    [House Hearing, 114 Congress]
    [From the U.S. Government Publishing Office]

       DIPLOMACY AND SECURITY IN THE SOUTH CHINA SEA: AFTER THE TRIBUNAL

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

                                    HEARING

                                   BEFORE THE

                      SUBCOMMITTEE ON ASIA AND THE PACIFIC

                                     OF THE

                          COMMITTEE ON FOREIGN AFFAIRS
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                               SEPTEMBER 22, 2016

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                               Serial No. 114-232

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                          COMMITTEE ON FOREIGN AFFAIRS

                     EDWARD R. ROYCE, California, Chairman
    CHRISTOPHER H. SMITH, New Jersey     ELIOT L. ENGEL, New York
    ILEANA ROS-LEHTINEN, Florida         BRAD SHERMAN, California
    DANA ROHRABACHER, California         GREGORY W. MEEKS, New York
    STEVE CHABOT, Ohio                   ALBIO SIRES, New Jersey
    JOE WILSON, South Carolina           GERALD E. CONNOLLY, Virginia
    MICHAEL T. McCAUL, Texas             THEODORE E. DEUTCH, Florida
    TED POE, Texas                       BRIAN HIGGINS, New York
    MATT SALMON, Arizona                 KAREN BASS, California
    DARRELL E. ISSA, California          WILLIAM KEATING, Massachusetts
    TOM MARINO, Pennsylvania             DAVID CICILLINE, Rhode Island
    JEFF DUNCAN, South Carolina          ALAN GRAYSON, Florida
    MO BROOKS, Alabama                   AMI BERA, California
    PAUL COOK, California                ALAN S. LOWENTHAL, California
    RANDY K. WEBER SR., Texas            GRACE MENG, New York
    SCOTT PERRY, Pennsylvania            LOIS FRANKEL, Florida
    RON DeSANTIS, Florida                TULSI GABBARD, Hawaii
    MARK MEADOWS, North Carolina         JOAQUIN CASTRO, Texas
    TED S. YOHO, Florida                 ROBIN L. KELLY, Illinois
    CURT CLAWSON, Florida                BRENDAN F. BOYLE, Pennsylvania
    SCOTT DesJARLAIS, Tennessee
    REID J. RIBBLE, Wisconsin
    DAVID A. TROTT, Michigan
    LEE M. ZELDIN, New York
    DANIEL DONOVAN, New York

         Amy Porter, Chief of Staff      Thomas Sheehy, Staff Director

                   Jason Steinbaum, Democratic Staff Director
                                     ------

                      Subcommittee on Asia and the Pacific

                         MATT SALMON, Arizona Chairman
    DANA ROHRABACHER, California         BRAD SHERMAN, California
    STEVE CHABOT, Ohio                   AMI BERA, California
    TOM MARINO, Pennsylvania             TULSI GABBARD, Hawaii
    JEFF DUNCAN, South Carolina          ALAN S. LOWENTHAL, California
    MO BROOKS, Alabama                   GERALD E. CONNOLLY, Virginia
    SCOTT PERRY, Pennsylvania            GRACE MENG, New York
    SCOTT DesJARLAIS, Tennessee

                                C O N T E N T S

                                  ----------
                                                                       Page

                                   WITNESSES

    Mr. Elbridge Colby, Robert M. Gates senior fellow, Center for a
      New American Security..........................................     3
    Mr. Dean Cheng, senior research fellow, Asian Studies Center, The
      Heritage Foundation............................................    19
    Amy Searight, Ph.D., senior adviser and director, Southeast Asia
      Program, Center for Strategic and International Studies........    30
    Amitai Etzioni, Ph.D., professor of international affairs,
      Director, Institute of Communitarian Policy Studies, The George
      Washington University..........................................    42

              LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

    Mr. Elbridge Colby: Prepared statement...........................     6
    Mr. Dean Cheng: Prepared statement...............................    21
    Amy Searight, Ph.D.: Prepared statement..........................    33
    Amitai Etzioni, Ph.D.: Prepared statement........................    44

                                    APPENDIX

    Hearing notice...................................................    70
    Hearing minutes..................................................    71

       DIPLOMACY AND SECURITY IN THE SOUTH CHINA SEA: AFTER THE TRIBUNAL

                                  ----------

                          THURSDAY, SEPTEMBER 22, 2016

                           House of Representatives,

                     Subcommittee on Asia and the Pacific,

                         Committee on Foreign Affairs,

                                Washington, DC.

        The subcommittee met, pursuant to notice, at 2:00 p.m., in
    room 2172 Rayburn House Office Building, Hon. Matt Salmon
    (chairman of the subcommittee) presiding.
        Mr. Salmon. Subcommittee will come to order. Members
    present will be permitted to submit written statements that
    will be included in the official record.
        Without objection, the hearing record will remain open for
    5 calendar days to allow statements, questions and extraneous
    materials for the record subject to the length limitation in
    the rules.
        South China Sea is one of the toughest and most persistent
    problems in this subcommittee's jurisdiction. These maritime
    and territorial disputes are universally recognized as a long-
    term security challenge.
        Mr. Sherman. Mr. Chairman? If I can just ask for permission
    to give my opening statement after the witnesses.
        Mr. Salmon. Oh, I am sorry. Yes.
        Mr. Sherman. Yes, I wanted to----
        Mr. Salmon. Okay. Good.
        Yes, Mr. Sherman will give his opening statement after the
    witnesses testify. He has actually got to go between a couple
    of different responsibilities today.
        Back to what I was saying, the maritime and territorial
    disputes are universally recognized as a long-term security
    challenge and a potential short-term flashpoint.
        Conflicting claims to the strategic waterways which connect
    maritime Asia endanger trade, transportation, commerce and
    energy flows, creating the risk of conflict.
        China has taken the riskiest and most dangerous actions of
    any of any party to the disputes, seizing territory far from
    its shores, fielding huge fleets of Coast Guard and fishing
    vessels to bolster its claims and constructing military
    outposts throughout contested zones to consolidate its
    strategic position.
        Despite the dire and worsening situation, recent
    developments have given the South China Sea an unfulfilled
    potential for positive progress.
        This summer, an Arbital Tribune, constituted under the
    United Nations Convention on the Law of the Sea, issued an
    eagerly anticipated ruling in a case between China and the
    Philippines, bringing legal certainty to the obvious truth that
    China's claims on the South China Sea are illegitimate.
        Though the international community cheered the ruling, its
    influence is still uncertain. Since the tribunal announced its
    ruling, the uncertain status quo has persisted in the South
    China Sea, and there have been signals that China plans to take
    its construction efforts to the Scarborough Shoal, a sensitive
    area right off the Philippines' shores, which would be a
    serious escalation.
        At the same time, China has moved aggressively to generate
    diplomatic cover for its legally untenable and unjustifiable
    claims. Throughout the Association of Southeast Asian Nations
    (ASEAN) China has used surrogates to disrupt and block
    consensus, successfully preventing unified statements on the
    issue, at least in regional summits. There are also obvious
    signs of intense efforts to win more southeast Asian support
    for China's position.
        For instance, Thailand recently stated its support for
    China's so-called efforts to maintain peace in the South China
    Sea, though Thailand is not a claimant to that dispute and has
    traditionally remained neutral on the issue.
        Conduct from the Philippines during this period has been
    more and more disappointing. The Philippines' victory before
    the international tribunal was a shining example of the
    peaceful resolution of a dispute between two states based on
    legal principle as opposed to force.
        It demonstrated the value of the system of international
    law that states have used cooperatively to avoid major conflict
    for decades.
        Despite this victory, the Philippines has not leveraged the
    ruling in its dealings with China. The cool response was at
    first lauded as savvy diplomacy, but since then, things have
    become decidedly worse.
        The new President, Rodrigo Duterte, has called into
    question the Philippines' dedication to the rule of law,
    creating a domestic crisis of widespread extrajudicial killing.
        He's engaged in childish name calling toward President
    Obama and our Ambassador to the Philippines. He's announced his
    intention to end a longstanding and successful counter terror
    cooperation in Mindanao, raised the possibility of increasing
    arms acquisitions from China and Russia and spoken of ending
    joint maritime patrols with the U.S. Navy.
        At the same time, the importance of the Philippines' legal
    victory has been downplayed or avoided altogether. President
    Duterte has affirmatively avoided the topic in his discussions
    with Chinese interlocutors, and he deliberately declined to
    raise the issue in a recent high-profile speech, throwing away
    his prepared remarks on the ruling at the last minute.
        To be sure, many ASEAN states have good reason to evaluate
    critically their capacity and will to resist China's influence
    on the issue.
        In virtually every case, modest defense capabilities and
    close economic ties mean that China is an undeniably important
    partner for each ASEAN country.
        By playing their cards close to their chest while signaling
    potential compromise with China, southeast Asian nations seem
    to be navigating the post-ruling uncertainties of the South
    China Sea extremely cautiously, feeling out bilateral options
    and seeking the most advantageous near-term result at the cost
    of a collective response that might better suit each of their
    needs.
        As in many other realms, responsibility falls to the United
    States in the South China Sea, not just to advance our allies'
    and partners' interests but to protect our own.
        Every nation has a stake in the rule of law, the protection
    of territorial integrity and in peaceful dispute resolution.
        In southeast Asia, where a vacuum of strategic military
    strength is being filled by China's rising forces, these
    interests are in jeopardy.
        It falls to us to back stop our partners with our own
    strength and integrity and to remind those nations faltering
    under China's self-serving diplomatic assault what is at stake.
        With our expert panel today, we will review the
    developments in the South China Sea disputes following the
    Arbital ruling with an eye toward formulating policy options to
    protect the freedom of navigation, the rule of law and peaceful
    dispute resolution.
        We will also be looking to strengthen rather than weaken
    our relationships in the region in response to this challenge.
    And I look forward to the witnesses' recommendations for that
    as well. And, as we have mentioned earlier, the ranking member
    will make his opening statements after your comments.
        And so I will start with the panel. Mr. Elbridge Colby,
    Senior Fellow at the Center for a New American Security; Dr.
    Dean Cheng, Senior Research Fellow at The Heritage Foundation's
    Asia Studies Center; Dr. Amy Searight, senior advisor and
    director of the Southeast Asia Program at CSIS; and Amitai
    Etzioni--did I say that right?
        Mr. Etzioni. Yes.
        Mr. Salmon. Oh, good. Professor of international affairs at
    the George Washington University. We thank the panel for
    joining us today and for their expertise, and I will start with
    you, Mr. Colby.

    STATEMENT OF MR. ELBRIDGE COLBY, ROBERT M. GATES SENIOR FELLOW,
                   CENTER FOR A NEW AMERICAN SECURITY

        Mr. Colby. Mr. Chairman, Ranking Member Sherman and
    distinguished members of the committee, thank you very much for
    inviting me to testify today on the South China Sea.
        It's an honor to speak with you on this matter of such
    importance to our Nation and to the Asia Pacific as a whole.
        Put forthrightly, the United States should press back more
    firmly against China's assertiveness in the South China Sea
    both directly and indirectly, and Washington should be must
    less shy about doing so.
        This course is likely to be more successful and stabilizing
    and, indeed, actually less risky than our current one, which is
    defined by a strange hesitancy on our part.
        Right now, China appears to believe it can rock the boat
    and that we will take pains to right it. We seem to be more
    nervous about China's will and ability to escalate and the
    threat that such firmness would have on our broader
    relationship with Beijing than they are. This is strange,
    because despite what President Duterte says, we still hold many
    commanding advantages.
        Our hesitancy seems to be leading Beijing to think it can
    continue pushing into the South China Sea and beyond. But, it
    is also leading regional states, both allies and partners as
    well as fence-sitters, to wonder whether it is prudent to work
    with us to balance and constrain China's assertiveness.
        If Washington is so anxious and tepid when we are still so
    strong, what does that say about our willingness to act as
    China grows stronger in the coming years? It certainly cannot
    and does not inspire confidence.
        Rectifying the situation requires resolute American
    leadership and sustained strength. Otherwise, states in the
    region are likely to be pulled toward accommodating rather than
    balancing Beijing.
        Moreover, the situation today is more serious than is often
    admitted. The perception of American irresolution risks
    hardening into a judgment, and China's militarized islands in
    the Spratlys already pose more of a threat to U.S. forces and
    regional states than is commonly appreciated.
        So what should we do? Our actions should be guided by two
    overarching principles. First, we need to demonstrate greater
    resolve and willingness to bear and assume risk.
        Second, we need to build up our allies' and partners'
    military and economic strength. In the first category, we
    should do the following.
        Conduct more FONOPs and conduct them more assertively,
    while describing their purpose and justification more candidly
    and unabashedly.
        At the same time, we should also conduct intense presence
    operations beyond those designed to vindicate U.S. legal
    positions. We should further encourage other like-minded
    countries like Japan, Australia, India and France, which has
    offered to coordinate EU patrols, to conduct their own FONOPs
    and/or presence operations either with us or separately.
        Secondly, we should shrink the white hull loophole China is
    exploiting by making clear we will respond to coercion or
    aggression by such ``white hull ships'' with whatever means we
    deem appropriate, including military force.
        China must not get a free pass by using technically
    nonmilitary ships for coercion or worse.
        Third, we should deter Beijing's militarization of
    Scarborough Shoal by showing resolve, demonstrating our
    capability and studying the merits of extending the mutual
    defense treaty with Manila to the shoal.
        Resolve is important, but military and economic power are
    even more so. China will only realistically be constrained if
    we are sufficiently strong. Accordingly, we need to strengthen
    our own hand and those of like mind. Thus, we should do the
    following.
        First, increase and extend U.S. military advantages and
    presence in the region. This means prioritizing and maintaining
    our conventional advantage in the Western Pacific through
    efforts like the Third Offset and related initiatives.
        Congress should fund and support these initiatives forward
    into the next administration. It also means increasing combat-
    credible U.S. presence in the region including by continuing to
    shift forces and especially higher-end forces to the region.
        Second, we should deepen military and other links with
    allies and partners and encourage their own indigenous efforts.
    This means expanding on the EDCA with Manila, despite the
    current turbulence in the relationship, capitalizing on Japan's
    interest in a broader footprint in the region and following
    through on openings to deepen engagement with states like
    India, Vietnam and Indonesia.
        U.S. efforts should especially focus on building up like-
    minded states' ability to resist or complicate Chinese
    assertiveness, both at the gray zone level through assistance
    with maritime domain awareness and more patrol craft and the
    like, but also selectively at the higher end by helping to
    develop anti-access area denial capabilities of their own.
        Third, and perhaps more importantly, we need to maintain
    U.S. economic leadership and leverage by ratifying TPP. A
    successful effort to balance China depends on a sense in the
    region of U.S. economic strength and leadership, especially in
    light of China's efforts to translate its own economic power
    into political leverage through efforts like the ``One Belt One
    Road'' initiative. TPP is crucial to such a successful effort.
        Conversely, rejecting TPP would deal a blow, and perhaps a
    very formidable one, to the U.S. position in the region. The
    Congress should therefore provide its advice and consent to the
    pact's ratification as expeditiously as possible.
        In sum, if the United States and other states fail to stop
    the expansion of China's power over the South China Sea,
    Beijing's ambitions are only likely to grow. If we succeed,
    however, a more stable and enduring balance is likely to
    result.
        Accordingly, we must get the South China Sea right. I hope
    that the steps offered here would contribute to that goal. I
    look forward to any questions you might have.
        Thank you very much.
        [The prepared statement of Mr. Colby follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                  ----------

        Mr. Salmon. Thank you.
        Mr. Cheng.

      STATEMENT OF MR. DEAN CHENG, SENIOR RESEARCH FELLOW, ASIAN
                STUDIES CENTER, THE HERITAGE FOUNDATION

        Mr. Cheng. Chairman Salmon, Ranking Member Sherman,
    distinguished members of the committee, my name is Dean Cheng.
    I'm the senior research fellow for Chinese political and
    security affairs at The Heritage Foundation.
        I would like to begin by expressing my appreciation for the
    opportunity to be here this afternoon and to note that the
    views I express are my own and should not be construed as
    representing any official position of The Heritage Foundation.
        My comments today will focus on the military and security
    side of the growing Chinese challenge to Asian maritime
    security.
        The past quarter century has seen a substantial improvement
    in the capabilities of the Chinese People's Liberation Army, or
    PLA.
        With the PLA Navy we have seen the introduction of several
    new classes of surface combatants. The newest Chinese
    destroyer, the Type 052D, is comparable to our own Arleigh
    Burke DDG-51 Class.
        The Chinese Type 054A frigate is both more capable and, let
    me note here, more reliable than our Littoral Combat Ship, both
    types of which are now sidelined due to engineering problems.
        We know the Chinese are producing multiple classes of
    submarines and at least one new aircraft carrier is under
    construction.
        China's naval combatants are among the youngest in average
    age, thanks to this major shipbuilding program. As important,
    China is not neglecting the key issue of maritime support.
        China is building a fleet train of logistic support ships
    which will allow the Chinese navy to operate for extended
    periods away from shore.
        Chinese submarines operating in the Indian Ocean have been
    accompanied by submarine tenders, allowing them to operate for
    longer periods away from Chinese ports.
        China, of course, has now also begun construction on a new
    facility in Djibouti, their first formal overseas military
    base, but probably not their last.
        Given the importance of air power for the Asia Pacific
    region, it is worth noting how the PLA Air Force, or PLAAF, is
    working on both the J-20 and J-31 fifth generation fighters.
        China is the only other nation to be fielding two stealth
    fighter programs at the same time. Chinese bombers are now
    overflying islands in the South China Sea, and as these
    aircraft can be equipped with long-range anti-ship and land
    attack cruise missiles, the signal being sent to China's
    neighbors are very clear.
        Again, the Chinese are also not neglecting the haft of the
    spear even as they sharpen the tip. China has introduced air
    transports to allow power projection and electronic warfare
    aircraft and AWACS to allow them the same kinds of advantages
    that our Air Force enjoys.
        Most worrisome is the new PLA Strategic Support Force,
    which brings together under one service space warfare,
    electronic warfare and network warfare capabilities, reflecting
    the ongoing Chinese effort to establish information dominance,
    which the Chinese see as the central key to winning future what
    they term local wars under informationized conditions.
        The objection of all of these various force improvements at
    the military level is to support China's move from a near-shore
    strategy of the 1960s to the near-sea strategy of the 1990s to
    today's far-seas approach, pushing Chinese military capability
    ever more extended distances from China's shores and deeper
    into the central Pacific and the Indian Ocean.
        The shift reflects not only Chinese growing capabilities,
    but a broader transition in Chinese strategic thinking, which
    affects not only the military but national security thinking as
    a whole.
        For the military, the extending reach is part of China's
    new historic missions, and while we must never forget that the
    People's Liberation Army is a party army where every officer is
    a member of the Chinese Communist Party, it nonetheless has
    also been charged with the responsibility of defending party
    and also national interests. Those national interests now
    include the seas, outer space and the electromagnetic spectrum.
        China increasingly sees its fundamental security as tied to
    the world's oceans. This should not be surprising. China's
    economic center of gravity is now on its shores.
        There is no longer a buffer of millions of square miles of
    territory between the Chinese economic center and the ocean's
    from which American and other allied capabilities spring.
        At the same time, China itself is also more dependent on
    the sea for access to resources of power--Chinese economic
    growth. China is now a net importer of not only oil but food,
    including wheat, barley, sorghum and even rice.
        Indeed, China is unique in being a traditional continental
    power that has become dependent on the seas. Napoleonic France,
    Wilhelmine Germany, the Soviet Union--all of these were
    continental powers for whom navies were luxuries or added
    benefits.
        For China, it has become a central part of their economic
    existence. Unfortunately, as a result, the Chinese effort to
    safeguard its interests is expressed by extending Chinese
    sovereignty over what had been international common spaces.
    China's efforts to bring the South China Sea into the umbrella
    of Chinese control has led to remarkably intemperate remarks
    regarding the Permanent Court of Arbitration's findings.
        The Chinese foreign minister termed them, ``a political
    farce.'' The Ambassador to the United States termed them, ``a
    matter of professional incompetence.''
        What this suggests, and what this should serve as a
    warning, is that the United States, as the keystone upholding
    international order and the main advocate for international law
    and norms, must respond strongly through a combination of
    FONOPs, arms sales, robust presence but, above all, countering
    Chinese efforts at political warfare to undermine the
    legitimacy of the international order.
        Thank you very much.
        [The prepared statement of Mr. Cheng follows:]

     [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                  ----------

        Mr. Salmon. Thank you.
        Dr. Searight.

    STATEMENT OF AMY SEARIGHT, PH.D., SENIOR ADVISER AND DIRECTOR,
    SOUTHEAST ASIA PROGRAM, CENTER FOR STRATEGIC AND INTERNATIONAL
                                STUDIES

        Ms. Searight. Thank you so much for this opportunity to
    talk about regional reactions to the Arbital Tribunal ruling.
        Just a little bit over 2 months ago on July 12th, the
    Arbital Tribunal, under the United Nations Convention on the
    Law of the Sea, or UNCLOS, issued its landmark ruling in the
    case brought by the Philippines against China involving
    maritime rights and entitlements in the South China Sea.
        In the weeks and months that have followed, the reaction to
    the ruling by the parties involved and others have played out
    more or less as expected.
        But what was very unexpected was the breadth and the
    decisiveness of the ruling itself, which delivered an
    overwhelming legal victory to the Philippines and, by logical
    extension, to other claimants in the South China Sea in a
    decisive legal defeat to China.
        In essence, the ruling does four things. First, it ruled
    that China's nine-dash line is not consistent with the Law of
    the Sea and invalidated Beijing's claims to historic rights
    throughout the nine-dash line.
        Second, features in the South China Sea are, at most,
    entitled to only 12 nautical mile territorial zones and do not
    generate 200-mile exclusive economic zones or continental
    shelves.
        Third, the panel found that China infringed on the
    traditional fishing rights of Filipinos by not allowing them to
    fish at Scarborough Shoal.
        And fourth, the tribunal held that China's in violation of
    its obligations under UNCLOS to preserve and protect the marine
    environment, finding that it created massive environmental
    damage through its reclamation activities.
        Now, the reactions to the ruling were very much predictable
    and predicated in most ways. China reacted swiftly and
    predictably, denouncing the tribunal as unjust and unlawful,
    declaring the award as null and void and has no binding force.
        And Former State Counselor Dai Bingguo, in a visit to DC
    just before the ruling, said that the ruling would be treated
    as just a piece of trash paper.
        The international community, led by the United States,
    including Japan, Australia, New Zealand and Canada, all put out
    very strong statements underscoring that the ruling was final
    and legally binding on both parties.
        And, also of note, India put out a relatively strong
    statement as well. The ASEAN reactions to the ruling were also
    rather predictable, with Vietnam, Singapore, Malaysia and,
    somewhat surprisingly, Myanmar, using language that originated
    in the Sunnylands declaration in support for resolving disputes
    peacefully through ``diplomatic and legal processes'' in
    accordance with international law and UNCLOS.
        Indonesia and Thailand also put out statements that were
    somewhat less robust, and the Philippines gave a very low-key
    response to its resounding legal victory. President Duterte had
    previously signaled that he wanted to move toward a soft
    landing with China.
        So, Manila signaled its willingness to move forward to find
    a way forward toward talks to resolve the disputes and
    President Duterte dispatched Former President Fidel Ramos to
    Hong Kong to meet with Chinese officials.
        These talks did not appear to yield any real progress, and
    there is still a major disagreement between the Philippines and
    China over whether the ruling should be the basis for any talks
    to resolve competing claims.
        Duterte has also done a number of things, as Chairman
    Salmon elucidated. He has made clear that he wants the
    Philippines to have a more independent foreign policy. But what
    that precisely means I think is still being--still being played
    out.
        The ASEAN reaction as a whole, as a grouping, ASEAN failed
    to project real unity in its response. It did not release a
    joint statement in the immediate aftermath.
        It did have a joint communique that was issued 2 weeks
    later when the foreign ministers of ASEAN met in Vientiane,
    Laos, and this joint communique had a very long section on the
    South China Sea, which acknowledged concerns by some ministers
    on land reclamation and escalation of activities at sea which
    have eroded trust and confidence, increased tensions and may
    undermine peace, security and stability in the region.
        So this was a way of providing an out to countries like
    Cambodia, which did not want to be on the record expressing
    concerns while giving voice to some of the concerns from
    Vietnam, the Philippines and others.
        The communique also used the Sunnylands language of ``full
    respect for legal and diplomatic processes'' but,
    interestingly, it lifted this language out of the section on
    the South China Sea, and put it in the introductory section of
    the joint communique, reportedly at the request of Cambodia.
        So as--you know, once again, this kind of revealed that
    ASEAN is a glass half empty and a glass half full in terms of
    its ability to deal with this issue and stand as a
    counterweight to China.
        It is easy to be disappointed with the ASEAN, but I think
    it is very important to continue the engagement. We have seen
    repeatedly the positive effects that the President's engagement
    at Sunnylands has had on the grouping and their ability to
    signal some limited degree of unity and cohesion on this issue.
        Secretary Carter is hosting the 10 ASEAN defense ministers
    in Hawaii next week, and it'll be very interesting to see what
    comes out of that.
        Obviously, the most important factor in terms of how the
    impact of the ruling will have will be very much about how
    China will respond.
        But let me just say three quick words about what role the
    United States can play.
        First, the United States should continue to visibly
    demonstrate that it will continue to fly, sail and operate
    wherever international law allows by conducting regular freedom
    of navigation operations and other presence operations in the
    South China Sea.
        Second, the United States should continue and accelerate
    capacity-building and training under the Maritime Security
    Initiative, foreign military financing and IMET. This is
    critical for enhancing capabilities of our key partners such as
    the Philippines, Vietnam, Indonesia and Malaysia and increasing
    interoperability with U.S. forces.
        And, finally ratifying UNCLOS would be a very positive step
    to take as well. The ruling of the Arbital Tribunal panel and
    regional reactions to the ruling cast a glaring light on the
    mismatch between U.S. rhetoric, on the importance of upholding
    international law and the need for all countries to be bound by
    rules and norms and the fact that the United States has not yet
    ratified the treaty.
        Simply put, our failure to ratify the treaty undermines our
    ability to fully work with our allies and partners in the South
    China Sea and insist that UNCLOS be used as a basis for
    resolving claims and arbitrating disputes.
        China says this quite loudly in the region. But I would
    note that other countries say this more quietly as well.
        [The prepared statement of Ms. Searight follows:]

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                                  ----------

        Mr. Salmon. Thank you.
        Dr. Etzioni. Could you turn on your microphone? Thank you.

    STATEMENT OF AMITAI ETZIONI, PH.D., PROFESSOR OF INTERNATIONAL
     AFFAIRS, DIRECTOR, INSTITUTE OF COMMUNITARIAN POLICY STUDIES,
                    THE GEORGE WASHINGTON UNIVERSITY

        Mr. Etzioni. Asking a professor to say anything in 5
    minutes is absolute torture.
        But thank you, Chairman Salmon, Ranking Member Sherman,
    distinguished members of the committee for tolerating a much
    less alarmed view of the situation and for the suggestion that
    we should see the questions of the contested islands in the
    context of the much larger question of the United States-China
    relationship.
        If I had to say in one sentence what I'm trying to suggest
    is that the situation is particularly ripe for a grand bargain
    between the United States and China on all the outstanding
    issues.
        The reason I argue that that on many, many issues, on most
    issues, is the United States and China have identical or
    complementary interests; therefore, the part which is left to
    be settled is relatively small.
        These include the fact that both nations desperately need
    resources for very pressing domestic issues. I won't list them
    because they are terribly familiar.
        But we tend to overlook that China also has enormously
    pressing domestic--hence, any additional deflection of
    resources needed for domestic rebuilding, to military,
    pressures both sides.
        China, as the Paris Accord shows, is concerned about
    climate issues. Both nations are concerned about proliferation
    of nuclear weapons.
        Both nations are concerned of jihadist terrorism. I cannot
    take more time. There is a long list of complementary and
    shared interests.
        The remaining issues, in my judgment, should be approached
    in a very different manner, and this is not often discussed--I
    appreciate the opportunity to put it before you--and that is
    focusing on issues in which there is a high difference in
    saliency.
        There are some issues which are very important to us and
    much less important to China and on those we should expect
    China to give way, and there are some issues that are very
    important to them and next to unimportant to us.
        And a bargain arises here not by trading A for B's but by
    us giving in on things that don't matter to us in return for
    things very important to us. Let me give an example to make it
    much less abstract.
        The number-one United States priority today is not who is
    going to fish where or who is going to build what on those
    rocks.
        The number-one security challenge is, obviously, North
    Korea, which in a year or two could have long-range missiles
    equipped with nuclear weapons.
        The only way short of an outright war, which would be
    extremely troubling, to get a handle on this is a collaboration
    with China.
        That's something very important to us. China has no deep
    reason to avoid reining in Korea other than they face much
    higher costs than we if they do so.
        So, if we are going to get China collaboration in reining
    in North Korea, we have to find out something which is
    important to them but not to us. And a great example is we
    don't need a missile shield in South Korea if the North Korea
    nuclear problem is defanged. China is very worried about it
    because it is not clear to them that the same shield will not
    stop their missiles.
        So, here is a good example of giving up something we really
    basically don't need in return for something which worries them
    a great deal.
        My second example would be the situation in Pakistan. Most
    security experts I know agree that the greatest threat as far
    as terrorism is concerned is if they get their hands on nuclear
    weapons in Pakistan, which are not under their control.
        Some of them are on the front lines next to India under
    local control. There have been already six attempts by ISIS or
    al-Qaeda and other groups to get a hold of these nuclear
    weapons. I would like to add something here which is not often
    mentioned.
        We control our airways, our interests in the United States
    and land quite well. Our seas are completely open. There are 2
    million recreational vehicles that come and go at will. It
    would be extremely easy for a group of terrorists and a nuclear
    weapon to land at any one of our beaches.
        So China has leverage with Pakistan, much more than we. We
    are arguing if you are going to give them $1 billion or not.
    China is pledging $25 billion. China has given them very large
    control of their armament and such.
        So here is an example. We should be very interested in
    China joining us in reining in the nuclear programs of
    Pakistan. But, what in turn will speak to them, which is of
    very low cost to us, may involve reining in India.
        I am running out of time here, but the basic principle is
    clear. You should see what's happening over the islands in the
    larger context, starting with most important to us, what is
    second most important to us, and see if there are not things
    which China can help us on these fronts, which they would be
    more than willing to do for giving them things which we are all
    too ready to get rid of.
        Thank you very much.
        [The prepared statement of Mr. Etzioni follows:]

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                                  ----------

        Mr. Salmon. Thank you.
        I'm going to turn to Mr. Sherman and let him make his
    opening statement.
        Mr. Sherman. And I don't know if there are other Democrats
    who would also like to make an opening statement. But none of
    them are indicating such.
        Mr. Chairman, thank you for letting me defer my opening
    statement until after the witnesses. This is not our first
    hearing on the South China Sea. It's not going to be our last.
        It's an issue that we should take seriously. But I think we
    need to lower the temperature. My fear is that we're making
    mountains out of reefs.
        We should keep in mind that it is not just China, but four
    other countries that added dirt on top of various reefs in
    order to make them bigger than God ever intended them to be.
        We should resist a tendency that I see at the Pentagon to
    try to reconfigure our military as one devoted to fighting
    China in the South China Sea.
        I think that we need to focus on the threats to the United
    States, especially terrorism, also North Korea--the witnesses
    have mentioned Pakistan--and not focus on who owns the natural
    resources, which are not proven to be significant at all,
    knowing that the one thing we're certain of is that those
    resources do not belong to us. We should focus on the threats
    to the United States.
        Now, we're told by those who try to hype the importance of
    these islands that $5 trillion of trade goes through the South
    China Sea.
        That's true--almost all of it in and out of Chinese ports.
    The control of these islands--and I'm not saying China should
    control them--would give them the capacity to blockade their
    own ports. Not a major problem.
        The second largest chunk of trade are oil tankers going to
    Japan, which may go through the South China Sea. Even if these
    islets were adjudicated to be a part of China, they could
    continue to go, and if they had to reroute themselves to go
    east rather than west to the Philippines, it might add a full
    penny to the cost of gasoline in Japan.
        I would point out that while it is in the interest of those
    at the Pentagon that want to see huge new naval expenditures to
    tell us that these islets are of critical importance, they're
    not that important to the countries that claim them.
        The Philippines wants to calm down. Japan is willing to
    spend only 1 percent of its GDP defending itself. They'd like
    more American tax dollars devoted to that effort.
        And then those who exaggerate the importance, say oh,
    what's at stake here is all of freedom of navigation and
    maritime law, as if this is the only maritime dispute--as if
    China is the only country that won't let UNCLOS determine who
    controls what.
        The fact is there are dozens and dozens of maritime
    disputes. The fact that there are maritime disputes, other than
    those involving China is rarely mentioned in this room because
    it has so little effect on the average American.
        I would point out that I was just meeting with the Prime
    Minister and founding President of Timor-Leste. They want to go
    to UNCLOS to deal with their maritime dispute with Australia.
    Australia refuses, and yet we're not having hearings about how
    Australia poses a threat to the world and free navigation and
    everything America stands for, and I'm sure there's an
    Australian side to this issue as well.
        But every other maritime dispute in the world not involving
    the United States is one we don't focus on.
        Finally, I will respond to one of our witnesses who talked
    about not building missile defense in South Korea.
        I would point out we don't need that missile defense in
    South Korea only if China defangs the North Korean nuclear
    program. I'm not sure they're willing to do that, and so to say
    we don't need it jumps the gun. We don't need it ``if.''
        And one of the other witnesses talked about TPP. I think
    TPP is an incredible bonanza for China because of two
    provisions. You got to get down on the weeds on this. One is
    the rules of origin so that goods could be 60 percent made in
    China and 40 percent finished in, say, Vietnam gets duty-free
    access to the United States.
        We get no access to the Chinese market under TPP, and
    that's if they admit, and you can be sure that if they admit
    that 60 percent was made in China the goods will actually be 80
    or 90 percent made in China.
        So this is 90 percent of the benefits of a free-trade
    agreement in the United States for China, 0 percent of our
    access to their market.
        And second, the agreement enshrines the idea that free
    trade doesn't require that you give up currency manipulation.
    Those are two incredible victories for China, and they didn't
    even have to pay their diplomats to show up for the meetings.
    That's spectacularly good negotiating.
        I yield back.
        Mr. Salmon. Thank you.
        I would like to ask the panellists, why should we care
    about the South China Sea? Is it the same as the disputes that
    Australia has or other disputes across the world when it comes
    to maritime space? Why is this one significant? Any
    panellists--Dr. Searight?
        Ms. Searight. I will just say a few words. I'm sure others
    will chime in.
        I would say that the reason why these disputes are
    significant is this is not about rocks and reefs. It's about
    rules and principles, and U.S. leadership in the region has
    long upheld a regional order based on international law, based
    on freedom of navigation, open commerce, an open inclusive
    system that all the countries in the region including China
    have benefited from, and countries in the region are looking to
    the United States to continue that leadership.
        And so the anxiety in the region as China has launched into
    massive reclamation activities and built military
    infrastructure on those outposts--those artificial islands,
    which far outstrip anything--any other efforts that other
    claimants have done and other claimants, certainly, have
    engaged in reclamation and infrastructure development.
        But China has done it on a massively different scale--over
    3,000 acres in a very short period of time of artificial island
    building and all of the kind of coercive activities that have
    surrounded those efforts as well: Harassing fishermen, not
    letting Philippine fisherman, for example, in to fish in
    Scarborough Shoal vicinity, which has been their historic
    fishing grounds forever.
        I mean, this has caused real anxiety in the region, and
    there is a strong demand signal--strong appetite for the United
    States to continue to step up and show support, not because we
    care ultimately over how those disputes are resolved.
        If the Philippines does want to engage in talks with China,
    and they find a way to get to the table, I think the United
    States should support those efforts to find some sort of
    peaceful resolution.
        But, you know, if countries want to capitalize on the legal
    victory that has really spelled out some of the obligations
    under UNCLOS, you know, I think the United States has a real
    obligation, certainly in order to maintain its leadership by
    continuing to stand with the rule of law.
        Mr. Salmon. I just have a follow-up question, and I will go
    to you next, Mr. Colby. But my follow-up question is kind of an
    adjunct to what I just asked.
        If the United States takes a back seat on this issue and we
    don't really weigh in on what's going on in the South China Sea
    with some of these disputes, what could be the outcome, and why
    should we care?
        Mr. Colby. Thanks very much, Mr. Chairman.
        I mean, I think the legal issues are very important but
    fundamentally this is a strategic issue and what China appears
    to be pursuing or feeling its way toward with these salami-
    slicing tactics is ultimately military and political economic
    dominance, which will allow them not just to project power in
    the immediate area but beyond and not just in the immediate
    seas.
        And I think the fundamental issue, sir, that you're
    alluding to is why would China stop and why would we expect
    them to stop.
        If they're able to push forward and make a lot of progress
    and achieve power that they can use then why stop? I think we
    know, given their behavior, their ambitions which have expanded
    markedly, even in their own rhetoric and certainly their
    behavior in the last few years as well given their ideological
    system, their approach to domestic international order, it is
    going to be in a way that's unfriendly to the kind of order
    that we have built and sustained.
        So, you know, just thinking about it rationally, if they're
    smart poker players, they're going to keep--they're going to
    keep raising if they're able to do so successfully.
        And I think the other point, sir, that you're raising is
    right now is crucial because there are a whole lot of allies,
    partners and fence sitters and a lot of those allies, partners,
    and fence sitters and they're determining right now, okay,
    China is Asia's rising behemoth. Is it safe, is it prudent to
    affiliate with the United States to work to constrain and
    balance China's assertiveness? They're making decisions right
    now, and it is going to be a tough and continuing struggle.
        If we are tepid and irresolute now, when we still have so
    many advantages, what does that say about the future? You have
    to say if you're a lot of those countries, I better make my
    case now because I don't want to stand naked before China,
    having alienated them.
        Mr. Salmon. Dr. Etzioni.
        Mr. Etzioni. Thank you. This is very difficult.
        I am surprised that the issue of freedom of navigation
    keeps coming up. As Congressman Sherman pointed out, why would
    China possibly want to prevent shipping from coming and going?
    I don't know they would survive 5 minutes.
        I mean, if there is any nation in the world which is
    dependent on regular flow of raw material and energy from
    overseas, it is China.
        I mean, nobody in their right mind thinks they would stop
    American ships and then Chinese ships would sail through.
        So whatever nationality of people coming up, I think this
    question of freedom of navigation is really a difficult
    argument to follow, if you agree or disagree.
        Second, as to the enormous military threats these islands
    will pose, they are basically like an aircraft carrier which
    lost its engines. They're marooned. Whatever two prop guns they
    have and one small Cessna, whatever, what are they going to do
    with it?
        They pose no serious military there; and, if there ever was
    a war, they can't move so they would be eliminated in the first
    5 minutes.
        I mean, there can be all kind of reasons. As to the
    question that they violated the rules and, therefore, if we
    stand here they're going to overrun us everyplace.
        As Congressman Sherman pointed out, if you allow the rules
    to be violated every Monday, Tuesday and Wednesday elsewhere
    and then we are now going to insist on them being protected in
    China, I am not sure that that will make us a very legitimate
    protector of rules.
        The place to look at is not what's happening necessarily in
    Australia. The place to look at is what happened in the Arctic,
    where Russia grabbed a huge amount of territory and we looked
    the other way.
        So yes, if you want to enforce the rules, yes, I very much
    agree with the previous witness. First of all, we should sign
    the rule ourself and second----
        Mr. Salmon. Thanks.
        Mr. Cheng.
        Mr. Cheng. Sir, in response to this rule, I'd like to
    respond to this at three levels.
        The first is the issue of military domination of the South
    China Sea. The Chinese were very clearly intent upon creating a
    strategic buffer throughout the South China Sea which would
    neutralize one of our key capabilities that we currently have,
    which is our undersea element.
        The ability of the Chinese to create a massive network,
    which they openly write about of sonar surveillance systems
    with additional anti-submarine helicopters and the like from
    the various runways that they are building would pose a really
    serious jeopardy to the ability of American submarines to
    operate there.
        Second of all, on the issue of FONOPs and why would the
    Chinese possibly cut their own throats, this goes to
    fundamentally larger issue, which is that China is, unlike
    Timor and Australia and et cetera, not simply focused on
    territorial sovereignty, but on the issue of rewriting the
    fundamental rules.
        The Chinese treat their exclusive economic zone not as
    unique--about economic exploitation, but as an extension of
    territorial waters.
        The same way we see with the East China Sea air defense
    identification zone, a demand that countries behave as though
    international airspace is actually Chinese territorial airspace
    where other nations must file flight plans and gain permission.
        So, would the Chinese necessarily cut their own throat by
    demanding other people file ship movements, et cetera? That
    depends on how far we are willing to push that and how far we
    are willing to accept a fundamental rewriting of those
    international rules.
        And finally, just very quickly, how would the region react?
    We see already that South Korea had to hem and haw an extensive
    amount of time before it chose to go ahead with THAAD because
    of Chinese pressure.
        We see the Chinese pushing Vietnam very hard by declaring
    their oil rigs ``mobile national territory.'' That is a Chinese
    description, not mine, and have now apparently deployed
    military radars on their oil rigs.
        So, the question that we have to ask is, how will the
    region react if we step away this one time? But, as my co-
    panellist has pointed out, the broader issue of what that
    presages and the implications of allowing China to rewrite not
    only the rules but to employ ever greater pressure.
        Mr. Salmon. Thank you.
        Mr. Sherman.
        Mr. Sherman. Thank you.
        I want to make sure that my views are clear. I am not
    saying we should step away. I am not saying these are
    unimportant.
        But, when you compare these rocks to North Korea's nuclear
    program, to Pakistan--a state with over 100 nuclear weapons and
    a government is hard to view as a single unified entity--when
    we look at the threats of extremist Islamic terrorism, I would
    say these rocks are not among the top three threats to the
    United States and I didn't even mention the Iran nuclear
    program. First time we have had a hearing when I haven't
    mentioned the Iran nuclear program.
        Mr. Colby, Mr. Cheng, you say that control of these island
    would be a terrible strategic danger to the United States if
    China got that.
        But our position is we want this taken to UNCLOS which may
    very well award some of these islands to China, perhaps the
    very ones they need should the United States willingly accept
    any adjudication that puts China in control of islands when you
    regard the Chinese control of these islands as a strategic
    threat.
        Or, do we bow to Dr. Searight when she says it is a matter
    of rules and principles, and if that means they have their foot
    on our neck by controlling these strategic islands, so be it if
    they won it fair and square in an adjudication? Can we--yes?
        Mr. Cheng. I think that there is something of a difference
    between the person who walks into the 7-11 and pays $10 for a
    bottle of Mountain Dew and the person who walks in and takes
    the Mountain Dew.
        Mr. Sherman. But the point you are saying is if this
    Mountain Dew is capable of being a huge strategic threat to the
    United States, then maybe it doesn't matter.
        We are trying to separate here--I am trying to separate
    whether what's at issue here is the principle or the Mountain
    Dew, and you seem to say it is the principle--that if they get
    the Mountain Dew legitimately and they control these islands
    and they have the sonar equipment because UNCLOS said that some
    of these islands belong to them, that's fine. They paid $10 for
    the Mountain Dew. They get the Mountain Dew and they get the
    sonar, too.
        I want to go on to Dr. Searight. You talk about rules and
    principles being at stake. Aren't they just as at stake when
    Russia occupies three Japanese-inhabited islands near Sakhalin?
    Aren't they just as at stake in the dispute between Oman and
    Yemen, the dispute between Iran and the UAE, France and the
    Comoros? Why is it that rules and principles are at stake only
    when we have a chance to confront China?
        Ms. Searight. Of course rules and principles are at stake
    in all of those cases. But I think the reason why it is so
    salient here is because these disputes affect so many countries
    in the region. There are many claimant states----
        Mr. Sherman. Well, excuse me. There are, like, four or five
    countries in these disputes.
        Ms. Searight. Right.
        Mr. Sherman. We've got a dispute between Madagascar, the
    Comoros and France. There's three. You can throw in Iran and
    the UAE and you're up to five.
        Ms. Searight. Right. But then----
        Mr. Sherman. So it is not like oh, principles are at stake
    when there are five countries involved----
        Ms. Searight. There is----
        Mr. Sherman [continuing]. In separate disputes but all with
    China but three countries that's not a principle.
        Ms. Searight. There is--there is, you know, a community in
    southeast Asia, which there are four claimant states, and they
    have been dealing with China and with each other on these
    issues for a long time. And this is why----
        Mr. Sherman. Let me finish.
        Ms. Searight. Can I just----
        Mr. Sherman. Let me--I've got limited time. Let me contrast
    this.
        These islets have no proven economic value, compared to the
    dispute between East Timor and Australia that involves the
    Sunrise oil fields with $40 billion of potential oil and gas
    reserves.
        Our principles are at stake. Should we deploy the U.S. Navy
    to force Australia to accept an UNCLOS decision? Is there a
    threat to the world because Australia doesn't accept UNCLOS?
        Ms. Searight. This is why these disputes are so important.
    China has been rising dramatically as an economic power for a
    couple of decades. About a decade ago, it reached sort of an
    understanding with these countries that it would resolve these
    disputes peacefully.
        It would put some of the real disputes on the shelf for a
    while. It signed a declaration of conduct in 2002 and off we go
    with China's further rise.
        This is all about how the region, in partnership with the
    United States, can or cannot shape Chinese behavior. With China
    now going down a much more coercive track and seeking to
    intimidate, coerce, punish countries that don't give in to
    China----
        Mr. Sherman. So the principle here then isn't maritime
    adjudication. The principle here is oppose China because--and
    you talk about rising powers. Over the last 10 years Russia has
    been rising. They occupy inhabited Japanese islands not to
    mention the maritime disputes.
        Iran is a rising power. They have a conflict they refuse to
    adjudicate with the UAE. So, China is the only worthy adversary
    of our Pentagon, and it is perhaps just a coincidence that all
    these other things that seem to be in the same category don't
    merit our attention in much of the same way. I mean, we are not
    going to have hearings here on Timor-Leste's dispute with
    Australia.
        I yield back.
        Mr. Salmon. Thank you.
        Mr. Rohrabacher.
        Mr. Rohrabacher. Mountain Dew, huh? Mountain Dew. I think
    I'd be more disturbed if they came in----
        Mr. Salmon. Yesterday, it was Skittles, and today it is
    Mountain Dew.
        Mr. Rohrabacher. I would be much more disturbed if they
    were going into the 7-11 and taking beer, for example, and most
    importantly, if they were taking beer and were armed with a
    shotgun and had a bulletproof vest that might be of concern.
        Yes, even more concerning than the value of the beer is
    that there is someone there with a shotgun, in your
    neighbourhood, with a bulletproof vest who feels perfectly
    comfortable to going into a store and using that shotgun to get
    what they want.
        That's sort of what we are facing now, isn't it? The
    dynamics are changing in the South China Sea. This hearing is
    about whether or not we should be really concerned about it.
        Mr. Sherman and I agree on many things in this committee,
    but I am very concerned about it. This is something that
    warrants concern.
        The fact is that what we are talking about is there has
    been a massive increase in power in China over the last four
    decades and over the last four decades there hasn't been any
    liberalization of Chinese Government whatsoever.
        If we think that liberalization means there would be less
    chance of confrontation of war, what we have then is a massive
    expanse of power, thus an increase in the chance of armed
    conflict and somebody coming in and stealing more than the beer
    or Mountain Dew.
        Maybe, for example, the Vietnamese may understand this
    because a few years ago in this very area that we are talking
    about in the South China Sea, Vietnamese were massacred.
    Unarmed Vietnamese standing on some kind of a reef were just
    shot down by Chinese warships and so the Vietnamese haven't
    forgotten that.
        Maybe some of us don't know about that. But the Vietnamese
    remember that, and they are scared to death of what's going on
    in the South China Sea.
        Now, so if the security dynamics are changing, I would
    agree that that doesn't necessarily mean the United States has
    to be the one to take up all the slack. We always take up the
    slack. We are always the ones that have to jump out and pay the
    bill, send the troops, drive our own country into bankruptcy.
        Well, we can't do that anymore. That's another dynamic at
    play in this world. I think it is time that we look, and
    realistically, at the Chinese expansion of power in this
    society that's probably the world's worst human rights abuser
    in the world in the sense of the magnitude of it. So, how do we
    balance that off?
        Let me just ask the panel very quickly. Doesn't it mean
    that we should be thinking about working with Japan and
    rearming and making Japan a more viable force in the area to
    counteract the Chinese force that's improving?
        Is that a plan, rather than trying to have the United
    States simply make up for it ourselves? Right down the panel,
    please.
        Mr. Colby. Sir, if I could comment. I agree with you
    completely, and I actually think that the inequities of the
    burden sharing are a real problem.
        But, actually, I think the way to address it--first of all,
    because China is so powerful, we do need to take the lead.
        But, actually, that leadership role will be more likely to
    catalyse that burden sharing because it is going to be so
    competitive with the Chinese that the Japanese are going to
    need to, and they should spend more. It's embarrassing they're
    only spending 1 percent on defense.
        Mr. Rohrabacher. You know, I would think of it more as a
    partnership with Japan.
        Mr. Colby. Yes.
        Mr. Rohrabacher. Japan is a modern----
        Mr. Colby. Yes.
        Mr. Rohrabacher [continuing]. Powerful country that we have
    kept weak in their ability to influence international events
    like the ones we are talking about. Now it is time to become a
    partner with Japan and other countries in that region, but
    especially with Japan.
        Mr. Cheng?
        Mr. Cheng. Sir, Japan, of course, has certain limitations,
    particularly on the nuclear side, that I am not sure we want to
    cross.
        So while we would--I would agree with you that Japan needs
    to play a larger role, we do need to recognize that there are
    limits but that also means that there are other players in the
    region that can also play a larger role--India, for example,
    which has a ``Look East'' program, we now are allowed to sell
    arms to Vietnam.
        We have limited our relationship with Thailand in the wake
    of their coup, a policy that we did not do, for example, with
    regards to Egypt. Perhaps we should reexamine whether or not we
    should expand our relations with Thailand.
        There are a number of other countries in the region that
    could also be part of that burden-sharing effort. So while I
    absolutely agree with you, I think we need to look beyond just
    Japan.
        Mr. Rohrabacher. Just to mention, I don't think that it
    would be necessary to have Japan or anyone else have nuclear
    weapons in order to increase the offset for Chinese strength in
    the non-nuclear area.
        I think my time has run out, but do you want to have the
    other ones comment on that--the other witnesses? Maybe the
    other two witnesses would like to comment on maybe a rising
    partnership between India and Japan rather than the United
    States having to face it ourselves. Yes, sir.
        Ms. Searight. Yes, I completely agree. I think India is
    going to be an increasingly important partner in the future. I
    would add Australia as well.
        I think that the more that we do together with Japan,
    Australia and India not only does it, I think, send a very
    strong signal to China, but it sends a signal to the region as
    well.
        You know, the region is very happy to see the like-minded
    large countries work together, especially when we include some
    of the smaller southeast Asian countries in terms of
    multilateral exercises or other kinds of things--joint capacity
    building efforts that we are starting to do with Japan and
    Australia with some southeast Asia countries like the
    Philippines. This is absolutely, I think, the way to go to
    network these aligned partnerships together.
        Mr. Etzioni. May I? I think joining Japan is about the most
    assured way to push all the possible buttons in China. If we
    are to really push them to mobilize and spend on arms, then we
    should do this with Japan.
        I was born as a Jewish child in Nazi Germany, and I am
    following Germany. Germany really turned around. Never again.
    Japan hasn't yet admitted to all of the horrible things it did
    in China. So relying on Japan as a lead partner is highly
    provocative.
        Next, every time we do one of those military alliances with
    a country in the region, we give them a finger on our trigger,
    and so we already extended a military treaty with Japan to
    those miserable islands. Any dispute about the islands now
    requires us to go to war, basically. So every time we involve
    one of these people.
        As to the China military buildup, it built up from such a
    small base--you can talk percentages. They can increase 100
    percentages, and they're still 100 miles from where we are.
        It's symbolized by the fact that we have 11 aircraft
    carriers, and they have one. So I don't want to take more time.
    I know you know the answer. They are very far from the massive
    threatening.
        Mr. Rohrabacher. Admittedly, it started from a small base,
    but we have an expansion of power and, at the same moment, that
    doesn't strike me you have to worry about it. But, at the same
    moment, you happen to notice they are trying to make incredible
    territorial claims in areas.
        Then they're going to say who gets to fly over large areas
    of the South China Sea, then there's something to be worried
    about.
        Mr. Salmon. We need to move to Mr. Bera.
        Mr. Bera. Great. Thank you, Mr. Chairman, and thank the
    witnesses.
        I look at this slightly differently than my colleague, Mr.
    Sherman, in the sense that China is not following the rule of
    law and how we approach this is certainly important in today
    and the message that we send to the region about our
    relationship with the region--our commitment to the region.
        But it also sets the stage for, you know, avoiding a
    kinetic conflict, you know, a decade from now or two decades
    from now.
        Absolutely, Dr. Etzioni, we do hold military advantages far
    and away right now. But what we are doing is we are engaging in
    a region that is unsure of what the future looks like, that
    increasingly is unsure of what our commitment to the region
    looks like. You know, there's very much an interest in building
    commerce and trade and economic relationships.
        Trade is a tool of diplomacy. Trade is about a lot more
    than the movement of goods and services. It's also an
    opportunity to reduce future tensions with China and bring
    China into the fold here.
        So as opposed to always looking at this as an adversarial
    relationship--I mean, China certainly is probing us to see what
    we are doing and, you know, if we stick with that Mountain Dew
    analogy, if they go in and walk out without paying for that
    Mountain Dew today, tomorrow it might be a six-pack of Mountain
    Dew. They're testing to see what we will do and what our
    response will be.
        That is why how we respond and stand up in a forceful way
    to the South China Sea. Yes, I am not worried that that is
    going to tip the balance of power today, but if we do nothing,
    well, they will take a next step.
        And the reason why the South China Sea is so important: It
    is one of the most important throughways and seaways of goods
    that are moving in and out of Asia.
        So making sure there's rule of law, that those seaways are
    open are not just important to us, but they're important to the
    countries in that region.
        And right now, you know, with the fact that TPP looks
    pretty precarious, they're wondering what we are going to do
    with the South China Sea.
        There is a real conversation going on in the region about
    what our commitment is. It's not all pessimistic.
        I mean, the relationships that are building with India, you
    know, the fact that they are now our largest partner in naval
    exercises and the growing at least military-to-military,
    defense-to-defense partnership with India is a positive step.
        The recommitment to the Philippines, to Vietnam, the
    opening up of these relationships are all positive steps. And
    it is not appropriate to say well, we are just focused on
    China. We are doing multiple things.
        Clearly, North Korea is a real threat. Clearly, an unstable
    Pakistan is a real threat. Clearly, you know, tensions in the
    South China Sea are real threats.
        What we want to avoid, though, is aircraft that are just
    flying around or ships that--you know, much of what you see
    happening in the Persian Gulf right now where you see
    provocative movements, one mistake leads to a war sometimes or
    leads to conflict. We want to avoid that.
        I also think it is in China's interest. If we have this
    leverage, if we have economic leverage as well as military
    leverage, it does give us an opportunity to pull China into--to
    have a seat at the table and to talk about how we create this
    partnership.
        They clearly are a major force in the 21st century. Let's
    try to figure out how we move this in a direction of mutual
    benefit and mutual partnership as opposed to adversarial
    relationships.
        I guess, you know, the minute I have left if you'd like to
    talk about why this is important in addressing today in the
    context of avoiding that conflict a decade from now. Mr. Colby.
        Mr. Colby. Thank you very much, Congressman. I pretty much
    agree with everything you said.
        So, just kind of building on that, I mean, I'd just say
    one--the one note of caution I'd sound is that I think our
    military advantages in the region are not as great as are
    sometimes supposed.
        There's some very good unclassified analysis, for instance,
    by the RAND Corporation in their Scorecard report last year
    that showed that in a contingency over Taiwan or the South
    China Sea, if you just look out a couple years and the trend
    lines are not good--it could be very stressing for the United
    States and the nature of the conflict would be so difficult to
    control that it'll be a much larger thing.
        And if you think our resolve is these are a bunch of rocks,
    the Chinese are aware of this, and that's why this perception
    now of trying to influence and show that we are going to stay.
        And I think, addressing the ranking member's point, why it
    is so important to focus on this issue because China is the one
    country that could plausibly defeat us in a large conventional
    war if we don't play our cards right.
        The Russians, if we don't play our cards right, could use
    nuclear weapons or the threat to terminate a conflict. But the
    others--you know, North Korea presents a very, very serious
    problem but the Chinese, if we don't play our cards right in
    the Western Pacific, we could be on the losing end and that
    will be a very, very different Asia.
        So I think that's why we've got to front load resolve and
    show that we are committed and that we are focused, and then
    make the investments to maintain that high end. I think that is
    what the Pentagon is trying to do and I commend them for it.
        Mr. Salmon. Mr. Chabot.
        Mr. Chabot. Thank you, Mr. Chairman, and I have to say it
    is been a very interesting hearing, so I commend you for
    bringing this quality panel here together. Really, it has been
    very interesting.
        Mr. Cheng, let me begin with you, if I can. President
    Reagan famously had the goal of a 600-ship Navy. Does President
    Obama share that goal?
        Mr. Cheng. Sir, I work for The Heritage Foundation, and I
    think it should be noted that President Obama generally doesn't
    really talk to us over at The Heritage Foundation.
        That being said, I think that what we see right now is not
    a 600-ship Navy. There doesn't seem to be anything in the U.S.
    Navy shipbuilding plan to approach that number.
        Now, admittedly, of course, we are under different
    circumstances than we were in the 1980s. That also being said,
    the kind of Navy we had with a 600-ship Navy was one that could
    support two simultaneous major regional contingencies.
        It was one that could also fulfill a very robust strategic
    deterrent role. It was one that had ships such as the Spruance,
    the Oliver Hazard Perry, the Ticonderoga, which operated 24/7
    around the world.
        When we look at how well or not well the LCS is operating,
    when we consider the fact that we now operate without an
    aircraft carrier in the Mediterranean on a regular basis. We do
    not have the Navy that we did then to fulfill the missions of
    requirements that we seem to still have.
        Mr. Chabot. Thank you. And it is my understanding I think
    we are down to, I am not on Armed Services, but we are down in
    the 250s, I believe, now as far as ships. And yes, some of them
    are more powerful than the ones when we--that we had when the
    great Ronald Reagan was President of this nation. But it is
    pretty scary, I think.
        As a matter of fact, if I have my facts straight, I believe
    that for the last 25 years that China has increased its
    military expenditures over the previous years by double digits
    for the last 25 years whereas I think this President's stated
    goals has been to reduce substantially all the branches of the
    government. I think all the--not the branches of the
    government. I mean, I think much of the government other than
    the military should be dramatically reduced.
        He seems to think one of those three branches is much more
    important than, historically, I think our founders envisioned a
    couple of the other branches.
        But as far as the numbers, I think we are going to be down
    to numbers in our army that are pre-World War II. I think we
    have the smallest air force that we have had since we had an
    air force. Shipbuilding and number of ships is going in the
    wrong direction. So it is absolutely frightening, I think,
    particularly when you look at the world as it is today.
        My colleague, Mr. Rohrabacher, was talking about has China
    come along. Have they liberalized when we have done things like
    given them most favored nation, when we trade with them all the
    time?
        I think we have bent over backwards to have a cooperative
    relationship with them. Have they, just talking about a couple
    areas--maybe I've missed something--but have they changed their
    view toward Taiwan, for example, recently?
        Mr. Cheng. No, sir. In fact, China has suspended all formal
    communications with Taiwan since the election of a DPP
    President.
        Mr. Chabot. All right. That's what I thought.
        Mr. Salmon. I understand they also just cut the number of
    visas from Taiwan to China almost in half----
        Mr. Cheng. I believe that's----
        Mr. Salmon [continuing]. Just because of the election of
    President Tsai.
        Mr. Cheng. Yes, sir. I believe that's the case.
        Mr. Salmon. In retaliation or to----
        Mr. Chabot. Yes. Thank you, Mr. Chairman.
        Have they moderated their views towards, say, the Falun
    Gong recently? Did I miss that, by any chance?
        Mr. Cheng. No, sir. I believe Falun Gong is still
    considered a criminal organization in the context of the
    People's Republic of China.
        Mr. Chabot. Are they still rounding people up, putting them
    in hospitals, murdering them and selling their body parts?
        Mr. Cheng. There are still reports to that effect, sir.
    Yes, sir.
        Mr. Chabot. I thought maybe they were still doing that.
        How about the big aside, suddenly Free Tibet? Did I miss
    that one, by any chance? Have they changed their views toward
    Tibet?
        Mr. Cheng. No, sir. I believe that, in fact, if you meet
    with the Dalai Lama, the Chinese Government still expresses
    extreme displeasure.
        Mr. Chabot. And how much effort have they made, really, to
    rein in, say, North Korea, which actually could be helpful to
    not only that region to--but world peace if they would actually
    do it? Have they done much of anything in that area?
        Mr. Cheng. While they have announced sanctions and the
    like, there have been a number of open news reports about
    continuing Chinese trade, Chinese investment, Chinese companies
    continuing to operate.
        There has been highlighted a case of U.S.-Chinese
    cooperation cracking down on a single Chinese company. But that
    has not affected, for example, the flow of oil or food into
    North Korea.
        Mr. Chabot. Thank you. Because that's something they really
    could do that would make a big difference to the whole world.
    I've long held the view that the only thing that will ever
    really get their attention is if South Korea and Japan--they
    don't have to have a nuclear program, but they ought to
    seriously think about one.
        I think that would get China's attention and probably about
    the only thing that would get them to back down and to
    cooperate with respect to North Korea. I've only got a minute
    left.
        I had a million questions, but let me turn to you if I can,
    Mr. Colby. You had mentioned the TPP--Trans-Pacific
    Partnership--and how if we don't move forward with it that it
    is going to send a message that the U.S. is otherwise engaged,
    although the public's view tends to be that that's just--that
    just helps China, you know, which is ironic because the reality
    is it is just the opposite.
        If the U.S. doesn't with our allies establish the rules
    there then ultimately China will because they're the big
    partner in the neighbourhood and they bully everybody around.
        But to be quite honest with you, both in the House here to
    some degree and certainly in the Senate, a lot of people are
    running for the high grass on that one. We've got both
    Presidential candidates--Hillary Clinton, who had said it was
    the gold standard, but when Bernie was chasing her around she
    went into the high grass too and switched completely, and
    Donald Trump, of course, has also come out strongly against it.
    So, do you see any hope there or what----
        Mr. Colby. Well, Congressman, I hate to--I don't know if
    this is good form, but I'd beg to ask you that question. I hope
    so. I mean, you know, I am certainly no economist and I don't,
    you know, accept appeals to authority on that basis.
        But I did notice that I think the heads of the Council of
    Economic Advisors of the last, you know, six or seven
    administrations of both parties suggested it was good on trade
    grounds.
        I am sure it is not perfect but no trade agreement, by
    definition, is going to be perfect, and I do know it demands a
    lot of sacrifice from countries like Japan that have resisted
    opening up for a long time.
        And I think you put it exactly right, sir. If we don't set
    the terms of trade, this is essentially a gift to China, and I
    think Prime Minister Lee of Singapore and Prime Minister Abe of
    Japan and others have been quite frank in public, and I can
    only imagine in private, about what it will do to our position,
    but also to the kind of region that we want.
        And, you know, when I am in Asia you often sort of get this
    idea oh, the Americans, are they going to be around? I point
    out, look, the United States, well before it got involved in
    Europe, opened up Japan in 1853 with the black ships and, you
    know, the open door policy of John Hay.
        And this has been--this has been something that goes back
    to the beginning of the Republic 200 years ago. This is a core
    interest of the United States, and so no one should think that
    this is something new that we took on as part of post-World War
    II.
        No, this is really core and, you know, I know foreign
    policy arguments don't necessarily trump pocketbook ones, but I
    think they should be balanced, and I hope that Congress will
    move forward on it.
        Mr. Chabot. Thank you very much. My time has expired, Mr.
    Chairman.
        Mr. Salmon. Thank you.
        We talked today about Mountain Dew and beer and all kinds
    of other things. I will use the Fram man commercial. He always
    used to say, ``Pay me now or pay me a lot more later.''
        And I think that's the situation that we are in today. If
    we want to have a horrible problem, let's just ignore it
    because the more and more China bullies some of our partners in
    the region and we acquiesce or don't take part, the more
    position and ground that they gain it'll be very untenable
    maybe a few years from now.
        And maybe the solutions then will either be impossible or
    incredibly painful as opposed to if well, if we act today and
    do what we need to to make sure that the rule of law is
    returned to that maritime space, then I believe that by doing
    that we actually avoid a much greater conflict that would be a
    lot more painful to the United States.
        And so I really appreciate the witnesses that came today.
    It was a very, very informative session and my hope is that our
    leaders in this country keep a sharp eye on that problem
    because if it escalates it could escalate very quickly and very
    badly and the costs of dealing with a problem that escalates
    out of control are far worse than tackling it now when it is
    manageable.
        So I thank the witnesses for being here today, and this
    subcommittee is now adjourned.
        [Whereupon, at 3:15 p.m., the subcommittee was adjourned.]

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