[Senate Hearing 114-75]
[From the U.S. Government Publishing Office]





                                                         S. Hrg. 114-75

    SAFEGUARDING AMERICAN INTERESTS IN THE EAST AND SOUTH CHINA SEAS

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

                                HEARING

                               BEFORE THE



                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 13, 2015

                               __________

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                COMMITTEE ON FOREIGN RELATIONS         

                 BOB CORKER, TENNESSE, Chairman        
JAMES E. RISCH, Idaho                BENJAMIN L. CARDIN, Maryland
MARCO RUBIO, Florida                 BARBARA BOXER, California
RON JOHNSON, Wisconsin               ROBERT MENENDEZ, New Jersey
JEFF FLAKE, Arizona                  JEANNE SHAHEEN, New Hampshire
CORY GARDNER, Colorado               CHRISTOPHER A. COONS, Delaware
DAVID PERDUE, Georgia                TOM UDALL, New Mexico
JOHNNY ISAKSON, Georgia              CHRISTOPHER MURPHY, Connecticut
RAND PAUL, Kentucky                  TIM KAINE, Virginia
JOHN BARRASSO, Wyoming               EDWARD J. MARKEY, Massachusetts
              Lester E. Munson III, Staff Director        
           Jodi B. Herman, Democratic Staff Director        

                              (ii)        

  











                            C O N T E N T S

                              ----------                              
                                                                   Page

Cardin, Hon. Benjamin L., U.S. Senator from Maryland, opening 
  statement......................................................     3
Corker, Hon. Bob, U.S. Senator from Tennessee, opening statement.     1
Russel, Hon. Daniel R., Assistant Secretary of State for East 
  Asian and Pacific Affairs, U.S. Department of State, 
  Washington, DC.................................................     5
    Prepared statement...........................................     7
    Responses to questions submitted for the record by Senator 
      David Perdue...............................................    36
Shear, Hon. David B., Assistant Secretary of Defense for Asian 
  and Pacific Security Affairs, U.S. Department of Defense, 
  Washington, DC.................................................    11
    Prepared statement...........................................    12
    Responses to questions submitted for the record by Senator 
      David Perdue...............................................    39

                                 (iii)

  

 
    SAFEGUARDING AMERICAN INTERESTS IN THE EAST AND SOUTH CHINA SEAS

                              ----------                              


                        WEDNESDAY, MAY 13, 2015

                                       U.S. Senate,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 2:16 p.m., in 
room SD-419, Dirksen Senate Office Building, Hon. Bob Corker 
(chairman of the committee) presiding.
    Present: Senator Corker, Gardner, Perdue, Cardin, and 
Murphy.

             OPENING STATEMENT OF HON. BOB CORKER, 
                  U.S. SENATOR FROM TENNESSEE

    The Chairman. I will call the meeting to order.
    In June 2014, this committee held a hearing on the future 
of United States-China relations. At that time, I raised 
concerns over the lack of a coherent China policy, including 
the absence of sustained high-level engagement from senior 
administration officials despite the consistent rhetoric that 
the United States-China relationship is one of the most 
consequential relationships for United States political, 
security, and economic interests.
    I left that hearing scratching my head. And after nearly a 
year later, I am even more troubled.
    Yesterday, this committee convened to discuss a new nuclear 
cooperation agreement with China. We heard troubling 
information about the Chinese intent to divert U.S. technology 
for military purposes. In addition, we were told that China has 
not taken adequate steps to end proliferation of sensitive 
technologies by Chinese entities and individuals to countries 
of concern, including Iran and North Korea.
    Despite these concerns, administration officials testified 
in support of a new nuclear cooperation agreement, noting the 
mutual benefits for the bilateral relationship, including 
commercial interests.
    This afternoon, the absence of a genuine China policy will 
be on display as we discuss the situation in the East and South 
China Seas where China continues to engage in provocative and 
destabilizing behavior.
    As you can see from these pictures on display, China 
continues to engage in land reclamation and construction 
activities, the scope and scale of which are unprecedented in 
the South China Sea.
    Figure 1 shows Fiery Cross Reef, in the Spratly Islands, as 
it appeared on May 2014. Figure 2 shows that same reef less 
than a year later with over 1,300 meters of runway already 
completed and analyst assessments that it could be expanded up 
to 3,100 meters.
    Clearly, these activities are not simply limited to 
dredging and piling sand. China is deliberately constructing 
facilities on these reefs and islets that could be used for 
military purposes, including airstrips and ports, as you can 
see in Figure 3, which shows Fiery Cross Reef just a few weeks 
ago. Again, in Figure 4, you can see large, multistory 
buildings with additional military capabilities.
    Moreover, Beijing has publicly confirmed that there are 
military uses for these facilities, with China's foreign 
ministry spokesperson stating on March 9 that this construction 
was undertaken in part to satisfy the necessary military 
defense needs.
    It is worth noting that all of these activities are 
occurring against the backdrop of China's massive military 
buildup, including significant investments in the antiaccess/
area-denial capabilities.
    Most China watchers believe that Beijing does not want to 
start a conflict in either the East or South China Seas. Yet 
many of the same experts concede that Beijing may do everything 
short of engaging in a military conflict to solidify its 
claims.
    That is why I recently joined Senators McCain, Reed, and 
Menendez in a bipartisan letter to Secretary Kerry and 
Secretary Carter to highlight our growing concerns with China's 
efforts to alter the status quo through ongoing land 
reclamation and construction activities in the South China Sea.
    According to the most recent statistics, some $5 trillion 
in global ship-borne trade passes through the South China Sea 
annually. As you can see from Figure 5, all of the major trade 
routes through the South China Sea pass near disputed areas in 
both the Spratlys and Paracels. And you can see those circled 
on this display.
    I hope we will be able to have a thoughtful discussion 
today that outlines U.S. interests in the Indo-Pacific and how 
Chinese actions in the East and South China Seas affect, if at 
all, the balance of the United States-China bilateral 
relationship.
    In addition, I hope we will explore various options 
available to the United States to ensure that the situation in 
the East and South China Seas does not result in a conflict. I 
support efforts to constructively engage with China, including 
strengthening economic and trade ties.
    Yet simply defaulting to an approach that maintains 
cooperation while managing differences with China is not a 
successful formula, particularly when such management cedes 
United States influence and places American interests at risk 
in the Indo-Pacific.
    I am concerned that absent a course correction, 
specifically high-level and dedicated engagement from the 
United States Government to articulate a coherent China policy, 
our credibility will continue to suffer throughout the region, 
whether it is in regards to nonproliferation or preserving 
freedom of navigation in the East and South China Seas.
    I look forward to hearing from the witnesses and thank them 
for being here.
    And now I look forward to hearing from our distinguished 
ranking member.

         OPENING STATEMENT OF HON. BENJAMIN L. CARDIN, 
                   U.S. SENATOR FROM MARYLAND

    Senator Cardin. Well, thank you, Chairman Corker. I 
appreciate you very much holding this hearing. This is a very, 
very important hearing.
    The relationship between the United States and China is 
critically important to this country. It is a complex 
relationship.
    Yesterday, we held a hearing on our civil nuclear 
cooperation, and I thought that hearing brought out many points 
that were extremely important to follow up on. Today's hearing 
dealing with the security in the South China Sea and East China 
Sea is equally important, and China plays a critical role in 
regard to maritime security issues.
    So it is a very important hearing, and I thank you for 
conducting this.
    There are clearly differences in the claims of territorial 
rights in the China seas. The important thing, though, is to 
have an effective mechanism to deal with maritime disputes. 
That needs to be our key policy objective. And I know President 
Obama has underscored the importance of effective mechanisms 
for dealing with the maritime disputes.
    Provocative conduct is not helpful at all, and we have seen 
more and more of these provocative incidents. China, 
particularly, has been very much responsible for taking actions 
that make the circumstances much more dangerous.
    Ambassador Shear, when I was in Vietnam, that was the most 
important issue that was brought up to me, the concern that 
Vietnam's future was very much at risk due to the oil rig 
activity that China was doing in areas that Vietnam had 
reasonable rights to make claims that that was their territory.
    Unilateral action by China caused a major problem at the 
time that could have escalated even more than it did. But that 
was not the only time. The reclamation efforts that Senator 
Corker is talking about, in an effort to gain more territorial 
and maritime claims, is a provocative action by China today.
    You mentioned Fiery Cross, where construction and 
reclamation has increased the size by elevenfold since August 
of last year. We can also talk about Gaven Reef, where 14,000 
square meters have been constructed since March 2014, or 
Johnson Reef, where there have been 100,000 square meters in an 
area that was submerged before, all this in an effort to really 
change the equation in the region by taking unilateral actions.
    What this does is it clearly affects the stability of the 
region and jeopardizes the free flow of commerce. So the United 
States has a direct interest in this and we must do everything 
we can to resolve these issues peacefully.
    China is not the only country that has taken provocative 
action, but they are the largest. And they are the ones who 
have been the most bold in taking these actions. There are 
conflicts over overlapping territorial claims by nations in the 
region, with China, the Philippines, Brunei, Malaysia, and 
Vietnam also making claims, often conflicting, to islands, 
reefs, and shoals in the South China Sea. And then there are 
China and Taiwan also asserting their rights, a whole lot of 
them through expansive nine-dash line territorial claims.
    In the East China Sea, it is clear United States policy 
that although we do not take a position on the ultimate 
sovereignty of the Senkaku Islands, the Senkakus are under 
Japan's administrative control, and we oppose unilateral 
efforts by third parties to change the status quo. Nonetheless, 
China has asserted a claim to the Senkakus.
    So what can we do? And what should the United States be 
doing? First and foremost, we believe it is essential for all 
parties to exercise self-restraint to avoid making the 
situation worse.
    The use of coercion, threats, or force to assert disputed 
claims in the region or to seek a change in the current status 
quo is just not acceptable.
    We have been working with the ASEAN organization to develop 
a code of conduct for resolving maritime disputes. It is not 
clear whether China will participate or not. They certainly 
have not been cooperative in developing a code of conduct that 
would allow for the rule of law, orderly processes to deal with 
disputes and not taking unilateral action.
    I think it is important that we continue to urge the ASEAN 
members to come up with a code of conduct, a gold standard for 
resolving these issues, even if China does not participate. We 
will at least have a gold standard for how to deal with this.
    I think we need to redouble our efforts to work with the 
Asia-Pacific region to develop a functional problem-solving 
architecture that could support the resolution of disputes 
through a collaborative diplomatic process consistent with the 
recognized principles of international law.
    Let me also point out there are other things that we can 
do. The United States can play a significant role in bolstering 
the region's maritime security capacity, including maritime 
domain awareness, and help contribute to effective regional 
management of maritime security issues.
    Finally, the United States must continue to demonstrate an 
enduring commitment to the region and an enduring presence 
there.
    We will stand by our treaty allies. We will deepen our 
partnership in the region. And we will continue the operations 
by our Armed Forces in support of freedom of navigation, the 
maintenance of peace and stability, and respect of 
international law.
    Mr. Chairman, let me just say lastly, it may not be 
directly on point, but I do think the fact that we have never 
ratified the Law of the Sea Treaty does not give us the full 
standing in this area where we could have a strong position. I 
know that there is controversy, which I do not fully 
understand, but I do believe that the United States has been a 
leader in maritime security issues. And our presence in the 
China seas is critically important to maintain stability.
    I just think we would have stronger standing if we would 
join other nations that have already ratified the Law of the 
Sea Treaty, and that would give us an even stronger standing.
    I want to welcome both of our witnesses here today. 
Secretary Russel and I worked together in the last Congress 
when I chaired the East Asia and Pacific Subcommittee that 
Senator Gardner now chairs. Secretary Russel has been an 
incredibly valuable partner with us in the rebalance to Asia, 
and we thank you very much for your help.
    And Ambassador Shear has been a great servant of the public 
and now in his position as Assistant Secretary of Defense.
    It is a pleasure to have both of you before our committee.
    The Chairman Thank you for those comments.
    I would never want to get in a tit-for-tat with the 
outstanding ranking member, who I respect so much and enjoy 
working with. I will say that China is a signatory to the Law 
of the Sea Treaty and it does not seem to be having a very 
positive effect, so I do not know that you can say one plus one 
equals two, in that particular case.
    Senator Cardin. I do not want to argue with my chairman, 
but if we were to ratify it, we might be able to use that 
mechanism more effectively with China.
    The Chairman Yes, I got it.
    Anyway, thank you so much.
    Our first witness is the Honorable Danny Russel, Assistant 
Secretary for East Asian and Pacific Affairs. We thank you for 
being here, and thank you for your service to our country.
    Our second witness, the Honorable David Shear, Assistant 
Secretary of Defense for Asian and Pacific Security Affairs. We 
also thank you for being here, and thank you for your public 
service.
    If you will, I think you know the drill, make some brief 
comments that you think are very important to our discussion 
openly here today. Your entire testimony will be entered into 
the record, and we look forward to the Q&A. Thank you very 
much.

STATEMENT OF THE HON. DANIEL R. RUSSEL, ASSISTANT SECRETARY OF 
 STATE FOR EAST ASIAN AND PACIFIC AFFAIRS, U.S. DEPARTMENT OF 
                     STATE, WASHINGTON, DC

    Mr. Russel. Mr. Chairman, thank you very much, and Senator 
Cardin, Senator Gardner. I appreciate the opportunity to 
testify today with my good friend and colleague, Dave Shear.
    I thank you also for this committee's strong bipartisan 
support of our work in the East Asia and Pacific region.
    The East and the South China Seas are important to global 
commerce and regional stability. So the handling of the 
territorial and maritime issues in these waters has economic 
and security consequences for the United States. And while 
disputes have existed there for decades, tensions have 
increased in the last several years.
    Not only could a serious incident provoke a dangerous 
escalatory cycle, but the region's efforts to develop a stable, 
rules-based order are also challenged by coercive behavior.
    This gives the United States a vested interest in ensuring 
that disputes are managed peacefully. Our strategy aims to 
preserve space for diplomatic solutions by pressing all 
claimants to exercise restraint, maintain open channels of 
dialogue, lower rhetoric, clarify their claims in accordance 
with international law, and behave responsibly at sea and in 
the air.
    Mr. Chairman, the United States strongly opposes the threat 
or the use of force or coercion of any kind, and we are 
concerned about assertive behavior, as we saw in the standoff 
following China's deployment of an oil rig in disputed waters 
off the coast of Vietnam last year; as we saw in several 
incidents involving the Philippines and China; and as we are 
seeing in China's land reclamation and construction, which, as 
you pointed out, dwarfs that of any other claimant.
    This ongoing activity raises regional tensions. It does 
nothing to strengthen China's legal claims. It runs counter to 
past agreements with ASEAN. And it also harms the environment.
    China's arguments and justifications have not alleviated 
its neighbors concerns. Only halting these activities, 
negotiating a binding code of conduct with ASEAN, and 
clarifying the claims in accordance with international law will 
lead to stability and good regional relations.
    We recognize it takes time for sovereignty disputes to be 
resolved. In the meantime, we are working for peace, stability, 
and for our national interests.
    Here is how. First, we are ensuring that maritime issues 
are at the top of the agenda in the region's multilateral fora, 
showing that the entire region is concerned. And I will host a 
conference on Friday with the senior officials from all 10 of 
the Southeast Asian ASEAN countries.
    Second, we are shining a spotlight on problematic behavior, 
including land reclamation, to ensure that destabilizing 
behavior is exposed and addressed.
    Third, we are defending the right to dispute settlement 
under law, including binding arbitration under the Law of the 
Sea Convention. Much of the region now accepts that as a valid 
way to deal with disputes when diplomatic negotiations have not 
succeeded.
    Fourth, we are forging cooperative partnerships with 
Southeast Asian coastal states to improve their maritime domain 
awareness so they know what is happening off the shores.
    Fifth, we are coordinating closely with allies like Japan 
and Australia to maximize the impact of our assistance and 
diplomacy.
    Sixth, we are encouraging information-sharing and 
consultations so that all countries seeking peaceful resolution 
operate from a common situational picture.
    Seventh, we are talking directly and at senior levels. For 
instance, President Obama has engaged President Xi of China 
candidly on maritime disputes. His message is clear: China 
should build common ground through diplomacy in the region, not 
artificial ground through dredging in the South China Sea.
    And lastly, we maintain an enduring and formidable security 
presence, which my colleague, Dave Shear, will address in a 
moment. It is lost on nobody that our alliances and our 
military footprint in East Asia deter conflict and help keep 
the peace in this important region.
    So, Mr. Chairman, our strategy and our actions are designed 
to protect rules, not protect rocks. We are working to protect 
U.S. national security, U.S. interests, to maintain the peace, 
to sustain freedom, to strengthen the rule of law, to deter 
aggression, to prevent coercion, to lower tensions and risk, 
and to encourage the claimants and the parties in the region to 
work together peacefully.
    Thank you very much.
    [The prepared statement of Mr. Russel follows:]

                  Prepared Statement of Daniel Russel

                      maritime issues in east asia
    Mr. Chairman, members of the committee, thank you for the 
opportunity to appear before you today to testify with David Shear, 
Assistant Secretary of Defense for the Asia-Pacific, on this very 
important and timely topic. I would also like to thank the committee 
for its leadership in supporting and promoting bipartisan engagement 
with the Asia-Pacific and advancing U.S. interests there. You have 
demonstrated that this committee understands the importance of the 
Asia-Pacific region to U.S. national security.
    Over the last 6 years, the Obama administration has established a 
``new normal'' of U.S. relations with the Asia-Pacific region, 
consisting of extensive collaboration with Asian allies and partners on 
important economic, security, and other global issues as well as a high 
tempo of sustained engagement by the President, Secretary Kerry, me and 
my team, and other Cabinet and senior officials. Over the course of 
this calendar year, we will have held 41 bilateral, 5 trilateral, and 
54 multilateral dialogues and high level meetings on a range of policy 
issues. We welcomed Prime Minister Abe last month, and President Obama 
will host several leaders from the region later this year, including 
from the Republic of Korea, China, and Indonesia.
    At the same time we are meeting ongoing crises and challenges 
elsewhere in the world, we are systematically implementing a 
comprehensive diplomatic, economic, and security strategy in Asia. At 
the heart of our rebalance is a determination to ensure that the Asia-
Pacific remains an open, inclusive, and prosperous region guided by 
widely accepted rules and standards and adherence to international law. 
This is clearly in the interest of our own national security, as 
developments in 21st-century Asia will reverberate throughout the world 
and here at home.
    For nearly 70 years, the United States, along with our allies and 
partners, has helped to sustain in Asia a maritime regime, based on 
international law, which has underpinned the region's stability and 
remarkable economic growth. International law makes clear the legal 
basis on which states can legitimately assert their rights in the 
maritime domain or exploit marine resources. By promoting order in the 
seas, international law has been instrumental in safeguarding the 
rights and freedoms of all countries regardless of size or military 
strength. We have an abiding interest in freedom of navigation and 
overflight and other internationally lawful uses of the sea related to 
those freedoms in the East and South China Seas and around the world.
    The East and South China Seas are important to global commerce and 
regional stability. Their economic and strategic significance means 
that the handling of territorial and maritime issues in these waters by 
various parties could have economic and security consequences for U.S. 
national interests. While disputes have existed for decades, tensions 
have increased considerably in the last several years. One of our 
concerns has been the possibility that a miscalculation or incident 
could touch off an escalatory cycle that would be difficult to defuse. 
The effects of a crisis would be felt around the world.
    This gives the United States a vested interest in ensuring that 
territorial and maritime issues are managed peacefully. Our strategy 
aims to preserve space for diplomatic solutions, including by pressing 
all claimants to exercise restraint, maintain open channels of 
dialogue, lower rhetoric, behave responsibly at sea and in the air and 
acknowledge that the same rules and standards apply to all claimants, 
without regard for size or strength. We strongly oppose the threat of 
force or use of force or coercion by any claimant.
East China Sea
    Let me begin with the situation in the East China Sea. 
Notwithstanding any competing sovereignty claims, Japan has 
administered the Senkaku Islands since the 1972 reversion of Okinawa to 
Japan. As such, they fall under Article V of the U.S.-Japan Security 
Treaty. With ships and aircraft operating in close proximity to the 
Senkakus, extreme caution is needed to reduce the risk of an accident 
or incident. We strongly discourage any actions in the East China Sea 
that could increase tensions and encourage the use of peaceful means 
and diplomacy. In this regard, we welcome the resumed high-level 
dialogue between China and Japan and the restart of talks on crisis 
management mechanisms. We hope that this will translate into a more 
peaceful and stable environment in the East China Sea.
South China Sea
    Disputes regarding sovereignty over land features and resource 
rights in the Asia-Pacific region, including the South China Sea, have 
been around for a long time. Some of these disputes have led to open 
conflict such as those over the Paracel Islands in 1974 and Johnson 
South Reef in 1988. While we have not witnessed another conflict like 
those in recent years, the increasing frequency of incidents in the 
South China Sea highlights the need for all countries to move quickly 
in finding peaceful, diplomatic approaches to address these disputes.
    We know that this is possible. There are instances throughout the 
region where neighbors have peacefully resolved differences over 
overlapping maritime zones. Recent examples include Indonesia's and the 
Philippines' successful conclusion of negotiations to delimit the 
boundary between their respective exclusive economic zones (EEZs) and 
India's and Bangladesh's decision to accept the decision of an arbitral 
tribunal with regard to their overlapping EEZ in the Bay of Bengal. 
There have also been instances where claimants have agreed to shelve 
the disputes and find peaceful ways to manage resources in contested 
areas. In its approach to the East China Sea, Taiwan forged a landmark 
fishing agreement with Japan through cooperative dispute resolution. 
These examples should be emulated.
    All disputes over claims in the South China Sea should be pursued, 
addressed, and resolved peacefully. In our view, there are several 
acceptable ways for claimants to handle these disputes. In the first 
instance, claimants should use negotiations to try and resolve the 
competing sovereignty claims over land features and competing claims to 
maritime resources. However, the fact remains that if every claimant 
continues to hold a position that their respective territorial and 
maritime claims are ``indisputable,'' that leaves parties with very 
little room for compromise. In addition, mutually agreeable solutions 
to jointly manage or exploit marine resources are more difficult to 
find if not all claimants are basing their claims on the Law of the 
Sea.
    Another reasonable option would be for claimants to submit their 
maritime claims to arbitration by a neutral third party to assess the 
validity of their claims. The Philippines, for example, is seeking 
clarification from an international tribunal on the validity of China's 
nine-dash line as a maritime claim under the United Nations Law of the 
Sea Convention, as well as greater clarity over what types of maritime 
entitlements certain geographic features in the South China Sea are 
actually allowed. This approach is not intended to resolve the 
underlying sovereignty dispute, but rather could help provide greater 
clarity to existing claims and open the path to other peaceful 
solutions.
    With respect to resolving the claimants' underlying sovereignty 
disputes, a wide array of mutually agreed third-party dispute 
settlement mechanisms, including recourse to the International Court of 
Justice, would be available to them.
    Short of actually resolving the disputes, there is another option 
which past Chinese leaders have called for--namely, a modus vivendi 
between the parties for an indefinite period or until a more favorable 
climate for negotiations could be established. In the case of the South 
China Sea, this could be achieved by any number of mechanisms, 
including, as a first step, a detailed and binding meaningful ASEAN-
China Code of Conduct.
    But for any claimant to advance its claims through the threat or 
use of force or by other forms of coercion is patently unacceptable.
    In my testimony before the House Foreign Affairs Subcommittee on 
Asia and the Pacific in February 2014, I noted U.S. concern over an 
apparent pattern of behavior by China to assert its nine-dash line 
claim in the South China Sea, despite the objections of its neighbors 
and the lack of clarity of the claim itself. More than a year later, 
China continues to take actions that are raising tensions and concerns 
throughout the region about its strategic intentions.
    In particular, in the past year and a half China's massive land 
reclamation on and around formerly tiny features, some of which were 
under water, has created a number of artificial above-water features. 
Three of China's land fill areas are larger than the largest naturally 
formed island in the Spratly Islands. China is constructing facilities 
on these expanded outposts, including at least one air strip on Fiery 
Cross reef that looks to be the longest air strip in the Spratlys and 
capable of accommodating military aircraft. China is also undertaking 
land reclamation efforts in the Paracel Islands, which it currently 
occupies.
    Under international law it is clear that no amount of dredging or 
construction will alter or enhance the legal strength of a nation's 
territorial claims. No matter how much sand you pile on a reef in the 
South China Sea, you can't manufacture sovereignty.
    So my question is this: What does China intend to do with these 
outposts?
    Beijing has offered multiple and sometimes contradictory 
explanations as to the purpose of expanding these outposts and 
constructing facilities, including enhancing its ability to provide 
disaster relief, environmental protection, search and rescue 
activities, meteorological and other scientific research, as well as 
other types of assistance to international users of the seas.
    It is certainly true that other claimants have added reclaimed 
land, placed personnel, and conducted analogous civilian and even 
military activities from contested features. We have consistently 
called for a freeze on all such activity. But the scale of China's 
reclamation vastly outstrips that of any other claimant. In little more 
than a year, China has dredged and now occupies nearly four times the 
total area of the other five claimants combined.
    Far from protecting the environment, reclamation has harmed 
ecosystems and coral reefs through intensive dredging of the sea bed. 
Given its military might, China also has the capability to project 
power from its outposts in a way that other claimants do not. And 
perhaps most importantly, these activities appear inconsistent with 
commitments under the 2002 ASEAN China Declaration on the Conduct of 
Parties in the South China Sea, which calls on all parties to forgo 
actions that ``would complicate or escalate disputes.''
    More recently, Beijing indicated that it might utilize the islands 
for military purposes. The Chinese Foreign Ministry stated that the 
outposts would allow China to ``better safeguard national territorial 
sovereignty and maritime rights and interests'' and meet requirements 
for ``military defense.'' These statements have created unease among 
neighbors, in light of China's overwhelming military advantage over 
other claimants and past incidents with other claimants. As the 
statement last week from the ASEAN Leaders Summit in Malaysia made 
clear, land reclamation in the South China Sea is eroding trust in the 
region and threatens to undermine peace, security, and stability in the 
South China Sea.
    Apart from reclamation, the ambiguity and potential breadth of 
China's nine-dash line maritime claim also fuels anxiety in Southeast 
Asia. It is important that all claimants clarify their maritime claims 
on the basis of international law, as reflected in the United Nations 
Convention on the Law of the Sea. On April 29, Taiwan added its voice 
to the regional chorus by calling on ``countries in the region to 
respect the principles and spirit of all relevant international law, 
including the Charter of the United Nations, and the United Nations 
Convention on the Law of the Sea.'' The ASEAN claimant states have 
indicated that their South China Sea maritime claims derive from land 
features. Beijing, however, has yet to provide the international 
community with such a clarification of how its claims comport with 
international law. Removing ambiguity goes a long way to reducing 
tensions and risks.
    Simple common sense dictates that tensions and risks would also be 
reduced if all claimants commit to halt reclamation activities and 
negotiate the acceptable uses of reclaimed features as part of a 
regional Code of Conduct. Talks on a regional Code of Conduct over 
several years have been inconclusive, but we share the growing view in 
the region that a binding Code should be completed in time for the 2015 
East Asia summit in Malaysia.
    Mr. Chairman, let me now turn the question of what the United 
States is doing to ensure peace and stability in the South China Sea.
    The United States can and does play an active role in the South 
China Sea to defend our national interests and international legal 
principles. And while it falls to the claimants to resolve their 
disputes, we will continue to play an active and constructive role. 
U.S. engagement in regional fora has been crucial in placing the South 
China Sea and maritime cooperation at the top of the agenda in the 
region's multilateral forums, and these issues are a major part of 
bilateral discussions with the relevant countries. By shining a 
spotlight on problematic behavior, including massive land reclamation, 
the United States has helped ensure that problematic behavior is 
exposed and censured, if not stopped.
    We also play an important role building regional consensus around 
rules and acceptable practices with regard to maritime and territorial 
issues. We defend the use of legal dispute settlement mechanisms that 
may be available to countries--including arbitration under the Law of 
the Sea Convention--when diplomatic negotiations have not yielded 
results.
    I would like to make two points regarding the Law of the Sea 
Convention. First, with respect to arbitration, although China has 
chosen not to participate in the case brought by the Philippines, the 
Law of the Sea Convention makes clear that ``the absence of a party or 
failure of a party to defend its case shall not constitute a bar to the 
proceedings.'' It is equally clear under the Convention that a decision 
by the tribunal in the case will be legally binding on both China and 
the Philippines. The international community expects both the 
Philippines and China to respect the ruling, regardless of outcome.
    Secondly, I respectfully urge the Senate to take up U.S. accession 
of the Law of the Sea Convention. Accession has been supported by every 
Republican and Democratic administration since it was transmitted to 
the Senate in 1994. It is supported by the U.S. military, by industry, 
environmental groups, and other stakeholders. I speak in the interests 
of U.S. foreign policy in the South China Sea in requesting Senate 
action to provide advice and consent to accede to the Convention. Doing 
so will help safeguard U.S. national security interests and provide 
additional credibility to U.S. efforts to hold other countries' 
accountable to their obligations under this vitally important treaty.
    Another line of effort is our work to forge strong partnerships 
with Southeast Asian coastal states to improve their maritime domain 
awareness so they have a clearer picture of what is developing in 
waters off their mainland coasts. We are also working with allies such 
as Japan and Australia to coordinate and maximize the impact of our 
assistance and to ensure that we are not duplicating efforts. By 
developing a common operating picture, claimants can work together to 
avoid unintended escalations and identify potential areas of 
cooperation.
    We have also encouraged the sharing of information and enhanced 
coordination amongst the claimants and others in the region to ensure 
that all countries with an interest in the peaceful resolution of 
disputes in the South China Sea are aware of events there, and 
understand what everyone else is doing.
    My colleague Assistant Secretary for Defense, Dave Shear, will 
speak next about the military implications of recent developments as 
well as the Department of Defense's efforts to ensure regional peace 
and stability. It is my belief that the consistent presence of the 
Seventh Fleet and our recent force posture movements have been 
significant factors in deterring conflict between claimants in recent 
years. Disputes in the South China Sea have simmered, but not boiled 
over.
    But against the backdrop of a strong and sustained U.S. military 
presence, which is welcomed by the overwhelming majority of countries 
in the region, diplomacy will continue to be our instrument of first 
resort. We are vigorously engaging with all of the claimants. We do so 
at major multilateral meetings like the East Asia summit and ASEAN 
Regional Forum and we do so bilaterally, as President Obama did in 
Beijing late last year. Next week, I will host my 10 ASEAN counterparts 
here in Washington and then will accompany Secretary Kerry to China in 
advance of the Strategic and Economic Dialogue he will host this 
summer. In each of these meetings, we will push forward on restraint 
and push back against destabilizing behavior; we will push for respect 
for the rules and push back on unilateral actions to change the status 
quo.
    Mr. Chairman, the net effect of what we are seeing in the South 
China Sea is a heightened interest from the region in ensuring that the 
existing rules-based order remains intact as well as a strengthened 
demand for the United States to continue playing a leading role in 
regional security affairs.
    Despite our differences over the South China Sea, the United States 
and China have worked hard to expand cooperation and develop effective 
channels of communication to manage differences. This administration 
has been clear and consistent in welcoming China's peaceful rise, and 
in encouraging China to take on a greater leadership role in addressing 
regional and global challenges. This was demonstrated clearly by our 
two countries' joint announcement of climate targets and military CBMs 
last November in Beijing. We are working with China constructively on a 
wide range of security and other challenges--including with respect to 
North Korea, Iran, climate change, and global healthy security. 
Moreover, we actively encourage all countries to pursue constructive 
relations with China, just as we urge China to take actions that 
reassure the region of its current and future strategic intentions. As 
President Obama pointed out recently, there is much to admire about 
China's rise and reason for optimism with regard to cooperation. But as 
he also noted, we cannot ignore attempts by any country to use its 
``sheer size and muscle to force countries into subordinate 
positions,'' including in the South China Sea. For the President and 
Secretary of State on down, maritime issues remain at the top of this 
administration's agenda with Beijing. We consistently raise our 
concerns directly with China's leadership and urge China to manage and 
resolve differences with its neighbors peacefully and in accordance 
with international law. We also underscore that the United States will 
not hesitate to defend our national security interests and to honor our 
commitments to allies and partners in the Asia-Pacific.
    Fundamentally, these maritime security issues are about rules, not 
rocks. The question is whether countries work to uphold international 
legal rules and standards, or whether they flout them. It's about 
whether countries work together with others to uphold peace and 
stability, or use coercion and intimidation to secure their interests.
    The peaceful management and resolution of disputes in the South 
China Sea is an issue of immense importance to the United States, the 
Asia-Pacific region, and the world. This is a key strategic challenge 
in the region. And I want to reaffirm here today that we will continue 
to champion respect for international law, freedom of navigation and 
overflight and other internationally lawful uses of the seas related to 
those freedoms, unimpeded lawful commerce, and the peaceful resolution 
of disputes.
    Mr. Chairman, I thank you for this opportunity to appear before you 
today to discuss this important issue. I look forward to answering any 
questions you may have.

 STATEMENT OF THE HON. DAVID B. SHEAR, ASSISTANT SECRETARY OF 
DEFENSE FOR ASIAN AND PACIFIC SECURITY AFFAIRS, U.S. DEPARTMENT 
                   OF DEFENSE, WASHINGTON, DC

    Ambassador Shear. Thank you very much, Mr. Chairman, 
Ranking Member Cardin, Senator Gardner. Thank you very much for 
inviting me to join you all today.
    I am particularly pleased to testify alongside my friend 
and colleague, Assistant Secretary Danny Russel. Danny has 
already framed the challenges we face in the South and East 
China Seas, so I will focus my remarks on defense implications 
and the actions DOD is taking.
    It is important to note that the territorial and maritime 
disputes in the South China Sea, while troubling, are decades 
old. All the claimants except Brunei have developed outposts in 
the South China Sea. In the Spratly Islands, Vietnam has 48 
outposts, the Philippines eight, China eight, Malaysia five, 
and Taiwan one. All of these claimants have also engaged in 
construction activity of different scope and degree.
    That said, China's reclamation of 2,000 acres just since 
early 2014 dwarfs the efforts all of the other claimants, and 
this suggests new and troubling changes in the regional status 
quo.
    China's land reclamation could potentially have a range of 
military implications, if China chooses to pursue them. These 
could include developing long-range radar and ISR aircraft, 
berthing deeper-draft ships, and developing a divert airfield 
for carrier-based aircraft. These types of actions could prompt 
other regional governments to strengthen their own military 
capabilities at their outposts, increasing the risk of 
miscalculations, crises, and arms races.
    It is important to note, however, that we do not really 
know at this point how the Chinese intend to use these 
facilities exactly. China could reduce the strategic 
uncertainty by halting reclamation activities, entering into 
discussions with other claimants about establishing limits to 
military upgrades in the South China Sea, negotiating a code of 
conduct, and clarifying its claims in accordance with 
international law.
    We have made our views on this crystal clear to the Chinese 

on multiple occasions at the senior-most levels. Our interests, 
of course, include peaceful resolution of disputes, freedom of 
navigation and overflight, unimpeded lawful commerce, respect 
for international law, and the maintenance of peace and 
stability.
    DOD is taking active steps to ensure that U.S. national 
interests in the South China Sea are adequately protected.
    First, we are modernizing our important alliances, Japan, 
the Philippines, and Australia. With Japan, we recently 
concluded the new guidelines on United States-Japan defense 
cooperation, which will greatly increase the scope of United 
States-Japan defense cooperation. With the Philippines, last 
year, we concluded the Enhanced Defense Cooperation Agreement, 
which will ultimately allow the stationing of rotational United 
States Forces in the Philippines. And in Australia last year, 
we concluded the force posture agreement, which will allow the 
increased stationing of Marines and Air Force in Australia on a 
rotational basis.
    Second, we are adopting a more geographically distributed, 
operationally resilient, and politically sustainable defense 
posture throughout the region. For example, our new rotational 
deployment of Littoral Combat Ships to Singapore is the Navy's 
first sustained forward presence in Southeast Asia since the 
closing of our naval base at Subic Bay in the early 1990s.
    We are leveraging in-theater assets to enhance our visible 
presence in the Asia-Pacific. In an average month, we are 
conducting port calls in and around the entire South China Sea. 
We are flying regular regional intelligence, surveillance, and 
reconnaissance missions, or ISR missions. We are conducting 
presence operations, exercising with allies and partners, and 
maintaining a persistent surface ship presence through routine 
transits.
    Third, we are helping regional governments improve their 
maritime security capacity and maritime domain awareness. For 
example, we have transferred Coast Guard vessels to the 
Philippines and are helping to build the Philippines national 
coast watch system. We are providing equipment and 
infrastructure support to the Vietnamese Coast Guard and are 
helping to support effective maritime security institutions 
there. We are also conducting a wide range of training 
exercises and activities with many allies and partners in Asia.
    Fourth, we are seeking to reduce the risk of miscalculation 
and unintentional conflict with China through healthy but 
prudent military-to-military engagement. Over the past year, 
through initiatives like the confidence-building measures our 
two Presidents agreed to last fall, we have made significant 
and prudent progress in our bilateral defense relationship.
    In conclusion, we share the committee's concerns about 
China's land reclamation and appreciate this opportunity to 
give you a sense of our thinking. We are actively assessing the 
military implications of land reclamation and are committed to 
taking effective and appropriate action.
    In addition to building our own capabilities, we are 
building closer, more effective partnerships with our allies 
and partners in the region to promote peace and stability.
    Thank you, Senators. I look forward to answering your 
questions.
    [The prepared statement of Ambassador Shear follows:]

                   Prepared Statement of David Shear

                              introduction
    Thank you very much Chairman Corker. Thank you also to Ranking 
Member Cardin and the members of the committee for inviting me to speak 
with you today.
    I'm pleased to be here to discuss maritime developments in the 
Asia-Pacific, including how issues like China's land reclamation in the 
South China Sea affect U.S. security interests. I'm particularly 
pleased to testify alongside my long-time colleague and friend, 
Assistant Secretary Danny Russel.
    I'd like to start by saying that this is an important issue and a 
timely hearing. I certainly share your concerns about recent 
developments in the East and South China Seas. Before I discuss my 
views on the problem in more detail, I'd like to lay out some of the 
context for the recent developments in the region.
                             east china sea
    In the East China Sea, through a persistent military and 
paramilitary presence as well as the announcement in November 2013 of a 
new Air Defense Identification Zone, China continues to engage in 
actions that appear designed to challenge Japan's administration of the 
Senkaku Islands. As President Obama noted in Tokyo last year and 
reiterated again last week during Prime Minister Abe's visit, ``our 
treaty commitment to Japan's security is absolute, and article 5 covers 
all territories under Japan's administration, including the Senkaku 
Islands''--a point that Secretaries Carter and Kerry also reaffirmed 
with their Japanese counterparts on Monday, April 27, 2015, during the 
``2+2'' meeting in New York. We have been clear, and remain so, that 
while we do not take a position on the question of sovereignty, the 
islands are under the administration of Japan. We will continue to 
oppose any unilateral action that seeks to undermine Japan's 
administration.
                            south china sea
    The challenges we face in the SCS, while troubling, are not new. In 
fact, the territorial and maritime disputes are decades old. These 
disputes are centered around three primary areas: the Paracel Islands, 
claimed by China Taiwan, and Vietnam; Scarborough Reef, claimed by 
China, Taiwan, and the Philippines; and the Spratly Islands (which 
include over 200 features, most of which are underwater) claimed all or 
in part by Vietnam, the Philippines, China, Malaysia, , and Taiwan. 
Indonesia's maritime claims also project into the South China Sea.
    Over the past two decades, all of the territorial claimants, other 
than Brunei, have developed outposts in the South China Sea, which they 
use to project civilian or maritime presence into surrounding waters, 
assert their sovereignty claims to land features, and monitor the 
activities of other claimants. In the Spratly islands, Vietnam has 48 
outposts; the Philippines, 8; China, 8; Malaysia, 5, and Taiwan, 1. All 
of these same claimants have also engaged in construction activity of 
differing scope and degree. The types of outpost upgrades vary across 
claimants but broadly are comprised of land reclamation, building 
construction and extension, and defense emplacements. Between 2009 and 
2014, Vietnam was the most active claimant in terms of both outpost 
upgrades and land reclamation, reclaiming approximately 60 acres. All 
territorial claimants, with the exception of China and Brunei, have 
also already built airstrips of varying sizes and functionality on 
disputed features in the Spratlys. These efforts by claimants have 
resulted in a tit-for-tat dynamic which continues to date.
                           china's activities
    While other claimants have upgraded their South China Sea outposts 
over the years, China's land reclamation activity vastly exceeds these 
other claimants' activities. Since 2014, China has reclaimed 2,000 
acres--more land than all other claimants combined over the history of 
their claims. When combined with a range of activities, including: 
assertion of its expansive Nine-Dash Line claim, relocation of oil rigs 
in disputed maritime zones, efforts to restrict access to disputed 
fishing zones, and efforts to interfere with resupply of the Philippine 
outpost at Second Thomas Shoal, we see a pattern of behavior that 
raises concerns that China is trying to assert de facto control over 
disputed territories, and strengthen its military presence in the South 
China Sea.
    We are concerned that the scope and nature of China's actions have 
the potential to disrupt regional security. China's actions and 
increased presence could prompt other regional governments to respond 
by strengthening their military capabilities at their outposts, which 
would certainly increase the risk of accidents or miscalculations that 
could escalate. In contrast to China, the other claimants have been 
relatively restrained in their construction activities since the 
signing of the China-ASEAN Declaration of Conduct (DOC) in 2002. This 
restraint may not hold in the face of China's unprecedented altering of 
the post-DOC status quo.
    Furthermore, China's ultimate intentions regarding what to do with 
this reclaimed land remain unclear. A Chinese spokesperson said on 
April 9 that it was carrying out reclamation work to ``better perform 
China's international responsibility and obligation in maritime search 
and rescue, disaster prevention and mitigation, marine science and 
research.'' However, the spokesperson also said China will use this 
construction to better safeguard ``territorial sovereignty and maritime 
rights and interests . . . (and for) . . . necessary military 
defense.'' This is not reassuring.
    Militarily speaking, China's land reclamation could enable it, if 
it chose, to improve its defensive and offensive capabilities, 
including: through the deployment of long-range radars and ISR aircraft 
to reclaimed features; ability to berth deeper draft ships at its 
outposts and thus to expand its law enforcement and naval presence 
further south into the South China Sea; and, airstrips will provide 
China with a divert airfield for carrier-based aircraft, enabling China 
to conduct more sustained air operations. Higher end military upgrades, 
such as permanent basing of combat aviation regiments or placement of 
surface-to-air, antiship, and ballistic missile systems on reclaimed 
features, would rapidly militarize these disputed features in the South 
China Sea.
    To be clear, the United States welcomes China's peaceful rise. We 
want to see a reduction--not an escalation--of tensions in the South 
China Sea, we want to see a diplomatic solution to these disputes, and 
we want constructive relations between China and other claimants. But 
as the President pointed out on April 9, ``(w)here we get concerned 
with China is where it is not necessarily abiding by international 
norms and rules, and is using its size and muscle to force countries 
into subordinate positions.'' These concerns are amplified when put 
into the broader context of China's rapidly increasing, and opaque 
defense budget--a budget that has more than doubled since 2008. As well 
as China's comprehensive military modernization effort that includes 
investments in capabilities such as ballistic missiles, antiship cruise 
missiles, and counterspace weapons. Though increased military 
capabilities are a natural outcome of growing power, the way China is 
choosing to advance its territorial and maritime claims is fueling 
concern in the region about how it would use its military capabilities 
in the future. Having these capabilities per se is not the issue--the 
issue is how it will choose to use them.
    China's actions are not viewed solely in the context of territorial 
and maritime disputes; they are viewed as indicators of China's long-
term strategic intentions. China's unwillingness to exercise restraint 
in its actions or transparency in its intentions is deepening divisions 
between China and its neighbors, as ASEAN leaders expressed 
collectively at the last ASEAN summit in April. As a result, our allies 
and partners are seeking to deepen their defense, security and economic 
relationships with us and with each other. China could reduce strategic 
uncertainty by taking concrete steps to: clarify or adjust its Nine 
Dash Line claim in order to bring it into accordance with international 
law as reflected in the Law of the Sea Convention; to renounce any 
intent to claim a territorial sea or national airspace around any 
artificial features formed by China's reclamation activities; halt 
reclamation activity and enter into discussions with other claimants 
about establishing limits to military upgrades in the South China Sea 
(either unilaterally and voluntarily as a confidence-building measure 
or in coordination with other claimants); and rapidly conclude a 
binding South China Sea Code of Conduct with ASEAN member states.
                         current dod activities
    DOD is taking action to protect U.S. national interests in the 
South China Sea: peaceful resolution of disputes, freedom of navigation 
and overflight, and other internationally lawful uses of the sea 
related to these freedoms, unimpeded lawful commerce, respect for 
international law, and the maintenance of peace and stability. These 
objectives are directly linked to the continued prosperity and security 
of the United States and the Asia-Pacific region. We therefore have a 
strong interest in how all claimants, including China, address their 
disputes and whether maritime claims accord with international law.
    First, we are committed to deterring coercion and aggression and 
thereby reinforcing the stability of the Asia-Pacific region, and we 
are taking proactive steps to do so. Our primary effort in this regard 
is to work to refresh and modernize our long-standing alliances. With 
Japan, we concluded last week a historic update to our bilateral 
Guidelines for U.S.-Japan Defense Cooperation, with an eye to enhancing 
the ability of the U.S.-Japan Alliance to support peace and security 
across the region and the globe. With the ROK, we are developing a 
comprehensive set of Alliance capabilities to counter the growing range 
of threats on the peninsula, while expanding our ability to tackle 
global challenges together. And in Australia and the Philippines, we 
signed ground-breaking agreements in 2014 that will provide enhanced 
access for U.S. forces while greatly expanding the combined training 
opportunities for our alliances.
    To expand the reach of these alliances, we are embarking on 
unprecedented ``trilateral'' cooperation--in other words we are 
networking our relationships. In some cases this cooperation directly 
benefits our work on maritime security. For example, we're cooperating 
trilaterally with Japan and Australia to strengthen maritime security 
in Southeast Asia and explore defense technology cooperation.
    Second, we are adapting our overall defense posture in the region 
to be more geographically distributed, operationally resilient, and 
politically sustainable. For example, we're shifting our Marines from a 
concentrated presence in Okinawa to Australia, Hawaii, Guam, and 
mainland Japan. We are already leveraging changes in our force posture 
to make existing engagements more robust. Our rotational deployments of 
Littoral Combat Ships to Singapore has provided the U.S. Navy with its 
first sustained forward presence in Southeast Asia since the closing of 
Subic Bay in the early 1990s and has opened the door for greater 
training and engagement opportunities with our allies and partners in 
Southeast Asia.
    We are also leveraging the assets we have in theater to maintain 
and enhance our visible presence in the Asia-Pacific, and the South 
China Sea. This presence not only reinforces our regional diplomacy, it 
also deters provocative conduct and reduces the risk of miscalculation 
in the area. The Department maintains a robust regional presence in and 
around the South China Sea. In an average month, U.S. military forces 
are conducting multiple port calls in and around the South China Sea, 
flying regular regional ISR missions, conducting presence operations, 
and exercising with allies and partners like the Philippines and 
Malaysia, all while maintaining a persistent surface ship presence with 
routine transits throughout the area. For example, our new Littoral 
Combat Ship, the USS Fort Worth, recently concluded a successful naval 
engagement with the Vietnamese Navy that included a full day of at-sea 
activities. And before her deployment is done, the LCS will have 
completed bilateral Cooperation Afloat Readiness and Training (CARAT) 
with seven different Asia-Pacific partners.
    Third, we are working with governments in the region to improve 
their maritime security capacity and maritime domain awareness in order 
to increase regional transparency and deter further conflict. In the 
Philippines, for example, we recently concluded the Enhanced Defense 
Cooperation Agreement and have transferred vessels to help our ally 
police its own waters and are helping to build a National Coast Watch 
System that will improve Manila's awareness of its maritime domain. The 
Philippines has also been the largest recipient of U.S. Foreign 
Military Financing (FMF) funds in the region. These funds have been 
used to assist the Philippines with communications interoperability, 
maritime interdiction boats, shipyards capacity and patrol vessel 
upgrades. We are also providing equipment and infrastructure support to 
the Vietnamese Coast Guard and are helping to support effective 
maritime security institutions there. Last October, the U.S. Government 
took steps to allow for the future transfer of maritime security 
related defense articles to Vietnam. We have three annual dialogues 
with Vietnam on defense cooperation--the Defense Policy Dialogue; 
Bilateral Defense Dialogue; and Political, Security, and Defense 
Dialogue.
    To support efforts to improve the maritime domain awareness of our 
allies and partners, we are encouraging greater information sharing in 
the region. PACOM will be hosting a workshop with our ASEAN partners 
next month to discuss lessons-learned and best practices in maritime 
domain awareness, to include information-sharing. We also support 
initiatives from within the region like the Regional Cooperation 
Agreement on Combating Piracy and Armed Robbery against Ships in Asia 
(ReCAAP) Information Sharing Center and Changi Information Fusion 
Center in Singapore to encourage greater collaboration among our allies 
and partners to establish a timely and accurate common operating 
picture of maritime activities in the region.
    Furthermore, DOD has a robust slate of training exercises and 
activities with many allies and partners in Asia, and we have begun 
incorporating a maritime focus into many of these engagements. Exercise 
Balikatan, our premier joint exercise with our Philippine allies, ended 
last week and is a great example of a long-standing exercise with a key 
ally that has evolved to meet new security challenges. This year's 
Balikatan focused on a territorial defense scenario off the Sulu Sea. 
This is the largest of more than 400 planned events we have with the 
Philippines to assist this important ally with a credible defense of 
its borders and territorial waters. We also conduct regular bilateral 
naval exercises with the Indonesians, including Cooperation and 
Readiness Afloat (CARAT) and Sea Surveillance Exercises (SEASURVEX) 
that focus on improved interoperability through maritime patrols, 
surveillance, vessel boarding, fixed and rotary wing naval aviation. 
The most recent SEASURVEX took place 6-10 April out of Batam, 
Indonesia, which included a flight portion over the South China Sea.
    We're also creating new defense engagements where needed. The 
Marines, for example, participated in their first amphibious exercise 
with the Malaysian Armed Forces last year. For the first time, last 
August, the United States trained with the Malaysia Armed Forces in 
Eastern Sabah for MALUS AMPHEX 2014. MALUS AMPHEX 2015 is scheduled for 
later this summer. We are also conducting routine CARAT exercises with 
Malaysia with the next scheduled for the summer where, as with 
Indonesia, we will focus on, among other things, navigation and 
communications, interoperability and maritime air surveillance.
    While the United States is doing a lot to help build partner 
capacity and regional cooperation on maritime security challenges, we 
aren't doing it alone. There is broad agreement on the importance of 
maritime security and maritime domain awareness, and we're working 
closely with our friends in Australia, Japan, South Korea, and 
elsewhere to coordinate and amplify our efforts toward promoting 
stability and prosperity in Asia.
    Fourth, we are seeking to reduce the risk of miscalculation and 
unintentional conflict with China in the South China Sea or elsewhere 
in Asia. To do so, we continue to speak out against China's disruptive 
behavior publically and privately. We also continue to call on China to 
clarify its Nine Dash Line claim under international law. And we will 
continue to urge all claimants to exercise self-restraint and pursue 
peaceful and diplomatic approaches to their disputes.
    At the same time, we are also working to build transparency and 
improve understanding with China through mil-to-mil ties. Over the past 
year, through initiatives like the confidence-building measures our two 
Presidents agreed to last fall, we have made significant and prudent 
progress in our bilateral defense relationship. This year, we will be 
working to complete another measure that aims to prevent dangerous air-
to-air encounters. In addition, we have institutionalized several key 
defense policy dialogues to include the Under Secretary-led Defense 
Consultative Talks and the Assistant Secretary-led Asia-Pacific 
Security Dialogue where we discuss a range of regional security issues, 
including our concerns about the South China Sea. We also hold 
discussions on operational safety in the maritime domain at the 
Military Maritime Consultative Agreement Talks.
                               conclusion
    In conclusion, we share the committees' concerns about China's land 
reclamation and appreciate this opportunity to give you a sense of our 
thinking. We are deeply engaged with the State Department, the NSC, and 
other interagency partners in adapting our integrated, whole of 
government response to meet evolving challenges. We are actively 
assessing the military implications of land reclamation and are 
committed to taking effective and appropriate action. In addition to 
building our own capabilities, we are also building closer, more 
effective partnerships with our allies and partners in the region to 
further peace and stability.
    The United States is a resident power in the Asia-Pacific. In 
addition to our significant economic and security interests in the 
region, we have more than 7,000 miles of Pacific coastline and more 
than 16 million citizens who trace their ancestry to the Asia-Pacific. 
Given the importance of the Asia-Pacific to our interests, we owe it to 
the American people to think, not just about the challenges of today, 
but also the potential problems of tomorrow. And in this respect, our 
regional friends and partners should rest assured--we will continue to 
protect security and promote prosperity of the Asia-Pacific and above 
all, we will honor our commitments.

    The Chairman Well, thank you, both. I appreciate the 
testimony. We were preparing for this meeting and our staff, 
doing the great job they do, came in and had some pretty hot 
comments for me to make relative to China. And I knew you guys 
were going to say something very similar to what you just said. 
I just do not see us doing anything that is real to alter this.
    So the comments that both of you made are interesting, 
involving long-term things that will not immediately stop what 
is happening.
    So I just want to ask a question: How long do we think it 
will be before what China has done with these islands and 
others is irreversible? I mean, it is not going to be the many 
years that you guys just laid out it would take for any longer 
term effect to have occurred. It is going to be in a very short 
amount of time.
    Would both of you all agree that, on the current pace, the 
change has already occurred and is going to be almost 
irreversible? Is that correct?
    Mr. Russel. Mr. Chairman, I do not know analysts who 
believe that the sand that has been dredged and formed into 
landfill in the South China Sea is going back into the water, 
but the key question that the administration is focusing on is 
what will China do, what is China's behavior? And it is China's 
behavior that we are influencing through the multiple tracks of 
diplomacy, leveraging our other instruments of power, and, of 
course, our substantial presence.
    The Chairman I do not see their behavior changing. It seems 
to me that, in a very short amount of time, they are going to 
have de facto control of the South China Sea.
    I guess I would ask our military leader, what is it that we 
think that is toward? Do we think they want to claim that as 
international space for them to have dominion over? What do you 
think their end is today?
    Ambassador Shear. Well, at a minimum, Mr. Chairman, I think 
the Chinese are trying to demonstrate administrative control 
over those features. They are trying to legitimate their claims 
to these features.
    I would note, however, that on the basis of international 
law, many of the features the Chinese and other claimants are 
building on are submerged features that do not generate 
territorial claims. So it is difficult to see how Chinese 
behavior, in particular, comports with international law.
    With regard to how the Chinese use the reclaimed features, 
it is our estimate that it will be 2017 to 2018 before the 
Chinese complete construction of the airfield on Fiery Cross 
Reef. So it will take some time for them to construct that 
airfield.
    Again, as Assistant Secretary Russel has said, how the 
Chinese use those facilities is the important question facing 
us now. We can have an influence on how the Chinese will use 
those features, and we are in the process of ensuring that the 
Chinese have a crystal clear view of what we think about their 
use of those features.
    Mr. Russel. Mr. Chairman, if I could interject, the Chinese 
are already paying a significant price for their behavior in 
the form of the pushback by the countries in the region against 
what they are doing.
    The Chinese set out three important goals for the South 
China Sea policy: no criticism, no internationalization of the 
issue, and what they call no legalization of the issue. And 
they have failed on all fronts, three strikes.
    They are the target of substantial international criticism, 
including just last month by the 10 ASEAN leaders. This issue 
is debated and discussed to their consternation in multilateral 
fora. And the case brought by the Philippines to the U.N. Law 
of the Sea tribunal, which the Vietnamese themselves have also 
weighed in on, is arguably legitimate access to international 
legal mechanisms, the very things that the Chinese sought to 
avoid.
    I think if we want proof that this opprobrium and 
diplomatic pushback has an effect on the calculus of Beijing's 
leaders, we can look at the example that Senator Cardin cited, 
namely the deployment of the oil rig off the coast of Vietnam 
where, after a face-saving period of a few weeks, the Chinese 
moved the rig out and subsequently have only sent it to explore 
in places where they had the permission of the government 
concerned.
    The Chairman Have we considered helping the other claimants 
build out their areas? And do you think they would have any 
desire for that to occur? Or do they feel cowered in this 
process also?
    Mr. Russel. Mr. Chairman, we are helping all the countries, 
including the claimants, in Southeast Asia to build their 
capacity to defend their coastal borders.
    The Chairman I am talking about building out their claims 
in the South China Sea, helping them with that in any way, 
which would be a more direct way of ensuring that China does 
not overtake the area. I know it is not something that I have 
heard discussed, but is that something we considered doing? 
Something that is very direct, versus these other activities, 
which seem to me are going to be a day late and a dollar short, 
based on the current trajectory?
    Mr. Russel. Mr. Chairman, we discourage, not encourage, the 
construction of outposts or the reclamation or the construction 
of potential military facilities by any claimant on these 
islands and shoals. So what is good for the goose is good for 
the gander.
    The problem is the scale and scope, as you pointed out, of 
China's reclamation activities combined with its military 
capabilities put it in a different category. What we are doing, 
as Assistant Secretary Shear referenced, is working with 
allies, including the Philippines, through things like the EDCA 
Agreement to expand our access and our military presence to 
ensure that we can continue to maintain the stability that we 
have had for the previous 6-plus decades.
    The Chairman. With the bilateral relationship that we have 
with China and the economic interests that we have there, does 
that stifle us from being a little bit more engaged directly in 
this issue?
    Mr. Russel. Any policymaker weighs all of the factors in 
making decisions about how to leverage our economic 
relationships or the other aspects of relationships with a 
country as large as China. But our strategy is built on the 
premise that we must push back on problematic behavior and that 
we must make clear, using all instruments of national power and 
as a whole-of-government effort, where we object and why we 
object. And we have made the set of concerns clear to the 
Chinese at high levels. We have also pointed out the negative 
effect that Chinese behavior has on not only congressional but 
broad public and business support for the United States-China 
relationship.
    So I think the short answer is that there are direct costs 
to China in its economic and political relationship with the 
United States for provocative or destabilizing behavior. But 
our goal, Mr. Chairman, is to build a solid, cooperative 
relationship with China that is consistent with our principles 
and that is consistent with our national interests.
    The Chairman Thank you very much.
    Senator Cardin.
    Senator Cardin. Secretary Russel, I assume that you are 
referring to the 10 leaders of ASEAN's statement during the 
recent meeting where they said that China's actions, ``eroded 
trust and confidence and may undermine peace, security, and 
stability in the South China Sea.''
    Mr. Russel. That is correct.
    Senator Cardin. See, I looked at that as a weak statement, 
not a strong statement. I was looking for a stronger action by 
ASEAN. Am I wrong? Were we satisfied with the response?
    Mr. Russel. I would say, Senator, that that statement is a 
7 on the Richter scale of ASEAN statements. It is a strong 
statement in the following respect. The Chinese have worked 
single-mindedly and energetically to discourage, if not deter, 
the countries of ASEAN from speaking out publicly, and they 
have worked as well through close friends of theirs within 
ASEAN to try to prevent the very outcome that they saw.
    Given the soft-spoken quality of the Southeast Asians, that 
is a ringing indictment to China's behavior.
    Senator Cardin. I wish I had you as one of my professors in 
college grading my papers. I think you are being pretty gentle.
    We have been waiting for ASEAN for a long time on this code 
of conduct, and I understand we have limited ability to control 
the way that they proceed on this, but can you just give me 
your observation, whether we can anticipate that they will, in 
fact, move ahead with a code of conduct that would be 
considered the gold standard as to how these disputes should be 
handled, from the point of view of eliminating these 
provocative type actions that have taken place?
    Mr. Russel. First of all, Senator Cardin, we are not 
waiting for ASEAN. We are working with ASEAN. We are 
encouraging ASEAN. And we are creating the space and the 
confidence that allows ASEAN to engage both diplomatically but 
also politically with China.
    I think that the foot-dragging on the code of conduct is a 
problem, and that is something that we shine a light on and 
encourage the parties, and particularly China, to get serious 
about resolving.
    But the more fundamental point is that China has already 
made a commitment; made a commitment to avoid and refrain from 
provocative actions that complicate these issues or make it 
more difficult to resolve them in 2002, in the declaration of 
conduct.
    So I think the real issue is not that ASEAN and China have 
not yet achieved a code of conduct, as much as we wish it, but 
rather that the parties are not adhering to the spirit and 
letter of the declaration of conduct.
    Senator Cardin. But I would anticipate that, under a code 
of conduct, there would be established avenues for resolving 
disputes other than taking unilateral action, but maybe we are 
asking for too much. It seems to me that the ASEAN countries 
have been talking about this for a long time.
    And I am not as satisfied as you are on the progress that 
we have seen to date, and I just hope that they can get their 
act together to give us some hope.
    Secretary Shear, if I might, in your statement, both 
written and oral, you spoke about our military alignments in 
the region, the types of deployments and the types of exercises 
that we have had.
    Is this a direct response to additional challenges that 
could be there because of maritime security concerns? And do we 
have enough assets and resources to deal with the potential 
threat in that region?
    We do have certain obligations, certain treaty obligations, 
that the President has underscored. Do we have the facilities 
or the assets in place to deal with these potential problems?
    Ambassador Shear. Senator, we are engaged in a long-term 
effort to bolster our capabilities in the region. We are 
engaged in a long-term effort to invest in the technologies we 
will need to maintain military superiority in the region, and 
we are engaged in an effort to strengthen our alliances and 
build capacity of our partners.
    Just a few examples of the increases in our capabilities in 
the region include the deployment of Global Hawks and F-35s to 
Japan. Soon we will be adding to the stock of the V-22s in 
Japan as well. We will have four Littoral Combat Ships in 
Singapore by 2020.
    I visited one of those the Littoral Combat Ships, the USS 
Fort Worth, in Singapore in January. These are very capable 
ships. They travel at 50 knots. They have a 15-foot draft. And 
they will be able to go places where no warship has been able 
to go in the past in the region, including opening up new ports 
for naval warship visits throughout the region.
    We are deploying high-speed vessels to Singapore and Guam. 
We are putting a new Virginia class submarine--an additional 
Virginia class submarine in Guam as well. So we will have no 
shortage of capabilities and assets throughout the region to 
back our diplomacy and ensure deterrence and ensure national 
security.
    With regard to our posture in the region, we are also 
undergoing an important shift in the way we posture our forces. 
Under the redeployment of long-term--medium- to long-term 
redeployment of Marines in Okinawa, we will be moving 
significant numbers of Marines to Hawaii, Guam, and Australia. 
We will be operating a mix of additional Air Force assets in 
Australia on a rotational basis, including fighter, bomber, and 
tanker aircraft. We are looking at further deployments in the 
Philippines on a rotational basis, once we have implemented the 
Enhanced Defense Cooperation Agreement.
    So we will have a very strong presence, very strong 
continued posture throughout the region to back our commitments 
to our allies and work with our partners to continue ensuring 
peace and stability in the region, as well as back up diplomacy 
vis-a-vis China on the South China Sea.
    Partner capacity-building will continue to be central to 
our efforts. We believe that among our most important goals is 
for our partners in the region to be able to pursue their own 
interests, which they have in common with us, as vigorously as 
possible. That is the medium- to long-term goal.
    And we are implementing that, in particular, with Vietnam, 
Malaysia. We hope we will grow our cooperative relationship 
with Indonesia as well.
    So we have strong potential in the region with our 
partners. With regard to capacity, partner capacity-building, 
we are working to maximize what we do under existing 
authorities and with existing resources. But, of course, we 
would welcome added resources for this effort and we would put 
them to good use.
    Senator Cardin. Thank you, Mr. Chairman.
    The Chairman Senator Gardner.
    Senator Gardner. Thank you, Mr. Chairman, and thank you to 
the witnesses today.
    This is an important hearing as we try to understand 
intentions in an area of the world where we are trying to grow 
our opportunity as well.
    Mr. Chairman, this is a very interesting conversation. It 
is clear, though, that the People's Republic of China's 
destabilizing activities in the East China Sea and South China 
Sea, including what can only be described as a unilaterally 
imposed Air Defense Identification Zone in the East China Sea 
or the inexplicable nine-dash line of sovereignty claims that 
encompass 90 percent of the South China Sea, are a threat to 
the stability in the region and create a serious challenge to 
the United States rebalance policy in the Asia-Pacific.
    These activities are contrary to China's own, to their very 
own past pledges and are possibly violations of international 
law, as we have said.
    These actions also threaten the freedom of navigation and 
sea lanes that are vital to global commerce, and also create an 
unstable security environment where unintended escalation and 
military confrontation in the region becomes likely, with dire 
consequences for all parties involved.
    But as we contemplate policy options to address Beijing's 
actions, we also need to understand their intentions, questions 
like: Are these actions a show of force intended to intimidate 
China's smaller neighbors? Are they intended to deter the 
United States, especially in the Asia pivot policy? Are they 
driven by economic considerations?
    The United States has been the guarantor of peace and 
prosperity in the region for generations, and we cannot remain 
complacent in light of these very serious challenges.
    So to Assistant Secretary Russel, in your testimony you 
stated, under international law, it is clear that no amount of 
dredging or construction will alter or enhance the legal 
strength of a nation's territorial claims. No matter how much 
sand you pile on a reef in the South China Sea, you cannot 
manufacture sovereignty.
    Just a couple questions. Could you clarify the legal basis 
that China is claiming that it has, just talk about the legal 
basis for its claims? Are they trying to create facts on the 
ground in this area, hoping that the international community 
will eventually just say that it is recognized? And do you see 
any similarities of China's actions to other territorial 
disputes in the region around the world?
    Mr. Russel. Thank you, Senator Gardner. I appreciate your 
leadership in the Asia-Pacific Subcommittee, so thank you very 
much for that.
    We have real concerns about the lack of clarity to the 
Chinese claims and have consistently pushed Beijing to clarify 
its claims in terms that are consistent with international law, 
and particularly the Law of the Sea Convention. That is above 
and beyond our concerns about the actual behavior of China 
itself.
    Now, there are ambiguities in the claims of other claimants 
in the South China Sea. There are many complicated historical 
factors at work. But the problem we are all looking at, 
grappling with, is the fact that, under the Law of the Sea, 
which, as Chairman Corker pointed out, China itself has 
ratified and signed, all sovereignty derives from land 
features. So for the Chinese to claim that, on the basis of a 
historical map, they are sovereign over the seas of the South 
China Sea cannot be squared with the way the international law 
operates.
    The case which the Philippines has brought, and now the 
Vietnamese are supporting, before the tribunal of the Law of 
the Sea is looking at that very question, not the underlying 
sovereignty to any land feature, but the expansive and 
ambiguous claim to maritime space.
    Senator Gardner. We have the upcoming United States-China 
strategic and economic dialogue this summer. Does the President 
plan to personally discuss this issue with President Xi in 
September?
    Mr. Russel. In my experience, and I have been a party to 
virtually every meeting that senior U.S. Government officials, 
including the President, have had with President Xi Jinping, 
there has never been a high-level meeting between the President 
or the Secretary of State and President Xi in which this issue 
was not raised. It will be raised, and it is raised not because 
we take one claimant's side against another, or we are against 
China. It is raised because the behavior associated with 
China's operations in the South China Sea is having a 
destabilizing effect on the region and, therefore, a negative 
impact on our national security interests.
    Senator Gardner. I do not want to blur the two, but it is 
also something that will be brought up at the United States-
China strategic and economic dialogue in the summer, correct?
    Mr. Russel. Well, Senator, it will, but it will be brought 
up as soon as this Saturday when Secretary Kerry travels to 
Beijing and meets with his counterparts, and on Sunday when he 
also meets with President Xi Jinping.
    Senator Gardner. Very good.
    A couple of comments you made in your testimony that I 
wanted to follow up on, and I do not remember, I am sorry, 
Secretary Shear, if this is something you had said or Secretary 
Russel had said this, but it is China's behavior we are 
influencing was the response to one question. It was also said 
that China is already paying a significant price for their 
behavior.
    So the comment that was made of China's behavior that we 
are influencing, if I could get an example--and I think the 
chairman was trying to get at this question as well--if I could 
get an example of where China has changed behavior as a result 
of us trying to influence that behavior, that would be great. 
And then on the significant price, I want to follow up on that.
    So if I can get an example of where China's behavior has 
changed as a result of these actions.
    Ambassador Shear. Sir, if I could draw from my experience 
as Ambassador to Vietnam. I was in Hanoi at the time the 
Chinese deployed the oil rig to the South China Sea in the 
vicinity of the Paracel Islands. During that time, we 
coordinated closely with the Vietnamese. Of course, we made our 
views very strongly known in public in Washington and to the 
Chinese at the time. And the Senate also passed a resolution 
condemning the Chinese action.
    I think all of that contributed to the early withdrawal of 
the oil rig. I think you can make a strong case supporting the 
argument that the Chinese withdrew that rig a month earlier 
than they originally said they would due in part to strong 
international attention, strong attention from the United 
States.
    Senator Gardner. So we have the withdrawal of the oil rig. 
What other behaviors have we influenced?
    Mr. Russel. I would add two points, if I may, Senator, to 
Dave Shear's observation. One is the lack of follow-through to 
a number of threats that China has made in the past.
    So two examples would be their decision not to follow 
through on an attempt to implement fishing regulations based on 
Hainan Island and associated regulations based on the 
declaration of a military district from Sansha City.
    The second is the simple fact that after an ill-advised 
declaration of an ADIZ in the East China Sea--Air Defense 
Identification Zone--which the United States, Japan, the 
Republic of Korea, and others immediately objected to and we 
have made clear in numerous ways, including through the flight 
of a B-52, that our military operations are not impeded nor do 
we recognize that zone. The Chinese have gone quiet on that 
score and have refrained from doing what many people thought 
and worried they would do, which is to proceed to declare an 
air defense zone in the South China Sea as well.
    So admittedly, these are dogs that have not barked. I am 
not saying they will never wake up. But it is, I think, certain 
to those of us who have worked hard on China for a long time 
that a firm and unified position can affect and generate 
restraint in terms of Chinese behavior.
    Senator Gardner. Thank you, Mr. Chairman.
    The Chairman Senator Murphy.
    Senator Murphy. Thank you very much, Mr. Chairman, Ranking 
Member. Thank you to our panelists.
    Over the last couple years, I spent a lot of time in and 
around Ukraine, as have the chairman and ranking member. It is 
interesting to me some of the parallels with respect to which 
Russia's actions in Ukraine look sometimes very much like 
China's actions in the South and East China Seas.
    So I wanted to ask a couple questions about whether I am 
right to understand some parallels here. Clearly, Russia 
engaged in provocations in eastern Ukraine, up until this day, 
that involve a thin veneer of separation between themselves and 
the separatists slowly moving into eastern Ukraine, little 
green men who are clearly connected and controlling the 
separatists, in the same way China is being very careful about 
what they do.
    But as they move forward these white-hulled ships rather 
than these grey-hulled ships, they are actually exerting some 
additional control over the territory without militarizing the 
conflict. It seems to me some of the same activities that the 
Russians are undertaking.
    My first question, though, is about the extent to which 
China is watching what is happening today in and around 
Ukraine. A lot of us have worried that a lack of a robust 
response from the United States and Europe in Ukraine kind of 
sets this new set of rules in which you can reset your borders 
or territories that you control through channels other than 
diplomacy. And Russia clearly has gotten away with that thus 
far.
    Is China watching how the Western response plays out to 
Russia's aggression in Ukraine? Does our ability to send strong 
messages to Russian matter in terms of what China does next and 
what new provocations they may look to?
    Mr. Russel. Thank you very much, Senator Murphy.
    The first point I would make is that while there are some 
analogies between the behavior of Russia in Crimea and Ukraine 
and other problems, including China's behavior, I think it is 
dangerous if not treacherous to try to overdraw any comparison.
    In terms of very significant differences, China is not 
physically seizing territory possessed by or controlled by 
another country. They are not evicting people from contested 
land features. They are not nationalizing territory and so on. 
So there are some very important distinctions.
    But it is, certainly, reasonable to assume that the Chinese 
watch closely and analyze not only what Russia is doing, but 
how the United States and the international community respond.
    One lesson that has to be crystal clear to China is that 
the Russians and the Russian economy have paid a devastatingly 
high price for an ill-considered tactical move. I hope and I 
believe that that example has a chastening effect as the 
Chinese leaders make judgments about how they will pursue their 
claims vis-a-vis their neighbors in the South China Sea.
    Senator Murphy. Another frequent topic of discussion with 
respect to Ukraine and Russia is the challenge that this kind 
of aggression presents to article 5 in NATO, the question as to 
whether and when our obligations are actually triggered should 
you see separatists break out inside the borders of a NATO 
country. There is fairly open talk about the definitions in 
article 5 and at what point the obligations are to be 
triggered.
    Do we have any similar concerns with respect to our 
treaties with the Philippines or with Japan with respect to 
some, again, movement of these white-hulled nonmilitary vessels 
that are engaging in this provocative behavior, which may not 
look military on its face? Or are we confident that we know 
exactly where that line ultimately is crossed that would 
trigger obligations from the United States under those 
treaties?
    Ambassador Shear. With regard to our treaty with the 
Philippines, when President Obama visited Manila last year, he 
described our commitment to the defense of the Philippines as 
ironclad, and we will keep that commitment. I think that the 
best thing that we can do with the Philippines in the short 
term, both to strengthen the alliance and to strengthen our 
deterrence in the South China Sea, is to implement the Enhanced 
Defense Cooperation Agreement, which will allow, as I mentioned 
earlier, the stationing of rotational United States forces in 
the Philippines.
    In the longer term, I think it will be important for us to 
assist the Philippines in building their own capacity to allow 
them, as I said earlier, to pursue their own interests in the 
South China Sea as vigorously as possible.
    Senator Murphy. Is that to mean you do not read any 
ambiguity into the treaty or the potential provocations that 
would trigger obligations?
    Ambassador Shear. Well, I think that if Philippine forces 
came under attack, we would, certainly, confer urgently and 
intensively with our Philippine ally with a view toward 
ensuring the safety and security of the Philippines.
    Mr. Russel. Senator Murphy, if I could add, I would perhaps 
take it one step further.
    First of all, unlike NATO, we do not have a multilateral 
defense arrangement in Asia, but we have five very strong, very 
solid treaty alliances. And I am proud to say that those 
alliances are in great shape today.
    We have ongoing consultations, ongoing dialogues and 
discussions, with each of our partners through mechanisms such 
as the U.S.-Japan 2+2 or the strategic security dialogue that 
Assistant Secretary Shear and I cochaired in Manila just 2 
months ago.
    There is an ongoing discussion about the security 
situation, so I would not regard this as an off-on switch. The 
provision of security, whether we are dealing with grey-hulled 
or white-hulled vessels, is a collaborative and ongoing 
partnership.
    Senator Murphy. And I do not think that it is any sign of 
weakness in an alliance or weakness within the scope of a 
treaty to admit that there are countries that are playing with 
security guarantees, that are being very careful not to cross 
lines, and thus precipitating conversations about different 
scenarios in which there might be a significant amount of grey 
as to whether or not these treaties become operative.
    Certainly, that is happening in NATO today. There are very 
open conversations about exactly what would trigger article 5, 
what would not. I do not think anybody sees any weakness in it.
    It sounds like you are doing the same thing. I would just 
encourage it so that we are not surprised by an action that 
causes us to meditate for too long on whether or not these 
treaties require our action.
    Mr. Russel. Senator Murphy, we are also working with 
nontreaty-allied partners like Singapore and with important 
countries like Vietnam or Malaysia and Indonesia, because the 
goal of our treaties, but the mission of our policy, is to keep 
the peace and to maintain security. And we will not let these 
artificial divisions or thresholds create risk for us.
    Senator Murphy. Thank you, Mr. Chairman.
    The Chairman Senator Perdue.
    Senator Perdue. Thank you, Mr. Chairman.
    I agree with the President's rebalancing strategy. It is a 
dangerous world out there, and I think our future, certainly, 
the 21st century has been characterized as the century of the 
Pacific, whereas the 20th century may have been the century of 
the Atlantic.
    Over the last 30 years, since China has really opened up, I 
have been blessed in my career, especially, to have lived there 
a couple times in the region. I worked in China a lot over the 
last 30 years. And I have watched United States engage China.
    And I do agree with that engagement policy. I hope we can 
continue that and use military engagement as well as economic 
engagement. It is a carrot-and-stick type of approach.
    Today, though, over the last 20 or 30 years, as their 
economy has grown and we have grown in terms of consuming their 
products, we have helped them develop a current account that is 
dramatically larger than ours, obviously. We have watched their 
economy grow such that today we have $18 trillion of debt. 
China and Japan together are the two largest country holders, 
second only to our own Federal Reserve.
    I am very concerned about our ability to continue to engage 
in a respectful way with China, given the size of our debt. 
Admiral Mullen, our past chairman of the Joint Chiefs of Staff, 
said in 2011 that our own national debt is the greatest threat 
to our national security.
    With regard to Asia, and particularly China, how does that 
debt situation, the fact that they hold a lot of our debt, and 
I would ask both of you, both from an economic point of view 
and a military point of view, what does that to do our ability 
to deal with them straight up, particularly when we have 
tactical security issues?
    Let me give you an example. It has been characterized that 
we have these, I think you said five, alliances in the region. 
One of those is Taiwan.
    We have an agreement with Taiwan that says if China invades 
Taiwan or attacks Taiwan, we have to come to Taiwan's defense 
and help defend Taiwan against China. But to do that, we have 
to go to China and borrow the money to go to Taiwan and help 
defend Taiwan against China.
    I just want to know the depth at which our own debt 
situation is hampering our ability to really engage China in a 
way that we need to over the next 30 years.
    Mr. Russel. Well, thank you very much, Senator Perdue, for 
the question, and also for your work on the committee, which we 
very much value.
    I had the honor to accompany the Vice President of the 
United States to China within several weeks of Moody's 
downgrade of the United States credit rating and was on the 
receiving end of what could only be described as a 
condescending expression of concern and sympathy by senior 
Chinese officials. And I was very proud as an American and as a 
Foreign Service officer at the vigorous way that the Vice 
President pushed back directly in those meetings in Beijing.
    What he said was that no one has ever won a bet who bet 
against the United States. He said that the vast majority of 
bonds and the debt of the United States is held by the American 
people. And he challenged the Chinese, if they wanted to 
unload, he would have no trouble finding buyers for them.
    I cite that as an example of the certainty I bring to 
answering the question, no, the deficit, the fact that China 
holds a significant share, albeit perhaps not as big as the 
share that Japan holds of United States debt----
    Senator Perdue. They are very close, though. They go one 
and two, back and forth.
    Mr. Russel. But that in no way impedes our ability to make 
national security decisions vis-a-vis China that are in the 
best interest of the United States people.
    I will take the liberty though, Senator, of telling you two 
things that do impede our ability to effectively pursue our 
policy in Asia. One is that uncertainty as to whether the 
United States will, in fact, succeed in adopting and ratifying 
the Trans-Pacific Partnership trade agreement.
    This is, in my experience, the issue that our Asian 
interlocutors are most focused on and most concerned about. And 
in just the last 24 hours, the number of expressions of concern 
and anxiety I have received from Asian counterparts watching 
the developments on TPA have convinced me that concluding the 
TPP agreement in 2015 is the single biggest step that we can 
take to advance our ability to shape the Asian-Pacific region 
in the 21st century.
    And I will take the further liberty of associating myself 
with Senator Cardin's earlier comment that it would greatly 
strengthen our hands if the Senate were to ratify the Law of 
the Sea Convention. That is used against us to discredit our 
strong arguments on 
the South China Sea, and inasmuch as both former President 
Bush and other Republican and Democratic Presidents have 
endorsed it, I very much hope that the committee would give 
that some consideration.
    Senator Perdue. Thank you.
    Secretary Shear, I would like to switch gears back. That is 
the economic side. The military side is that China has really 
increased their investment in their military, such that they 
are really moving into--I think this is directionally correct. 
They will be very soon spending about half of what we spend on 
our military.
    The fact that we have a two-theater strategy, and have had 
for some 60 years or so, if you just do the math, does that not 
give you concern that over time that that puts us in jeopardy, 
in terms of being able to project force in the region and 
affect behavior on the part of China?
    Ambassador Shear. Thank you very much, Senator.
    Chinese military spending, certainly, has grown 
considerably over the past few years. I believe last year the 
Chinese defense budget grew by approximately 9.5 percent to 
reach the public figure of $135 billion. I think if you 
included activities such as the purchase of foreign weapon 
systems in the Chinese defense budget, which they do not 
include, the defense budget could be as high as $165 billion.
    They are using these increases in defense spending to 
quickly modernize their forces and to quickly grow their 
forces. And we are seeing the effects of that, not only in the 
South China Sea, but throughout the region.
    Senator Perdue. I am sorry to interrupt. I only have a few 
seconds left. Could you talk specifically about the naval fleet 
and their increased investment in the aggressive shipbuilding 
program they have underway right now, and the long-term, 10-
year impact of that on the balance of power in Asia?
    Ambassador Shear. Well, Senator, it is clear that the 
Chinese are devoting considerable resources to shipbuilding. 
Their ability to build ships in a very short timeframe is very 
high. I do not have the figures at my fingertips, but I can get 
you those figures for a record.
    But, certainly, their capability in terms of the number of 
ships, and the capability of the weapon systems on those ships, 
has increased considerably just over the past few years.
    Senator Perdue. Thank you.
    Thank you, Mr. Chairman.
    The Chairman Thank you.
    I sit here listening and it brings me back to my opening 
comments about where we were headed before this meeting. I see 
no price whatsoever that China is paying for their activities 
in the South and East China Seas. None.
    As a matter of fact, I see the price being us paying a 
price. We are paying the price. We have our friends coming in 
constantly worried about where we are, what our commitment 
levels are, pointing out that our foreign military financing in 
the region is 
1 percent of what it is in the rest of the world. They question 
whether there really is any kind of pivot or rebalance.
    So I actually look at what China is doing right now, and I 
see them paying no price. I see us getting ready to enter into 
a 123 agreement knowing they are going to violate it. We see 
them violating international norms now, on this particular 
issue.
    You say that they are being criticized. Gosh, we all get 
criticized around here all the time. It does not affect our 
behavior.
    So tell me what price they are paying. I see none. I see us 
actually paying a price in our esteem in the region. I think 
that our friends are very concerned about us.
    And what I see when I visit the region is they see a 
dominant China, both economically and militarily, and I see 
them constantly in a state of almost trepidation as to doing 
anything that might offend them.
    Now, what the Philippines did was interesting, and I 
support their efforts in that regard. I know we are, as a 
country.
    But explain to me the balance here. I think we are the ones 
that are paying the price by no one seeing any kind of tangible 
activity relative to this, and they are actually gaining and 
paying no price.
    Mr. Russel. Mr. Chairman, I respectfully but passionately 
beg to differ. I think, unquestionably, China is paying a 
price, and it is a growing price for its behavior.
    I cited the strong ASEAN push back, but the net result----
    The Chairman Now, wait a minute, wait a minute. My good 
friend, Senator Cardin, talked about how feckless that response 
was. You talked about it as a 7 on the Richter scale. It is a 
different scale than I am accustomed to.
    Tell me something that is tangible. I mean, okay, we see a 
group of people make a statement. Tell me what tangible price 
China is paying.
    Mr. Russel. Number one, the net effect of China's behavior 
is to strengthen the pull on United States engagement and 
presence in the Asia-Pacific region from China's neighbors. So 
we are increasingly in demand. We are sought out as the 
security guarantor. That is the opposite of an Asian-centric or 
Sino-centric policy. We have become an even more trusted 
partner as a result of this behavior.
    As I said before, China has failed in the effort to prevent 
criticism, to prevent internationalization, and, as they see 
it, embarrassment or even humiliation by virtue of their 
behavior being taken up as an issue in international fora.
    China vigorously opposed and objected to the Philippines 
introducing a case in the UNCLOS tribunal. And yet, as a result 
of their action, other claimants, Vietnam, have also weighed in 
with friend of the court briefs in opposition.
    The President of Indonesia, days before traveling to 
Beijing, made a public statement in which he asserted 
unequivocally the nine-dash line has no basis in international 
law.
    Coastal states around the South China Sea are developing 
their own capabilities, their own capacities. They are coming 
to the United States, they are going to Japan, they are going 
to Australia, to develop the wherewithal to monitor and to 
defend and to protect their territorial waters. They are 
conducting exercises.
    And I come back to the fundamental point. They are inviting 
the United States in. If the Chinese strategy was to freeze us 
out, not only is it not working, it has backfired.
    We are giving the smaller countries the confidence to push 
back. We are giving them the capabilities to monitor and defend 
their own territory and their interests.
    But most importantly, Mr. Chairman, we have prevented the 
situation from boiling over.
    The Chairman I do think they are relying more heavily or 
asking to be able to rely upon us more heavily. I do not see 
much in the way of substantive changes that are taking place.
    Let me move to defense. There are stories in many of the 
publications this morning about our activities and potentially 
piloting a boat within 12 nautical miles of one of these 
islets. Could you talk to me little bit about the effect of 
that and the importance of that? And are we actually going to 
do that?
    Ambassador Shear. Thank you, Mr. Chairman.
    With regard to the specific activities or operations 
mentioned in the Wall Street Journal article, I regret that I 
am not at liberty to discuss the details of our operations in 
an unclassified setting. However----
    The Chairman Well, should I call the authors of the article 
to find more detail? I mean, it is kind of out there.
    Ambassador Shear. Sir, in general, the Defense Department--
--
    The Chairman Let me ask you this. Do you think that us 
cruising within 12 nautical miles of one of these islets on a 
one-time basis or periodic basis will have an effect on what 
China is doing?
    Ambassador Shear. Many of the features in the Spratlys, 
including those claimed by China, are submerged features. They 
do not generate a legal territorial claim. We claim the right 
of innocent passage in such areas, and we exercise that right 
regularly, both in the South China Sea and globally. And we are 
going to continue exercising that right both on the surface of 
the water and in the air.
    The Chairman Let me just ask back again, let us just assume 
that the authors of this story were on the right path, or let 
us just ask a hypothetical. Would us cruising our military 
vessels within 12 nautical miles of these particular islets, 
would that have some kind of effect on what China is doing?
    Ambassador Shear. Sir, I am not in a position to comment on 
the hypothetical situation. But, in general, the Chinese take 
close notice of our freedom of navigation operations in the 
South China Sea. They take very close notice of most of our 
operations in the South China Sea. And they have an effect both 
on Chinese operations and on Chinese views of our commitment to 
the security of the region.
    And I think our presence and our posture in the region 
demonstrates repeatedly the continued strength of our 
commitment to the region and backs what we say to the Chinese 
with regard to our concerns about their behavior in the South 
China Sea.
    The Chairman Senator Cardin.
    Senator Cardin. So let me talk a little bit about the 
impact of China's decision in 2013 to establish the Air Defense 
Identification Zone in the East China Sea. When that was done, 
there was a lot of concern. And then it looked like there was 
just about pragmatic acceptance, not acknowledging legitimacy, 
but not challenging the activities of flights over that zone.
    Can you just give me an update as to the status of flights 
in that zone, what is being done, and if there is a concern 
that China may make a similar declaration in the South China 
Sea?
    Mr. Russel. Yes, Senator Cardin.
    The President and Vice President and senior officials made 
clear almost instantly after China's unilateral claim to have 
created an ADIZ in the East China Sea that we do not recognize 
it, and we will not accept or abide by it. Other countries, 
including Japan and the Republic of Korea, that were directly 
affected, made a similar response.
    As a matter of safety and pragmatism, civilian aircraft may 
choose to circumvent that area, so as to err on the side of 
safety on behalf of their passengers. But for any aircraft 
directed by the U.S. Government, any government aircraft, and I 
will let my colleagues speak to the military aircraft, we do 
not recognize, we do not accept, we do not avoid that ADIZ.
    Now, obviously, not speaking for the Chinese, but it is 
obvious that they have heard loud and clear the degree to which 
their neighbors would respond negatively and would oppose the 
creation of an ADIZ in the South China Sea. And I recognize and 
commend that restraint.
    Senator Cardin. Just so I have it clear, commercial flights 
that fly in that area are not complying with the Chinese 
requirements?
    Mr. Russel. The decision about whether or not to enter----
    Senator Cardin. And if they----
    Mr. Russe [continuing]. Or to respond to a signal from any 
air traffic controller, regardless of----
    Senator Cardin. But what is happening? Are they responding 
or not responding? Do we know?
    Mr. Russel. I believe that any commercial pilot who takes 
his passenger plane through an area and, in this case, the 
specific area in the East China Sea, will respond to queries.
    Senator Cardin. That is what I thought they were doing, so 
in reality then, China is accomplishing its mission by what it 
did because they are, in fact, establishing a claim that is not 
legitimate but making it legitimate by time?
    I understood you bristled a little bit at Senator Murphy's 
comparison between Russia and Ukraine. And I understand the 
differences, believe me. But I must tell you, when I was over 
in Asia, the Ukraine was mentioned frequently and concerns 
about China's unilateral actions were mentioned in the same 
paragraph.
    So if there is a de facto recognition of these zones as 
being effective in responding to the radio tower, because of 
the safety of the passengers, I fully understand that.
    Is that not an extremely dangerous precedent?
    Mr. Russel. It is a precedent that we, certainly, do not 
want to see repeated, which is why we have made it very clear 
to the Chinese that we would have great concern with, and 
object to, any move to declare additional ADIZs in contested 
areas.
    But the decision by a commercial aircraft pilot to respond 
to a query from a tower in whatever language from whatever base 
has no bearing on China's claim to sovereignty. Now, it may 
well be that the Chinese themselves hope to erode the 
administrative control that Japan exercises in the Senkakus, 
but that is something that we not only do not support but 
actively oppose.
    Senator Cardin. And do we believe there is any intention of 
China to do a similar zone in the South China Sea?
    Mr. Russel. It is a topic that I myself have raised with 
Chinese interlocutors. And while they are not showing their 
cards, we are. Our cards are unambiguous. It would be a 
destabilizing and problematic act were China to move in that 
direction.
    Senator Cardin. Well, I appreciate that, and I agree with 
that statement. The question is, if they do it, do we have 
options? What are our options?
    Mr. Russel. Senator, of course, we have options, and we are 
in the business of generating answers to questions about 
contingencies within the interagency for consideration by the 
President and his national security team. But I do not see any 
evidence that we are close to that point.
    Senator Cardin. And I understand we do not want to show all 
our cards. I understand that we want to be able to reserve the 
rights to choose our response, based upon what China may or may 
not do. But it does seem to me that this committee is concerned 
that there are a lot of risk factors in the China seas--we have 
a lot of military obligations in the China seas and it will be 
extremely challenging to protect these alliances, and demanding 
on the United States. So it would be good to share with us in 
an appropriate setting how we can be more aggressive in our 
options to maintain stability and maritime security, and to 
make clear that provocative actions will not be ignored by us, 
because it seems to me, yes, we have had strong statements, and 
I know our actions are limited, but it seems like we are 
letting certain things go unchallenged which could lead to 
other provocative actions, which could lead to military 
conflict, which is something we all want to avoid.
    Mr. Russel. Senator Cardin, if I could, very briefly, I 
have one heartfelt plea: Do not give up on diplomacy. Do not 
underestimate the power----
    Senator Cardin. This is the committee of diplomacy. We will 
not give up on diplomacy. We are not the Armed Services 
Committee. We are the Foreign Relations Committee. We will not 
give up on diplomacy.
    But share with us at times in an appropriate setting what 
your strategy is in this regard, because at times we think we 
are not really showing any response to these type of 
provocative actions, other than issuing a press release. I 
think we would like to do more, and we would like to have our 
allies know that we are very much on their side when it comes 
to these provocative actions.
    The Chairman Senator Gardner.
    Senator Gardner. Thank you, Mr. Chairman.
    Just to follow up on Senator Cardin's comments, in response 
to the question of has China's behavior changed or been 
influenced by our actions, we cited the oil rig moved out a 
month ahead when they said it was going to, a lack of follow-
through with a threat on some fishing territories, and the Air 
Defense Identification Zone.
    Those seem to be the only three that we talked about. Maybe 
there are others. But I guess to follow up on Senator Cardin's 
comments, is there a lack of legislative authority that we need 
to be discussing here in terms of actions the administration 
can take through diplomacy, or other areas where we need to be 
concentrating to show results here?
    If their activities, at least on the one island, are 
completing and 2017 or 2018, we do not have too much time to 
sit around before completion, if they are going to be serious 
about claiming that area as some kind of zone or territory.
    And the other question I had, is there political cover that 
the administration is lacking or looking for? Let us have those 
discussions in ways that we can help to make sure we are 
providing diplomatic solutions.
    Secretary Russel, you talked about the TPP. One concern I 
had after yesterday's vote--we had the failed cloture vote; 
hopefully, there are some breakthroughs today that we will move 
forward on. When we failed to proceed to what is a significant, 
I believe, opportunity to move forward on TPA, do you think 
China looks at that? Do they look at that and find I guess new 
energy, in terms of their efforts to look at the United States 
as weak or not committed to the region?
    Mr. Russel. Thank you, Senator.
    To your first question, I mentioned two very specific 
things, TPP and UNCLOS. I think that we have the full 
bipartisan support of the Congress behind the strategy of 
engagement and rebalance. That is valued and tremendously 
valuable. I think also that the support for the strong United 
States commitment to rule of law and building a rules-based 
Asia-Pacific, including with China, is well-recognized and 
appreciated in the region.
    With regard to TPP, China is not the only country that is 
watching with very intense interest to ascertain whether, to 
put it colloquially, we can get our act together. And were 
China or other Asian partners to come to the conclusion over 
time that the United States will not ultimately be able to 
follow through and to ratify a TPP agreement that not only sets 
tremendously high standards in terms of trade investment, 
environment, labor, governance, et cetera, but more 
fundamentally creates options for Asian partners, creates the 
ability to diversify economies so as not to be exclusively 
dependent on one major commercial partner. Were they to reach 
that conclusion, our strategic advantages in the Asia-Pacific 
region would suffer a major setback, I believe.
    Fortunately, based on what I know about the TPP agreement, 
and because it is an agreement that does so much to create jobs 
and growth in the United States, as well as to create a system 
of rules that coincide with our vision of an Asia-Pacific in 
the future, I am convinced that as more and more Members of 
Congress read the agreement itself, support in the U.S. 
Congress for the agreement will expand.
    Senator Gardner. My concern, again, just continues to be 
around whether or not China is able to use the rejection of 
cloture yesterday to even advance the TPA portion, the Trade 
Promotion Authority portion, of our trade objectives moving to 
TPP, that they will use it throughout the region to say the 
United States is not serious, it is not committed, and try to 
weaken our relationships amongst the region. That continues to 
be a concern of mine.
    Would it make sense, and perhaps this is best directed to 
Secretary Shear, would it make sense to have some kind of 
international maritime operations center as some have suggested 
in the region to address concerns with territorial issues or 
claims in the South China Sea?
    Ambassador Shear. Thank you, Senator.
    I would just like to take a moment at the start of my 
answer to address the issue of Trans-Pacific Partnership.
    Secretary of Defense Carter has spoken out energetically in 
favor of the Trans-Pacific Partnership, because, as Assistant 
Secretary Russel suggested, he believes it is of great 
strategic importance to the United States. It does not just 
provide economic benefits, prospective economic benefits to us, 
but will bolster our security because it will allow our trading 
partners to diversify their trading partnerships to the maximum 
extent possible, and help bind our partners more closely to the 
United States, not just in economic terms, but in general terms 
as well.
    So, Secretary of Defense Carter strongly supports TPP, 
because he understands the strategic importance to the United 
States, the importance of this agreement to U.S. security.
    With regard to your second question on the establishment of 
a regional maritime center, we support efforts like that. As 
you may know, Singapore has established a data fusion center, 
which takes information on the situation in the seas around 
Singapore in the South China Sea and the Indian Ocean and the 
Malacca Strait and fuses them into a single common picture.
    We think our partners throughout the region would benefit 
greatly by having a common maritime and air picture of the 
region, so that everybody can view what is going on in the 
region with complete transparency and calculate their interests 
accordingly.
    With that in mind, the Pacific Command this month is 
conducting a seminar with like-minded partners from Southeast 
Asia, ASEAN members and ASEAN claimants, to look at best 
practices in maritime domain awareness, to look at partner 
shortfalls in maritime domain awareness. And the results of 
that seminar will feed into our efforts to strengthen our 
partners' capacity throughout the region.
    Senator Gardner. And I guess, Secretary Shear, just to 
follow up, if we support the efforts of some kind of 
international an operations center, what steps are we doing to 
make that happen?
    Ambassador Shear. Well, first of all, we are supporting 
Singapore in its efforts to broaden the use of its data fusion 
center. Secondly, with the Philippines, specifically, we 
support the establishment and operation of their national coast 
watch center.
    So it is not only important for countries to work together 
to increase their maritime domain awareness, but we are working 
with individual countries to ensure that they have a good 
picture of what is going on in the region.
    Senator Gardner. But then are we doing anything on the 
international operations center itself? And if so, what?
    Ambassador Shear. I think we could support an international 
operations center in the region, and we would be happy to 
explore that with our partners, and we will keep you informed.
    Senator Gardner. But we have not explored that with our 
partners?
    Ambassador Shear. We will take the question, sir, and get 
back to you.
    Mr. Russel. If I may just add, in the context of our 
cooperative work in multilateral fora with ASEAN, including the 
ASEAN regional forum and the East Asia summit, we have a number 
of programs and joint exercises that promote collective 
maritime operations, disaster relief, humanitarian assistance, 
information-sharing. And promoting both on a bilateral and 
multilateral basis maritime information-sharing has been a high 
priority for U.S. programs in ASEAN for the last several years.
    Senator Gardner. So I guess, Secretary Russel, Secretary 
Shear had said that an international operations center might be 
something that would be supported. You talked a little bit 
about the work, the cooperation between the organizations. Is 
that something we can come to on an international basis with 
states and others to actually compose one single operation 
center? Would that be helpful?
    Mr. Russel. We will have to take a look at that, but we 
will gladly do so.
    The Chairman Thank you, Senator.
    We appreciate you coming today. I just want to recap, if I 
could.
    Senator Murphy, I think, made some interesting comments, 
especially having come from Senator Murphy. This committee, as 
Senator Cardin rightly said, is a committee that focuses on 
diplomacy. And, Secretary Russel, I know you referred to that, 
and not giving up on it.
    But typically, diplomacy works when people pay a price if 
it does not. I think the pattern began in August 2013 most 
clearly to me, August and September 2013, when there was very 
specific, targeted surgical price for Syria to pay for crossing 
the redline with chemical weapons. It did not happen.
    This committee, along those same timeframes and even 
before, right after that, passed legislation to cause us to do 
some things with the Syrian opposition that did not happen, 
that would have raised the price for Assad.
    Then Senator Murphy rightly pointed out the situation with 
Russia and eastern Ukraine and Crimea. And again, not only this 
committee, but the Senate unanimously passed a bill raising the 
stakes so that on the ground Russia would pay a price. Not much 
of that happened, a very small amount of that, even though it 
was authorized. The administration did not follow through.
    So in the South and East China Seas, I do not think the 
options are nearly as clear. They are much more vague. And some 
of the situations there are, certainly, more vague.
    But I will say diplomacy only works when people think there 
is a real price to pay. I do not see any price being paid at 
all.
    I do hope that Secretary Shear will arrange a meeting where 
he can talk to us clearly about what the U.S. military is 
getting ready to do, or not getting ready to do. If these 
reports in the paper this morning are not accurate, then come 
tell us they are not accurate.
    But I would hope that very quickly you would arrange a 
meeting where Senator Cardin and myself and others can 
understand what is actually happening here, whether it is just 
a show or whether something significant is getting ready to 
occur.
    But look, I do not think the decisions around China are 
easy ones. I think they have learned a lot from us, learned a 
lot from our own foreign policy over the last 2 or 3 years. And 
I think this new leadership in China understands that well and 
understands the things that we are undertaking are interesting, 
but there is no real price to pay.
    So I do not think much is going to change. I get a little 
worried, even though I think both of you, I know, represent our 
country well, when we make these statements in these hearings, 
it just again builds on the narrative that there is a lot of 
talk coming out of the administration, with not much follow-
through. And I do hope that somehow we will develop a coherent 
policy relative to China that somehow, while they violate 
international norms in multiple ways, we can figure out a way 
for a price to be paid.
    I do understand that China could be one of those and 
hopefully is going to be one of those countries where a strong 
relationship with them is going to benefit not only their 
citizens but obviously the ones we care about most, our own. I 
understand all of those things come into play.
    But I think you should leave here today with a sense of 
disappointment from both sides of the aisle about us not really 
having, still, a coherent policy. The reason this hearing is 
taking place today is, a year ago, we were concerned about the 
fact that the United States does not have a coherent policy 
relative to these issues and others with China. I agree that 
TPP could be very important. Hopefully, China will accede to 
TPP over time, if we are able to cause it to come to fruition.
    But I leave here as disappointed as I was a year ago about 
the fact that we do not have a policy. That is certainly not a 
disappointment in the service that the two of you have 
provided. We thank you for being here.
    The record will remain open through the close of business 
Friday. Hopefully, if you have questions, you will respond to 
them quickly.
    The Chairman And without objection, Mr. Ranking Member, the 
committee is adjourned.
    [Whereupon, at 3:52 p.m., the hearing was adjourned.]
                              ----------                              


              Additional Material Submitted for the Record


                Responses of Daniel Russel to Questions 
                   Submitted by Senator David Perdue

    Question. President Obama has warned that if TPP is not approved, 
then ``China, the 800-pound gorilla in Asia will create its own set of 
rules.'' Can you detail the strategic consequences for the United 
States if TPP is not approved, and China creates ``its own set of 
rules?''

    Answer. Concluding the Trans-Pacific Partnership (TPP) is the most 
important step we can take in the Asia-Pacific this year, both 
strategically and economically. We say TPP will be a 21st-century 
agreement, and we mean it. TPP will certainly address traditional trade 
issues such as tariffs, market access, and investment. But TPP also 
gives us the opportunity to protect workers and the environment with 
the highest and most enforceable standards of any trade agreement ever. 
And it will allow us to tackle a number of issues that have never been 
addressed in trade pacts--for instance, it will put disciplines on 
state-owned enterprises and help ensure a free and open Internet.
    That's why TPP is not just an important trade agreement for the 
Asia-Pacific region. TPP is an important environmental agreement. TPP 
is an important labor agreement. TPP is an important transparency and 
anticorruption agreement.
    As President Obama has repeatedly noted, if we cede leadership, if 
we do not set the rules of the road, our competitors surely will. If we 
don't lead through TPP, who will maintain a free and open Internet or 
promote innovation by protecting the intellectual property that 
innovators have developed? How will companies be protected from unfair 
competition by state owned enterprises? Where will the protections and 
enforcement of workers' rights or environmental interests come from?

    Question. Do you think it is likely that China would ever be 
included in the TPP?

    Answer. TPP remains open to any country willing to meet its high 
standards. However, the current focus remains on completing the 
agreement. TPP is not designed to contain any particular country. 
Rather it is intended to strengthen and expand the open, transparent, 
and rules-based system that has been the foundation of the region's 
peace, stability, development, and prosperity.

    Question. Mr. Shear, Mr. Russel, can you expand on the Secretary's 
remarks regarding the strategic importance and security benefits of 
approving the Trans-Pacific Partnership?

    Answer. Our credibility and our ability to lead are at stake. 
Countries in the region look to us to help establish the rules and set 
high standards. While the region seeks greater United States economic 
engagement, the steady loss of United States trade market share in 
recent years to Asian competitors, particularly China, feeds an 
inaccurate perception of United States economic decline. Put more 
bluntly, the region still welcomes U.S. leadership, but it also still 
worries about our economic staying power. Failure to complete and 
approve TPP this year would be a setback to confidence in the United 
States.
    Beyond what we're doing is how we do it, and how this reflects who 
we are. In today's global economy, the true wealth of a nation lies not 
in its territory or simple industrial output, but in its ability to 
maximize its human resources--to help its people to reach their full 
creative and innovative potential. The United States steady, sustained 
commitments and engagement over many decades, and our hard work to 
build fair, inclusive rules that lead to shared growth and opportunity, 
may not be flashy, but they have helped maintain peace, lift hundreds 
of millions of people out of poverty, and protect our national 
interests.
    Despite the strengths of the ``American brand,'' we cannot assume 
that other countries will adopt our free, open economic model and our 
values. The major question facing both the United States and the region 
is where do we go from here? I believe the United States and the other 
economies of the Asia-Pacific will continue to grow and prosper 
together. That's the future we can build together. But it depends on 
wise leadership that reinforces our values. Our work supports security 
and prosperity, which are inherently linked and inseparable.

    Question. How will this free trade agreement help us ``deepen our 
alliances'' and ``promote a global order that reflects both our 
interests and our values''?

    Answer. The United States prosperity and Asia's prosperity are 
inseparable. We are all aware of the region's spectacular growth in 
recent decades, and analysts predict significant growth for years to 
come. The region is home to both the world's two largest economies, 
excepting the United States, and has many of the world's fastest 
growing economies as well. The UNDP estimates that the Asia-Pacific 
will be home to two thirds of the global middle class by the year 2030, 
and the OECD predicts the region's middle-class consumers will number 
2.7 billion by then.
    Access to U.S. markets and investment has been crucial for the 
region's economic growth and development. Bilateral trade in goods and 
services is now at an all-time high, and U.S. business remains the 
region's largest source of foreign direct investment, with over $620 
billion in investment stock in the region reported in 2013.
    For this growth to continue, concluding the Trans-Pacific 
Partnership (TPP) negotiations, remains the single most important thing 
the United States can accomplish in its economic and strategic 
relationship with the Asia-Pacific region this year. There's an urgent 
question of which future will define East Asia and the Pacific for the 
century to come. Will the Asia-Pacific reaffirm, strengthen, and expand 
the open, transparent, and rules-based system that has been the 
foundation of the region's peace, stability, development, and 
prosperity? Or will it instead engage in a near-sighted race to the 
bottom, with arrangements that do not promote shared and sustainable 
economic growth?

    Question. How does China's holding of our debt impact our 
decisionmaking with regard to security? Particularly with security 
decisions in this increasingly volatile region?

    Answer. China's holding of United States debt does not influence 
our security decisions. China holds U.S. Treasury securities for the 
same reason that other investors do--for their safety, and because the 
market for Treasuries is deep, liquid, and not influenced by individual 
decisions to buy or sell.
    Approximately externally owned U.S. debt is held by a diverse group 
of countries, and we are not overly reliant on any one overseas holder 
of U.S. Treasury securities.
    While China has a strong interest in the stability of our debt, as 
a creditor, China's holdings of Treasury securities have no effect on 
any United States foreign policy decisions.

    Question. China last year created the Asia Infrastructure 
Investment Bank to, ``promote interconnectivity and integration in the 
region.'' It is clear that Asia has yawning gaps in infrastructure 
financing that must be addressed. Roads, bridges, ports, railroads, and 
airports will be key to spurring economic growth in the region. It has 
been widely reported that the U.S. lobbied other nations not to join 
the AIIB. However, the United Kingdom, Germany, France, and other 
Western nations have joined the AIIB.

   Can you explain to me why the United States chose not to 
        sign up as a founding member? Do you believe the United States 
        should join the AIIB now?

    Answer. As the President has said, we have not and do not oppose 
the Asian Infrastructure Investment Bank (AIIB), and we are not opposed 
to other countries participating. We hope the AIIB will operate with 
robust standards and safeguards and will help borrowers develop 
sustainable infrastructure in their countries. Moreover, we encourage 
the ADB and the World Bank to work with the AIIB on a wide range of 
issues. As for the United States, at present, we are focusing on 
meeting our commitments to the existing multilateral development banks.

    Question. China is currently the United States third-largest export 
market and biggest source of imports, making it the second-largest 
overall U.S. trading partner. In 2014, U.S. exports to, and imports 
from, China were an estimated $125 billion and $466 billion, 
respectively. According to the U.S. Bureau of Economic Analysis, 
cumulative Chinese foreign direct investment (FDI) in the United States 
by the end of 2013 was $8.1 billion, while cumulative U.S. FDI in China 
was $61.5 billion. At an estimated $341 billion in 2014, the U.S. trade 
deficit with China is significantly larger than its trade deficit with 
any other partner. I think that one problem we face now, is that we 
have gotten out of balance on the trade front with China. I am 
concerned that this lack of balance on trade is causing China to act 
out more aggressively.

   I am curious to get your views, on the economic diplomacy 
        here, if you think that increased trade and economic dependency 
        between our two nations might ease China's recent military 
        behavior?

    Answer. Through increased economic ties, we integrate China into 
the existing rules-based system of trade and make it a more responsive 
stakeholder in the international system as a whole. This is a process. 
As time goes on, China may be more likely to change its military 
posture on the basis of its economic interests. However, there are a 
number of countries with which China is engaged in strategic 
competition with whom they share close economic ties. There are also a 
number of countries which depend on strategic ties with China, but due 
to a lack of a developed market, do not enjoy a robust economic or 
trade relationship.

    Question. In his address to Congress, Prime Minister Abe told us 
that Japan is, ``resolved to take yet more responsibility for the peace 
and stability in the world.''
    During his press conference with the Premier, President Obama 
reiterated, ``our treaty commitment to Japan's security is absolute, 
and that Article 5 covers all territories under Japan's administration, 
including the Senkaku Islands . . . and the United States and Japan are 
united in our commitment to freedom of navigation, respect for 
international law, and the peaceful resolution of disputes without 
coercion.''

   (a) Mr. Shear, Mr. Russel, can you detail how the new 
        security guidelines would affect a U.S.-Japanese response to 
        Chinese encroachment against the Senkaku islands?
   (b) In addition to the new guidelines, Japan has 
        reinterpreted its Constitution to allow a right to collective 
        self-defense. Can you describe Japan's goals in this ongoing 
        reevaluation of its global role?

    Answer (a). As reflected in the President's statement quoted above, 
the United States position on the Senkakus is long-standing: we do not 
take a position on the question of ultimate sovereignty, but we 
acknowledge that Japan administers the Senkaku Islands and has done so 
since the 1972 reversion of Okinawa to Japan. As such, the islands fall 
under Article V of the U.S.-Japan Treaty of Mutual Cooperation and 
Security. Article V provides that ``[e]ach Party recognizes that an 
armed attack against either Party in the territories under the 
administration of Japan would be dangerous to its own peace and safety 
and declares that it would act to meet the common danger in accordance 
with its constitutional provisions and processes.''
    Answer (b). We welcome the Government of Japan's new policy 
regarding collective self-defense and related security activities. The 
U.S.-Japan Alliance is one of our most important security partnerships, 
and therefore we value efforts by Japan to strengthen our bilateral 
cooperation. In addition, we welcome Japan's goal of playing a greater 
international role in promoting peace and security, as seen in 
decisions to send reconstruction and support forces to Iraq and Kuwait, 
deploy peacekeepers to South Sudan and Haiti, conduct refueling 
activities in the Indian Ocean, and dispatch Naval assets to counter 
piracy. We appreciate Japan's efforts to maintain openness and 
transparency throughout the implementation of this new policy. Japan 
wishes to build on its contributions to regional and global security, 
having demonstrated over the last 70 years an abiding commitment to 
peace, democracy, and the rule of law.

    Question. China's Military Modernization.--China recently announced 
that its defense budget would grow another 10 percent in 2015.
    Although official statistics are not reliable, a leading estimate 
suggests that Chinese defense spending sped past $200 billion per year 
in 2014, a sixfold increase over the course of 15 years.
    Meanwhile, the Pentagon's base budget has fallen by 14 percent over 
the past 5 years, and the 2015 Department of Defense report on military 
and security developments involving the People's Republic of China 
finds that ``China's military modernization has the potential to reduce 
core U.S. military technological advantages.''

   (a) Mr. Shear, Mr. Russel, in light of these facts, do you 
        agree that the regional balance of power continues to shift in 
        China's favor?
   (b) Has it already reached a point where China has a 
        military advantage over the United States in regional waters, 
        inside the ``first island chain''?
   (c) Is it possible to begin shifting the balance back in 
        our favor while sequestration remains in place?
   (d) Does the continuing shift in China's favor undermine 
        the U.S. ability to deter provocative behavior, such as China's 
        intimidation tactics in the South and East China Seas?

    Answer. The Answer to this question is not within the purview of 
the Department of State. The Department of State defers to the 
Department of Defense.

    Question. In the 2015 posture statement for U.S. Pacific Command, 
Admiral Locklear chronicled China's extensive military modernization 
programs.
    It is pursuing an ``aggressive ship-building program to produce and 
field advanced frigates, destroyers, and the first in-class cruiser-
sized warship,'' and will soon begin construction of its first 
indigenously produced aircraft carrier.

   (a) Mr. Shear, can you summarize what capabilities these 
        new platforms will have in comparison to the U.S. Navy, and 
        those of our regional allies?
   (b) To what extent will China's new naval capabilities 
        facilitate its efforts to enforce its claims in the South and 
        East China Seas?

    Answer. The Answer to this question is not within the purview of 
the Department of State. The Department of State defers to the 
Department of Defense.

    Question. How are America's regional partners and allies responding 
to the quantitative and qualitative growth in China's military?

    Answer. Across the region, we are strengthening our alliances and 
security partnerships with many countries, who increasingly are asking 
us for closer security cooperation. Our shared capabilities help us 
provide additional security to address a variety of traditional and 
nontraditional challenges. These challenges include, but are not 
limited to, increasing maritime domain awareness and capacity in light 
of China's approach to maritime and territorial disputes.

    Question. China's participation in RIMPAC.--Some U.S. lawmakers and 
military leaders have expressed their hope that the administration 
would cancel China's invitation to attend next year's RIMPAC military 
exercises.

   (a) Mr. Shear, in light of China's continued regional 
        aggression, can you explain why China should be invited to 
        participate in next year's exercise?
   (b) What does the fact that China sent an intelligence 
        vessel to monitor the 2014 RIMPAC exercises when it was invited 
        to participate in them say about China's distrust of its 
        neighbors and the United States?

    Answer. The Answer to this question is not within the purview of 
the Department of State. The Department of State defers to the 
Department of Defense.
                                 ______
                                 

                 Responses of David Shear to Questions 
                   Submitted by Senator David Perdue

          trade promotion authority/trans-pacific partnership
    As you know, we are set to vote on Trade Promotion Authority here 
in the Senate in the near future, which will help the administration 
finalize the Trans-Pacific Partnership (TPP). In a speech on April 6, 
Secretary of Defense Ashton Carter said ``passing TPP is as important 
to me as another aircraft carrier. It would deepen our alliances and 
partnerships abroad and underscore our lasting commitment to the Asia-
Pacific. And it would help us promote a global order that reflects both 
our interests and our values.'' While we are talking about TPP here, 
China is finding other ways to gain global influence. China recently 
started the Asian Infrastructure Investment Bank, and has brought key 
American allies (including South Korea, Germany, and Britain) on board. 
At the same time, China is setting up other trade pacts around the 
region. And, they have been pushing for a pact known as the Free Trade 
Area of the Asia Pacific. I am concerned about these trade agreements 
whose rules China can write by virtue of the huge size of its market--
China has an official GDP of $10.36 trillion and PPP GDP of $17.63 
trillion.

    Question (a). President Obama has warned that if TPP is not 
approved, then ``China, the 800-pound gorilla in Asia will create its 
own set of rules.'' Can you detail the strategic consequences for the 
United States if TPP is not approved, and China creates ``its own set 
of rules?''

    Answer. As Secretaries Carter and Kerry recently stated, ``our 
strength abroad ultimately rests on the foundation of our vibrant, 
unmatched, and growing domestic economy.'' The rules-based system that 
has brought prosperity to the Asia-Pacific region, and the United 
States, for many years is now at risk. If the United States does not 
take the lead in protecting a rules-based approach, we risk ceding 
leadership to other countries that do not share our interests and our 
values and are pushing their own regional initiatives with weaker 
standards. Right now, China and others are negotiating their own 
agreements. They do not protect workers' rights or environmental 
interests. They do not protect intellectual property rights or maintain 
a free and open Internet. And they do not do anything about unfair 
competition from State-owned enterprises. If that becomes the model for 
the fastest growing region of the world, it will not only put our 
workers and firms at a significant disadvantage, it will result in 
Asian markets being carved up, removing the United States from supply 
chains, decreasing our linkages to important allies and partners, and 
seeing our overall influence diminished.

    Question (b). Do you think it is likely that China would ever be 
included in the TPP?

    Answer. I refer to the Department of State on this question.

    Question (c). Mr. Shear, Mr. Russel, can you expand on the 
Secretary's remarks regarding the strategic importance and security 
benefits of approving the Trans-Pacific Partnership?

    Answer. As Secretary Carter has said, our military strength 
ultimately rests on the foundation of a vibrant and growing economy. 
TPP and the Transatlantic Trade and Investment Partnership (TTIP) would 
boost our economy and provide our workers and businesses a more fair 
and level playing field abroad. They also make strategic sense for our 
country. The agreements would help us promote stability and security in 
critical regions of the world by deepening our alliances and 
partnerships abroad, reinforcing U.S. global leadership and engagement, 
and promoting a global order that reflects both our interests and our 
values.

    Question (d). How will this free trade agreement help us ``deepen 
our alliances'' and ``promote a global order that reflects both our 
interests and our values?''

    Answer. TPP would cement the strong alliance framework and 
partnerships that ensure the Asia-Pacific region's security and 
prosperity. It would greatly increase our cooperation and commercial 
ties with Japan, Vietnam, Malaysia, and Australia, among others. It 
would also assure our allies and partners that our long-term commitment 
to the region reaches beyond security and into the economic realm. 
Furthermore, concluding the TPP, with countries representing more than 
40 percent of global gross domestic product (GDP), would build a 
magnetic effect attracting nonmembers across the region to the benefits 
that it offers.
    TPP would also define the values that we want to see prevail in the 
Asia-Pacific region--values like fair labor standards, environmental 
protection, and laws updating intellectual property rights. If we can 
finalize TPP, we will unite the countries representing two-thirds of 
the world's trade into a coalition of free and fair trade that will 
drive the standards and rules for the 21st century--a coalition too 
large for countries to ignore the basic rules that we have agreed on.
                      chinese holding of u.s. debt
    Question. In 2014, China was the United States second-largest 
trading partner, its third-largest export market, its biggest source of 
imports, and one of the two largest foreign holders of U.S. debt in the 
form of U.S. treasury securities. Japan has recently passed China as 
the largest holder of U.S. debt. China has recently seen slowing growth 
which has caused them to invest more of their foreign earnings 
domestically. The amount of U.S. debt held by China still concerns me 
greatly. In 2011, ADM Michael Mullen said that the national debt is the 
greatest threat to our Nation.

   How does China's holding of our debt impact our 
        decisionmaking with regard to security? Particularly with 
        security decisions in this increasingly volatile region?

    Answer. U.S. decisionmaking and engagement in the Asia-Pacific 
region, as elsewhere in the world, is based on U.S. national security 
interests and priorities. China's U.S. Treasury holdings are not a 
factor in our security decisionmaking.
                      new chinese investment bank
    China last year created the Asia Infrastructure Investment Bank to, 
``promote interconnectivity and integration in the region.'' It is 
clear that Asia has yawning gaps in infrastructure financing that must 
be addressed. Roads, bridges, ports, railroads, and airports will be 
key to spurring economic growth in the region. It has been widely 
reported that the U.S. lobbied other nations not to join the AIIB. 
However, the United Kingdom, Germany, France, and other Western nations 
have joined the AIIB.

    Question (a). Can you explain to me why the United States chose not 
to sign up as a founding member?

    Answer. I would refer you to the State Department on questions 
related to the Asia Infrastructure Investment Bank.

    Question (b). Do you believe the United States should join the AIIB 
now?

    Answer. I would refer you to the State Department on questions 
related to the Asia Infrastructure Investment Bank.
                             trade balance
    Question. China is currently the United States third-largest export 
market and biggest source of imports, making it the second-largest 
overall U.S. trading partner. In 2014, U.S. exports to, and imports 
from, China were an estimated $125 billion and $466 billion, 
respectively. According to the U.S. Bureau of Economic Analysis, 
cumulative Chinese foreign direct investment (FDI) in the United States 
by the end of 2013 was $8.1 billion, while cumulative U.S. FDI in China 
was $61.5 billion. At an estimated $341 billion in 2014, the U.S. trade 
deficit with China is significantly larger than its trade deficit with 
any other partner. I think that one problem we face now, is that we 
have gotten out of balance on the trade front with China. I am 
concerned that this lack of balance on trade is causing China to act 
out more aggressively.

   I am curious to get your views, on the economic diplomacy 
        here, if you think that increased trade and economic dependency 
        between our two nations might ease China's recent military 
        behavior?

    Answer. President Obama has made clear that the United States 
welcomes a positive, cooperative, and comprehensive relationship with 
China. This includes positive economic, political, and military 
relations. However, I cannot speculate on the precise relationship 
between economic relations and Chinese military behavior.
                                 japan
    In his address to Congress, Prime Minister Abe told us that Japan 
is, ``resolved to take yet more responsibility for the peace and 
stability in the world.'' During his press conference with the Premier, 
President Obama reiterated, ``our treaty commitment to Japan's security 
is absolute, and that Article 5 covers all territories under Japan's 
administration, including the Senkaku Islands . . . and the United 
States and Japan are united in our commitment to freedom of navigation, 
respect for international law, and the peaceful resolution of disputes 
without coercion.''

    Question (a). Mr. Shear, Mr. Russel, can you detail how the new 
security guidelines would affect a U.S.-Japanese response to Chinese 
encroachment against the Senkaku islands?

    Answer. As reflected in the President's statement quoted above, the 
United States position on the Senkaku Islands is long-standing: we 
acknowledge that Japan administers the Senkaku Islands and has done so 
since the 1972 reversion of Okinawa to Japan. As such, the islands fall 
under Article V of the U.S.-Japan Treaty of Mutual Cooperation and 
Security. Article V provides that ``[e]ach Party recognizes that an 
armed attack against either Party in the territories under the 
administration of Japan would be dangerous to its own peace and safety 
and declares that it would act to meet the common danger in accordance 
with its constitutional provisions and processes.'' However, we do not 
take a position on the question of ultimate sovereignty.
    We continue to carry out our rebalance to the Asia-Pacific by 
dedicating more resources to the region in a way that is commensurate 
with the truly comprehensive nature of our engagement. The stronger 
U.S.-Japan Alliance cemented by the new Guidelines for U.S.-Japan 
Defense Cooperation is a success story of the rebalance strategy. The 
new guidelines also provide a framework for Japan to expand its 
contributions to international peace and security in concert with the 
United States and like-minded partners during the coming decades.

    Question (b). In addition to the new guidelines, Japan has 
reinterpreted its Constitution to allow a right to collective self-
defense. Can you describe Japan's goals in this ongoing reevaluation of 
its global role?

    Answer. We welcome the Government of Japan's new policy regarding 
collective self-defense and related security activities. The U.S.-Japan 
alliance is one of our most important security partnerships. We, 
therefore, value efforts by Japan to strengthen our bilateral 
cooperation. We will continue to carry out our rebalance to the Asia-
Pacific by dedicating more resources to the region in a way that is 
commensurate with the truly comprehensive nature of our engagement. The 
stronger U.S.-Japan Alliance cemented by the new Guidelines for U.S.-
Japan Defense Cooperation is a success story of the rebalance strategy. 
The new guidelines also provide a framework for Japan to expand its 
contributions to international peace and security in concert with the 
United States and like-minded partners during the coming decades. In 
addition, we welcome Japan playing a greater international role in 
promoting peace and security, as demonstrated by its decisions to send 
reconstruction and support forces to Iraq and Kuwait, deploy 
peacekeepers to South Sudan and Haiti, conduct refueling activities in 
the Indian Ocean, and dispatch naval assets to counter piracy. We 
appreciate Japan's efforts to maintain openness and transparency 
throughout the implementation of this new policy. Japan wishes to build 
on its contributions to regional and global security, having 
demonstrated over the last 70 years an abiding commitment to peace, 
democracy, and the rule of law.
                     china's military modernization
    China recently announced that its defense budget would grow another 
10 percent in 2015. Although official statistics are not reliable, a 
leading estimate suggests that Chinese defense spending sped past $200 
billion per year in 2014, a sixfold increase over the course of 15 
years. Meanwhile, the Pentagon's base budget has fallen by 14 percent 
over the past 5 years, and the 2015 Department of Defense report on 
military and security developments involving the People's Republic of 
China finds that ``China's military modernization has the potential to 
reduce core U.S. military technological advantages.''

    Question (a). Mr. Shear, Mr. Russel, in light of these facts, do 
you agree that the regional balance of power continues to shift in 
China's favor?

    Answer. As you note, DOD's 2015 Report on Military and Security 
Developments in the People's Republic of China highlights China's 
extensive investments in capabilities that have the potential to erode 
U.S. military technological advantages over time. However, the United 
States has abiding areas of strength that no other country--including 
China--can match: from our unrivaled ability to innovate, to our 
unparalleled operational experience, and our extensive network of 
alliances and partnerships in the region. As part of President Obama's 
rebalance strategy, the Department of Defense is modernizing our 
alliances and partnerships; we are enhancing our defense posture to be 
more geographically distributed, operationally resilient, and 
politically sustainable; we are moving key capabilities and assets 
forward to the Asia-Pacific region; and we are investing in new 
capabilities that will be especially relevant to the security 
environment in the future. In short, as Secretary Carter has stated, 
the United States ``will remain the principal security power in the 
Asia-Pacific for decades to come.''

    Question (b). Has it already reached a point where China has a 
military advantage over the United States in regional waters, inside 
the ``first island chain''?

    Answer. No. As Secretary Carter has said, although we face 
challenges to our technological superiority, it will take years for any 
country to build the kind of military capability the United States 
possesses today. And in the meantime, we will not be standing still. 
The Department has committed to moving our finest capabilities and 
assets forward to the Asia-Pacific region, and we are investing in new 
capabilities that will be especially relevant to the security 
environment in the future. We are mindful of several countries' growing 
areas of military strength and will continue to make the investments 
necessary to ensure that we manage security competition from a position 
of strength.

    Question (c). Is it possible to begin shifting the balance back in 
our favor while sequestration remains in place?

    Answer. We are doing what we can with the funds and authorities we 
have at this time. We would, of course, welcome additional funds and 
authorities to do more.

    Question (d). Does the continuing shift in China's favor undermine 
the U.S. ability to deter provocative behavior, such as China's 
intimidation tactics in the South and East China Seas?

    Answer. No. The United States is taking active steps to deter 
aggression and coercion in the Asia-Pacific region. The Department of 
Defense has committed to moving our finest capabilities and assets 
forward to the Asia-Pacific region, and we are investing in new 
capabilities that will be especially relevant to the security 
environment in the future. We are also modernizing our alliances and 
partnerships to ensure they can meet the challenges of the Asia-Pacific 
region's dynamic security environment. Finally, we are adopting a more 
geographically distributed, operationally resilient, and politically 
sustainable defense posture that will bolster our persistent presence 
across the region, especially in Southeast Asia. As Secretary Carter 
has stated, the United States will ``remain the principal security 
power in the Asia-Pacific for decades to come.''
                         chinese ship-building
    In the 2015 posture statement for U.S. Pacific Command, Admiral 
Locklear chronicled China's extensive military modernization programs. 
It is pursuing an ``aggressive shipbuilding program to produce and 
field advanced frigates, destroyers, and the first in-class cruiser-
sized warship,'' and will soon begin construction of its first 
indigenously-produced aircraft carrier.

    Question (a). Mr. Shear, can you summarize what capabilities these 
new platforms will have in comparison to the U.S. Navy, and those of 
our regional allies?

    Answer. As we have noted in our Annual Report to Congress on 
Military and Security Developments Involving the People's Republic of 
China, China's ambitious naval modernization program is producing a 
more technologically advanced and flexible force that now consists of 
the largest naval fleet in Asia. The United States continues to closely 
monitor these trends. While I cannot provide a comparative assessment 
of U.S. and Chinese naval capabilities, I would note that the United 
States is making significant investments in those capabilities most 
relevant to the Asia-Pacific security environment and we are committed 
to moving our finest capabilities forward to the region. As Secretary 
Carter has stated, the United States will ``remain the principal 
security power in the Asia-Pacific for decades to come.''

    Question (b). To what extent will China's new naval capabilities 
facilitate its efforts to enforce its claims in the South and East 
China Seas?

    Answer. To date, China has used its government controlled, civilian 
maritime law-enforcement agencies in maritime disputes and uses the PLA 
Navy in an overwatch capacity in case of escalation. The Chinese Coast 
Guard is rapidly increasing its total force level, adding new, larger 
patrol ships and craft as well as helicopters and UAVs. In the next 
decade, a new force of civilian law enforcement ships will afford China 
the capability to patrol more robustly in the East China Sea and the 
South China Sea. The PLA assets you mention could play a role in a 
situation where a maritime dispute escalates militarily. These assets 
could also be used to augment PLA presence operations in the region, 
for signaling and naval diplomacy.
                    china's participation in rimpac
    Question (a). Some U.S. lawmakers and military leaders have 
expressed their hope that the administration would cancel China's 
invitation to attend next year's RIMPAC military exercises.

   Mr. Shear, in light of China's continued regional 
        aggression, can you explain why China should be invited to 
        participate in next year's exercise?

    Answer. We invited China to the Rim of the Pacific (RIMPAC) 
exercise to demonstrate positive standards of multilateral security 
partnership, to advance cooperative approaches to common security 
challenges, and to increase transparency and mutual understanding. This 
exercise also integrates China into a cooperative multilateral forum, 
demonstrating the standards we seek to promote in the region. The 
exercise provides an opportunity for the United States, China, and 
countries throughout the Asia-Pacific region to put into practice the 
key tenets of operational safety that are essential to ensuring that 
tactical misunderstandings do not escalate into crises.
    China's involvement will be scoped appropriately, based on our 
engagement objectives to increase cooperative capacity in areas of 
mutual interest, such disaster relief, humanitarian assistance, and 
counterpiracy. Of course, all engagements with the People's Liberation 
Army are carefully considered and reviewed for compliance with relevant 
law, policies, and regulations. As with all defense engagements, we 
continuously review military-to-military activities to assess their 
appropriateness and consistency with U.S. objectives. We may modify our 
engagement decisions based on evolving circumstances.

    Question (b). What does the fact that China sent an intelligence 
vessel to monitor the 2014 RIMPAC exercises when it was invited to 
participate in them say about China's distrust of its neighbors and the 
United States?

    Answer. We agree that it was odd for China to send an intelligence 
ship to observe its participation in the Rim of the Pacific (RIMPAC) 
exercise last year. However, it is important to note that the DONGDIAO-
class vessel that China sent to conduct such operations followed 
international law and norms. The U.S. Navy conducts military operations 
in waters beyond the territorial seas of coastal nations around the 
world, and China is permitted to do the same.

                                  [all]