a void they are there.
    I look at South America, and I see going in South America 
many of the businesses. I look at what they are doing in 
Africa, the way they are using Africa.
    I don't know. We just don't seem to get it. And I was just 
wondering, Dr. Yang, you have been a spokesman for human rights 
and the abuses that have gone on in China. Do you still fear 
for your life or your family's life back home?
    Mr. Yang. Yes.
    Mr. Sires. You still do, after all these years?
    And some of the members that are here today from some of 
the other groups, I assume that they also fear for their 
families as they speak up against this, you know, this monster 
that is developing before our eyes. I was just wondering if you 
could comment on that. Do you still get threats? Does your 
family still get threats back home?
    Mr. Yang. Yes. My family members in China need to report to 
the authorities on a regular basis.
    Mr. Sires. They have to report to the authorities on a 
regular basis?
    Mr. Yang. Yes, so that is why I minimize my correspondence 
with them, to minimize the trouble to them. And my case may not 
be the worst. I think many of my colleagues and their family 
members are being with us today. And I want to emphasize that 
China has the largest Communist system in the whole world, and 
it is still able to put anybody in prison, disappear anybody if 
it determines to do so. So this government is not responsive to 
its own people, and treats its own people harshly.
    So I am wondering this kind of a government will do any 
good in the rest of the world. So we have to keep asking this 
question once and once again. So when we come to the foreign 
policies toward China, we cannot forget this component. And I 
often hear many people in this country talking about Cold War 
mentality. So whenever we hear the word Cold War we will fear. 
So I don't understand. But I, my comment is, we just cannot 
simply explain away the component which can be described as 
Cold War in the relationship between U.S. and China.
    Look at the U.S. allies, friends with China, Japan, South 
Korea, Taiwan, these countries are democratic, and these two 
countries, U.S. and China, have fundamentally conflicting 
values which you just cannot explain away. It will not go away 
in the days to come. So there is a component that can be called 
Cold War. And the only difference is that U.S. and China has 
economic interdependence that the Cold War did not. The United 
States has no such close economic relationship with former 
Soviet Union and Eastern Europe. But that is the only different 
element.
    But I echo what Mr. Gordon Chang said. There is a myth in 
this country that China always has upper hand in economic 
relationship with U.S.
    Chairman Ros-Lehtinen. The gentleman's time has expired. 
Thank you.
    I recognize Mr. Manzullo, the chairman-designate of the 
Subcommittee on Asia and the Pacific.
    Mr. Manzullo. Thank you, Madam Chair. As I mentioned in my 
opening statement, manufacturing is the backbone of our economy 
in northern Illinois. This question is for Mr. Chang, but 
others on the panel are obviously welcome to answer. I spend 
much of my time working with numerous small and medium size 
manufacturers that have been harmed in one way or another in 
China. Most of the time the issue is theft of intellectual 
property and piracy, which is the case with a waste water 
treatment company in my district called Aqua Aerobics. We 
actively engaged the Chinese embassy and asked them to 
intervene and actually got a favorable ruling in the Chinese 
courts on that issue. But how many companies can pick up the 
phone or go to their Congressman to get a direct intervention 
on an obvious IP violation?
    Other times the problem is more complicated, such as the 
case of the office shredder maker Fellows. It is, I think, the 
number one paper shredder maker in this country. They are 
fighting a fierce battle in China on a joint venture where they 
were locked out, inventory stolen, machine tools, business 
practices and IP. And if you are big you can succeed. But the 
small guys or the medium sized manufacturers are having an 
extraordinarily difficult time. And so how do we encourage the 
national provincial and local governments of China to enforce 
the law? And beyond the rhetoric and grand themes there has to 
be a better way of dealing with China.
    I guess that is an easy question.
    Mr. Chang. Right. And I think the important thing that we 
have to do is start, as I said, less diplomacy in a way. But I 
also think that we need to follow the approach of H.R. 2378, 
which is really to impose penalties whenever we see that there 
are violations of China's trade obligations because this gives 
us immediate relief. You talk about the problems of small 
manufacturers. They can't wait for the 3 or 4 years that it 
takes to get through the dispute resolution mechanism of the 
World Trade Organization. That is just not a practical remedy 
for them. And that is why I think that we need legislation, 
which is really tough, because when we do that the Chinese will 
understand. They have reacted to pressure, and this is really 
about the only way I think that we can do it in terms of saving 
small manufacturers because their plight is not only important, 
it is also urgent.
    Mr. Manzullo. And sometimes it is like Whack-a-Mole. You go 
in there, I have testified twice before the ITC on tires, 
recreational vehicle tires and automobile tires, and once was 
on the surge and the other two were on dumping and illegal 
subsidies. And you get the remedies, and then they come right 
back again and all of a sudden someone is doing the same thing 
under a different name. It is over and over and over and over 
and again, and these companies spend fortunes on attorney's 
fees trying to protect their intellectual property.
    Isn't there, can't there be a mechanism that our government 
can have, for lack of a better word, an 800 number for people 
who are the objects of piracy that simply can't afford 
attorneys to go in there and do battle for them?
    Mr. Chang. Well, we certainly could do that in many ways. 
That would basically involve beefing up the commercial sections 
of our embassy in Beijing and in the consulates around China, 
but also in the Department of Commerce. It just needs to be put 
at a higher priority that we have.
    Normally, what happens in trade disputes, as you point out, 
is you have this enormous litigation, and the United States 
really relies on injured parties to bring their case and to 
prosecute it. I think that your suggestion is an excellent one, 
which is really to have the government be much more proactive 
and to bring all sorts of proceedings, both internally in the 
United States and through the WTO because that is about the 
only way we can do it. We need to speed up the process because 
time, I think, is critical.
    Mr. Manzullo. I would look forward to meeting you in my 
office and putting our heads together and try to come up with 
some type of remedy there.
    Mr. Chang. I will be there.
    Mr. Manzullo. Thank you very much. I yield back my time.
    Chairman Ros-Lehtinen. Thank you very much, Mr. Manzullo.
    We are proud to recognize Mr. Cicilline of Rhode Island. 
Welcome to our committee, sir.
    Mr. Cicilline. Thank you, Madam Chairman. I appreciate the 
opportunity to ask some questions. My questions also relate to 
the impact of our relationship with China on American 
manufacturing. And I know that, I think it has been pretty 
clear to most of us that the Chinese have really woefully been 
weak in addressing the theft of intellectual property, and it 
is presenting real problems for American businesses, and so I 
would like to hear your thoughts on what actions we might take 
to really protect American businesses from this theft of 
intellectual property, the seizing of assets in joint ventures, 
and the refusal to meet contractual obligations. And related to 
that, I am particularly interested in your thoughts on what 
mechanisms we have, in particular on the opportunity that 
exists for the production and development of renewable energy. 
I know there was a recent complaint filed at the WTO against 
the Chinese subsidy policy which the administration contends 
favored Chinese producers of wind equipment and that there have 
been examples where those kinds of conflicts have been resolved 
at the U.S.-China Joint Commission on Commerce and Trade.
    So in answering that, I am wondering whether you think 
those are an effective place for resolution, if there are 
changes we need to make that really will help American 
manufacturers be sure that we are enforcing in every way 
policies that protect the American manufacturers and the jobs 
connected to those manufacturers.
    Mr. Chang. We really have two problems. One of them is 
China's internal rules such as the new indigenous innovation 
product accreditation rules that President Hu Jintao has been 
pushing. Those would basically force a transfer of American 
intellectual property to joint venture companies for anyone who 
wants to sell to government or state enterprises. And that is 
really an issue for the United States itself in its discussions 
with China. The Obama administration has put this up at a 
higher priority because it is so important. And I think that it 
is just a question of these needing to be discussed all the 
time.
    The other point which as you raised, which is just the 
outright theft, this is extremely difficult because you can't 
litigate in the Chinese courts because the courts are 
controlled by the party and often controlled by local interests 
that have been, really, the culprits. And so the only way the 
United States can deal with this issue really is to have the 
commercial section in the embassy and in the various consulates 
make it known to both national and provincial authorities that 
this is a case which is of importance to the United States 
which oftentimes is sending the Ambassador or the Consul 
General to a court case to show the presence of Washington and 
its importance to us. But this is extremely very difficult.
    Mr. Cicilline. Mr. Sutter, do you have anything to add?
    Mr. Sutter. I would agree. I think you need to keep the 
pressure on. It has to cost the Chinese. I think you are 
advocating an approach, you are pushing on an opening door with 
the Obama administration, it seems to me. Listening to the 
Secretary of Commerce and the USTR, they very much want to do 
this kind of thing. Maybe they need more people. Maybe they 
need some funding from the Congress to help in this regard. But 
I think there is a broad sentiment in the Obama government that 
this should be done, that you have just what Mr. Chang was 
saying. You need case-by-case, you need to work these issues, 
you need to pressure in a way that is credible. And I think 
that high level attention to it with officials is a way to go. 
And I think that is going to, as I say, it is going to win some 
support, I think, from the USTR and the Commerce Department.
    Mr. Cicilline. Thank you very much. I yield back the 
balance of my time.
    Chairman Ros-Lehtinen. Mr. Cicilline yields back. Thank you 
for that.
    I recognize Mr. Rivera of Florida for 5 minutes.
    Mr. Rivera. Thank you very much, Madam Chairman. I am going 
to ask about two island nations, Cuba and Taiwan, one, an 
island prison and the other a bastion of democracy surrounded 
by a fortress of tyranny. And we will start with Cuba.
    Given China's involvement in Cuba, and this question 
specifically we will start off with Dr. Wortzel. Given China's 
involvement in Cuba, I wonder if you could give us your 
thoughts as to China's geopolitical intentions in Cuba, perhaps 
as establishing another beachhead in Latin America, generally, 
and specifically, what you believe China is up to with regard 
to oil drilling, given information that has been published 
regarding the company involved with oil drilling also having a 
nexus with Iran. So generally speaking, China's geopolitical 
interest in Cuba, and specifically with regard to oil drilling.
    Mr. Wortzel. Thanks for the question. First of all, China 
has taken over, as I understand it, the entire signals 
intercept complex that the Soviet Union had in Cuba. So there 
is, without question, a military and an intelligence purpose 
for their relationship. I think part of it is also support for 
another socialist state, and I think you can link Chinese 
activities with Venezuela and support there, their support in 
Cuba and for Cuba.
    With respect to resources, I think they would be very happy 
to extract resources any way they could get it. But if you look 
at the visits of Chinese military leaders and political 
leaders, I always ask myself why the head of China's strategic 
rocket forces, the Second Artillery, is visiting Cuba? We are 
not going to be in another Cuban missile crisis, but there is 
certainly something to a military relationship going on there, 
and the same goes with Venezuela.
    In some cases their relationships in Central America and 
Latin America are related to diplomatic relations with Taiwan, 
and they have managed to wean a couple of countries away from 
recognition of Taiwan and toward recognition to China. And that 
is part of it. I think it is fair to say, and I sum it up, that 
they sure don't recognize the Monroe doctrine.
    Mr. Rivera. Thank you very much. With respect to Taiwan, 
and I will direct this question to Mr. Chang, and the issue of 
the F-16s and this administration's decision or decisions, 
previous decisions on prolonging shipment of F-16s to Taiwan 
and what you believe is your perspective on how this affects 
the Taiwan Relations Act and fulfillment of the Taiwan's 
Relations Act.
    Mr. Chang. I would love to talk about this topic, but I am 
sitting next to the world's expert, and so perhaps----
    Mr. Rivera. I yield to Mr. Wortzel. Thank you.
    Mr. Wortzel. Taiwan's Air Force really needs modernized 
aircraft. The debate is F-16 CD, which has longer range and 
could be used for deeper strikes inside China if their military 
chose to do that, versus modernizing the AB. When I talk to 
aviation engineers, they think you could take the AB, put in 
brand new avionics, new radar and targeting equipment, it needs 
new refrigeration to be able to handle that, and that they 
would then have a very, very capable aircraft. It is not one 
that would necessarily satisfy the Taiwan legislature. And 
there would still be a fight over the programming for the 
weapons systems and the avionics. They are going to want 
program codes. We are not going to transfer them. We never do. 
So they need it. If you have made the decision, I don't think 
there is any guarantee that they would accept the way we make 
it. And then there is the political cost of approving a brand 
new system that China would object to. They are going to object 
no matter what we do, but they need the aircraft and I think 
they have to have that need addressed.
    Mr. Rivera. Thank you. Thank you, Madam Chair.
    Chairman Ros-Lehtinen. Thank you, Mr. Rivera.
    I am pleased to recognize Mr. Connolly of Virginia. Welcome 
back, my friend.
    Mr. Connolly. Thank you very much, Madam Chair. And thank 
you for your service. I want to thank the panel. And 
particularly Bob Sutter. Bob, we used to work together when I 
was on the Senate Foreign Relations Committee and you were at 
CRS, as I recall, so great to see you on the other side of the 
table. Let me ask you, Bob, understanding serious, serious 
human rights issues in China, and lots of other issues that we 
are concerned about that have been enumerated here at this 
dais: In your view, given the fact that since Richard Nixon we 
have had a level of relations with the head of state of that 
country notwithstanding, is it a mistake for this 
administration to receive the President of China?
    Mr. Sutter. Thank you, Congressman. It is great to be here. 
I think what you find is that we have a very complicated and 
interdependent type of relationship. We have so many 
priorities, we have to balance them. And as you have indicated, 
every President that we have had since Nixon has done this. And 
so people can object in various ways and have very good reasons 
for this, but obviously Republican and Democratic Presidents, 
they prioritize these things and they determine no, this is the 
best way to go.
    We may be at a crossroads now. We may have to change the 
situation. China may be trying to dominate the world and this 
type of thing. I don't think so. I think China has got too many 
problems. I think the United States is the leading power in the 
world, and that is going to stay that way for some time. And so 
it gives me a lot of confidence in this situation.
    But I think the bottom line is, you have to figure out 
where do you come down on these priorities and I think it is, 
and as you have indicated, every President of the United States 
has endorsed this kind of approach.
    Mr. Connolly. Thank you. Mr. Wortzel, you were talking a 
little earlier about Taiwan's defense capability, and you said 
they are in bad need of an upgrade of their fighter aircraft. 
Is there any reason to believe that the government in Taiwan is 
not capable of defending itself in the event of a military 
incursion?
    Mr. Wortzel. I don't think that that is the issue. I think 
that the issue is how capable would they be of doing it and 
what form might any attack take. They would have a hard time 
defending against all those 1,100 ballistic missiles which 
could do a lot of damage. I think they would be very hard 
pressed if there were massive special operations insertions 
into Taiwan to disrupt infrastructure. They themselves could do 
more to harden some of their air fields and their storage 
facilities. I think they have been woefully deficient in the 
way they dribbled in the command and control and data links for 
their current forces. I mean, if I--and I said this to their 
Minister of Defense. If there is one thing you could do to 
immediately improve your capabilities, it is take the whole 
data link and C-4 ISR package and link all your ground and 
naval and air assets and missiles so they could take part in 
cooperative targeted engagements.
    But they are doing things, and they have bought a lot, not 
everything that we offered. They are also developing their own 
modable launch rocket systems. They could probably use 
assistance with precision guided rounds.
    Mr. Connolly. Let me ask you another part of that, given 
the limitation of time. We have 1 minute. Is there--one of the 
things that always concerns somebody about the Taiwan Straits 
is that there is a misunderstanding about the nature of the 
United States' commitment to the security of Taiwan.
    In your view, does the current government of China fully 
understand the nature of the U.S. commitment to Taiwan?
    Mr. Wortzel. I think the government of China does. I think 
at times some of the political actors in Taiwan misinterpret 
our support as--I mean, I had a legislator from Taiwan say, you 
know, we are glad to get this $16 billion arms package. As far 
as we are concerned it is a $16 billion insurance policy that 
you will come to our defense. They have to be ready to defend 
themselves.
    Mr. Connolly. That is right. Mr. Chang, we have 20 seconds, 
but you wanted to answer that, too.
    Mr. Chang. I think that with the remilitarization of 
Chinese politics and policy, there is a danger that Beijing 
does not understand our commitment and thinks that we will not 
defend Taiwan.
    Mr. Connolly. Thank you.
    Chairman Ros-Lehtinen. Thank you so much, Mr. Connolly.
    I would like to recognize Congresswoman Ellmers of North 
Carolina; so pleased that you selected our committee. Welcome.
    Mrs. Ellmers. Thank you, Madam Chairman. I would like to 
thank our distinguished panel, and I would also like to reach 
out to the individuals and family members who have suffered 
human rights violations in China. You are a constant reminder 
to us that we need to be vigilant around the world to human 
rights violations and how fortunate we are here in the United 
States.
    My question is for Dr. Wortzel, do you prefer to be 
referred to as Colonel? Doctor?
    Mr. Wortzel. It doesn't matter, ma'am. Either are very 
polite. I have been called a lot of other things.
    Mrs. Ellmers. Along the security issues that we have been 
discussing, last September a Chinese fishing boat, thought to 
be a spy vessel, deliberately collided with some Japanese Coast 
Guard vessels in the vicinity of the Senkaku Islands. Tensions 
rose to an unprecedented level before the Chinese boat captain 
was released. How close did the two sides come to military 
conflict? And in your opinion, what are the implications for 
the United States, given our treaty obligations with Japan?
    Mr. Wortzel. I don't think in that instance they came close 
to military conflict, but it was a very serious diplomatic 
spat, and it still continues to reverberate among the populace 
in both countries. But I think these things can escalate and 
could escalate if there are other incidents.
    We have a treaty obligation with Japan. It is a very, very 
important ally. And without question, if Japan got into a 
conflict, a military conflict with China, we would be at their 
side. I think that the Pacific Commander and the Secretary of 
State have taken very strong and principled positions not 
recognizing the sovereignty of the island, of the islands, but 
at the same time, ensuring that the Chinese understand that the 
United States is fully supportive of its treaty ally, and I 
think the Japanese understand that. We need to be very close to 
them. We need to work very closely with them. And even under 
the Democratic Party in Japan I know the Foreign Minister well, 
they have got a strong leadership that understands the threats 
from China.
    Mr. Sutter. If I could say something about this, it is part 
of a pattern we have seen over the last 2 years of China being 
very assertive about the maritime area around their periphery, 
South China Sea, Yellow Sea, this type of thing. The net effect 
of this has really damaged China's position in the Asia Pacific 
region. China is weaker today than it was a year ago because of 
this behavior. The United States is much stronger and the Obama 
government has this re-engagement of Asia strategy which this 
just feeds into. And so what you are doing is reinforcing 
America's stature and strength in Asia while weakening China.
    If I were a calculating person in China I would say this is 
really dumb policy. We have to stop doing this type of thing. 
And so the thing to watch, after Mr. Hu Jintao's visit is will 
they stop. Will they stop doing this kind of thing? Because it 
really is dumb. It is hurting them. And I think this is how you 
get the attention of the Chinese leaders. It costs them. You 
make it hurt them and then they stop. And I think the Obama 
government has done a very good job, very quietly, of 
intervening in various ways and saying, we are not going to 
allow this; this isn't going to happen. And I think it has been 
quite effective. And so let's watch. Let's see what happens.
    If we have a situation where the military is out of control 
in China, if it is being remilitarized, as Mr. Chang suggested, 
then it could be a more dangerous situation. But at this point 
I would have to agree with Mr. Wortzel. I think the civilian 
leaders do have ultimate control and when they look at their 
cost and benefits this kind of behavior hurts them, and so I 
think they have to calm it down.
    Mrs. Ellmers. Thank you very much. And thank you, Madam 
Speaker. I yield back the remainder of my time.
    Chairman Ros-Lehtinen. Thank you so much. The gentlelady 
yields back.
    I am pleased to recognize Mr. Ackerman, the ranking member-
designate on the Subcommittee on Middle East and South Asia.
    Mr. Ackerman. Thank you, Madam Chair. The Chinese have 
always been bad actors. They were the national focus of 
attention for being almost exclusively the world's number one 
recluse until Richard Nixon, as was pointed out, came along and 
decided to have an intervention, and decided it was a better 
policy to try to engage the Chinese rather than to continue 
with China bashing, which to some seemed counterproductive to 
reaching a particular policy and behavior change end. Now we 
have noticed that there is a small club of recluse nations, and 
the Chinese and the North Koreans have found each other, and 
have formed Recluse Anonymous, with China being the recovering 
recluse, trying sometimes very unsuccessfully to affect the 
behavior of the North Koreans. Both seem to be engaging in very 
provocative activities on and off, especially of late.
    Can the Chinese really affect the behavior of the North 
Koreans? They seem to be looking like they are trying, 
sometimes looking like they are not. Is that something that 
they dial up, dial down, depending on China's needs, kind of a 
control? Or do they lack any influence in the end?
    Mr. Wortzel. I don't think it is a can they. The question 
is will they?, Congressman Ackerman.
    Mr. Ackerman. You are saying they can?
    Mr. Wortzel. Well, they provide somewhere between 70 and 90 
percent of North Korea's energy needs, somewhere around 40, 50 
percent of their fuel needs, and a great deal of foreign 
investment. So, yes, they can. They fear that if they cut some 
of that, it would lead to instability in North Korea, and they 
would end up with South Korea, Japan, and the United States on 
their border. That is one thing.
    Second, my view is that they absolutely enjoy the fact that 
the United States is pretty heavily dependent on them, at least 
perceptually, to interact with North Korea, and that certainly 
restrains, in my view, a lot of the State Department's 
diplomacy against China--or toward China.
    Mr. Sutter. I think China could help with North Korea, too, 
and I think their interest is very much on stability. That is 
what they want. And they worry that pressure on North Korea not 
only could lead to the effects that Mr. Wortzel pointed out, 
but North Korea, you could see them as an enemy. The North 
Koreans talk like this quite often, how hostile their feeling 
is toward China. And so--but the net effect is what will the 
Chinese do? I would think they will seat their interest in 
stability. If the situation in North Korea looks like it is 
going to become very unstable then they will intervene. And I 
think they did intervene in the case of the North Korean 
provocation at the artillery barrage that killed several South 
Koreans later, in the latter part of last year. And the United 
States has maintained to the North Koreans that North Korea's 
provocations, and particularly its development of nuclear 
weapons, is a direct threat to the United States.
    So the United States put I think very good pressure on the 
Chinese to get them off the dime to move the North Koreans into 
their tactical----
    Mr. Ackerman. You are saying that the Chinese have an 
actual 12-step plan?
    Mr. Sutter. No, they don't have a 12-step. I think this the 
idea of China rising and being in control. They are not in 
control. They are riding the tiger on this one. They don't 
control North Korea. They have a lot of influence over it, but 
this is----
    Mr. Ackerman. The same can be said with their very 
different but also dangerous relationship with Iran.
    Mr. Sutter. Iran is much further away and their influence 
in Iran is much lower than it is in a place like North Korea. 
They are fundamental in North Korea. It is right on their 
border, it is very----
    Mr. Ackerman. But they are dealing with a nuclear power and 
a nuclear wannabe. And the Chinese are usually pretty 
farsighted. Don't they see this as a threat, not just to us, 
but to themselves?
    Mr. Sutter. They see the more near term threat more 
dangerous. The danger of instability, not so much the 
geopolitical. It is the geopolitical element of South Korea 
being on the border of China. It is the basic whole idea of 
instability.
    Mr. Ackerman. You are talking about the economic 
instability?
    Mr. Sutter. Exactly. It is bad for business.
    Mr. Ackerman. And they are threatened more by that than the 
nuclear instability?
    Mr. Sutter. I believe they are, yes, sir.
    Mr. Ackerman. I yield back the remaining 4 seconds.
    Chairman Ros-Lehtinen. Thank you very much, Mr. Ackerman.
    I recognize Mr. Burton, chairman-designate of the 
Subcommittee on Europe and Eurasia.
    Mr. Burton. Thank you, Madam Chair, for having this 
hearing. I am going to ask, after I ask a couple of questions, 
I am going to yield my time to my good friend, Mr. Smith. First 
of all, you may have answered this question, Mr. Yang, but is 
there any, do you have any idea how many people, how many 
million people are in Communist gulags?
    Mr. Yang. It is really difficult to get a number, for the 
obvious reason. And I am talking about a prison system. I have 
to talk to two prison systems. One is official. Through the 
court, you can get a record of how many people they detained. 
But there is another prison system that is black jail. There 
are hundreds of them in China now run by local government on 
various levels. So you just cannot find out how many people are 
being detained. And on top of that, many people are made 
missing, and many people are being put under house arrest. So 
you just don't know how many people.
    Mr. Burton. Well, we have been told it is in the millions. 
And I presume that you would agree with that.
    Mr. Yang. I don't have a specific number, and I would say 
many. I would say China has the most prisoners of conscience in 
the world. Yeah.
    Mr. Burton. One of the things that I gathered from 
listening to these learned people is that I believe China is 
not dumb. I believe they are very smart. They are leaders and I 
think that they are playing chess and they are doing it over a 
long period of time. They are moving as they can into the 
Caribbean and into South America. They are making friends and 
supporting tyrants who are not socialists, but many of them are 
just plain out Communists. And they are putting us in a trick 
bag because of the economic things that they are doing to us. 
Right now we have a $270 billion trade deficit with them. I 
think we are well over $1 trillion in hock to them as far as 
what we owe them. And if they started pulling those strings, 
which I think they probably will at some point, they can make 
us, at least to some degree, dance to their tune.
    And so I would like to get from you gentlemen your 
perception on the long term goals of China and whether or not 
they are doing what I think they are doing, both economically 
and militarily. They are building their military up 
dramatically, and so they have got us by the throat as far as 
our debt to them. And that would threaten our economy long 
term. And if they are building up their military and making 
these connections around the world, does that pose as a real 
long-term threat to the United States and our security? And I 
yield to Mr. Chang and Mr. Wortzel.
    Mr. Wortzel. Let me say that, in my view, there is a long-
term historical and cultural----
    Mr. Burton. Can you sum up pretty quickly?
    Mr. Wortzel. Yes, long-term cultural affinity for the 
accrual of power and dominance in China, and that creates the 
sense of suzerainty where Chinese leaders believe they can 
almost dictate to other independent states how they should 
behave. And that is the way I read a lot of their behavior, 
particularly around their periphery.
    Mr. Chang. I believe that they want to be a peer competitor 
to the United States. They want to drive the United States out 
of Asia, which I think is very clear. They would like the 
renmimbi, their currency, to be the world's reserve currency. 
And certainly, they want to dominate nations on their 
periphery.
    This is clear from what the Chinese have been doing. And as 
we have seen in this past year, it has been very concerned 
about their relations with Japan, South Korea, India, where we 
see military or semi-military moves against these countries, 
which are after all our allies. So clearly, China is an 
adversary, and one that we have to be very careful about 
because, yes, I do think that they do play chess. But the one 
thing though is that they often make very serious strategic 
errors. They are very good on tactics, but long-term strategic 
moves may be not so good, as we saw in this past year, and as 
Dr. Sutter talked about.
    Mr. Burton. Thank you. I yield to Mr. Smith.
    Chairman Ros-Lehtinen. Mr. Smith is recognized.
    Mr. Smith. Thank you very much. Let me just make a point. 
My friend and colleague, Mr. Connolly, a moment ago asked the 
question about receiving, you know, a Chinese President like Hu 
Jintao. It is not that you don't meet with or receive, it is 
how you do it. And the concern that many of us have is that a 
state dinner, when Bush had a working lunch in 2006, it sends a 
message, especially when he is the jailer of Liu Xiaobo.
    Chairman Ros-Lehtinen. Thank you, Mr. Smith. Thank you.
    We welcome Congresswoman Bass of California to our 
committee. Thank you. And I am pleased to recognize Mr. Chabot 
of Ohio. We are so pleased to have you return to serve with us. 
Thank you. The gentleman is recognized.
    Mr. Chabot. Thank you very much, Madam Chair. Mr. Wortzel, 
I have a couple of questions for you first. I was, for quite a 
few years, one of the cochairmen of the Congressional Taiwan 
Caucus and so have been very interested in those issues and 
been there many times over the years. And relative to their 
defense, you had mentioned the fighter planes, in particular. 
Could you discuss, at the time there was a move for some 
submarines as well, and that ultimately didn't go anywhere. I 
see you frowning. What are your thoughts about that?
    Mr. Wortzel. It is a very difficult problem. It is a 
problem for the United States Navy because they really don't 
want to have to work on or produce diesel submarines.
    Mr. Chabot. They were talking about doing it in France or 
Europe or someplace.
    Mr. Wortzel. The French got away with bribing enough 
Chinese and Taiwanese to get some destroyers there. Everybody 
involved in that had an accident falling off a tall building. I 
don't think that will work a second time. They need this 
submarine. I mean, if the United States could get Costa Rica to 
buy a dozen submarines from Germany and then transfer them it 
doesn't hurt anybody, if the Germans look the other way on the 
retransfer license. If we brought them and retransfer, they 
need them. But I don't think it is viable to think that they 
are going to begin to produce them from nothing and then fill 
out the rest of their defense budget.
    Mr. Chabot. Okay. And relative to the missiles, I think 
when we first organized the caucus, and this has been 12, 14 
years ago or so, I think the number then was 400 or 500 
missiles, then it went to 600 or 700, kept going up now to 
1,100. I mean, clearly China has been threatening Taiwan for 
many, many years now, and bullying to a considerable degree. 
Relative to the missiles, is there anti-missile technology that 
would be helpful? There was talk about that at the time. You 
mentioned some missile system. Could you elaborate on that 
slightly?
    Mr. Wortzel. Well, we have sold them ballistic missile 
defense technology. They bought a limited amount. It will help 
them. It could protect specific areas. That is still an awful 
lot of missiles. My personal view, and this is really a United 
States defense need, we need to be working on a laser. We don't 
want to be shooting two or three missiles at another missile. 
We need to melt them right out of the sky quickly.
    Mr. Chabot. Okay. And then slightly off topic, but not 
really that much, again, continuing in the Taiwan vein, 
President Chen Shui-bian has been in prison now for some time. 
And you know certainly he has been punished for his alleged 
transgression. Isn't enough enough? Isn't it about time--I 
mean, have they reached the point where you have perhaps the 
criminalization of politics here?
    Mr. Chang, I see you nodding. If you want to jump in you 
are welcome to do so.
    Mr. Chang. I think the real issue with former President 
Chen is the procedures under which he was convicted, and at 
this point there needs to be a thorough review of the way that 
the current government, the Kuomintang government, has been 
prosecuting and persecuting members of the Democratic 
Progressive Party. This is really a very bad story. The United 
States needs to pay attention. Freedom House has talked a lot 
about the erosion of human rights in Taiwan and it is going to 
be a big story in Taiwan for the next 2 or 3 years.
    Mr. Chabot. Okay. Thank you.
    Mr. Sutter. Congressman, if I could just say something 
about Chen Shui-bian and your comments about Taiwan. One thing 
about the--first, on the Chen Shui-bian side, yes, there have 
been problems perhaps with the due process. But, my God, the 
charges against him that have been proven are very damning. So 
the fact that he is in jail it seems to make a lot of sense to 
someone like me.
    Mr. Chabot. How long has he been in prison now?
    Mr. Sutter. 2 years maybe, a little less than 2 years.
    Mr. Chabot. Family members in prison as well, son, I think 
wife.
    Mr. Sutter. Yes. His wife. I am not sure where she is right 
now but she has been convicted. So this is big corruption, sir. 
And so I think the charges are worth looking at carefully. On 
the military side, just keep in mind, with the one reservation 
I have about this, one of the most important ones, is Taiwan 
willing to buy? Taiwan, their GDP, their military budget is 
less than 3 percent of their GDP. You are not dealing with a 
country that really wants to militarize itself or build itself 
up militarily.
    Mr. Chabot. And I have only got 5 seconds. That was one of 
the frustrating parts. We kept pushing them to buy the weapons 
system and the legislature just couldn't find a way to do it.
    Chairman Ros-Lehtinen. Thank you. And we thank Ms. Bass of 
California for yielding her time. And recognize Mr. Marino of 
Pennsylvania who will be yielding his time to Mr. Smith. If you 
could make that motion.
    Mr. Marino. Madam Chair, I do yield my time to Mr. Smith. 
Thank you.
    Chairman Ros-Lehtinen. Mr. Smith is recognized.
    Mr. Smith. Thank you, Madam Chair, for that courtesy, and 
my good friend and colleague, the new member. Just a couple of 
questions in follow-up. I kind of ran out of time a moment ago 
about the issue of how you receive a person who, with his past 
and present, raises serious issues about what we are actually 
doing, especially to the dissidents who we know in the laogai 
throughout all of China, including Liu Xiaobo and his wife who 
is under house arrest, that the jailer of Liu Xiaobo is getting 
a state dinner. These aren't nuances. These are profound issues 
that are raised here.
    So if you could perhaps some of you might want to speak to 
that issue. And let me also say that and the distinguished 
chairlady mentioned a moment ago that in this audience are some 
of the greatest and finest human rights defenders and their 
loved ones. Liu Dejun was abducted out of Vietnam right as the 
President took over in 2002. They have not seen their father. 
They try to get in to see him. He was abducted out of Vietnam 
back to China where he is now spending a horrific, enduring a 
horrific ordeal in the laogai. Geng He, who is Gao's wife, who 
is here today, she made a 2000 trek to Thailand with her two 
children, after her older daughter was so despondent, perhaps 
even suicidal because she was being so mistreated.
    What we often forget, it is not just the dissidents, but it 
is their families who share in the cruelty meted out by the 
Chinese dictatorship. She made it, thankfully, and her 
children. But again, it raises the question about how can a man 
who is responsible, and I would say directly responsible, he 
gets a state dinner. When Frank Wolf and I made several trips 
to the PRC we met with Li Peng, premier. I believe we do have 
meetings like that. We had a list of prisoners. We had issues 
dealing with forced abortion, religious persecution. We laid it 
all out. He wasn't happily in receipt of all that, but it was a 
very, very real conversation. And I wonder if, when the toasts 
are made later on tonight and there is all of this hoopla 
around a state dinner that all of that kind of like simmers 
into the background and what message have we sent?
    Also, if you can speak to this then I will yield to you, 
the bad governance model. You know, I chaired, when I chaired 
the Africa Subcommittee years ago, three hearings on what China 
is doing in Africa, you know, when people like Bashir in 
Zimbabwe, Mugabe and so many others who are dictators love the 
Chinese model of control and secret police. And I am very 
worried about the influence that their bad governance model and 
their bad human rights model is having, unless we really speak 
loud and clear. And I would again make my appeal to the 
President, to the Press Corps, be public. Don't namby pamby, 
don't walk on egg shells. Speak boldly about, especially 
President Obama, about his fellow Peace Prize winner, because 
he won it last year, this year obviously Liu Xiaobo, who is 
languishing guilty in prison and his wife under house arrest.
    Mr. Yang. Congressmen, I am personally upset about the 
honor that Hu Jintao is receiving. So it is not a matter 
whether to meet or to receive Hu Jintao. It is how to do it. I 
agree with you totally. And giving Hu Jintao this honor will 
send two messages to China, one to Chinese government and the 
other to Chinese people. To the Chinese government that can be 
described as that we can get away with the atrocities we 
perpetrated in the past. Disappearing people. Put Nobel Peace 
Prize winner in jail. We can get away with any human rights 
violations.
    The message to the people, that is, U.S. may not be that 
sincere about human rights issues in China. And I want to 
emphasize that China is a very practical, very rational player. 
Chinese government legitimacy is performance based; namely, the 
only source of legitimacy for this regime to continue its rule 
in China is fast economic growth.
    So we have too much imposed fear on ourselves thinking that 
if we take a stronger position on human rights issues, that 
will jeopardize our economic relationship with China. Why 
should I fear? They are the persons, it is them that we should 
fear, you know, any jeopardizing of economic relationship with 
the United States and the rest of the world because the slow 
economic growth will leave bare all the problems we have been 
accumulating in the past years that will cause the government 
to collapse.
    Mr. Smith. Thank you.
    Chairman Ros-Lehtinen. Thank you very much, Mr. Marino, for 
yielding the time to Mr. Smith.
    And now, batting cleanup, one of our committee's super 
stars, Mr. Royce, chairman-designate of the Subcommittee on 
Terrorism, Nonproliferation, and Trade, is recognized for 5 
minutes.
    Mr. Royce. Thank you, Madam Chair. I was going to ask Larry 
a question. I think this is an issue that maybe everybody who 
is representative of the business community who does business 
in China should be thinking about. There was an article on 
extortion in the Harvard Business Review in December entitled 
``China vs the World: Whose technology Is It?'' It is an 
exhaustive study of the actual consequences for U.S. businesses 
in China. Let me just read you, Larry, one of the conclusions 
that the authors wrote here:

          ``Chinese officials have learned to tackle multi-
        national companies,'' including U.S. companies, ``often 
        forcing them to form joint ventures with its national 
        champions and transfer the latest technology in 
        exchange for current and future business opportunities. 
        Companies that resist are simply excluded from 
        projects. The Chinese Government uses the restrictions 
        to drive wedges between foreign rivals vying to land 
        big projects in the country and induce them to transfer 
        the technologies that state-owned enterprises need to 
        catch up.''

    This is extortion, and we all know numerous examples. We 
have heard from witnesses; I think 2 years ago we heard from 
Nancy Weinstein, of Nancy's Lifestyles, who opened a business 
in Beijing, only to have it stolen out from under her. She was 
in Shanghai. That was a Shanghai example. But since that 
hearing I have probably heard from a half dozen businesses that 
said we don't want to go public, but this is their modus 
operandi. Now this appears in the Harvard Business Review, 
laying out the case that this is the modus operandi for the 
Chinese Government.
    Could I have your thoughts on that.
    Mr. Wortzel. Mr. Royce, it is the modus operandi. Now, I 
have to say that American companies that are induced to do that 
do that of their own volition because they hope that, based on 
the ability to enter the marketplace, they can earn a lot of 
money. Some do, some don't.
    Mr. Royce. Larry, we understand that part. But the next 
chapter is once the technology is stolen, that company had 
better be prepared for a pretty quick exit out of China because 
its contracts are often about to change, its work force doesn't 
show up the next morning. This is in violation of any number of 
new rules, its leases are terminated. We have heard the stories 
over and over again.
    Mr. Wortzel. Well, I would only suggest a legislative 
strategy to remedy it, and that is if a company can 
legitimately demonstrate that its products or its technology 
were stolen, then prohibit the sale of that stuff in the United 
States.
    Mr. Royce. Well, that is a good remedy. But from the 
experience that we have had going to bat with our constituents 
out in California, and Nancy Weinstein would be an example, we 
have not been able, through the court system in China, to have 
any success and, to my knowledge, I don't know of any success.
    I wondered if you would agree with one of the points made 
in this report, and the authors conclude, it might be useful 
for the United States to dispense with the premise that it can 
have an economically compatible relationship with China; in 
other words, knowing that these are two radically different 
systems and China has failed to bring their system into 
compliance with any of the international norms for commercial 
activity or for rule of law.
    Mr. Wortzel. I don't know why you would choose to do 
business with a documented thief.
    Mr. Royce. Well----
    Chairman Ros-Lehtinen. Excuse me. Did you say ``documented 
thief''?
    Mr. Wortzel. Yeah.
    Mr. Royce. My hope would be that there are many other 
countries in Asia that have an interest in closer relations 
with the United States. We see this in polling all the time, 
and I think a key aspect of managing China's rise will be our 
alliances with China's neighbors across East Asia and South 
Asia. I think that giving reassurance to our friends and 
placing a check on China's regional ambitions is going to be 
necessary. But, what more should we be doing with these 
countries to encourage trade investment? And what more should 
we do to let the U.S. business community know their return on 
investment is a negative one in terms of China? That gets out 
occasionally in the Journal, but not often enough.
    Chairman Ros-Lehtinen. Thank you, the gentleman's time has 
expired. And now for truly our last question and answer, 5 
minutes, will be Mr. Fortenberry of Nebraska, a strong pro-life 
legislator, Mr. Fortenberry to close out our hearing.
    Mr. Fortenberry. Thank you, Madam Chair, for the time. And 
thank you, gentlemen, for appearing before us today. I have a 
fairly lofty sentence in front of me. Basically it says, I want 
to stress the importance of managing our complex relationship 
with China in a manner that honors the transcendent principles 
that define our national purpose and identity.
    But let me stop there. As I look out into the audience 
here, I see a number of young people. And I think it is 
important to get your mind around this. Many of you are perhaps 
newly married or hope to be married in the future. Let's 
suppose you were in China, and the authorities come by and say, 
how many children do you have? We have one, and we have one on 
the way. Well, that is one too many. Come with us.
    Can you imagine that in the United States? We can't even 
get our mind around these concepts. And yet, this is President 
Hu Jintao's China of today. Now, I sincerely hope that as the 
President meets with--as President Obama meets with President 
Hu, that human rights issues are going to figure most 
prominently in these discussions and the White House has 
indicated some direction in that regard. But since I have been 
serving in Congress, members of both sides of the aisle have 
boldly challenged Beijing on the ruthless treatment of 
democracy activists and their families, Internet freedom 
activists, religious minorities, and women and families 
victimized by a callous policy of coerced abortion.
    Now, let's turn to economics. A full estimate is that we 
owe about $2 trillion to China, and we have a bilateral trade 
deficit approaching $300 billion and, of course, this poses 
weighty concerns. Where appropriate, I believe we must 
challenge China to abandon its unbridled mercantilism which 
manifests itself in massive subsidies and other trade 
distorting practices that contribute to this staggering 
imbalance. I think also we must look ourselves in the eye in 
the United States and take action to get our fiscal house in 
order, to revive our stagnant manufacturing industries, 
refurbish our industrial base and take responsibility for our 
economic future.
    The reality is we buy their stuff and they buy our debt, 
and this is a truly dysfunctional marriage. So I think we have 
an obligation to forthrightly address the sources of tension in 
this relationship with China, and our commitment to mutual 
respect should never entice us to ignore these very serious 
concerns. And I hope that the administration will echo these 
concerns in their meetings today with the Chinese leadership.
    My question to the panel is this: The Chinese give cover to 
the North Koreans. The Chinese do business with Iran. The 
Chinese do not respect human rights. What type of world does 
China envision? What is their end game? A nationalistic surge 
underwritten by a new capitalistic Communist model never 
foreseen in the history of the world? Can you comment on that, 
please?
    Mr. Sutter. I would be very happy to comment. I think the 
Chinese objective is very much focused on the here and now. Mr. 
Yang emphasized that they have a legitimacy deficit. And their 
legitimacy rests on economic performance and to do that they 
need stability. And to do that they have to interact with the 
world on a lot of different ways, in a lot of different ways, 
with economic development being primary. And so to confront the 
United States in a major way is something that I think is not 
fundamental to what they are about right now. Their long-term 
plans are very vague. They have got a very big agenda for the 
short term, and it is going to keep them busy for a long time.
    Mr. Fortenberry. So does raising the concerns that I 
raised, as well as many others today, help address or give rise 
to more legitimacy concerns as they further distance themselves 
from what we would consider to be the international community 
of responsible nations?
    Mr. Sutter. The idea that we should address all the issues 
that you have mentioned in a forthright way is very, very 
clear. We should do that. No question. But I think your idea 
that somehow the Chinese have this plan for domination and 
control of the world, I think, a better image is that China is 
a bit scrambling, trying to keep legitimacy, trying to keep 
control over their very, very vibrant economic and social 
situation, that isn't under good control in many respects.
    Mr. Fortenberry. Does raising the issues I just raised 
hinder their quest for this legitimacy.
    Mr. Sutter. I think it could. It could.
    Mr. Fortenberry. Or do you not care, because economics 
trumps everything?
    Mr. Sutter. No, economics does not trump, deg. 
everything because prestige is important as well and their 
position is important as well.
    Chairman Ros-Lehtinen. Thank you. The gentleman's time has 
expired.
    It is a testament to the great interest that this topic has 
that members keep coming back. So pleased to recognize Mr. 
Deutch, my Floridian colleague, for 5 minutes.
    Mr. Deutch. Thank you, Madam Chair, I appreciate it. I 
appreciate your leadership of this committee.
    I would like to spend a couple of minutes talking about the 
way in which the Chinese Government has been willfully weak in 
enforcing intellectual property rights. The creativity, the 
imagination, the innovation of American workers, their 
intellect, is being stolen and it is being stolen on a regular 
basis in China. It is being stolen by illegal downloads, it is 
being stolen by pirated DVDs, it is being stolen by seizing, 
again, the intellectual property of our Nation.
    What can we do to increase the pressure on the Chinese 
Government to be more serious in enforcing and protecting the 
intellectual property rights of our citizens?
    Mr. Chang. I think the one thing that we can do if we 
really are serious about it is start adding tariffs for goods 
of countries that do engage in willful theft of intellectual 
property. This is a really important thing for us to do, and I 
think it is probably about the only way to do it.
    There are a number of other strategies. And one thing the 
Obama administration has done is, it has gone after these 
indigenous innovation rules that President Hu Jintao has 
sponsored and really does put American companies at a serious 
disadvantage if they want to do business in China. So that is 
one thing.
    But when it comes to the actual theft, which is another 
issue, I believe that the only way to deal with this is 
sanctions of some sort, penalties of some sort. And they 
probably are going to follow the general trajectory of H.R. 
2378.
    Mr. Deutch. Dr. Wortzel, are you nodding your head?
    Mr. Wortzel. I agree with Mr. Chang. We have to avail 
ourselves of the available World Trade Organization remedies, 
and we are not always doing that. They are more limited than we 
might like, but we must avail ourselves of them. And we have to 
work particularly with our European allies and friends, so that 
when a case is brought, it is not just brought by one country. 
I think that helps.
    Countervailing duties is another potential remedy that I 
think would be useful.
    Mr. Deutch. I would like to broaden the discussion to the 
implications of the theft of intellectual property to the links 
between stealing intellectual property and the funding of 
terrorist organizations like Hezbollah and Hamas. A majority of 
the counterfeit goods originate in China and wind up in places 
like the tri-border region of South America, where millions of 
dollars in direct contributions have then been to Hezbollah. 
One such specially designated global terrorist entity in 
Paraguay provided a lump-sum payment of $3.5 million 
dollars  deg.to Hezbollah.
    Is there a way, even moving beyond the important nature of 
intellectual property rights on its own, to helping, to 
reinforcing the severe implications of these violations in our 
own and helping to protect our national security?
    Mr. Wortzel. I kind of think you just pointed the way 
toward a response to that. And that would be to take a look at 
the Iran Sanctions Act, and with the terrorism nexus see if 
legislation could be modeled along the lines of the Iran 
Sanctions Act that would specifically sanction the Chinese 
violators that are engaged in that activity.
    Mr. Deutch. And along those lines, Dr. Wortzel, under the 
Iran Sanctions Act and the legislation that we passed last 
year, by all accounts there are Chinese firms that ought to be 
sanctioned. They have not been. Do you have thoughts on the 
actions taken by these Chinese companies, state-owned in Iran, 
in helping them to overcome the sanctions that have been 
imposed on other companies?
    Mr. Wortzel. You know, here you really have to get the 
Oversight Administration and Enforcement. If they are not doing 
the job, they are not doing the job.
    Mr. Chang. You know, we sanctioned individual Chinese 
enterprises, but essentially they all are controlled by the 
state. So essentially what we should be doing is thinking about 
sanctions that go beyond just the individual enterprise. 
Because essentially what we are doing is, we are going after 
the pinkie when we really should be going after the head.
    Mr. Deutch. In the remaining seconds on that specific 
issue, how do we go after the head?
    Mr. Chang. It would be basically putting sanctions on goods 
from countries that are involved in certain prohibitive 
behavior. This is going to be very difficult for the United 
States to do. We haven't, up to now, had the will to do it. But 
when it comes to things like Iran sanctions or selling arms to 
the Taliban, something else, we really have to think about our 
priorities.
    Mr. Deutch. Thank you. Thank you, Madam Chair.
    Chairman Ros-Lehtinen. Thank you very much, Mr. Deutch. 
Thank you, panelists, for excellent testimony. And thank you to 
the members who participated, thank you to the audience. And 
the briefing is now adjourned. Thank you.
    [Whereupon, at 12:43 p.m., the committee was adjourned.]
                                     

                                     

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