[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]





                     CHECKING CHINA'S MARITIME PUSH

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


                                HEARING

                               BEFORE THE

                  SUBCOMMITTEE ON ASIA AND THE PACIFIC

                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           FEBRUARY 28, 2017

                               __________

                            Serial No. 115-6

                               __________

        Printed for the use of the Committee on Foreign Affairs




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                      COMMITTEE ON FOREIGN AFFAIRS

                 EDWARD R. ROYCE, California, Chairman
CHRISTOPHER H. SMITH, New Jersey     ELIOT L. ENGEL, New York
ILEANA ROS-LEHTINEN, Florida         BRAD SHERMAN, California
DANA ROHRABACHER, California         GREGORY W. MEEKS, New York
STEVE CHABOT, Ohio                   ALBIO SIRES, New Jersey
JOE WILSON, South Carolina           GERALD E. CONNOLLY, Virginia
MICHAEL T. McCAUL, Texas             THEODORE E. DEUTCH, Florida
TED POE, Texas                       KAREN BASS, California
DARRELL E. ISSA, California          WILLIAM R. KEATING, Massachusetts
TOM MARINO, Pennsylvania             DAVID N. CICILLINE, Rhode Island
JEFF DUNCAN, South Carolina          AMI BERA, California
MO BROOKS, Alabama                   LOIS FRANKEL, Florida
PAUL COOK, California                TULSI GABBARD, Hawaii
SCOTT PERRY, Pennsylvania            JOAQUIN CASTRO, Texas
RON DeSANTIS, Florida                ROBIN L. KELLY, Illinois
MARK MEADOWS, North Carolina         BRENDAN F. BOYLE, Pennsylvania
TED S. YOHO, Florida                 DINA TITUS, Nevada
ADAM KINZINGER, Illinois             NORMA J. TORRES, California
LEE M. ZELDIN, New York              BRADLEY SCOTT SCHNEIDER, Illinois
DANIEL M. DONOVAN, Jr., New York     THOMAS R. SUOZZI, New York
F. JAMES SENSENBRENNER, Jr.,         ADRIANO ESPAILLAT, New York
    Wisconsin                        TED LIEU, California
ANN WAGNER, Missouri
BRIAN J. MAST, Florida
FRANCIS ROONEY, Florida
BRIAN K. FITZPATRICK, Pennsylvania
THOMAS A. GARRETT, Jr., Virginia

     Amy Porter, Chief of Staff      Thomas Sheehy, Staff Director

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

                  Subcommittee on Asia and the Pacific

                     TED S. YOHO, Florida, Chairman
DANA ROHRABACHER, California         BRAD SHERMAN, California
STEVE CHABOT, Ohio                   AMI BERA, California
TOM MARINO, Pennsylvania             DINA TITUS, Nevada
MO BROOKS, Alabama                   GERALD E. CONNOLLY, Virginia
SCOTT PERRY, Pennsylvania            THEODORE E. DEUTCH, Florida
ADAM KINZINGER, Illinois             TULSI GABBARD, Hawaii
ANN WAGNER, Missouri





















                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

Mr. Dean Cheng, senior research fellow, Asian Studies Center, The 
  Heritage Foundation............................................     8
Michael Auslin, Ph.D., resident scholar, director of Japan 
  studies, American Enterprise Institute.........................    17
Michael D. Swaine, Ph.D., senior fellow, Asia Program, Carnegie 
  Endowment for International Peace..............................    28

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

The Honorable Ted S. Yoho, a Representative in Congress from the 
  State of Florida, and chairman, Subcommittee on Asia and the 
  Pacific: Prepared statement....................................     3
Mr. Dean Cheng: Prepared statement...............................    10
Michael Auslin, Ph.D.: Prepared statement........................    19
Michael D. Swaine, Ph.D.: Prepared statement.....................    30

                                APPENDIX

Hearing notice...................................................    56
Hearing minutes..................................................    57
Written responses from the witnesses to questions submitted for 
  the record by the Honorable Ann Wagner, a Representative in 
  Congress from the State of Missouri............................    58

 
                     CHECKING CHINA'S MARITIME PUSH

                              ----------                              


                       TUESDAY, FEBRUARY 28, 2017

                       House of Representatives,

                 Subcommittee on Asia and the Pacific,

                     Committee on Foreign Affairs,

                            Washington, DC.

    The subcommittee met, pursuant to notice, at 2:30 p.m., in 
room 2172, Rayburn House Office Building, Hon. Ted Yoho 
(chairman of the subcommittee) presiding.
    Mr. Yoho. We are going to call this meeting to order. This 
will be the first committee hearing of the Asia and the Pacific 
Subcommittee, and it is an honor to be the chairman.
    I welcome you guys here, and thank you for being part of 
this committee and allowing me to be at the helm of it.
    Good afternoon and welcome to the first meeting of the 
Subcommittee on Asia and the Pacific of the 115th Congress. The 
subcommittee will come to order. Members present will be 
permitted to submit written statements to be included in the 
official hearing. Without objection, the hearing record will 
remain open for 5 calendar days to allow statements, questions, 
extraneous material for the record subject to length 
limitations in the rules.
    The People's Republic of China's aggressive and provocative 
behavior in the maritime territorial disputes represents a 
threat to vital U.S. interests as severe as those from Russia, 
Iran, North Korea, and terrorism from the Middle East, 
according to the Heritage Foundation's 2017 index for U.S. 
military strength. Since 2013, China has rapidly advanced its 
maritime capabilities, employed them to transform the South 
China Sea with artificial islands, place Japan under increasing 
pressure in the East China Sea, and attempt to restrict freedom 
of navigation in its near waters. Unbelievably, China has 
suffered little, if any, cost for this maritime push.
    In the South China Sea, China has built over 3,200 acres of 
land over disputed features in the Spratly Islands, complete 
with military-capable airstrips, ports, radars, anti-aircraft 
weapons, and, confirmed just last week, surface-to-air missile 
silos.
    China also continues to press Japanese vessels around the 
Senkaku Islands in the East China Sea. Uncommitted to existing 
global norms, China continually undermines attempts at a 
unified response of these activities from ASEAN and has 
attempted to use its economic influence to buy off other 
claimants.
    The United States and our allies and partners recognize 
that our military presence in the Western Pacific has been a 
force for stability and for good across decades, but so far, we 
haven't acted with nearly the level of resolve that China has 
in its aggressive pursuit of its arbitrary claims.
    For example, officials from the last administration 
proclaimed the importance of freedom of navigation far and wide 
in response to China's effort to restrict it. But this 
fundamental right, and the international law which protects it, 
was only hesitantly enforced with four Freedom of Navigation 
operations, none of which challenged China's tacit assertion 
that its artificial islands are entitled to territorial seas.
    For nearly a decade, we have said much and done little. 
While the South and East China Seas may seem distant, we have 
important national interests at stake. The disputed areas are 
key global economic and trade arteries. Nearly 30 percent of 
the world's maritime trade moves through the area. Domination 
of these routes might allow a regional power to use disruption 
as leverage.
    The security of these areas is also essential for the 
energy security of key U.S. defense allies and partners. Most 
of the energy supplied to South Korea, Japan, and Taiwan comes 
through the South China Sea. Energy insecurity among our 
friends in the region could have serious implications for our 
ability to handle potential contingencies arising from North 
Korea and elsewhere.
    Perhaps most importantly, the lack of U.S. resolve hasn't 
just allowed China to change the status quo on the ground but 
contributes to worries among our allies and partners that the 
United States lacks sufficient commitment to the region and 
feeds the narrative that China has been successful in degrading 
U.S. influence and global norms. The perceived potency of our 
military and diplomatic power is very much at risk. The South 
and East China Seas are strategic keys to East Asia, and 
acquiescence to restrictions on U.S. Forces' freedom of 
operations there will undermine the U.S. security guarantee and 
degrade both regional and world stability.
    We need a new strategy, and the entrance of a new 
administration represents a good opportunity to form and 
implement better policies to represent or reassert U.S. 
strengths in these critical areas. It may be time to consider 
an assertive plan. As we have seen, endlessly backing away from 
conflicts carries its own risks. China has taken advantage of 
U.S. acquiescence to revise the status quo, advancing its 
strategic interests in ways that raise the risk of conflict. 
Timidity hasn't de-escalated these maritime disputes; it has 
only raised the stakes.
    Today, we will hear suggestions from our expert panel for 
defining U.S. goals and addressing China's maritime push as 
well as policy options to operationalize more effective U.S. 
engagement on this important issue.
    At this moment, without objection, the witnesses' written 
statements will be entered into the hearing record.
    I now turn to our ranking member, Mr. Sherman, for any 
remarks he may have.
    [The prepared statement of Mr. Yoho follows:]
    

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    Mr. Sherman. Chairman Yoho, thanks for those remarks. 
Welcome to your new role. I look forward to working with you. 
And you will find, as you already know, that I am hawkish on 
our trade relationship with China and dovish on the so-called 
islands, more reefs than anything else.
    China is waging--every day--an attack on American working 
families by refusing to accept our exports and by demanding 
coproduction agreements when they will take a few of our 
exports, demanding that we transfer factories and technology as 
a price for having some limited access to their markets. That 
is devastating State after State in America. And, instead, we 
are focused on these islands.
    Why? Well, because the most powerful economic decision 
maker in America is Wall Street, and they want us to ignore the 
devastation of America's working families. And the most 
important decisionmaker in the area of our military and 
national security is the Pentagon and others who want to see a 
10-percent increase in our defense budget, and they know that 
China is the only worthy adversary to the might of the American 
military.
    So I do think it is important that we look at our bilateral 
relations with China, and the aggression of China in the South 
China Sea, the East China Sea, is an irritant and maritime 
disputes and our support for a free, international maritime 
regime is important.
    If it was more important, we might join UNCLOS and actually 
be part of the international order when it comes to maritime 
disputes. Instead, we focus all of our attention on China's 
refusal to adhere to international law on these disputes.
    There are 20 maritime disputes that do not involve China, 
and not a single one of them has been the subject or even a 
partial subject of any hearing of this subcommittee, any 
subcommittee, or the full committee of Foreign Affairs. Why? 
Because none of those disputes justify a massive increase in 
the American military budget, and none of those disputes 
distract us sufficiently from the war that China is waging 
against American working families.
    Now, we are told that these ports--these islands pose this 
great threat to international trade because $5 trillion of 
trade goes close to these islands or reefs. Yet, almost all of 
that trade is going in and out of Chinese ports, and if China 
controlled these reefs, they could blockade their own ports, 
and what threat, witnesses, does that pose to American national 
security?
    Now a few--some of that trade--are oil tankers coming from 
Saudi Arabia to Japan, and in a worst-case scenario--and I do 
note--that if China somehow dominated wrongfully and tried to 
interdict in this area, those tankers would have to change 
their course, thus increasing the cost of gasoline in Japan by 
at least \1/10\ of 1 cent per gallon. That is the worst that 
could happen to international trade. If they could blockade 
their own ports, they could force some trade to go a little--on 
a slightly different route. And that is a level of aggression 
that I don't think any of us would tolerate.
    So we have--let me see.
    Finally, we have got to look at burden sharing. Japan 
demands that we risk lives to defend these uninhabited islands 
and that we spend billions--and apparently need to shut down a 
quarter or a third of our State Department to be able to afford 
to do it--to defend these islands. They spend less than 1 
percent of their GDP on defense. We have to defend their 
islands. There is no oil there, but if there is any oil there, 
it is Japan's oil or South Korea's oil; it is not our oil. But, 
also, what happens to our mutual defense treaty when America 
was attacked on 9/11? Our European forces--partners at least 
put troops in harm's way. Some of them are spending 2 percent 
of their GDP on defense. Japan said, ``Well, we have got this 
constitution. So we won't help you, and we won't amend our 
constitution either to help you.'' So Americans died by the 
thousands, a country with a mutual defense treaty with the 
United States binding them to help defend us, basically 
ignored. I think there was a ship in the Indian Ocean that had 
a Japanese flag on it.
    So we are told that the Pentagon needs more money to defend 
islands that Japan is unwilling to tax itself to defend, a 
country that responded rather insufficiently when America was 
attacked.
    And we are told: Don't pay attention to China's attack on 
American working families; pay only attention to whether they 
are adding a little dirt to a reef in the South China Sea.
    I yield back.
    Mr. Yoho. I appreciate my colleague's comments there. And, 
yes, there are a lot of other conflicts or areas that are a 
concern out there. But when we start seeing military equipment 
going in their land strips and things like that, I think it 
causes more concern in this issue. And I look forward to the 
dialogue.
    And at this point, I would like to yield a minute to my 
colleague Mr. Rohrabacher from California.
    Mr. Rohrabacher. And congratulations, Mr. Chairman----
    Mr. Yoho. Thank you.
    Mr. Rohrabacher [continuing]. On being Mr. Chairman.
    Let's just note that President Abe in Japan has been doing 
his best to end the type of relationship that you have just 
described. President Abe and the people of Japan are honorable 
people, and they are courageous people when they have to defend 
their interests. We have been doing that, and we have insisted 
upon that since the end of the Second World War.
    President Abe is moving forward now and trying to move 
through his Parliament an end to the restrictions that were 
placed on Japan by their constitution after the Second World 
War.
    I think that President--and we should applaud that. I don't 
know if--certainly, the last administration did not applaud it, 
and I would hope that President Trump would, indeed, look at 
what Abe is trying to do to become an equal partner rather than 
a junior partner who is being taken care of. So we should 
applaud that.
    And, second of all, in terms of what is going on with the 
Chinese, if we turn our back and just say, ``That doesn't 
affect us,'' what we are talking about is an arrogant 
disruption of international rights-of-way both in the air and 
on the sea that will do nothing but embolden this rotten 
dictatorship in Beijing from moving forward with even more 
aggressive moves elsewhere.
    Mr. Yoho. Thank you.
    Now we will turn to Mr. Bera, Dr. Bera, from California.
    Mr. Bera. Thank you. I want to add my congratulations to 
Chairman Yoho.
    Mr. Yoho. Thank you.
    Mr. Bera. And welcome back to the ranking member.
    I think this is a timely topic for us to start this session 
of Congress off and this subcommittee off. I was in Japan last 
week, had a chance to meet with the Prime Minister, Prime 
Minister Abe, and some of his team, and I think it is very 
important for us to reassure our allies in the region that we 
will uphold our commitments. I mean, we can talk about the 
South China Sea. We can talk about the East China Sea. And more 
acutely what is happening in North Korea is an existential 
threat to Japan and our allies in the Republic of Korea. So 
this is very much a timely topic.
    And I would agree with my colleague from California, Mr. 
Rohrabacher, that Prime Minister Abe is trying to step up some 
of Japan's defensive capabilities, and they are working within 
the confines of their constitution to take on some more of the 
burden.
    But, again, it was a bipartisan group meeting with our 
Japanese counterparts. We did send a strong message that we are 
ready to stand with our allies in the region in a collaborative 
way.
    With that, I will yield back.
    Mr. Yoho. Thank you. And I appreciate your comments.
    And the thing that I am excited about is so much trade goes 
through here. This region is so important to so many people 
around the world that it is having these discussions in the 
open that we can help maybe draft policies that would direct 
our State Department, our administration, and build alliances 
stronger in that area and focus on economies, trade, and 
national security that affects all of us. And so I look forward 
to those debates.
    As typical for meetings, we will have 5 minutes of 
questioning. You will each have an opening statement of 5 
minutes that will be submitted into the record. And then each 
member will go back and forth for 5 minutes of questioning.
    And so, with that, I would like to introduce our panel.
    Mr. Dean Cheng, senior research fellow at the Heritage 
Foundation's Asia Studies Center. Thank you. You have been here 
before, and we appreciate you coming back.
    Dr. Michael Auslin, resident scholar and director of Japan 
studies at the American Enterprise Institute. And, again, we 
thank you for your contributions.
    And Dr. Michael Swaine, senior fellow with the Carnegie 
Endowment for International Peace, Asia Program.
    And I have read all of your opening statements and several 
things from you, Dr. Swaine, and I look forward to an 
informative hearing.
    So, with that, Mr. Cheng, if you would start your opening 
statement. Thank you.
    Mr. Cheng. Chairman Yoho.
    Mr. Yoho. And make sure everybody turns their mike on when 
you speak.

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

    Mr. Cheng. Chairman Yoho, Ranking Member Sherman, and 
members of the committee, thank you very much for the 
opportunity to testify before you this afternoon at the first 
meeting of the Asia and the Pacific Subcommittee. My name is 
Dean Cheng. I am the senior research fellow for Chinese 
political and security affairs at the Heritage Foundation, but 
my comments today reflect solely my own opinion and do not 
reflect the views necessarily of the Heritage Foundation.
    As has been very clear to anyone who has been watching the 
news, China is heavily engaged in the South China Sea region as 
the PRC has been asserting claims over an extensive expanse of 
the South China Sea based on a combination of claims of 
historic rights and a so-called nine-dash line that was laid 
down in 1947 under the previous Government of the Republic of 
China.
    The Permanent Court of Arbitration at the Hague, however, 
found that neither of those arguments was, in fact, a basis for 
legitimating China's very expansive claims, including its 
artificial island construction in the Spratlys.
    It is worth, I think, considering a bit about why China is 
so interested in the South China Sea. And I would suggest that 
there are several factors involved that are driving China's 
insistence on pushing in the region, even when it antagonizes 
its neighbors. And these broadly fall into the categories of 
resources, strategic depth, and national reputation, as well as 
the potential capacity for the Chinese concept of deterrence, 
which it is important to note, for the Chinese incorporates the 
idea of coercion. If you all have read Bernard Brodie, Thomas 
Schelling, and Herman Kahn, the American concept of deterrence 
is solely focused on dissuasion, but for the Chinese, it 
incorporates coercion.
    When we talk about resources in the South China Sea, we 
tend to assume that it is about oil. The funny thing is that, 
although there have been a number of studies about potential 
hydrocarbon reserves in the South China Sea, the actual amount 
of hydrocarbon discovered by various test walls has, in fact, 
been extremely limited. It hasn't yet panned out.
    The main resource, currently, that is actually of 
particular interest to the Chinese but also to neighboring 
states is that of food. The South China Sea includes some of 
the richest fishing grounds in the world. And while some of 
those rich fishing grounds are actually now being pushed toward 
collapse due to overfishing, it nonetheless remains a key 
source of relatively free protein. As China moves up the 
socioeconomic scale, its people are demanding more protein. So, 
if you are going to try to meet those demands, you can import 
meat, which is going to be very expensive, or you can try to 
catch more of it basically off the hooks, so to speak.
    The second aspect here is strategic depth. And here, the 
Chinese have a distinct need to control the East Asia littoral, 
not just the South China Sea but the waters up through the 
entire first island chain, as a defensive measure because 
China's center of gravity, its economic center of gravity, is 
now on the coast. If you think about Shenzhen, Shanghai, 
Pudong, Tianjin, these are all port cities, and this is what 
China has invested billions and billions of dollars over the 
last 30 years in terms of building up its economic 
infrastructure.
    The South China Sea, however, is especially important given 
the militarization of Hainan Island, which contains, among 
other things, China's newest and largest space sport, a 
facility for ballistic missile submarines, a carrier berth, 
submarine pens, and multiple military airfields, including the 
one that the U.S. EP-3 had to crash land on after the collision 
in 2001.
    One of the American trump cards is our submarines, our 
nuclear attack submarines. They are extremely quiet. China has 
openly discussed the creation of sonar surveillance arrays in 
the bottom of the South China Sea. Those arrays need to come up 
at some point in order to collect the data, to allow the data 
to be analyzed and exported. And I would suggest that some of 
these islands may serve that particular function.
    In addition, for this Chinese Communist Party, legitimacy 
rests upon core interests. And among the core interests that 
were defined by the senior counselor Cui Tiankai in his 
meetings with then Secretary of State Clinton is maintaining 
territorial integrity and State sovereignty, which is 
especially important in the wake of the so-called century of 
humiliation that China suffered when China was faced with the 
potential of dismemberment.
    So the South China Sea, like Taiwan, like Xinjiang, like 
Tibet, is increasingly associated by the Chinese leadership as, 
basically, if we lose this, where will it end? Where will it 
stop?
    It is no surprise, then, that the U.S. has been accused of 
fomenting the entire South China Sea problem from the--by such 
senior leaders of General Fang Fenghui in his joint press 
conference with then Chairman of the Joint Chiefs Dempsey and 
Madam Fu Ying of the National People's Congress.
    So, within this focus, within this broad context, then, 
China is driven by a number of considerations here to push for 
extending its sovereignty over what normally would be 
considered international common spaces. And this is likely to 
become even more urgent as China's leadership faces the 19th 
Party Congress this fall, where Xi Jinping is going to wind up 
with an entirely new leadership cadre.
    In order to counter China, I think some of the things that 
we should be considering and which I hope the committee will 
consider future hearings are the issues of maintaining a 
presence in the region, emphasizing the legality of the 
Permanent Court of Arbitration's findings, and employing 
economic as well as more traditional political and diplomatic 
means to pressure China.
    Thank you very much.
    [The prepared statement of Mr. Cheng follows:]
    

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                              ----------                              

    Mr. Yoho. Thank you, and I appreciate your testimony. And 
those are the things we want to gain out of this. You know, we 
will come back to some of your comments that I have questions 
on.
    Dr. Auslin, if you would go ahead.

STATEMENT OF MICHAEL AUSLIN, PH.D., RESIDENT SCHOLAR, DIRECTOR 
        OF JAPAN STUDIES, AMERICAN ENTERPRISE INSTITUTE

    Mr. Auslin. Mr. Chairman, Ranking Member Sherman, members 
of the committee, I am honored to speak before you today on the 
issue of U.S. maritime strategy in Asia. With a new 
administration, it is a particularly timely moment to do so. I 
believe it is also time to adopt a larger geostrategic picture 
of the entire Asia-Pacific region. Seeing the South China Sea, 
the East China Sea, and the Yellow Sea as one integrated 
strategic space or what we might refer to as the Asiatic 
Mediterranean.
    The United States maintains several enduring interests in 
maritime East Asia. First, since the close of World War II, we 
have sought to prevent the emergence of a hostile hegemon that 
could dominate our partners or eventually threaten the U.S. 
mainland. U.S. forward-based military forces along Asia's first 
island chain have served to deter full-scale war in Asia for 
more than six decades.
    Second, the U.S. maintains an interest in preserving our 
network of allies and partners in the region. American 
alliances remain a fundamental source of our strength in the 
world.
    Third, the U.S. retains an interest in defending the free 
flow of trade and commerce through Asia's waterways. Annually, 
$5.3 trillion of trade passes through the South China Sea. U.S. 
trade accounts for $1.2 trillion of this total.
    There are numerous threats to U.S. interests or potential 
threats to U.S. interests that may emerge in the future. From a 
domestic political perspective, Beijing views its maritime 
claims in the South and East China Seas as what it calls ``blue 
national soil.'' Foreign claims to the Spratly and Paracel 
Islands are an infringement, in Beijing's view, on its 
sovereign territory, and Chinese leaders have hardened their 
public positions on the South China Sea over time.
    China's nine-dash line encompasses 90 percent of the South 
China Sea. While Beijing remains vague about its claims to the 
waters and airspace within the line, it considers the area to 
be historically Chinese waters. To both defend its maritime 
claims and protect its southeastern flank, Beijing has spent 
the past three decades building its military power projection 
capabilities out to dispersed island chain and beyond, 
developing anti-access/area denial technology and naval forces 
to challenge the U.S. military in its near seas.
    Over the past two decades, Chinese ships have harassed, 
shadowed, and interfered with the activities of U.S. naval 
assets operating in its near seas. While in the East China Sea, 
the PRC continues to challenge Japan's administration of the 
Senkakus by frequently sailing flotillas of fishing boats, 
coast guard ships, and maritime militias in and around the 
Senkakus territorial waters.
    By slowly changing the situation on the ground or on the 
water, China hopes to transform the Asiatic Mediterranean into 
a Chinese lake. Chinese control of the South China Sea at the 
exclusion of the U.S. is obviously not a fait accompli, but we 
must act to implement a counter coercion strategy if we hope to 
maintain assured access to Asia's littorals.
    Let me mention a few policy recommendations. First, we 
should demonstrate diplomatic leadership. Washington's network 
of allies and partners throughout the Asia Pacific remains the 
backbone of our engagement in the region. The first order of 
business for the Trump administration is to continue energetic 
diplomacy throughout the region, to assure allied capitals, and 
signal to the China that we remain committed.
    Later this year, I hope to see the administration send 
high-level attendees to the June Shangri-La dialogue, the 
August ASEAN regional forum, and the November East Asia and 
APEC summits. Diplomatic jaw-jaw alone, however, is 
insufficient. We must also strengthen economic ties with our 
liberal allies in the region. While the current administration 
has declared the Trans-Pacific Partnership dead, it has 
remained open to the possibility of bilateral free-trade 
agreements. If it pursues this path, then the best place for 
President Trump to start would be with Japan.
    In addition, we must engage in more multilateral security 
cooperation. It is incumbent on the U.S. to attempt to better 
train and equip the forces of Southeast Asian nations as well 
as our allies and partners to resist coercion and intimidation 
by the Chinese Navy and raise the cost of Beijing's salami-
slicing strategy in the East Asia Seas.
    I believe the U.S. must continue to raise foreign military 
financing levels in Southeast Asia. In 2015, Congress 
authorized a $28 million East Asia-Pacific foreign military 
financing fund that could be disbursed to various Southeast 
Asian nations as needed. This pot of money should be renewed 
annually. The U.S. should also encourage regional players to 
engage in these cooperative security efforts including our 
allies in Japan, Australia, and South Korea.
    And, finally, we should reinforce these efforts with U.S. 
hard power. We should increase the tempo of our Freedom of 
Navigation operations in the region, not as a provocation but 
as a signal that we will defend our rights in accordance with 
international law.
    We must be more willing to use coercive diplomacy to raise 
the costs on China and against its actions against our allies 
or our interests.
    The goal, in conclusion, is not to back the Chinese into a 
corner or goad them into further aggression but, rather, just 
the opposite. They must understand that unprovoked and 
belligerent acts will merit a rejoinder; otherwise, they will 
get the wrong message and continue testing the U.S. Government 
and our allies.
    Thank you.
    [The prepared statement of Mr. Auslin follows:]
    

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                              ----------                              

    Mr. Yoho. Thank you for your statement.
    And, Dr. Swaine, look forward to hearing yours.

  STATEMENT OF MICHAEL D. SWAINE, PH.D., SENIOR FELLOW, ASIA 
      PROGRAM, CARNEGIE ENDOWMENT FOR INTERNATIONAL PEACE

    Mr. Swaine. Thank you very much, Mr. Chairman, members. It 
is a pleasure to be here today.
    Let me speak, first, about the situation in the maritime 
areas, as I see it. Since roughly 2007, 2008, China has clearly 
taken a more assertive and active stance toward its 
longstanding territorial claims in the South and East China 
Seas, both bordering its long maritime coast. In truth, the 
historical dynamic at work in the disputed maritime areas has 
long involved an interactive tit-for-tat rivalry among the 
claimants made possible by the absence of any clear and 
commonly accepted code of conduct and driven by deep-seated 
suspicions and strongly felt nationalist impulses on all sides.
    In recent years, however, Beijing has certainly gone beyond 
such proportional tit-for-tat interaction to apparent attempts 
to establish itself as the dominant claimant in the Spratly 
Islands, which are the southern islands in the South China Sea, 
arguably to deter perceived provocations by others and to 
establish a strong position in future negotiations, correcting 
what had been a very weak position in that area.
    In the case of the East China Sea dispute with Japan, 
Beijing has also departed from its past tit-for-tat stance in 
an attempt to establish itself in recent years as an equal 
claimant to Tokyo over disputed islands, thereby supposedly 
correcting years of what it regards as Japanese dominance.
    While not taking any formal position in support of any 
claimant's sovereignty, Washington has clearly focused the vast 
majority of its concern and its actions since roughly 2010 on 
Beijing while backing its allies. The obvious danger presented 
by this situation is that increasing numbers of U.S. allies and 
Chinese air and naval assets operating in close proximity to 
one another or perceived provocations of various sorts, 
including further military deployments onto land features, 
could produce escalating crises and conflict.
    This danger is reinforced by the failure of China, and to a 
lesser extent other disputants, to clarify their claim 
regarding various waters. Contrary to widespread claims in the 
media and elsewhere, Beijing has yet to define exactly what the 
so-called South China Sea nine-dash line denotes regarding the 
waters within it. The resulting uncertainty stimulates worst-
casing about motives and behavior, thus leading to further 
escalation.
    So what is to be done in this situation? First, I think 
there needs to be a recognition that a continuous, unilateral 
U.S. military escalation in presence and activities in an 
effort to retain a clearcut level of military predominance over 
China will have, at best, a limited short-term dampening effect 
on the worsening security competition and would more likely 
make the situation much worse.
    The forces of nationalism, the public visibility of actions 
taken, the close proximity of the disputed areas to mainland 
China and Beijing's continued economic and military growth and 
distrust of U.S. make a confrontation more, not less, likely 
under such circumstances.
    Moreover, barring an unlikely near total collapse of the 
Chinese economy and/or a major surge in the overall U.S. GDP, 
Washington will not possess the capacity to greatly exceed the 
kind of military and economic capabilities that China will be 
able to bring to bear in its nearby maritime areas over the 
coming years.
    We are looking at the emergence of a de facto unstable 
balance of power in the Western Pacific under present 
conditions.
    Second, in place of an open-ended escalation, a stable, 
enduring modus vivendi among all relevant parties is needed. 
This should center on agreements to exercise mutual restraint 
in asserting local sovereign or special rights as well as an 
effective peaceful process for handling incidents. Such an 
understanding ideally should consist of several elements. The 
first is a far greater emphasis on diplomacy than we have seen 
thus far to establish an interim set of understandings among 
the claimants and between Beijing and Washington regarding 
levels and types of militarization and non-use of force. The 
United States and China must take the lead in this effort based 
on a common recognition of the need to remove the maritime 
issue as a driver of their deepening strategic competition.
    A second element should include a staged diplomatic process 
for clarifying the jurisdictional disputes involving both 
sovereignty issues and nonsovereignty rights over resource 
extraction such as fishing. Washington must do more to 
facilitate this effort and not leave it simply to Beijing and 
the other disputants to determine. During this process, Beijing 
would need to clarify the meaning of the nine-dash line, and 
all claimants would specify their claim to land or underwater 
features and corresponding waters as well as so-called 
historical rights ideally as they relate to relevant legal 
definitions under UNCLOS.
    Third, on the basis of such clarification of claims and 
jurisdictions, all parties in the South China Sea and East 
China Sea disputes must reach an agreement on those areas 
subject to joint resource development and a procedure for 
implementing such development.
    Finally, on the basis of the previous actions, the 
claimants must eventually negotiate elements of a binding code 
of conduct for limiting levels of militarization and handling 
future incidents over the long term. Obviously, many obstacles 
would confront any efforts to greatly reduce disputes over 
maritime territory claims. And American leverage is extremely 
limited in this area because of its failure to ratify UNCLOS. 
How can Washington seriously press China and others to abide by 
UNCLOS rulings and establish a code of conduct when it refuses 
to subject itself to such scrutiny? These obstacles are not 
insurmountable however, especially if they are placed within a 
larger effort to create an overall regional balance of power, 
and they must be surmounted since the likely alternative is a 
steady escalation toward more crises.
    Thank you.
    [The prepared statement of Mr. Swaine follows:]
    
  
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    Mr. Yoho. Thank you. And I appreciate everybody's comments. 
And that is what we are here for, you know, let's define the 
region. Let's define what the norms are.
    Dr. Auslin, you were talking about China pressing its 
national sovereignty in the out islands against international 
norms. Our historical agreements with countries like Japan, the 
Philippines, Taiwan, South Korea, if we look at the advent of 
those when they came out, it was peaceful in nature, non-
aggressive, and non-encroaching on other nations whereas what 
we are seeing with the Government of China has expanded its 
reach. We see the militarization of the islands that have come 
out of nowhere, the castles in the sand. And I think your 
description of the lake of China versus the South and East 
China Sea is very descriptive in the mentality coming from the 
Chinese Government.
    When we see the--not just offensive weapons on there--or 
the defensive but the offensive weapons, I think it is time 
that we come to the table and get clarification on this so that 
we can make policies and get people in agreement on that.
    After becoming party chairman in the late 2012, President 
Xi announced his so-called Chinese dream, which he said would 
lead to the great rejuvenation of the Chinese nation. How 
important do you think China's maritime claim in the South and 
East China Seas are to achieving President Xi's Chinese dream? 
That is question number one.
    What is Beijing's ultimate goal in the South and East China 
Seas, and how far do you believe China is willing to go to 
defend these claims? And I am going to open it up to all three 
of you, but Dr. Auslin, if you will start on that.
    Mr. Auslin. Thank you, Mr. Chairman.
    I think that, in terms of the ultimate goal that Xi Jinping 
has, it is--which is not surprising for any national leader--it 
is to have the ability to do what he decides he wants to do in 
the future, meaning, to reduce any restrictions on either his 
own capabilities, which is a domestic issue, or against those, 
such as the United States, who may pose an obstacle, or 
potentially international norms that conflict with those 
interests.
    One thing I don't think we have fully appreciated here in 
the States is the degree to which China considers the new 
territories that it has built and reclaimed in the South China 
Sea as sovereign territory and how that will change Chinese 
doctrine, military doctrine, defense doctrine should they feel 
that those territories are at risk. After all, they point out 
to us that those are--there are post offices and schools on the 
islands, not just airstrips and defensive installations.
    I think, secondly, to wind up in terms of your question as 
to how important this is, it is--I would not say it is the 
single most important driver of China's perception of its own 
position and role in the region, but it is part of a much 
larger perception that China has of regaining a position of 
dominance that it once had, of being recognized as, if not the 
hegemon, as the dominant player, and, therefore, with the 
ability to have its own perceptions of what its interests are 
and the norms that surround those respected by its neighbors.
    This is where the other nations and Asia push back. It is 
where the United States has hesitated to step in to uphold the 
global norms that go on to issues that include free trade and 
fair trade. So that is where I would actually link Ranking 
Member Sherman's opening statement with our discussion on 
security. It is a question of liberal norms and behavior 
globally.
    Thank you.
    Mr. Yoho. All right. Let me interject in here.
    Dr. Swaine, you were saying, as you stated, it will be 
harder in the future for us to have more of a presence there. 
You know, if you look at our economic situation and our 
military strength, that is why I find it is imperative that we 
have an agreement now and understanding that we can build from 
in the future. What are your thoughts on the direction that we 
should go and knowing our current state of affairs in America?
    Mr. Swaine. Oh, that is an important caveat.
    Mr. Yoho. We will just deal with the Asia-Pacific area 
right now.
    Mr. Swaine. Yes. I mean, in some respects I think we are 
moving in the wrong direction on a lot of fronts.
    Mr. Yoho. Agreed.
    Mr. Swaine. I am not a big fan of the revoking of TPP. I 
think it can be modified, and it is something that signifies 
American's presence in the area. But I do believe that it is 
incumbent on the United States to think long term on this issue 
and think hard about what our relative capabilities in that 
field, in that area, because they are changing. And the ability 
of the United States to be able to predominate in the Western 
Pacific is going to go away. And so how do you deal with that 
effectively? Well, you can argue that you want to double down 
and just spend more on defense, and you will maintain that gap. 
I don't think that is going to be feasible, particularly if the 
United States is not a strong economic player in the region as 
well.
    So the best procedure is to move toward some type of 
balance of power in the region. And that means gaining 
understandings with, first of all, allies, the United States 
with Japan, with South Korea, and with the Philippines, about 
what is needed in the region in the long term. And, secondly, 
reassuring them that balance of power does not mean 
accommodation. Balance of power does not mean retreat from the 
region. Balance of power does not mean a weak U.S. The U.S. 
acts on the basis of its strength and influence to try to do 
that.
    And I have laid out a whole series of moves that I think 
are necessary in a report that I wrote last year on this 
question.
    Mr. Yoho. I saw that. And I appreciate that because that is 
what this is all about. You know, we can't do it. It is not 
sustainable for us to do it alone. We have to come to 
agreements in that area so that we can forge strong alliances 
and have a common understanding because if we allow the 
precedent of China moving on, does that allow any other nation 
to do the same thing?
    Mr. Swaine. Right.
    Mr. Yoho. And that is what I fear. We need to come together 
on an agreement.
    I am out of time, and I am going to turn this over to the 
ranking member for his 5 minutes.
    Mr. Sherman. Thank you. I want to make it clear: I regard 
this aggressiveness by China as important. I am just not so 
sure it is as important as the administration has said as ISIS 
or Crimea.
    American weakness is hurting us, and American weakness is 
demonstrated by our weakness on trade, and our response is, 
well, let's get tough on the islands. Yes, China may be 
stealing some fish from Japan, but China's refusal to accept 
American imports, China's demand for coproduction agreements, 
where we have to transfer technology as a price for access to 
their markets, this has devastated Michigan and Wisconsin and 
Ohio and western Pennsylvania, millions of American families, 
and we show weakness every day that we do not impose tariffs on 
Chinese goods coming into our country.
    And the best way to preserve our weakness is to say: Look 
over here. There are some islands. There are some fish.
    What we haven't discussed much here is how China and its 
government can use nationalism to expand power. It works here; 
it works there. Now, the Chinese Government has a problem in 
that there is no theoretical answer for the question, why does 
that government rule? Democracy is a good theoretical basis. 
Theocracy works reasonably well for the government of Tehran, 
and even the divine right of kings has justified why people are 
in control. But the rulers in Beijing are not the vanguard of 
the proletariat.
    Their only answer for the question why they rule is the 
exaggerated nationalism, and we play right into that hand. We 
may have to because they may get so aggressive that we have to 
respond. But we play right into their hands when we confront 
them in the South China Sea.
    Dr. Auslin, you talk about coercive diplomacy. Do you have 
anything in mind other than yelling loud? Give me--spend 10 
seconds and just tell me what is--one example of coercive 
diplomacy.
    Mr. Auslin [continuing]. Including disinviting China from 
maritime exercises we can invite them to like RIMPAC, 
curtailing military exchanges, considering whether or not to 
continue high-level diplomatic dialogue.
    Mr. Sherman. Some of that just makes the South China Sea 
far more dangerous. They play games; we respond. And I don't 
want to start a war there by accident. I notice, of course, you 
didn't say tariffs as part of that.
    You say that $1.2 trillion of U.S. trade passes through the 
South China Sea. Can you name the number one port that that 
trade goes to that isn't Chinese? Is any significant portion of 
that $1.2 trillion not U.S. trade with China?
    Mr. Auslin. All the leading ports are Chinese.
    Mr. Sherman. All the leading ports are Chinese. So, once 
again, these strategic islands would allow China to close off 
trade with the United States through Chinese ports.
    Dr. Swaine, Japan has this constitutional provision. Does 
that prevent them from spending 1.5 percent of their GDP or 
even 2 percent of their GDP on defense? Does that prevent them 
from defending what they say is their own territory?
    Mr. Swaine. Well, by law, they have restrictions on the 
amount that they pay as a percentage of their GDP----
    Mr. Sherman. That is by law. That is not their 
constitution. We have a law that we spend only so much for 
defense, but we change that every year.
    Mr. Swaine. They could spend more.
    Mr. Sherman. And they could spend more. They could, and 
they choose not to because they would rather we defend them----
    Mr. Swaine. Well, if I may, it is a little bit more 
complicated than that.
    Mr. Sherman. I am sure it is. And if I was given more than 
5 minutes, we would explore those complications. And, again, we 
respect the Japanese people, but their willingness to tax 
themselves to defend what they claim is their sovereign 
territory faces certain political limits, and we are told that 
we have got to increase our defense budget by 10 percent and 
that these islands are an important part of that.
    And 9/11 happened 16 years ago. Has there been any effort 
in Japan to say we have to amend our constitution so that we 
can send forces to Afghanistan?
    Dr. Auslin, name the leading Japanese politician who has 
called for the deployment of Japanese troops to Afghanistan?
    Mr. Auslin. Combat troops, none, but they sent 
reconstruction troops to Afghanistan. And they had an 8-year 
refueling mission----
    Mr. Sherman. Okay. But they haven't put their people in 
harm's way?
    Mr. Auslin. They are precluded by the constitution----
    Mr. Sherman. And not a single Japanese politician has stood 
up and said: ``America has defended us for the better part of a 
century. America was attacked on 9/11. It is time for us to 
change our constitution for the purpose of helping America.'' 
No Japanese politician has said that?
    Mr. Auslin. Congressman, they respond to their constituents 
as you do.
    Mr. Sherman. Exactly. And their constituents want my 
constituents to pay for the defense of their islands, and their 
constituents don't want to pay in blood or treasure for the 
defense of America, which is happening in Afghanistan right 
now.
    Again, these islands are important. We shouldn't let China 
walk all over us, but the other view I am glad to have 
represented here. And I think we have a balanced hearing 
because I am sure that there will be others who will present 
the other side.
    I yield back.
    Mr. Rohrabacher [presiding]. Well, thank you.
    And I would yield to myself while the chairman is out. Look 
at that. I have got it in my hands finally.
    Mr. Sherman. Wait a minute. You have got one on your--you 
are controlling the whole world.
    Mr. Rohrabacher. That is it. There you go.
    I have some very strong agreements with Mr. Sherman on some 
of the trade issues that he has brought up today, and I also 
have some very strong disagreements with him as to the scope 
and depth of how we approach China today, a threatening China 
to the world peace.
    Certainly, China--I led the floor fight when I came here 
with Chris Cox against Most Favored Nation status with China. 
At that time, we made the argument that those people were 
telling us that the more fluent and the more trade--the more 
fluent China with more trade in the United States meant a 
liberalization of China, that we would eventually have a more 
democratic government. That has proven to be absolutely wrong. 
And I call it the ``hug a Nazi, make a liberal'' theory. And it 
is no more, liberal and politically, than it was two decades or 
three decades. In fact, there is some evidence that, at that 
time, because of Tiananmen Square, they actually had more 
freedom than they have today in terms of political freedom in 
China.
    So let us note that the idea that we have permitted a 
monstrously oppressive regime that brutalizes their own people, 
that we have enabled them to put the rules of trade together 
that has resulted in a massive transfer of wealth that has then 
been kept in the control of the clique that runs China--and as 
you said, Mr. Sherman, this is not a clique that is now 
directed by beliefs of some philosophy like they are the 
proletariat, as they were during the Communist days. This is 
just a self-serving, vicious, fascist-state clique that runs 
China, and that threatens the world when that type of clique 
becomes a massive military power and dominates a region of the 
world. That is when it becomes a threat beyond trade. And that 
is what is happening today.
    That massive wealth is being used to build up their 
military capabilities, and what we have seen is an arrogance of 
decisionmaking in Beijing, and I would say, again, there are no 
opposition parties there. There are no people--there is no 
reason for them to worry about public opinion. This is just a 
power play by arrogant oppressors, as we have seen in many 
throughout history. You have a vicious dictatorship in a 
country that becomes a military power. They always end up 
aggressing upon their neighbors.
    So, with that, that means we have a threat to deal with, 
especially when all the signs are there, which in the South 
China Sea is not a--if I can just note here, the South China 
Sea is closer, the Spratly Islands and these other islands 
here, maybe not the Paracels, but the islands--the Paracel 
Islands--are closer to the other countries in the South China 
Sea, meaning the Philippines and even Indonesia and certainly 
Vietnam, are much closer to those countries than they are to 
China. There was no island there before. We are talking about 
reefs that were under water at high water.
    Now, I was lucky, after the CIA for decades prevented me--I 
should say for a decade, not decades--for a decade prevented me 
from flying over the Spratly Islands. And about 15 years ago, I 
managed to fly--get another plane from another--anywhere where 
I got it, to fly me over the Spratly Islands. And there they 
were building the islands. And so all of this time for the last 
15 years, we know that they have been building those islands, 
and we have let it happen. We have not confronted it, which 
they have seen as a sign of weakness.
    And what maybe we could have done, maybe start building 
islands of our own. We could have maybe financed the Filipinos 
to go there and build their own islands right next door, see 
what they would have thought about that. But most importantly. 
And we are trying to come to this formula, and I have only got 
a couple of minutes for you to reply, but let me just note: I 
think the most important thing in making sure that we have 
peace and stability in that part of the world is not to ignore 
everything but the trade with China, but make sure that we work 
with the Japanese. The Japanese are the only ones who are 
strong enough to counterbalance this.
    And let me note that if the United States had had a country 
foolish enough for decades to say, ``Let us take care of all of 
your defense,'' the American people wouldn't be in favor of 
using their money when the other country would let them cover 
their defense. It is time for us not to cover the defense of 
Japan but treat the Japanese as equal partners and allies and 
help President Abe, who is committed to being a force to 
counteract this what I consider to be evil coming out of 
Beijing.
    Now, I have overspoke my time, but I will give all you 
witnesses 15 seconds to say ``you are out of your mind'' or ``I 
really like what you had to say.''
    Mr. Cheng. I would note, sir, that what is essential is a 
comprehensive approach toward dealing with China. We cannot 
succeed in dealing with China simply via trade or simply via 
military or simply via diplomatic issues. Comprehensive 
includes what you have noted, which is working with our allies, 
but it also means thinking about all of the instruments 
available to the United States, including access to our 
markets, as Representative Sherman has suggested, including 
financial markets as well as things like supply chains and 
things like that where many--much of that trade is going to 
China. That is not finished products necessarily, but it is 
often key spare parts.
    Mr. Rohrabacher. Very good.
    Mr. Auslin. Representative, just very briefly, I think we 
do start with our allies and partners. Japan spends $50 billion 
on its military per year. It is purchasing advanced weaponry, 
such as the F-35, and it does take the lead in protecting its 
own islands in the Senkakus. The United States Navy has done 
none of that. What they have asked for is a guarantee that, 
should war break out with China, that we would honor our 
alliance commitment to them. But the Japanese Coast Guard and 
Navy are always the first responders constantly to China.
    Mr. Swaine. You are out of your mind. No.
    Mr. Rohrabacher. Great.
    Mr. Swaine. I mean, I just fundamentally disagree with 
many, many of your assumptions, Congressman.
    Mr. Rohrabacher. Okay.
    Mr. Swaine. I mean, I think looking at the Chinese system 
as simply a question of Communist dictators bent on overtaking 
the world is a very inaccurate way of understanding them. Yes, 
it is a one-party dictatorship. Yes, they restrict a lot of 
political freedoms within their regime. They are not, however, 
ruling over a population that is dying to overthrow them. They 
have a lot of people in China who are very supportive of what 
the PRC regime has done over the last 30 to 40 years, and I am 
sure you are aware of that. It has raised their standards of 
living up very, very high.
    No, they don't have political rights in a variety of ways 
that we would like them to have, but they are not going to 
become like an American liberal democracy. They are going to 
have some version of some kind of stronger state because of the 
size of the country and because of the history of the country 
and the fear that they have had of instability and collapse 
within that regime.
    Now, you can argue that a democratic China would be much 
better for us and much better for them, but give me a good 
sense about how you get there without creating chaos, and I 
would be very willing to hear because nobody has thought of how 
to do this.
    So what you have, then, is an effort on the part of the 
Chinese Government to expand their growth as great as they can, 
and they do it for the people as well as for themselves, and to 
establish a military that is going to reduce what they regard 
as their vulnerabilities.
    The United States has dominated the Western Pacific right 
up to China's 12-mile limit for the last 70 years. That is 
changing. The question is, how do you address that problem 
without provoking a conflict with the Chinese?
    They are not like Iraq. They are not like Granada. They are 
not like Panama. They have nuclear weapons and a big military.
    Mr. Rohrabacher. All right. Thank you.
    And we do have fundamental disagreements, but neither one 
of us are out of our mind. So we will have a good discussion on 
that. Thank you.
    And Mr. Becerra.
    Mr. Bera. Mr. Bera. Mr. Becerra is back in California.
    Mr. Rohrabacher. No, we just met with him this afternoon.
    Mr. Bera. You know, I think this is a very important and 
interesting dialogue. I would agree with you, Dr. Auslin, that 
as we look at Asia and the Pacific, and certainly East Asia, in 
the latter half of the 20th century, post World War II, post 
the Korean conflict, the U.S. presence really did have a 
remarkable effect in creating a stable democracy in Japan, 
creating a stable democracy in the Republic of Korea, you know, 
helping create thriving economies. And that was a good thing.
    And I do think it is important for us to reassure our 
allies in the region that we are not withdrawing from the 
region. I think it is also a good thing as Prime Minister Abe 
and the Japanese Government looks at stepping up some of its 
own defensive capabilities, understanding some of the threats.
    And one of those threats, clearly, are tensions in the 
South China Sea. And I would agree with my colleague, Mr. 
Rohrabacher, that we should have responded sooner, but we are 
where we are. And part of the challenge of not responding 
sooner is there is--if you look at some of the Chinese strategy 
is they will provoke, see what kind of response that they get. 
If they don't get a response, well, then they will push a 
little bit further and see what kind of response. And at this 
juncture, it becomes a much more complicated issue, much more 
so in the South China Sea than in the East China Sea.
    None of us has an interest in creating a kinetic conflict. 
And there is always a danger of an accidental kinetic conflict, 
which whether that is a Chinese vessel with a Japanese vessel 
or a Filipino vessel or an American vessel. And that is the 
danger. So we do have to think about strategies to start 
reducing those tensions.
    I do think, you know, the other big piece of it, whether 
you supported TPP or were opposed to TPP, these are the fastest 
growing markets in the world. There clearly is a benefit to 
American companies to be able to compete and sell in these 
markets. You know, we sell a lot of American products in Japan. 
We sell a lot of American products in Korea. And as the other 
southeast Asian markets and Chinese markets open up, we want to 
be able to compete and sell our products there. That is good 
for American workers. We want to make sure we do it in a fair 
way.
    If I start to think about the next steps--and maybe I will 
give each of you a chance to talk about that--with this desire 
to avoid a kinetic conflict, that wouldn't be in China's 
interests, either. What would be one or two next steps to start 
reducing those tensions, and using some of our soft power to 
reduce and deescalate the region?
    Maybe, Mr. Cheng, if you want to start.
    Mr. Cheng. Thank you very much, Representative.
    Several thoughts do come to mind. First, I think it is very 
important to note that the Chinese leadership does have to 
worry about public opinion. They are not subject to election, 
of course, but when we watch how quickly they suppress and 
limit the internet and the free flow of information, it is very 
clear, that is something that worries them.
    And that is something that we should continue to champion 
at a political level, internet freedom; at a governance level, 
in terms of not walking away from things like ICANN; and at a 
technical level, in terms of promoting the ability to flow 
information around, over, and through the Great Firewall of 
China.
    The other thing here is to consider the extent to which 
China's activities in places like the South China Sea land 
reclamation are, nonetheless, dependent on Chinese companies, 
which, in turn, are dependent upon imports. The spare parts 
required for the mechanical act of reclamation often is sourced 
not in China, ironically enough, but in Europe or the United 
States. And a diplomatic effort on the part of the U.S. to 
bring in Japan and our allies, to basically constrain Chinese 
behavior, or else suffer the consequences to their supply 
chains, is, I think, one that is worth considering.
    Mr. Bera. Dr. Auslin.
    Mr. Auslin. Congressman, I think you are right, that we are 
where we are, meaning we are in a different situation today 
than we were 8 years ago, or 16 years ago. There are certain 
things we cannot do today. There are other things that we can.
    I would say, first, we do need to consider how to best 
build the capacity of our partners, high-end partners such as 
Japan as well as lower-end partners, those that are struggling 
to just protect their own waterways.
    Second, I think enhancing the U.S. presence, ensuring that 
we maintain a robust, U.S. presence, which is both air and 
ground and naval in the region, that there is co-training, 
there are exercises, there are port visits and the like, is not 
inherently predominance, but it does maintain stability and it 
sends messages of reassurance.
    At best, what I think we want--not at best, what I think we 
want to do is complicate China's perception of what it is able 
to do uncontested in these areas, and nudge it toward a more 
cooperative posture. And I think you do that by creating a 
community of interests.
    Mr. Bera. Dr. Swaine.
    Mr. Swaine. Well, I mean, there are several different 
aspects to what needs to be done. One of them is domestic. The 
United States needs to, as I said before, think very carefully 
about what the long-range future of the United States is in the 
Western Pacific, in terms of its capabilities, its influence, 
how likely is it able to match specific types of resources with 
specific types of objectives.
    And I don't think that dialogue or that discussion has 
occurred. Nobody thinks really long term about U.S. 
capabilities and tries to understand a range of outcomes that 
may occur and what you would do to try and minimize the less 
likely, or the less favorable ones and maximize the more 
favorable ones. That is the first thing.
    The second thing I think we have to do is we have to have a 
discussion with our allies about them improving their relations 
in various ways with the Chinese. There is very little 
discussion by the United States in interacting with China and 
ASEAN to do with their disputes in the South China Sea. After 
all, the disputes are about them; it is about their 
relationships. And we need to be more effective diplomatically 
and not be reducing the State Department, cutting back on the 
State Department's capability, in order to engage with allies 
and with others in the region on how they are going to develop 
a real code of conduct.
    The Chinese have committed themselves to this. They are 
supposed to have a framework for a code of conduct by the 
middle of this year. The United States barely says a thing 
about it. It needs to base itself on the 2002 declaration that 
ASEAN and China reached, and then use that as a basis for 
moving forward for a code of conduct that will cover a lot of 
these areas.
    Mr. Bera. Thank you.
    Mr. Yoho [presiding]. Thank you. I am going to afford Mr. 
Sherman 30 seconds.
    Mr. Sherman. One comment is that we might be stronger 
diplomatically if we were part of UNCLOS. We don't subscribe to 
the international standards for maritime disputes, but we 
demand China do so.
    But I want to pick up on what Mr. Cheng said. They do need 
to manipulate their domestic public opinion. They will 
especially need to do that if economic conditions change, and 
they can no longer, you know, provide 5 or 10 percent economic 
growth. And if there is a recession in China, the best, or the 
most likely way for them to try to retain power is to go 
eyeball to eyeball with us and wrap themselves in nationalism.
    I yield back.
    Mr. Yoho. Thank you. At this time, we will go to Mr. Perry 
from Pennsylvania.
    Mr. Perry. Thanks, Mr. Chairman.
    I know this goes back a ways. It is probably longer than 
most people care to think about, and maybe it is not even 
relevant to today's conversation. But I would think, for 
historical purposes, it is important that we remind ourselves 
in a way how we got here. And I am one of the people that 
believes that a United States diplomat named John Service in 
the fall of Chiang Kai-Shek as opposed to Mao and our State 
Department and our meddling on behalf of communists have helped 
create the problem that we now find ourselves within. And I 
just think it is important to think about those things, because 
I see parallels to today with some other places we are engaged 
and other things we are doing.
    That having been said, I turn to Mr. Cheng. Our new 
Secretary of State Tillerson warned of a more confrontational 
South China Sea policy, but he also said that the island 
building had to stop, and that access to those islands would 
not be allowed.
    The President has recognized the one China policy, as we 
all know. The last administration expressed a floor for China, 
including the militarization of the South China Sea; but as far 
as I can tell, that was never backed up, never backed up with 
any action.
    So the question is, so if we are going to maintain, if we 
are going to maintain that there is a floor for China, what 
specific conditions should we articulate to China regarding 
that; and when China invariably breaks the floor, or floors, 
what should our actions be?
    Mr. Cheng. Congressman, I think that, to begin with, we 
should be treating our allies and our friends at least as well 
as we treat China. So I think that the incorporation of China 
into things like RIMPAC, when forces from, for example, the 
Republic of China/Taiwan are excluded sends, I think, a very 
distinct message to Beijing, especially when they show up not 
only with the forces that are supposed to show up, but also spy 
ships which were uninvited.
    And yet, we are apparently going to invite them yet again. 
They showed up in 2014 with a spy ship as well as their forces. 
They showed up in 2016. And now, apparently, we are going to 
invite them again in 2018. That isn't even a floor; that is not 
a net; that is an open doorway.
    I think that, with regards to confrontation, again, there 
are economic aspects that can be undertaken. The companies that 
are doing this reclamation should be given a fairly simple 
choice. You can work for China and make millions, or you can 
work the global market that the U.S., Europe, and Japan can 
influence, and that is billions of dollars. I think many of 
these companies may well, at least, impose pressure on their 
own system to rethink some of their policies.
    And then with regards to our allies, again, I think that 
many of them are still militarily less capable. They want to 
cooperate with the United States. We are representing the gold 
standard. That doesn't mean we shouldn't be engaging 
diplomatically. It doesn't mean we shouldn't be engaging in 
other aspects. But these are things that also do send a 
political signal as well, whether it is sales of more advanced 
weapons, or whether it is cooperating in--inviting our friends 
and allies to cooperate in multinational military exercises.
    Mr. Perry. So that seems pretty proactive, I mean, not 
inviting the Chinese. Maybe we continue to invite them, but we 
also invite our allies is what you are saying. But I would say 
that there also should be an immediate prohibition of them 
bringing the spy ship, if you want to call it that. Right? That 
seems pretty axiomatic as well as making the contractors make a 
choice. Right? That seems pretty obvious as well. But those are 
kind of prospective, right? We could make that decision right 
now.
    But anticipating that China will always step one foot 
closer, what is in our arsenal of diplomatic--and maybe 
``arsenal'' is not the right term, right, but what is in our 
grab bag of options, something that will be meaningful to China 
when it is either imposed upon them or taken away from them, et 
cetera?
    Mr. Cheng. Congressman, I think that, again, access to our 
markets is something that China wants as much as we want access 
to theirs. Financial markets in particular. We, in an odd way, 
represent sort of the underwriters limited seal of approval 
when a Chinese IPO occurs.
    And the inability to access our stock markets, our 
financial networks, is something that should be undertaken very 
carefully, because that is a very, very serious step, but it 
does send a very serious message to Beijing. If you want to 
still benefit from that global transfer of funds that 
undergirds your economy, then you need to play by the rules, 
the rules that you have already signed up to play by.
    Mr. Perry. Always a privilege, Mr. Cheng.
    Thank you, Mr. Chairman.
    Mr. Yoho. Thank you. And now we will go to Ms. Titus from 
Nevada.
    Ms. Titus. Thank you, Mr. Chairman.
    Perhaps we shouldn't have been so anxious to send Bao Bao 
back if we are facing these kind of diplomatic problems.
    All of you have mentioned that we need to increase our 
engagement in the South China Sea, and all of you have 
mentioned we need to do this through diplomacy, not just with 
China, but with our other allies there. You pointed that out, 
Mr. Cheng.
    Dr. Auslin said, I think your quote was energetic diplomacy 
through ASEAN, or attending some of these other summits.
    And then Dr. Swaine, you noted the only effective way to 
create a more stable environment in the maritime areas near 
China is for the U.S. to lead a serious diplomatic dialogue 
with Beijing and others in the area. You kind of trumped my 
question there in passing in your earlier answer, but I would 
like to hear all of you say, how in the world are we going to 
be able to increase diplomacy, not just with China, but the 
other areas, when we have no clear message coming out of the 
White House? We have so many vacancies at top levels in the 
State Department, and we have what we anticipate a budget from 
this new President where they are just cutting as much as they 
can from the State Department.
    How are we not creating a power vacuum there? How are we 
going to deal with this situation? Maybe, Dr. Swaine, you could 
start.
    Mr. Swaine. Well, you are preaching to the choir on this. I 
think what is--we don't know yet, right, exactly what the Trump 
administration intends to do by way of cutting back in order to 
pay for a $54 billion increase in defense spending. It is 
claiming that it is going to have offsets to be able to do this 
without having to raise taxes or increase the deficit. I don't 
know what that means.
    Ms. Titus. We do know he wants other people to step up and 
do their share, so that is kind of a hint what is coming.
    Mr. Swaine. Right. So gutting agencies, EPA and the State 
Department. And to me, it is just incredibly foolish if that is 
what is going to happen, because the State Department, more 
than any other agency, needs to have more funding. It has been 
operating on a shoestring for way too long. To put them at a 
lesser level of spending is going to make the ability of the 
United States to really be effective in places like the Far 
East, where it really counts, much, much less.
    So I don't, in any way, sanction or endorse the kind of 
direction where the administration is going today. I think 
there has to be a clear, strategic assessment about what our 
long-term future is in the Western Pacific and how we bring to 
bear our most important assets--diplomatic, military, 
economic--to achieve those gains.
    Much of U.S. policy has to do with process. Engagement is a 
process, as if it is something we can do or not do. We have no 
alternative to engaging with the Chinese. The Chinese are so 
big and so influential and the rest of the world is so 
committed to dealing with them that efforts by us to try and 
cut back on that would be totally self-destructive.
    So we have to get smart about how we are going to be more 
engaged on this in a very changing dynamic for power relations, 
particularly in the Western Pacific. That is the only real area 
where the United States and China, in my view, can have serious 
problems. It is not over larger questions globally; it is 
primarily in the Western Pacific. And if we don't get that 
right, things are going to affect many other areas. So I agree 
that we need to have greater capabilities on the diplomatic 
side and on the economic side.
    Ms. Titus. We have seen, visiting some new democracies, 
where China has moved in there very eagerly to build 
infrastructure. And if you start cutting back at the State 
Department, cutting back the small budget that is foreign aid, 
this can have repercussions beyond the South China Sea.
    Mr. Cheng, or Dr. Auslin?
    Mr. Auslin. Congresswoman, just on your last point, I 
agree. We don't do infrastructure. We do capacity building. So 
if you want judges or police, you come to us. You want a road, 
you want a school, a power plant, you go to China or Japan. We 
should be doing infrastructure.
    We have spent decades, however--to get to your earlier 
point--we have spent decades stripping our capability of 
spreading a democratic message about our values and our society 
and our culture. USIA, U.S. Information Agency, was 
disestablished years ago and rolled into the State Department. 
The current cuts may be extreme, but they are part of a long 
trend under both Democratic and Republican administrations to 
make it harder for our diplomats to get our message out. We do 
need to turn that around. I believe in it, but it is only part 
of a solution.
    And as much as we need to engage with China, we have to be 
realistic. A country that wants to cooperate or be cooperative 
will do so without our blandishments. We have to understand the 
limitations of that even as we pursue it, because it sends a 
message to others who want to emulate our ways. Thank you.
    Ms. Titus. I guess I am out of time. I am sorry. Thank you.
    Mr. Yoho. Thank you.
    We will go to Ms. Gabbard from the great State of Hawaii.
    Ms. Gabbard. Thank you, Mr. Chairman.
    Thank you, gentlemen, for being here and sharing your 
insights and thoughts.
    No one has really talked about North Korea yet, and how the 
various courses of action that are being suggested here will 
impact the very direct threat that we face from North Korea, 
and the reality that any resolution to North Korea's situation 
will require the engagement and cooperation of China in that.
    So I would love to just hear each of your thoughts on 
specifically how you suggest your suggested course of action 
will impact the threat we face from North Korea. Start with Dr. 
Cheng.
    Mr. Cheng. Representative, frankly, I don't see any 
solution to North Korea, because the North Korean regime has 
associated itself with retaining its nuclear capability, and 
China has repeatedly demonstrated for pretty much the last 30 
years it has no intention of solving the North Korean problem, 
particularly for the United States.
    And the reality is that North Korea's nuclear weapons 
aren't aimed at China; they are aimed at Japan, South Korea, 
and the United States, which, from the Chinese perspective, is 
not a great solution, but not necessarily a particularly 
troubling one.
    I will note, however, that the one time that anything was 
done that truly caught the North Korean regime's attention was 
when we should the down Banco Delta Asia by using the financial 
networks to force the Chinese, again, to make that choice, the 
millions of dollars that they gain from working with North 
Korea or the billions in dollars in financial flows that would 
otherwise occur. Unfortunately, after less than a year, we 
decided that those sanctions were too dangerous to continue and 
sustain against North Korea.
    Ms. Gabbard. Thank you.
    Mr. Auslin. Congresswoman, thank you. I would agree with my 
colleague. I would say, however, I would modify it slightly to 
say there are no good solutions to North Korea. There are lots 
of bad solutions to North Korea. And I agree entirely that we 
have to give up the fiction that China wants, in any way, to 
solve North Korea, certainly for our own purposes.
    I would say, however, that given the increasing erratic 
nature of the Kim Jong-un regime, the assassination of his 
half-brother, who was protected by China just a few weeks ago 
in Malaysia, as well as the assassination in 2014 or 2013, of 
Jang Song-Thaek, who was Kim Jong-un's uncle, but, more 
importantly, China's main agent in North Korea, means that 
Beijing is as worried about their influence as we are worried 
about our lack of. And there may be opportunities out of pure 
self-interest, which is a fine thing, for the two of us to 
figure out ways of pressuring that regime, or at least talking 
more creatively about how to contain it.
    At some point, by the way, we are going to have to decide 
when we declare it a nuclear power. It is a nuclear power. I 
understand that we do not want to shred the nonproliferation 
regime, but we are going to have to wake up to reality one day. 
Thank you.
    Ms. Gabbard. Thank you.
    Mr. Swaine. Well, I agree with what Dean and Michael have 
said already, that this is not a problem with a solution. I 
mean, it is really trying to maximize, or optimize, a bad 
situation. Unfortunately, what drives this situation the most 
is the behavior of North Korea, which no country outside of 
North Korea, has real control over, including the Chinese.
    I believe that the Chinese have moved in their position 
toward a greater degree of cooperation and support in dealing 
with North Korea. They certainly wouldn't fully endorse 
everything that the United States might want to see toward 
North Korea for a legitimate national security interest of 
their own, as well as other interests, which may not be as, 
from our perspective, as legitimate; but I do think that we 
have choices here.
    We have a very--the policy thus far has not worked. So we 
need to think about a new way of addressing this issue. We 
can't simply regard the Chinese as being the panacea, that they 
are going to solve it, because they are not going to solve it. 
So we have to think about how we can work with the Chinese, the 
South Koreans, and the Japanese to deal with it.
    We have two different paths that we can go. One of them is 
toward a greater degree of unified sanctions against North 
Korea, in the hope that the regime will collapse or give up its 
nuclear weapons. I think that is very unlikely. I think they 
are committed to these weapons, and they are not likely to give 
them up. And they are going to continue to move toward a 
deliverable ICBM capability with a nuclear warhead. And when 
they get close to that capability, the question is, what do we 
do about that?
    And, in my view, the only thing that one can do is you have 
to make a choice between being--well, you can combine both. You 
can be extremely clear about the consequences of any use or 
threat of use of a nuclear weapon by North Korea, that it will 
involve the destruction of North Korea, and that this applies 
to threats to South Korea and to Japan, our allies for whom we 
have a nuclear umbrella.
    And at the same time, however, I think we have to consider 
whether or not it is possible to develop a diplomatic strategy 
in which you address each of the concerns that the North 
Koreans have said that they have on their security front. Many 
people say this is all useless, because the North Koreans will 
ignore all this and continue to take advantage of it. But you 
can make the argument that the United States and the other 
powers have not fully tried to implement what you call an 
omnibus approach to North Korea, that would give them over a 
period of time in response to certain actions that they would 
take a certain level of benefits for them, economic and 
diplomatic.
    And if they turn those things down, and you offered them 
all in good faith and the Chinese sign onto that, then the 
basis for the Chinese to continue to not cooperate in dealing 
with North Korea will be reduced, in my view.
    Ms. Gabbard. Thank you. Thank you, gentlemen.
    There are clearly no easy answers to the situation, but, 
Dr. Swaine, I would argue that the time to ask that question 
what will we do is now. And understand that as we look at these 
other issues, whether it be the South China Sea or other issues 
within the region, we can't operate in a silo with any of them, 
because of the ripple effects that will occur as we look at the 
various threats that exist there.
    Thank you.
    Mr. Yoho. Thank you. And they have called votes. We have 
got 10\1/2\ minutes.
    I am going to turn this over to Mr. Connolly from Virginia.
    Mr. Connolly. Thank you, Mr. Chairman.
    And I would urge--welcome our panelists--if we can all be 
concise, I would appreciate it, because we have to go vote.
    What my concern is, at the very start of the new 
administration, we have seen, or we are seeing policies that 
contradict each other with respect to this region and China. So 
we rattle the cage with a call to the President of Taiwan. We 
announce a budget that is going to add $54 billion in defense 
spending and the purpose of which is for ship building, 
military aircraft, and establishing ``a more robust presence in 
key international waterways and checkpoints,'' like the South 
China Sea, while saying we are going to fund that, but cutting 
back on the State Department and AID specifically.
    Now, I was just in Sri Lanka. The Chinese, as you said, Dr. 
Auslin, are building everything. You know, ports, airports, 
roads, bridges, high-rises, sports stadiums, hospitals, they 
are building it. But we are financing democratization. We are 
providing real, in-depth assistance, both through IRI and NDI 
to help, frankly, democratize institutions in Sri Lanka, and it 
is working. But that is funded through the AID program.
    Now, if we retrench in our foreign assistance and 
diplomatic posture in places like the Philippines, Vietnam, 
Burma, Sri Lanka, doesn't that create a vacuum for the Chinese? 
And before you answer, so that is one vacuum I am worried 
about, and one set of contradictions.
    The other is, in the first week, we rip up TPP. And what is 
happening as we speak, Beijing has summoned a region-wide 
convocation to talk about a new trade agreement that has zero 
provisions on labor, on human rights, and on the environment. 
And I don't know, I am a simple soul, but that seems like we 
just contradicted ourselves and, frankly, handed an enormous 
victory to the Chinese that will be very long-lasting.
    Your comments?
    Mr. Cheng. Representative, I believe that TPP was 
negotiated by the previous administration that indicated that 
it was not going to bring it forward to Congress. It was not 
going to present it for a vote at all. And in counting noses 
over who would have voted, I am not sure how many members of 
the previous administration's party could be relied upon to 
vote for TPP.
    Mr. Connolly. Irrelevant point, Mr. Cheng. I am making a 
different point. And by the way, I happen to be one of those 
people who would have and did.
    However, what I am making--and if you don't want to answer 
it, then I will move to Dr. Auslin and Dr. Swaine. The question 
is, are we not handing an enormous victory, irrespective of 
what Obama's administration was prepared to do or not do--they 
were prepared to bring it to a vote, but time kind of ran out. 
But did we just hand the Chinese an enormous victory, and isn't 
the witness of that what is happening as we speak in Beijing?
    Thirty percent of all of the world's economic activity is 
going to be covered by the agreement they are now forging, and 
I might add, U.S. allies, like Australia and New Zealand--maybe 
Australia isn't an ally anymore after the tongue-lashing they 
got from the new President.
    Dr. Auslin, did you want to comment?
    Mr. Auslin. Congressman, I would prefer to see the 
administration go back to TPP. However, if all we can get are 
bilaterals, then I think we should all push as strongly as 
possible to get bilaterals, starting with Japan.
    Your point about the AID vacuum, I think, is important. It 
is an important part of our strategy. I would prefer to see 
that part of the budget increased as well. But we have to do a 
lot better at the messaging that we send out. We have not been 
very good under either Democratic or Republican administrations 
in the State Department sending out those messages.
    Mr. Connolly. Thank you.
    Dr. Swaine, real quickly, because we are running out of 
time.
    Mr. Swaine. I basically agree with that, but I think the 
United States does really have to have a much better job, do a 
much better job of presenting what the economic costs and 
benefits are and what the advantages the United States gets 
from multilateral trade agreements, but it is just not in the 
position of doing that.
    Mr. Connolly. I just have never seen the United States 
quite so blatantly, in the matter of 1 month, contradict itself 
so profoundly with respect to something so important, namely, 
our relations with China. So on the one hand, we want to deter 
them and we are going to build up military forces to do that; 
and on the other, we are going to unilaterally disarm on trade 
and foreign aid and diplomacy, because we are going to defund 
it.
    I yield back. Thank you, Mr. Chairman.
    Mr. Yoho. Thank you, gentlemen, for being here. Just kind 
of one last comment, because, again, what I hope to get out of 
this is to get enough information that we can help direct some 
of the foreign policies.
    I read an article, and I got chastised for this because I 
brought it up in this committee. They were talking about how 
China, as you brought up, Dr. Auslin, how they go in and they 
build infrastructure, and we focus on other things. I think it 
is a misstep of ours. We should go in and build strong 
infrastructures and develop strong trading partners, and in 
that process we will bring people to our side and meet the 
goals that we have as far as human rights and things like that. 
And I think we should focus on that.
    I want to point out to Dr. Swaine, and I know you are well 
aware of this. Robert Gates' book Duty, there was a section in 
there where they were talking about military sales to Taiwan. 
And a couple years ago, the Chinese negotiator raised holy 
Cain, because of the military sales. And our negotiator says, 
why are you making a big fuss over this? We have done this for 
many years, since 1979. He goes, yes, you did, but we were weak 
then; we are strong now. I think we are seeing that presence. 
So I think it is imperative that we come to an agreement of 
what we can do and can't do and forge those strong 
relationships.
    I am going to turn this over to the ranking member, and let 
him finish, and we have to go vote.
    Mr. Sherman. China will become more nationalistic as it 
needs to satisfy its own population, and even more 
nationalistic if they face economic reversals. TPP enshrined 
the idea that currency manipulation isn't a problem. And its 
rules of origin provision gave China a chance to have free 
access to the U.S. market on goods that were to be purportedly 
only 50 percent made in China, but, as an old accountant, I 
know that would be 80 or 90 percent. So 90 percent of the 
advantages of a free trade agreement. But at least they would 
have a made in Vietnam label put on.
    We do not have--we will not put tariffs on China, because 
Wall Street won't let us. We will, instead, spend $50 billion 
extra on our military, because the Pentagon will want that; and 
we will meet the domestic needs of the institutions that are 
most powerful in our society. Wall Street will be happy. The 
Pentagon will be happy. Beijing will fan nationalism. And Ohio 
and Western Pennsylvania will suffer.
    I yield back.
    Mr. Yoho. Thank you for your comments.
    Gentlemen, thank you for being here with your great 
information as you have helped us cipher through some things, 
and I look forward to dealing with you more. We have to go vote 
now. This meeting is adjourned, and thank you.
    [Whereupon, at 3:57 p.m., the subcommittee was adjourned.]

                                     

                                     

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