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


                  REVIEWING PRESIDENT XI'S STATE VISIT

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


                                HEARING

                               BEFORE THE

                  SUBCOMMITTEE ON ASIA AND THE PACIFIC

                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 7, 2015

                               __________

                           Serial No. 114-105

                               __________

        Printed for the use of the Committee on Foreign Affairs
        
        
        
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]        


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

                                __________
                                
                                
                        U.S. GOVERNMENT PUBLISHING OFFICE
96-907PDF                      WASHINGTON : 2015                        
                                 
                               
________________________________________________________________________________________  
For sale by the Superintendent of Documents, U.S. Government Publishing Office, 
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, 
U.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free).
E-mail, [email protected].  
                               
                                 
                                 
                                 
                      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
TOM EMMER, MinnesotaUntil 5/18/
    15 deg.
DANIEL DONOVAN, New YorkAs 
    of 5/19/15 deg.

     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. Chen Guangcheng, founder, The Chen Guangcheng Foundation.....     3
Jessica Chen Weiss, Ph.D., associate professor of government, 
  Cornell University.............................................     6
Mr. Richard Bejtlich, chief security strategist, FireEye.........    14
Scott Kennedy, Ph.D., director, Project on Chinese Business and 
  Political Economy, Center for Strategic and International 
  Studies........................................................    22

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Mr. Chen Guangcheng: Prepared statement..........................     5
Jessica Chen Weiss, Ph.D.: Prepared statement....................     9
Mr. Richard Bejtlich: Prepared statement.........................    16
Scott Kennedy, Ph.D.: Prepared statement.........................    25

                                APPENDIX

Hearing notice...................................................    40
Hearing minutes..................................................    41

 
                  REVIEWING PRESIDENT XI'S STATE VISIT

                              ----------                              


                       WEDNESDAY, OCTOBER 7, 2015

                       House of Representatives,

                 Subcommittee on Asia and the Pacific,

                     Committee on Foreign Affairs,

                            Washington, DC.

    The subcommittee met, pursuant to notice, at 12:15 p.m., in 
room 2200 Rayburn House Office Building, Hon. Matt Salmon 
(chairman of the subcommittee) presiding.
    Mr. Salmon. The subcommittee will come to order.
    Two weeks ago President Obama welcomed China's Xi Jinping 
to the United States for his first state visit as President. It 
was an opportunity for the administration to make inroads with 
Mr. Xi on areas of mutual interest, as well as to address areas 
of serious concern.
    I, joined by the ranking member, members of the Foreign 
Affairs Committee, and the House at large, wrote President 
Obama a letter urging direct communication on a few especially 
troubling issues. As we review the state visit with our 
distinguished panel, I hope to learn more about how receptive 
the administration was to these concerns, and what challenges 
outside of these major obstacles remain.
    Since President Xi's ascension, China's new-found 
assertiveness has generated some distressing policy 
developments. For instance, over the years, China's cyber 
economic espionage has become a significant irritant in U.S.-
China relations. It was clear that progress on cyber security 
relations was a priority for our administration, and we are 
supportive, that neither country's government will conduct or 
knowingly support cyber-enabled theft of intellectual property 
to benefit their economies.
    This agreement is a positive and necessary step, but it is 
not sufficient. China still refuses to acknowledge its role in 
these attacks, despite evidence that clearly points to the 
contrary. It is my hope that our administration holds guilty 
actors accountable through punitive actions such as cyber 
sanctions, takes steps to deter future incidents of malicious 
cyber espionage, and improves our own cyber defense against 
these kinds of threats. Congress, too, will be watching this 
very closely.
    In the months leading up to the visit, the business 
community expressed serious concerns about China's growing 
protectionism. China's national security reforms, some of which 
have already been codified into law, could force U.S. 
businesses and institutions out of China's market through 
forced technology transfers while other provisions would block 
both trade associations and humanitarian NGOs on national 
security grounds.
    President Xi has promised to use the review only for bona 
fide security reasons, but China defines ``national security'' 
much more broadly than the U.S. does. And the process itself is 
fundamentally opaque, creating serious risk for abuse and few 
avenues to appeal harmful actions by the Chinese Government.
    Increased state intervention in the recent stock market 
troubles, and currency exchange rates also breaches China's 
commitments to let market forces play a decisive role in its 
economy.
    China's aggression in the South China Sea has been a 
longstanding concern for this subcommittee, one which is shared 
throughout the government and civil society. I appreciate that 
the administration continues to raise the issue with their 
Chinese counterparts, but President Xi's position on China's 
illegal maritime claims did not budge during the visit. 
President Xi mentioned that China does not intend to pursue 
militarization, and I know we will hold him accountable for 
this.
    There was no noticeable progress on worsening human rights 
conditions in China. President Xi noted that countries have 
different historical processes and realities to justify its 
poor record on human rights. That is not an excuse, and I will 
work to ensure that human rights play a larger role in foreign 
policy decisions.
    I understand what China is doing here. China, benefitting 
from decades of central planning geared toward economic growth, 
is slowing down. Laden with increasing demands from a new 
middle class, the country is at risk of political, economic, 
and even military unrest. China is trying to divert crises 
through assertive domestic and foreign policies, but often the 
actions that we see are not reflective of a responsible 
international player, if that is what China wants to be.
    The visit also yielded pledges that the U.S. and China 
would boost cooperation on various multilateral issues 
including nuclear security, wildlife trafficking and 
conservation, which are welcome developments. I am concerned 
about the climate deal, however, which signs U.S. businesses up 
to strictly adhere to environmental standards while China is 
not obligated to implement any reforms at all until 2030.
    Encouraging the use of responsible and clean energy 
technology is understandable and laudable, but I remain 
concerned and frustrated that the Obama administration 
continues to use climate politics to put U.S. businesses at a 
competitive disadvantage and impose burdensome costs on U.S. 
families all in the hopes that 15 years from now China will 
live up to a non-binding agreement they make today.
    I hope to hear from our distinguished panel about their 
impressions of the visit and what it portends for the future on 
our bilateral relationship. I support China's integration with 
the international community. China has a lot to offer, and 
their leadership on a number of quarrelsome issues facing the 
global community, like an unstable and belligerent North Korea, 
is welcome. I hope that our Government continues to engage 
China, but also holds it accountable to being the responsible 
actor it portrays itself to be.
    Members present will be permitted to submit written 
statements to be included in the official hearing record. And, 
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 of limitation 
in the rules.
    And I now yield to Ms. Meng, the ranking member here today, 
for her opening statement.
    Ms. Meng. Thank you, Chairman Salmon, and thank you to our 
distinguished panel of witnesses for being here today.
    President Xi's recent visit came at an important yet tense 
time for our two countries. U.S.-China ties have long been 
complex. But as the world's two most powerful economies, it is 
essential that our countries work together and cooperate in 
areas on which we agree.
    While there were very few areas of new cooperation, the 
administration was able to expand and highlight existing 
cooperation and climate change, reining in North Korea's 
nuclear programs and military confidence building. However, 
foremost in our minds is the new promise of cooperation in 
cyber security and on intellectual property.
    I know that my colleagues and I are interested to see if 
these new developments will lead to positive changes, and I 
look forward to hearing your thoughts today.
    Thank you, and I yield back.
    Mr. Salmon. Thank you.
    Mr. Perry, did you have an opening statement?
    Mr. Perry. No.
    Mr. Salmon. I will introduce the panel. First of all, Mr. 
Chen Guangcheng, known to many as the Barefoot Lawyer, is the 
founder of the Chen Guangcheng Foundation and a visiting fellow 
at Catholic University. Welcome, Mr. Chen.
    Dr. Jessica Chen Weiss is a professor of government at 
Cornell University. Welcome.
    Mr. Richard Bejtlich is chief security strategist at 
FireEye and previously was chief security officer at Mandiant.
    And Dr. Scott Kennedy joins us from CSIS where he is deputy 
director of the Freedom Chair in China Studies and director of 
the Project on Chinese Business and Political Economy.
    And I am going to start with you, Mr. Chen, and we are just 
thrilled that you could be here today.

STATEMENT OF MR. CHEN GUANGCHENG, FOUNDER, THE CHEN GUANGCHENG 
                           FOUNDATION

    [The following statement and answers were delivered through 
an interpreter.]
    Mr. Chen. Dear Mr. Chairman and Members of Congress and all 
friends and people who care for human rights, I must say thank 
you. Human rights matter to everybody and should, therefore, be 
a core issue in U.S.-China relations.
    And during Mr. Xi Jinping's visit here, everybody showed 
concern about the human rights issues on the agenda during his 
meeting with Mr. President Obama, the ongoing crackdown on 
human rights defenders, human rights lawyers, and democracy 
activists and religious freedom activists, and it is getting 
worse. And victims of such a crackdown since July 9 has 
amounted to 300.
    And such brutal things as forced abortion, forced 
demolition, and land grabbing, threatening and harassment on 
those human rights activists, and those who speak their mind is 
still going on. And a tragedy happened that is during the 
petition some petitioners were killed. And it was just last 
month that happened to a landowner burned alive in his own home 
during the forced abortion by the local government in Pingyin 
County, Shandong Province.
    United States is the globe leader in human rights defenders 
and democracy model and icon of freedom. Defending universal 
human rights should be a very important part of the 
international responsibility for the United States. We are 
still not sure how much that President Obama has talked about 
human rights during his meeting with Mr. Xi Jinping.
    Did the President talk about human rights issues as an 
individual person who really care about human rights or it is 
just a part of his job? But what we saw actually during Mr. Xi 
Jinping's visit to the White House that the President used a 
kind of white curtain to block the view of those protesting 
outside the House.
    It is sad to see there are so many countries who, you know, 
just care about the money that--from the Communist regime who 
doesn't really care about the living standards of its own 
people for the short term, and they just ignore the 
deteriorating human rights conditions in China. So, for that, I 
would recommend the following.
    And, therefore, the United States' President, 
Congresspeople, and all those who should talk human rights 
issues openly and through media coverage and to let people know 
what exactly the human rights conditions are, and also, 
therefore, to let the world know that the United States really 
cares about human rights.
    We demand the Communist regime to release those prisoners 
of conscience like Mr. Gao Zhisheng, Xu Zhiyong, Mr. Liu Ping, 
and Ms. Li Heping, and Madam Gao Yu, who are still in custody, 
and under housing arrest is definitely not allowed.
    And, third, there should be a special law to deny the 
entries of those Chinese officials who are violators of human 
rights, and also fortify their personal wealth in the United 
States.
    And, number four, that a system to develop the cyber 
software to break down the burning--cyber burning wall in order 
to build a democratic alliance and international community.
    Thank you very much.
    [The prepared statement of Mr. Guangcheng follows:]
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
                              ----------                              

    Mr. Salmon. Thank you very much, Mr. Chen.
    Dr. Weiss.

STATEMENT OF JESSICA CHEN WEISS, PH.D., ASSOCIATE PROFESSOR OF 
                 GOVERNMENT, CORNELL UNIVERSITY

    Ms. Weiss. Chairman Salmon and distinguished members of the 
subcommittee, it is a pleasure and a privilege to share with 
you today my thoughts on Xi Jinping's recent visit and my 
assessment of U.S.-China relations going forward.
    In my view, President Xi's visit produced modest but 
measurable progress in managing the growing frictions in our 
relationship with China. The large number of business and 
industry leaders who participated underscores the continued 
importance of our economic relationship.
    President Xi's speeches reflected his recognition of 
American concerns, particularly among the business community. 
The joint agreement to refrain from cyber theft marked an 
important step forward. It remains to be seen whether words 
will be followed by actions, as President Obama put it, but the 
pledge means that Chinese agencies can be held to account, for 
President Xi's international credibility here is on the line.
    President Xi also used the weight of his words to reiterate 
China's commitment to a market-based exchange rate and to curb 
greenhouse gases through a cap and trade system. No doubt, 
implementing these priorities will be fraught with challenges, 
but the direction underscores China's desire to address 
international concerns in line with continued domestic reforms.
    The visit also produced progress in the area of the 
relationship that could lead to unwanted military escalation. 
The annex on air-to-air encounters adds an important component 
to the memorandum of understanding on the rules of military 
engagement.
    The Chinese Government recognizes that an incident in the 
air could derail the relationship, given the strong patriotism 
and mutual suspicion on both sides. A repeat of the 2001 
collision between a Chinese fighter jet and U.S. EP-3 
reconnaissance plane could easily escalate and take on outsized 
significance in the public imagination.
    In 2001, the Chinese Government managed to mourn the 
Chinese pilot while repressing anti-American street 
demonstration. But today China, under Xi Jinping, may not be 
willing or able to show similar restraint, given the dramatic 
improvement in Chinese capabilities and the exponential growth 
of the internet and social media in China.
    The Chinese Government may have the ability to shut down 
conversation online, but it is increasingly costly for the 
government to do so, particularly when it is patriotism that 
the government is repressing.
    During his visit, President Xi also stated for the first 
time that China does not intend to militarize or pursue 
militarization of reclaimed islands and features in the South 
China Sea and committed to upholding and respecting the freedom 
of navigation. As with his commitment to fight cyber crime, 
President Xi's remarks provide welcome reassurances, and we 
should continue to engage China to define what constitutes 
militarization.
    Over the past 3 years, China has kept a lid on many of the 
domestic pressures that might provoke or complicate a potential 
crisis. China has streamlined its maritime patrols under a 
consolidated and more professionalized coast guard, and under 
President Xi China has also largely restrained nationalist 
mobilization, preventing grassroots protests against Prime 
Minister Abe's visit to Yasukuni Shrine in 2013, as well as his 
efforts to revise and reinterpret the Japanese constitution.
    Chinese authorities also stymied protests against Vietnam 
after Vietnamese anger spilled over into riots that killed 
Chinese workers. At the same time, Chinese activities have 
effectively changed the status quo in the East and South China 
Seas, ending Japan's exclusive control of islands in the East 
China Sea and outpacing rival efforts to reclaim land and build 
infrastructure in the South China Sea.
    In response, some today are calling for a more muscular 
American approach. While not intended to ignite conflict, we 
must recognize that such measures are intrinsically risky, 
particularly if these operations involve highly public denials 
of Chinese claims. As such, we must determine in advance how 
far we are willing to go, or we might otherwise find ourselves 
in a contest where our actions are driven more by concern for 
American credibility than our underlying interests.
    Chinese restraint and adherence to international legal 
principles will be critical to lowering the temperature in the 
region, and we should link progress on this front to 
corresponding and conditional U.S. assurances. Threats to 
impose costs on China for undesirable behavior must, at the 
same time, be coupled with credible reassurances that the 
United States welcomes China's contribution to global 
governance and multilateral leadership.
    As noted in the joint statements, the United States 
welcomes China's playing a more active role in taking on due 
responsibility for the international financial architecture.
    In conclusion, how we talk about China matters as much as 
how we act toward China. Whether or not China is the intended 
audience, Chinese observers are listening to the tone as well 
as to the words we speak. Some campaign statements may be taken 
with a hefty dose of salt, but others will be regarded as 
credible indicators of future policy.
    U.S. pressure on China can be effective if it strengthens 
the hand of those inside China who are trying to push policy in 
the same direction for their own domestic reasons. But any U.S. 
policy or strategy based solely on beating China or a peaceful 
evolution is bound to be guarded with suspicion at best and 
hostility at worst.
    Thinly veiled or outright opposition to a stable and 
prosperous China will harm the ability of those inside China 
who advocate for international cooperation. If the United 
States abandons engagement, nationalists and conservatives in 
China will be vindicated in their belief that the United States 
seeks to keep China weak and divided.
    In sum, the future is not written, and acting as if 
conflict is preordained will only create a self-fulfilling 
prophecy. To manage our differences and build upon the modest 
but measurable progress we have already made requires the hard 
work of tough, sustained engagement rather than the fiery 
posturing that it is all too easy for voices on both sides to 
indulge.
    Thank you.
    [The prepared statement of Ms. Weiss follows:]
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
        
                              ----------                              

    Mr. Salmon. Thank you.
    Mr. Bejtlich.

 STATEMENT OF MR. RICHARD BEJTLICH, CHIEF SECURITY STRATEGIST, 
                            FIREEYE

    Mr. Bejtlich. Chairman Salmon, Congresswoman Meng, 
distinguished members of the subcommittee, thank you for the 
opportunity to testify. I am Richard Bejtlich, chief security 
strategist at FireEye. I am also pursuing a Ph.D. in war 
studies from King's College London. And I began my security 
career as a military intelligence officer in 1997 at the Air 
Force Information Warfare Center.
    Has President Obama secured relief from Chinese hacking? On 
balance, the agreement is a step in the right direction. At 
best, I would expect it to result in a decrease in the digital 
intrusion pressure applied by Chinese military and intelligence 
forces against American companies.
    The Chinese would likely continue pursuing their strategic 
goals by changing tactics at the human level and operations at 
the merger and acquisition level. At worst, I expect the 
agreement to have no effect whatsoever.
    Let me briefly offer five issues for your consideration. 
First, consider President Xi's posture prior to the December 25 
press conference. In written answers to questions posed by The 
Wall Street Journal, President Xi claimed,

        ``The Chinese Government does not engage in theft of 
        commercial secrets in any form, nor does it encourage 
        or support Chinese companies to engage in such 
        practices in any way.''

    Combining this statement with his later declarations, it is 
possible that President Xi is saying that the Chinese 
Government does not hack, because he doesn't consider the 
People's Liberation Army, the Ministry of State Security, or 
other organizations conducting hacking operations to be part of 
his definition of Chinese Government. Therefore, PLA units, 
such as 61398, revealed by my Mandiant colleagues in 2013, will 
continue to raid American companies because President Xi does 
not count them as government forces.
    A second interpretation could be congruent with both U.S. 
and Chinese interests. The U.S. targets Chinese organizations, 
as well as others worldwide, to conduct economic espionage. 
Such economic espionage is designed to better understand 
foreign financial conditions and uncover bribery and corruption 
that harms American businesses.
    The U.S. has a longstanding policy of not passing what it 
learns from these spying missions to American companies for 
competitive gain. It is possible the U.S. administration 
believes its Chinese counterpart will now act in a reciprocal 
manner. American companies will still be targeted by Chinese 
hacking teams, but the Chinese Government will claim that it is 
working to collect economic data and uncover bribery and 
corruption. Whether the Chinese Government passes what it 
learns to Chinese companies for economic advantage remains an 
open question.
    A third interpretation can signal a tactical shift in 
Chinese commercial data acquisition. China has never been a 
one-trick pony when it comes to stealing business information. 
The Chinese conduct extensive and aggressive cyber operations, 
but they also employ equally comprehensive human campaigns as 
well. The Chinese may have decided to simply shift resources 
toward the physical collection of commercial data and wind down 
their cyber operations.
    A fourth interpretation could signal an operational shift 
in Chinese commercial data acquisition. President Xi's words, 
combined with his meeting with American business leaders in 
Seattle, could mean that he wants to conduct more merger and 
acquisition activity, and he expects the Obama administration 
to permit it.
    Currently, sensitive technology deals, such as the rumored 
$23 billion bid by China's Tsinghua UniGroup, Ltd, for 
chipmaker Micron, are likely to be blocked by the Committee on 
Foreign Investment in the United States, or CFIUS. While some 
deals, such as the 2014 acquisition of IBM's low-end server 
business, have cleared CFIUS approval, others remain 
problematic.
    Xi's mention of many of his government's strategic emerging 
industries when talking to President Obama indicates to me that 
these remain a strategic priority. As shown by Baidu's 
investment in, and joint venture with, American content 
delivery network company CloudFlare, China will use traditional 
business methods to acquire intellectual property, market 
share, and service know-how in order to advance its strategic 
goals.
    A final consideration for this agreement is who left out. 
The focus on U.S. and Chinese companies ignores many other 
targets. These include civil society organizations, as well 
documented in the recent report by the University of Toronto's 
Citizen Lab titled Communities at Risk. These civil society 
organizations include dissident groups inside and outside 
China, universities, think-tanks, media organizations, lawyers 
like Mr. Chen, and human rights watchers.
    Companies in other parts of the world are not covered by 
the U.S.-China agreement. And, honestly, I am surprised we 
haven't seen the Brits or Germans going to China and saying, 
``Hey, we want the same agreement to cover us as well.''
    Those organizations continue to be held at risk. So, in 
conclusion, the Xi visit produced more positive statements than 
I expected, but now we must see if words are followed by 
decreased malicious activity in cyber space.
    I look forward to your questions.
    [The prepared statement of Mr. Bejtlich follows:]
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
                                  ----------                              

    Mr. Salmon. Thank you.
    Dr. Kennedy.

STATEMENT OF SCOTT KENNEDY, PH.D., DIRECTOR, PROJECT ON CHINESE 
   BUSINESS AND POLITICAL ECONOMY, CENTER FOR STRATEGIC AND 
                     INTERNATIONAL STUDIES

    Mr. Kennedy. Chairman Salmon, members of the committee, I 
am honored by the opportunity to testify before you today and 
present my thoughts on the Chinese economy and U.S.-China 
commercial relations in the context of the recent state visit.
    The main point I want to convey today is one of caution. In 
broad historical terms, China's economy is much more market-
oriented than it was 30, 20, or even 10 years ago. And the 
United States--business and consumers and workers--have largely 
benefitted from the commercial relationship and China's growing 
role in the global economy.
    However, over the past few years, the pace of 
liberalization in China has slowed, and in some ways the state 
is expanding its intervention in the economy in ways that 
parallel developments in human rights and the internet that 
have already been discussed.
    At the same time, China's economy is slowing. It is 
becoming much more volatile. As a result, doing business with 
China is more challenging, and the slowdown in volatility we 
see in China are creating new challenges and risks for foreign 
businesses and other economies.
    Ongoing efforts to engage China bilaterally and 
multilaterally, as well as adoption of the Trans-Pacific 
Partnership, are addressing many of these problems, but we 
should expect continued commercial frictions in the coming 
years.
    You have my full written statement. Let me briefly 
elaborate on this conclusion. There is broad consensus that the 
Chinese economy is slowing dramatically. There is no consensus 
as to exactly how much, why, or what the future trajectory of 
growth is. My own view is that growth is somewhere below the 
official figure of around 7 percent, but that China is not in a 
recession.
    Continued growth in services, consumption, and wages 
distinguish the current period from 2008 and '09 when China did 
fall into a recession. The current slowdown is in part the 
product of a government-induced contraction brought about by 
much tighter credit conditions and a vast anti-corruption 
campaign that has made officials throughout the system far more 
hesitant to approve projects.
    Now, Xi Jinping came into power promising a much more 
aggressive reform agenda than his predecessor, Hu Jintao. And 
over the past 2 to 3 years there have been a series of 
individual reform policies announced and implemented, but they 
have not all been--they have been all-embracing or 
comprehensive. And within the last 18 months, the trend has 
decidedly been in a statist direction.
    The government has chosen monetary and fiscal stimulus over 
liberalization in an effort to get the economy moving. It 
pushed up the stock market in 2014, and this past summer 
famously and unsuccessfully intervened to keep this bubble it 
created from bursting.
    The reform package for state-owned enterprises announced 
several weeks ago is anything but reformist. And China's 
forthcoming 5-year plan--yes, China still has 5-year plans--
looks like it will include only incremental reforms to the 
economy and the country's governance institutions.
    It is no surprise, then, that U.S.-China economic ties are 
under some significant stress. Commercial relations over the 
past 36 years have broadly benefitted the American economy, our 
businesses, consumers, and even, on balance, workers. But 
American companies that do business in China and with China are 
understandably worried about the slowing pace of 
liberalization, the continued use of industrial policies to 
promote domestic firms, and the opacity of China's policy 
process.
    Even in services, which are much less politically sensitive 
than high technology, the Chinese are not embracing 
liberalization despite the fact that there would be immediate 
benefits to economic growth and to the broader public if they 
opened up services in health care, education, and elsewhere.
    The most important emerging issue is the potential negative 
effect that China's economic volatility and slowdown can have 
on the global economy. China's economy is now so large, and 
financial flows so substantial, that develops in its economy 
ripple throughout the rest of the world very quickly. And as 
China's capital markets open, the ripple effect could become a 
tidal wave traveling at the speed of light. We saw this occur 
in July in the wake of China's intervention in the stock 
market, and in August following the revision of how the 
Renminbi's rate is set.
    Now, there was some progress on these issues during the 
recent state visit. President Xi did repeatedly reaffirm the 
importance of continued economic reform and keeping the 
country's doors open to foreign businesses, and he reaffirmed 
the importance of the Bretton Woods institutions and pledged 
collaboration between the Asian Infrastructure Investment Bank, 
which China helped create, and The World Bank and other 
multilateral development institutions.
    But despite these commitments, it is appropriate to remain 
cautious about whether American companies will achieve greater 
access to the Chinese market or be treated more fairly going 
forward. In addition, I wasn't convinced that President Xi 
fully appreciates the need to provide greater transparency 
about the economy and their economic policies.
    At the press conference that he had with President Obama on 
Friday, the 25th, President Xi did try to reassure markets by 
saying there is no reason for the Renminbi to depreciate over 
the long run. I think there is a good debate to be had on that 
statement. But even given that, this leaves unresolved whether 
the government may permit a devaluation of the Renminbi in the 
short term to support growth or stem capital outflows.
    The U.S. and China announced that their negotiators have 
made incremental progress on a bilateral investment treaty, but 
I don't expect a U.S.-China BIT to be submitted to Congress any 
time soon. China is focused on its anti-corruption campaign and 
avoiding economic instability, while the number one economic 
policy priority toward the region for the United States is 
passage of TPP. It seems highly unlikely the U.S. will seek to 
conclude a BIT, let alone submit to Congress prior to passage 
and adoption of TPP.
    Finally, let me say something more about TPP. As you know, 
China is not a negotiating party, though it has expressed 
interest in potentially joining. It is possible China will 
react to Monday's announcement by expanding its own regional 
arrangements, but being outside TPP would put Chinese companies 
at a competitive disadvantage in those sectors it needs to move 
into to have sustainable growth over the long term, including 
high technologies and advanced services.
    The U.S. would be wise to use TPP not as a tool just to 
compete with China, but as a lever to help induce greater 
economic reforms in China, which would not only be in China's 
self-interest but would also benefit American companies, 
workers, and consumers, and likely contribute to reducing 
China's carbon emissions and cleaning up its environment.
    Thank you.
    [The prepared statement of Mr. Kennedy follows:]
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
       
                              ----------                              

    Mr. Salmon. Thank you. I will begin with questions, and 
then, Mr. Rohrabacher, I will turn to you, and maybe we can 
have a couple of rounds of questions. Does that sound good to 
you?
    Mr. Chen, I would like to start with you. Back in the '90s 
when we were debating whether or not to grant China permanent 
normal trade relations and end the Jackson-Vanik debate every 
year, I believed at that time that by more constructively 
engaging economically with China and having a stronger U.S. 
presence in China that some day some of the things that vexed 
us the most would change, namely human rights, that they would 
get better, and that things like intellectual property rights 
would, if they were accepted into the WTO, would get better.
    I have been wrong. In fact, most of those things have never 
materialized. In fact, the human rights situation, it appears 
to me, while there have been times when I thought it was 
getting better, it seems to me that under this current 
President China has taken a big step backward.
    I believe Deng Xiaoping had a vision of economic openness, 
but I think that maybe even he believed that it would yield 
more personal freedoms as well. It doesn't seem to be 
happening.
    First, can you tell me, what are the most egregious 
affronts to human rights that are happening in China right now? 
And what can we do to be more of a positive influence to get 
changes in those areas?
    Also, would you agree that with President Xi Jinping, this 
President, that the human rights situation has actually gotten 
worse?
    Mr. Chen. During those days of debate, the people believed 
that economic integration or opening to China will help improve 
eventually the human rights conditions there. But, actually, we 
see the fact that during those years that American doing 
business in China, and those business--and they learn bad 
things from the Communist regime there actually.
    When I saw the game change is when we have a kind of 
software that could break down China's--the cyber wall, the 
firewall, and then there are some cases of human rights 
violations in China has been exposed to the outside walls.
    Mr. Salmon. Dr. Kennedy, I would like to talk to you just a 
little bit about China's economy, the stock market. You 
addressed a lot of the issues in your opening statement. On 
August 24, 2015, the Shanghai Stock Market Index fell 8.49 
percent, followed by 7 percent on the following day.
    At that time, the Chinese Government took really 
controversial measures to try to minimize the damage. During 
his visit, President Xi defended his response to the stock 
market crash as needed to prevent mass panic. Some analysts 
predict additional China stock market falls in the future.
    Is their economy slowing faster than analysts predicted? I 
know that you said in your opening statement that 7 percent is 
probably robust, probably a little optimistic. But is it 
slowing faster than analysts predicted? And do you think that 
China will continue to manipulate their stock market, and do 
you think that is a good idea for China's economy? Does it 
really stop panic, or does it actually stop future investment? 
And then, finally, what cost does the market manipulation 
impose on U.S. and global markets?
    Mr. Kennedy. That is a terrific question. I think that 
growth has slowed more than people expected it would, because 
they didn't realize how significant the anti-corruption 
campaign would have on growth. That is the biggest 
contractionary policy in China today, and it is more important 
than just simply having less credit into the system. Actually, 
this is much more important overall. And, in fact, if they 
announced an end to the anti-corruption campaign today, 
investment would pick up tomorrow.
    So it is not the weight of debt; it is really this 
politically induced contraction, because they feel that is the 
way to restructure their economy. So besides that, you know, 
because they cracked down on investment in real estate, all 
that money flooded into the stock market.
    So the problem with the intervention isn't July; it is June 
2014 and since. What we saw was just the most obvious, because 
it was about stemming the collapse and the popping of the 
bubble.
    When President Xi was here, and in his statement in The 
Wall Street Journal and elsewhere, talked about the systemic 
risk, it is the first time they ever mentioned systemic risk as 
a justification for intervention. China's stock market only 
accounts for about 5 percent of total financing in China. You 
know, the Chinese stock market could disappear, and China would 
still have the same financial system essentially.
    So I think that is really a post hoc justification for an 
addiction to intervention that--because state-owned companies 
were losing money, and people were worried about--the Chinese 
Government was worried about their reputational hit that they 
would take by so many folks losing money, even though all they 
lost was the run-up in the year before.
    The intervention that they had was poorly timed, executed, 
and has resulted in a loss of confidence from investors, 
domestic Chinese inventors and foreign investors. Combined with 
the bungled adjustment of the Renminbi's setting and the 
depreciation, there is great concerns going forward.
    When you are managing an economy that is primarily a real 
economy where you have got investments made over months and 
years, investors will move much more slowly. But now that you 
are talking about securities markets and a somewhat open 
capital account, this loss of confidence actually can change 
the direction of the economy in seconds just simply by us 
pushing a button, by selling Renminbi or whatever, and that 
volatility will affect us more and more.
    So I was--the most disappointment I had from his visit, 
maybe the President talked about this with President Obama 
privately, is they didn't explain really what that systemic 
risk supposedly was and why the way they decided to intervene 
was the best way. And they didn't restore confidence among the 
investment community also. I still think they are in a much 
worse position than they were several months ago.
    Mr. Salmon. Thanks.
    Mr. Rohrabacher.
    Mr. Rohrabacher. A couple of points. Sometimes impacts of 
these type of visits are not measurable in terms of the economy 
or in terms of events that happen within a small short 
framework after the visit. I would suggest that if we say this 
visit maybe at best had--at worst had no impact. No. The worst 
is having it seem to have no impact but having it demoralize 
the people in China who are trying to build a better China.
    And I would say having a President of China visit the 
United States and be treated with such respect and not being 
confronted, even--I am not sure privately or publicly with some 
of the many what I consider to be evil things that are going 
on, would have a dramatic impact in the long run, in that good 
people will be demoralized and then not move to make China a 
better place. So there can be a negative impact without anybody 
even seeing it.
    I was very honored to have led the floor fight, with 
Congressman Chris Cox at the time, opposing Most Favored Nation 
status for China. I remember the only reason they made that 
permanent was when I think it was Bill Clinton over a holiday 
decided to declare it a permanent state where they didn't have 
to come back every year and put Most Favored Nation status 
before us, because when they had to come every year, at least 
there was some pressure that was on them through that year to 
correct their behavior, to correct bad behavior.
    We eliminated that, and we eliminated that with the promise 
that if we liberalized our--and I say ``liberalization.'' It is 
not just economics, but that is what we were saying. A 
liberalized economic relationship with China would lead to a 
much freer and a much--and it would lead to progress in many 
other areas.
    That was about 25 years ago now, and maybe let me ask the 
panel as a whole, has there been--we were promised we would 
have things like an independent court system would emerge. Is 
there an independent court system that is a fair court system 
that has emerged now in China in the last 25 years? Has that 
happened? No. No. No. Is there anyone saying yes so that? Okay. 
No one is saying yes to that.
    We were told there would be opposition parties that would 
be permitted. Are there opposition parties now functioning in 
China to take the place of the ruling Communist Party? Anybody 
on the panel know about--no. Okay. What about we were told that 
there would be greater freedom of press and freedom of speech 
if we just had greater economic relationships. Is there greater 
freedom of speech and press now in China as compared to before 
Tiananmen Square?
    Mr. Kennedy. Can I answer that?
    Mr. Rohrabacher. Yes.
    Mr. Kennedy. There I think the answer is much more mixed.
    Mr. Rohrabacher. Okay.
    Mr. Kennedy. There is not a fully independent media that 
has the rights to ask any question on any issue and write about 
it without fear. But there is a more active media, particularly 
on economic issues and economic issues that touch upon civil 
society questions, that is more active.
    And the boundaries on which they can report has expanded 
some, and the growth of social media--Chinese versions of 
Twitter--you see much more discussion. But it is still highly 
constrained, and it is----
    Mr. Rohrabacher. Mr. Chen testified to several incidences 
of people who are losing their property and corrupt officials, 
not necessarily these corrupt officials are being brought to 
justice, but that they are doing these corrupt acts. Are those 
corrupt acts--can they be printed in the paper when a 
government official, not being arrested but just a newsman 
thinking that there is corruption there and we should 
investigate it? Is that possible, for a newspaper to publish 
that in China? Mr. Chen?
    Mr. Chen. I must say this, that as long as the common 
regime remains in power there will be no such a kind of thing 
as an independent judicial system or independent court. As Mr. 
Wang Qishan, the Chinese Communist Party Chief of Commission--
Disciplinary Inspection Commission of the Communist Party told 
the visiting Stanford scholar, Francis Fukuyama, that no such a 
thing is possible as independent court in China. Never. 
Anything that we talk about China is on the fact that 
authoritarian regime is, by itself, by its nature, against 
freedom and democracy.
    As for the economy that we talk about, the Chinese GDP 
numbers, as everybody knows, it is fabricated. And even my 
village chief would know that for the next year GDP growth 
objective would be something at one number above the one that 
we have this year. It is nothing to do with the real economy.
    Well, as you can see, the Chinese economy collapse is 
inevitable as is the regime, because this group of people who 
supervise or regulate the stock market are themselves investors 
and brokers with those power brokers in a state-owned business. 
How could that prevent collapse of the Chinese economy?
    Mr. Rohrabacher. Okay. One last question. I have got to 
jump in here. And that is that the Chinese President promised 
or indicated when he was here that it wasn't government that is 
doing this hacking and spying into our system. Does any one of 
our witnesses believe that? No.
    Let me suggest that when we are dealing with such a regime 
that we shouldn't be playing these games. And if we have to 
deal with it because it is in our national security interest, 
or whatever, as we did during the Cold War, maybe we should 
just be up front about it.
    But it will--but if we aren't, it will demoralize the 
people in trying to think--they think that--the people who will 
reform that system in China are greatest allies of the Chinese 
people. And if we demoralize them by them thinking that we 
believe this garbage, we have done a great disservice to future 
Chinese and future Americans as well.
    Thank you very much, Mr. Chairman.
    Mr. Salmon. Thank you.
    Mr. Sherman.
    Mr. Sherman. Thank you. For the record, I would like to 
claim that I am not 1 hour late for this hearing. I am 1 hour 
early. That is to say, we were scheduled at 2 o'clock p.m. This 
is not the fault of our esteemed chairman by any means. You had 
to reschedule rather suddenly because of an important 
Republican conference, and, Mr. Chair, it is my understanding 
that you won't be in a position to control the timing of the 
Republican conference until you are elected Speaker, which we 
eagerly await.
    I yield to the gentleman.
    Mr. Salmon. Don't hold your breath on that one.
    Mr. Sherman. It could happen. I am running, too.
    Mr. Chen, thanks for being with us. Your story is 
inspirational.
    This has been a big week for Asia, a big week for U.S.-
China relations, and a huge week of victories for the Chinese 
Government. The most notable part is something they didn't have 
to lift a finger to do, and that was this trade agreement. You 
say, ``Well, how is China affected?'' It is affected by the 
rules of origin provisions, so that goods that are made perhaps 
65 percent in China, 35 percent in Vietnam, have free access to 
the U.S. market.
    Now, we don't know what the percentage is for various types 
of goods. We know for auto parts but nothing else. The 
legislators of the government of Brunei, they know. Chinese 
intelligence knows. We don't know. We look forward to being 
treated with at least as much dignity as the legislators in 
Brunei or Vietnam. But until then, we can only look at prior 
agreements where we would expect that goods would only have to 
be 35 percent made in one of the 12 contracting parties, so 
they could be 65 percent made in China. But that is de jure. 
Then, there is de facto.
    By the way, this is kind of my opening statement and I am 
going to ask questions. So I will go a little bit long. I was 
told I could make an opening statement, but I want to throw in 
a question.
    I will ask our witnesses, would China--the Chinese 
Government cooperate in making sure that goods that were 85 
percent made in China, and 65 percent made in Vietnam, are not 
mislabeled to be 35 percent made in Vietnam and only 65 percent 
made in China? Should we expect any cooperation from the 
Chinese Government in enforcing the rules of origin provisions?
    Dr. Kennedy? I think this is a one-word answer.
    Mr. Kennedy. Actually, yes.
    Mr. Sherman. You are saying the Chinese Government would 
rat out a Chinese-based company because goods were 80 percent 
made in China and 20 percent made in Vietnam, but they 
labeled--they claimed to U.S. authorities that it wasn't just 
20 percent made in Vietnam, it was 35 percent made in Vietnam. 
You are saying the Chinese Government would rat out that 
company.
    Mr. Kennedy. I think it would be hard for them to, over a 
long period of time, maintain that fiction, since the 
Vietnamese Government is going to have a different interest 
with them and other----
    Mr. Sherman. Oh, no. The Vietnamese Government will say, 
``Here is an opportunity to export goods to the United States, 
a highly competitive market, in the most efficient way 
possible.'' And if the goods can be produced most efficiently 
at the highest quality--85 percent made in China, 15 percent 
made in Vietnam--why would Vietnam want to crush that export or 
that company, that product, in order to see goods made in 
Mexico take their place on American shelves?
    So in any case, I will ask any of our witnesses, are you 
aware of any occasion where the Chinese Government has come 
forward and disclosed to American authorities that a Chinese 
company, not run by a dissident, was in violation of U.S. law? 
Got a lot of knowledge about China here. Can anybody come up 
with an example? I don't see Dr. Kennedy raising his hand. I 
don't see the next witness raising--Mr. Bejtlich raising his 
hand, not Dr. Weiss, and not Mr. Chen.
    Mr. Kennedy. I will just--the only example that I could 
think of off the top of my head would have been to the extent 
in 2013 and '14 when the Chinese Government was focused on 
anti-corruption or unfair competition practices in their health 
care sector, and others, and they would have let the U.S. 
Department of Justice know about potential violations of 
foreign corrupt practices at----
    Mr. Sherman. Okay. So that was attacking a U.S. company and 
depriving American workers and American companies of access to 
the Chinese market. You have illustrated my point. They will 
reveal that information only when it is in the interest of 
mercantilist objectives of Beijing.
    So we have one huge benefit, and that is they get--China 
gets free access to our market, and of course there is nothing 
in this agreement that gives us access to Chinese markets, 
because China isn't even a signatory. But the other big win 
here was we were told that this deal would be a chance for the 
United States to establish that it is American trade rules that 
will govern the Pacific.
    Well, to a good extent, Wall Street's rules are going to 
govern the Pacific. But there is one departure, and that is 
currency manipulation. This agreement sanctifies the view that 
countries are free to manipulate their currency and to have all 
the benefits of free trade agreements. And I don't think that 
is a victory for American trade objectives. That is a victory 
for Chinese trade objectives.
    But I want to go on to the media, and here is where I may 
have some expertise given my home district. The day is gone 
when Hollywood is going to make a movie about Tibet. As a 
matter of fact, I don't know if Richard Gere will get many 
parts in the future at all.
    We now have a situation where, whether it is Mars or 
anywhere else, there has to be a pro-Chinese Government hero 
message in the movie in order to be made in Hollywood. Not only 
do the Chinese control their own market, but a Chinese company 
controls, I believe it is AMC anyway, the second largest bit of 
screens in the United States.
    So if any of you--I hate to break this to you, Mr. Chen, 
you will not be the lead character in any major movie made in 
Hollywood, either yourself nor will you be played by a famous 
actor, because that movie will not be shown on a big chunk of 
American screens, and the Chinese only let--what is it? Thirty-
five movies made in America into their country.
    So all of Hollywood is desperate to be one of those 35, and 
the only way to be sure that you are going to be one of those 
35 is to make sure that the Chinese Government or its agencies 
or activities are one of the heroes of your movie, whether it 
is Mars or anywhere else. So those who think the Chinese 
Government only controls China don't understand how 
interconnected the world is.
    We have an expert in human rights in China. Mr. Chen, what 
can we do to expand human rights in China?
    Mr. Chen. As I recommended in my statement testimony, that 
if Congress makes laws to deny the entrance of those human 
rights violators in the Communist regime, that will help defend 
human rights in China. Another thing is about freedom of 
internet.
    As I said, if Congress budgets a little bit more assistance 
to develop the cyber software to break down the firewall of 
China, which would provide the information definitely needed 
for the Chinese people which will promote press freedom and 
democracy there. That would be a great contribution.
    And, actually, the Chinese regime knows this very well, and 
they tried to stop people invest--in developing such a kind of 
software. And, as a matter of fact, I observed that some of the 
shortwave radios have stopped broadcasting, which is a mistake. 
That is just what the Communist regime needs.
    Mr. Salmon. Thank you.
    Mr. Sherman. If I could----
    Mr. Salmon. The gentleman's time has expired.
    Mr. Sherman. It has more than expired.
    Mr. Salmon. Yes. We are going to vote in just a minute, but 
I did have one followup question, because it is such a pressing 
issue, with Mr. Bejtlich.
    This agreement that our two Presidents made regarding cyber 
hacking, what are the ramifications or implications if China 
doesn't agree? Was there anything really tangible that can act 
as a deterrent for this happening? And, you know, what would be 
the likely outcome if something does occur?
    And then, the second thing is, with the People's Liberation 
Army not being involved in any of this agreement, does China 
just have the ability to kind of do this now and blame them? Or 
not even blame them, but say our Government is not involved, 
like you said in your opening statement, and is there a way for 
us to continue to push forward to say, ``Wait a minute. You 
know, we are asking that you make sure that the Army doesn't do 
any of this hacking as well. And, anyway, what are the best 
ways for us to move in that direction?''
    Mr. Bejtlich. Thank you for the question, sir. The last 
consequence that we appear to have available is sanctions. The 
President mentioned that in the event the Chinese don't appear 
to be upholding their end of this agreement that the 
administration would pursue activities, possibly through U.S. 
Trade Rep or through the WTO or through some mechanism. The 
Executive Order that they signed earlier this year gives them 
the authority to impose sanctions as well.
    My personal opinion is we are not going to see sanctions 
anywhere within, say, a 6-month period. And, honestly, that 
starts to get toward the end of the Obama administration, and 
he may simply say, ``I am going to hold off just for the rest 
of my time.''
    As far as the issue with the PLA, it is entirely possible 
that the Chinese Government could, rather than direct the PLA 
or the MSS to conduct these operations, they could sort of take 
a Thomas Becket approach and say, ``Wouldn't it be great if 
someone could get us this information,'' or ``There is a need--
the government has a need for this sort of information.''
    And the military might pursue it on their own, or you may 
see a movement of people from those units into the Chinese 
private sector where suddenly they become security companies 
and contractors who carry out this activity. We have called 
that the decentralized scenario at FireEye.
    Honestly, until the Chinese Government changes its 
strategic decision to pursue Western technology and to abandon 
any sort of vulnerability or dependence on Western technology, 
they are going to continue to get this by any means necessary.
    Mr. Salmon. So it sounds like to me everybody is on their 
own. Everybody would be advised to beef up your security as 
much as you possibly can, because in the near future there 
probably isn't going to be any real significant government 
action to make sure that it doesn't keep happening.
    Mr. Bejtlich. Yes. We are not worried about not being busy 
for the next many years in our industry. And, by the way, sir, 
there is nothing about this that is exclusively Chinese either. 
You could easily see a country like Nigeria or some other 
country say, ``We are going to adopt a similar model.''
    Mr. Salmon. Or Iran or any number of countries, as you 
mentioned.
    Mr. Bejtlich. Yes.
    Mr. Salmon. Mr. Sherman, I am going to give you one more 
question, and then we will go ahead and wrap up.
    Mr. Sherman. Thank you.
    China has a program against corruption. I think this is 
maybe just aimed at the opponents of whoever, President Xi. The 
United States has the capacity to identify assets owned by 
princelings and their children and relatives outside of China, 
and otherwise to paint a beautiful, clear, and embarrassing 
picture of unwarranted wealth of those in power.
    If we had this information and leaked it to various press 
organs, would that outrage the Chinese people at the party? And 
which publications would have both the courage to publish and 
the credibility with the Chinese people? I will go to any 
witness who wants to answer.
    Mr. Chen. For those human rights violators of the Communist 
regime, we can tell who they are and what they did through the 
internet users in China who expose their violations. Well, we 
can tell by the normal calculation of the monthly salary or 
year salary of those Communist regime officials, and so we know 
that any number beyond that should be regarded as ill-gotten 
wealth, which is quite easy to recover, I think.
    And as you can tell that by the already reported wealth of 
those individual top Chinese officials whose household wealth 
could be--amount to tens of thousands of--multi-millions of 
U.S. dollars, actually, and I can't imagine how could that 
possible based on their basic income as an official in China. 
If we had this system of exposure in place, I think that we 
could find solutions to those issues in relating the two 
countries.
    Thank you.
    Mr. Salmon. Thank you very much. This has been a very 
wonderful discussion. There is so much more to say and so many 
more things to learn. The goal is to improve the bilateral 
relationship. It is not just to cast aspersions but to build 
that relationship.
    We do have some very big concerns. Mr. Sherman has raised 
several, and has in the past, about currency manipulation 
issues and unfair trade practices.
    Mr. Chen, we are very honored that you would take the time 
to be here today. You have developed such a wonderful global 
reputation for fighting for freedom and for human rights, and 
we appreciate it.
    But all of our distinguished panelists have been extremely 
good, and we appreciate you being here today.
    And this committee will be adjourned. Thank you.
    [Whereupon, at 1:32 p.m., the subcommittee was adjourned.]

                                     
                                    

                            A P P E N D I X

                              ----------                              


         Material Submitted for the RecordNotice deg.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                 [all]