[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]




 
 DOLLAR DIPLOMACY OR DEBT TRAP? EXAMINING CHINA'S ROLE IN THE WESTERN 
                               HEMISPHERE

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

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
          THE WESTERN HEMISPHERE, CIVILIAN SECURITY, AND TRADE

                                 OF THE

                      COMMITTEE ON FOREIGN AFFAIRS
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              May 9, 2019

                               __________

                           Serial No. 116-36

                               __________

        Printed for the use of the Committee on Foreign Affairs
        
        
        
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Available: http://www.foreignaffairs.house.gov/, http://docs.house.gov, 
                           or www.govinfo.gov
                           
                           
                             ______

             U.S. GOVERNMENT PUBLISHING OFFICE 
 36-227PDF             WASHINGTON : 2019                           
                           
                           
                           
                      COMMITTEE ON FOREIGN AFFAIRS

                   ELIOT L. ENGEL, New York, Chairman

BRAD SHERMAN, California             MICHAEL T. McCAUL, Texas, Ranking 
GREGORY W. MEEKS, New York               Member
ALBIO SIRES, New Jersey              CHRISTOPHER H. SMITH, New Jersey
GERALD E. CONNOLLY, Virginia         STEVE CHABOT, Ohio
THEODORE E. DEUTCH, Florida          JOE WILSON, South Carolina
KAREN BASS, California               SCOTT PERRY, Pennsylvania
WILLIAM R. KEATING, Massachusetts    TED S. YOHO, Florida
DAVID N. CICILLINE, Rhode Island     ADAM KINZINGER, Illinois
AMI BERA, California                 LEE ZELDIN, New York
JOAQUIN CASTRO, Texas                JIM SENSENBRENNER, Wisconsin
DINA TITUS, Nevada                   ANN WAGNER, Missouri
ADRIANO ESPAILLAT, New York          BRIAN MAST, Florida
TED LIEU, California                 FRANCIS ROONEY, Florida
SUSAN WILD, Pennsylvania             BRIAN FITZPATRICK, Pennsylvania
DEAN PHILLIPS, Minnesota             JOHN CURTIS, Utah
ILHAN OMAR, Minnesota                KEN BUCK, Colorado
COLIN ALLRED, Texas                  RON WRIGHT, Texas
ANDY LEVIN, Michigan                 GUY RESCHENTHALER, Pennsylvania
ABIGAIL SPANBERGER, Virginia         TIM BURCHETT, Tennessee
CHRISSY HOULAHAN, Pennsylvania       GREG PENCE, Indiana
TOM MALINOWSKI, New Jersey           STEVE WATKINS, Kansas
DAVID TRONE, Maryland                MIKE GUEST, Mississippi
JIM COSTA, California
JUAN VARGAS, California
VICENTE GONZALEZ, Texas

                            
                                     

                    Jason Steinbaum, Staff Director

              Brendan Shields,  Republican Staff Director
                                 ------                                

  Subcommittee on the Western Hemisphere, Civilian Security, and Trade

                   ALBIO SIRES, New Jersey, Chairman

GREGORY W. MEEKS, New York           FRANCIS ROONEY, Florida, Ranking 
JOAQUIN CASTRO, Texas                    Member
ADRIANO ESPAILLAT, New York          CHRISTOPHER H. SMITH, New Jersey
DEAN PHILLIPS, Minnesota             TED S. YOHO, Florida
ANDY LEVIN, Michigan                 JOHN CURTIS, Utah
VICENTE GONZALEZ, Texas              KEN BUCK, Colorado
JUAN VARGAS, California              MIKE GUEST, Mississippi

  
                       Sadaf Khan, Staff Director
                       
                       
                            C O N T E N T S

                              ----------                              
                                                                   Page

              OPENING STATEMENTS SUBMITTED FOR THE RECORD

Hon. Albio Sires, Chairman of the subcommittee...................     3

                               WITNESSES

Myers, Margaret, Program Director, Asia and Latin America 
  Program, Inter-American Dialogue...............................    10
Fonseca, Brian, Director, Jack D. Gordon Institute For Public 
  Policy, Steven J. Green School of International and Public 
  Affairs, Florida International University......................    20
Walker, Christopher, Vice President for Studies and Analysis, 
  National Endowment for Democracy...............................    30

                  INFORMATION SUBMITTED FOR THE RECORD

Washington post article submitted for the record from Mr. Fonseca    55

                                APPENDIX

Hearing Notice...................................................    61
Hearing Minutes..................................................    62
Hearing Attendance...............................................    63

             ADDITIONAL MATERIALS SUBMITTED FOR THE RECORD

Prepared statement submitted for the record from Representative 
  Rooney.........................................................    64

            RESPONSES TO QUESTIONS SUBMITTED FOR THE RECORD

Responses to questions submitted from Chairman Sires.............    65


                     DOLLAR DIPLOMACY OR DEBT TRAP?



            EXAMINING CHINA'S ROLE IN THE WESTERN HEMISPHERE

                         Thursday, May 9, 2019

                        House of Representatives

                Subcommittee on the Western Hemisphere,

                      Civilian Security and Trade

                      Committee on Foreign Affairs

                                     Washington, DC

    The committee met, pursuant to notice, at 10:03 a.m., in 
room 2172 Rayburn House Office Building, Hon. Albio Sires 
(chairman of the subcommittee) presiding.
    Mr. Sires. Good morning. This hearing will come to order. 
``Dollar Diplomacy or Debt Trap? Examining China's Role in the 
Western Hemisphere'' will focus on China's growing role in 
Latin America, as well as its implication on United States 
national security.
    Without objection, all members may have 5 days to submit 
statements, questions, and extraneous material for the record 
subject to the length limitation in the rules. I will now make 
an opening statement and then turn it over to the ranking 
member for his opening remarks.
    Good morning, everyone. And thank you to our witnesses for 
being here today. I have long felt the United States does not 
spend enough time engaging with our own hemisphere. It is my 
view that on the successive administrations, both Democratic 
and Republican, the United States has played too little a 
attention to Latin America and the Caribbean. And it is now 
clearer than ever that China is filling the void.
    Since 2002, China's annual trade with the region has 
increased from $17 billion to $300 billion. Seventeen countries 
in the region have now joined its Belt and Road Initiative. The 
Chinese Government has provided over $140 billion in loans to 
Latin American countries. And China has now surpassed the U.S. 
as the top trade partner for Brazil, Chile, and Peru.
    Some of China's investments had helped countries build 
much-needed roads and bridges. However, I have deep concerns 
about the negative financial impact of many of these projects 
on our allies. Moreover, I believe China's involvement in the 
region poses significant national security challenges that we 
need to examine much closer.
    In Venezuela, China has propped up a brutal dictator, 
providing $70 billion that enabled Maduro and his cronies to 
plunder State resources while mortgaging the country's future.
    China's State-backed telecom giant ZTE has helped the 
Maduro regime develop a system of social control to monitor 
people's activities and voting behavior and distribute or 
withhold State resources depending on their loyalty to the 
regime.
    In Ecuador, China has constructed a multi-billion dollar 
dam that is an engineering nightmare. The Coca Coda Sinclair 
Dam is only 2 years old but has thousands of cracks. It is 
routinely clogged with debris, and it sits next to an active 
volcano. In the words of Ecuador's energy minister, ``China 
took advantage of Ecuador.''
    Now Ecuador is exporting 90 percent of its oil to China to 
pay back the debt for this disastrous dam.
    China's engagement goes well beyond securing access to 
natural resources. Chinese State-backed companies have carried 
out over 20 port projects, obtaining access to strategic 
waterways like the Panama Canal and creating serious security 
concerns for the U.S. Its telecommunications companies ZTE and 
Huawei have built networks in at least 24 countries, despite 
their record of stealing intellectual properties and helping 
the Communist Party conduct spying and surveillance.
    In the last 3 years, China has worked aggressively to 
isolate Taiwan, successfully persuading Panama, the Dominican 
Republic, and El Salvador to no longer recognize Taiwan. China 
also pursued an ambitious soft power agenda, opening more than 
40 Confucius Institutes and bringing Latin American journalists 
to China to expose them to propaganda that whitewashes the 
Communist Party's repression of its own people.
    We need to be clear-eyed about China's ambitions and the 
impact it is having in the region. And, we should meet the 
challenges of China's rise by deepening U.S. engagement with 
our own hemisphere, not by cutting our diplomatic and foreign 
assistance programs.
    I look forward to hearing from the experts with us today 
about what the U.S. can do in coordination with our allies to 
address the China challenge and advance our shared interests.
    Thank you. And I now turn to the ranking member, Mr. Yoho, 
from Florida.
    [The prepared statement of Mr. Sires follows:]
    
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    Mr. Yoho. Thank you, Mr. Chairman, I appreciate it. I 
appreciate our witnesses being here.
    Before I start, I have got to give a shout-out to Mr. Dean 
Phillips of Minnesota. He and I participated last night in the 
celebrity chef cook-off for the March of Dimes, and he was the 
winner of the event. So, congratulations. We look forward----
    Ms. Phillips. Potato latkes, that is the magic, potato 
latkes.
    Thank you, Mr. Yoho.
    Mr. Yoho. You betcha, man. I appreciate you doing that. 
They raised $1.3 million for March of Dimes.
    Mr. Sires. Oh, that is great.
    Mr. Yoho. It is.
    I cannot thank you enough for having this hearing. And to 
stress the importance of this hearing, this is the third 
meeting on China in Foreign Affairs this week. If I am China, I 
would probably say, ``Isn't that great. You know, they are 
focusing on us because we have done so much.''
    Yes, it is. And we commend them for their success, but not 
at the expense of other nations.
    Mr. Chairman, I want to thank you for holding this hearing 
today on a very timely topic for China and the Western 
Hemisphere. The issue of China is one that I follow closely as 
the ranking member of the Subcommittee on Asia and the Pacific, 
and Nonproliferation.
    First want to start off by recognizing the ranking member 
of this subcommittee, Mr. Francis Rooney, who is out recovering 
from his recent surgery. We wish him the best for his recovery 
and look forward to seeing him back here in this chair real 
soon.
    I am deeply concerned about the increasing influence of 
China in the western hemisphere. Just last week I returned from 
a congressional delegation visit to the region with Chairman 
Sires, and Mr. Meeks, Ms. Torres. And it was clear to me in my 
conversation with many regional leaders that they also share 
our concerns toward China. The behavior of the Chinese 
Government and Chinese firms undermine the sovereignty of 
national security not just of their countries but of the United 
States and the western hemisphere.
    The clearest example is China's involvement in Venezuela. 
It is no surprise that China has been involved in propping up 
the Maduro, the murderous regime of Nicolas Maduro. China 
invested over $67 billion in Venezuela and is still owed close 
to $20 billion. The Chinese chose to invest in Venezuela 
despite years of economic mismanagement by the Maduro regime 
and its overt contempt for democracy and the rule of law.
    This is straight out of China's playbook for engagement 
throughout the world, and demonstrates how China refuses to 
adapt to international standards as it expands its global 
influence.
    As the chairman brought up, with China's Belt and Road 
Initiative in Asia and Africa, the Chinese are now moving to 
implement the initiative in the western hemisphere, recently 
signing BRI agreements with Peru and Chile. Make no mistake 
about this, with their offer of the Huawei and ZTE technology 
that we know they have given to the Maduro regime, China is 
looking to harness and capture despotic, authoritarian regimes, 
and give them a tool that they can manage their people and get 
their people to submit to serve their government.
    We are so blessed in this country to have a government that 
we say our rights come from a creator, not from government; 
that government is instituted by we, the people, to protect our 
God-given rights. Our government empowers people. That is 
western democracy. That is what we do and that is what China, 
Russia, and these other countries that are involved, in this 
case China in the western hemisphere, they are picking up these 
people to take advantage of weak militaries and propping them 
up at the expense of the citizens.
    Let me be clear, we are not telling sovereign nations who 
they can and cannot do business with. And we understand that 
China will remain a significant trading partner in the region, 
but it is important that our partners in the region are aware 
of the inherent risk of closer engagement with China that 
includes financial death traps, lack of transparency in 
business deals, and undue political influence, among others.
    As you brought up, Ecuador is an unfortunate example of the 
risk of dealing with China. I am not going to repeat what you 
said, but the way I understand it, the hydroelectric dam that 
they built cannot even run at maximum capacity. I think it has 
only been run up to 50 percent capacity. And it vibrates so bad 
because of the poor stainless steel that was put in there that 
they are afraid to run it any higher. And then who would build 
at the base of a volcano, active one?
    The lack of transparency in China's business deals are 
especially concerning for the region as it contributes to the 
widespread corruption that many of these countries are 
struggling to address, and erodes good governance.
    Thankfully, some countries in the regions have begun to 
push back and wake up. We welcome these opportunities as the 
U.S. strives to be a partner of choice for all countries in the 
western hemisphere. However, many challenges remain in 
overcoming the allure of Chinese influence in the region, and 
it requires increased and strategic engagement in the region 
that demonstrates the short and long-term benefits of doing 
business with the U.S.
    I was proud to lead on two important pieces of legislation, 
the BUILD Act, and the Championing U.S. Business Through 
Diplomacy Act that will play a critical role in countering 
China's influence. U.S. engagement in the region must continue 
to highlight the U.S. priorities: transparency, corporate 
social responsibility, the protection of intellectual property, 
and long-term sustainable results.
    Congress will play a critical role in promoting the U.S. as 
the best partner of choice in the region, while also ensuring 
that China plays by international standards so it can help 
countries develop their own potential.
    I look forward to the testimony of the three expert 
witnesses. And I yield back. Thank you.
    Mr. Sires. Thank you very much, Mr. Yoho.
    Let me introduce first Ms. Margaret Myers, Director of the 
Asia and Latin America Program at the Inter-American Dialogue. 
She established the Dialogue's China and Latin America Working 
Group in 2011 to examine China's growing presence in the 
region. Before arriving at the Dialogue, Myers worked as a 
Latin American analyst and China analyst for the U.S. 
Department of Defense.
    We welcome you to the hearing.
    We will then hear from Mr. Brian Fonseca, Director of the 
Jack D. Gordon Institute for Public Policy at Florida's 
International University's Steven J. Green School of 
International and Public Affairs.
    Brian's technical expertise is in U.S. national security 
and foreign policy. Before joining FIU, Fonseca served as the 
Senior Research Manager for socio-cultural analysis as the 
United States Southern Command's Joint Intelligence Operations 
Center South.
    Thank you for being here today.
    And, finally, we will hear from Mr. Christopher Walker, 
Vice President for Studies and Analysis at the National 
Endowment for Democracy. Previously, Walker was Vice President 
for Strategic Analysis at Freedom House, and senior associate 
at the East-West Institute.
    And thank you for being here today, Mr. Walker.
    I ask the witnesses, please limit your testimony to 5 
minutes. Without objection your prepared written statement will 
be made part of the record. Thank you so much. And make sure 
that you please turn your mic when you give your first 5 
minutes. Thank you.

 STATEMENT OF MARGARET MYERS, PROGRAM DIRECTOR, ASIA AND LATIN 
            AMERICA PROGRAM, INTER-AMERICAN DIALOGUE

    Ms. Myers. Thank you. I would like to thank the committee 
and subcommittee chairman and ranking members, and other 
esteemed committee members for the opportunity to testify 
today. I will be summarizing my written testimony which I have 
submitted for the record.
    As China engages more extensively and with a wider variety 
of economic sectors in Latin America, this is a critical moment 
to assess the type, scale, and effect of Chinese activity in 
the region, and to formulate a well-reasoned U.S. policy 
response. With this in mind I would like to offer just a few 
thoughts on the ways in which the China-Latin American 
relationship has developed over the past decade, how it is now 
evolving, and some implications for U.S. relations with the 
region.
    I would first note the need for us to be very clear about 
the extent of Chinese engagement with Latin America. We have 
seen remarkable growth in Chinese activity in the region, but 
we are not seeing a headlong, unfettered advance on the part of 
Chinese actors. Chinese economic engagement, and influence for 
that matter, is unevenly distributed across the region.
    China presumably has the most influence and the greatest 
capacity for exercising what some have called coercive economic 
diplomacy in those countries that depend heavily on Chinese 
trade, such as South America's major commodity exporters, or 
that have relied heavily on Chinese State finance or 
development assistance.
    And there you have Venezuela, Brazil, Ecuador, Argentina, 
and some Caribbean countries, and a handful of countries in the 
Central American region.
    China has indeed used its economic leverage in some of 
these countries to ensure, for example, that Chinese companies 
are awarded key contracts. There are also indications that some 
of these governments have weakened investment and other 
standards or are disregarding existing regulations to attract 
Chinese investment and facilitate trade.
    That said, China's economic presence in the region does not 
always guarantee support for Chinese objectives. Some 
governments, like Costa Rica's, have been seemingly dismissive 
of China's interests or, as in Chile, resistant to China's 
model of government-to-government deal making.
    Chinese companies have also frequently failed to deliver 
projects in Latin America, and Latin American companies have 
taken note of this. Even in those countries where they have 
relative carte blanche, which is due in large part to a failure 
to practice due diligence and accurately assess risk. But I 
should say, based on our own analysis, that they have been 
extraordinarily successful in acquiring and investing in port 
facilities.
    The second point I make is that the China-Latin America 
relationship is evolving rapidly in ways that are both 
troubling and occasionally encouraging. China's economic 
objectives in Latin America are largely the same as they were 
about a decade ago: securing access to raw materials in export 
markets, promoting Chinese brands, and internationalizing 
Chinese firms. But the ways in which China defines these 
objectives and its approach to achieving them has changed over 
time, and will have some implications for regional welfare.
    Efforts to integrate more extensively across the region's 
natural resource supply chains have left China with an 
increasingly dominant position in some of the region's 
strategic sectors.
    China is also supplying the region with a very different 
set of products than it was a decade ago: high-tech electricity 
transmission lines, cutting edge telecommunications and 
surveillance equipment, for example. Some of these goods will 
be promoting of economic development, but the possible 
implications of others, like Chinese-made intelligence 
monitoring systems, as you have already mentioned, are 
exceedingly troubling.
    On the more encouraging side, there are some limited 
indications that Chinese companies are embracing global 
standards for corporate social responsibility in particular. 
Some are also partnering more extensively with local and 
foreign firms when striking deals in the region. But these 
cases are, again, limited, and there are not any particular 
poster children, Chinese poster children in this respect.
    And, finally, as concerns U.S. policy on the matter, I 
would simply say in the interests of time that the U.S. must 
recognize that it cannot replace China in Latin America. China 
plays a critical economic role at this point in the region that 
no other partner or group of partners can fill entirely. As a 
result, an us or them policy will be viewed as unrealistic by 
almost all governments in the region.
    But, we can try to ensure best outcomes in the China-Latin 
America relationship, in addition to boosting outreach, 
including through the BUILD Act. And I commend Congressman Yoho 
on his, for his great work on that. But I agree with Chairman 
Sires that even more must be done in terms of engagement.
    The U.S. must also focus on strengthening governments, 
including transparency in fighting corruption, to ensure better 
results, and as level a playing field as possible for American 
and other international companies, or domestic companies for 
that matter.
    The development and enforcement of rules-based trade and 
investment mechanisms will also be critical to ensuring 
regional stability and a strong U.S.-Latin America relationship 
in the years to come.
    I will end my comments there. Thank you again.
    [The prepared statement of Ms. Myers follows:]
    
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    Mr. Sires. Thank you.
    Mr. Fonseca.

STATEMENT OF BRIAN FONSECA, DIRECTOR, JACK D. GORDON INSTITUTE 
FOR PUBLIC POLICY, STEVEN J. GREEN SCHOOL OF INTERNATIONAL AND 
        PUBLIC AFFAIRS, FLORIDA INTERNATIONAL UNIVERSITY

    Mr. Fonseca. Thank you, Chairman Sires, gentlemen. It is an 
honor, absolutely privilege to be here with you today to talk 
about China's, the role China plays in terms of its threats to 
U.S. national and regional interests.
    Although there is certainly a strategic and even 
aspirational intent to China's rise, there still remains 
elements of opportunism that guide its global and hemispheric 
engagement. Chinese activities across the hemisphere vary in 
size and scope, as Margaret notes. And although it is well 
known, it is still important to note that, that Latin America 
is not the only space in which China is aggressively pursing 
relations.
    And so, what that means is from a strategic security 
perspective China's engagement in the western hemisphere is 
undoubtedly part of a broader global effort aimed at shaping a 
world consistent with its authoritarian model. So, in general, 
I assess four areas where, excuse me, where Chinese engagement 
in the western hemisphere is challenging U.S. and regional 
national interests.
    The first two include Chinese economic practices and the 
proliferation of Chinese surveillance and IT technologies, both 
of which I strongly feel undermine the efficacy of democratic 
institutions and expand Chinese influence across economic, 
political, and security landscapes.
    Whether intentional or not, China's economic engagement 
enhances Chinese influence in these economic, political, and 
security spaces, but it also undermines already-struggling 
democratic institutions by inducing corruption and 
circumventing transparency and accountability, critical pillars 
to democratic governance.
    Chinese engagement also undermines rule of law and bypasses 
important environmental and labor standards.
    As far as Chinese investment in telecommunications, 
artificial intelligence, and other critical technologies, I 
feel it represents a serious concern for the United States. The 
concern is largely in the vulnerabilities of Chinese 
technologies from a technical perspective. There is also the 
potential to use technologies to serve as intelligence 
collection platforms against the United States and its partners 
in the region. And certainly there are questions about the 
overall impacts on digital sovereignty and norms.
    Third is Beijing's complex information campaign where it is 
leveraging Chinese regional media platforms, Confucius 
Institutes, and overseas ethnic Chinese. And it is deepening 
people-to-people contacts in the region to build soft power and 
differentiate the Chinese brand from the United States.
    And then, finally, Chinese military and security engagement 
is positioning itself as an alternative to U.S. security 
assistance, and could influence security calculations of 
countries in the region in the long term, while also providing 
China with importance access in this hemisphere.
    Additionally, China is emphasizing engagement with Latin 
American law enforcement agencies in a comprehensive way. This 
shows that Beijing acknowledges that domestic security concerns 
are more prominent than external security threats for the 
region. The influence of military institutions across the 
region vary. You can take Argentina as an example where the 
minister of defense, that cabinet-level position, is usually 
afforded to a member of the opposition, which shows you the 
diminishing influence of militaries in the region. There is 
design to that.
    I would also sort of suggest that China is also expanding, 
that China's expanding engagement in Latin America will 
probably not lead to direct military challenge to the United 
States in the near term, such as the establishment of soviet-
style client State relationships, military bases in the region, 
or open funding of anti-U.S. insurgencies. This is not, 
however, due to benevolence, Chinese benevolence, rather I 
think it is simply not currently in its strategic interest to 
do so.
    For now it is far more effective to buy its way into the 
region.
    However, as Chinese corporations become more involved in 
Latin America, and Chinese communities grow with respect to the 
political profile in the region, China may be increasingly 
tempted to engage in security cooperation with governments of 
the region to protect the interests of its corporations and 
nationals. China's position in Venezuela is a glaring example 
of its willingness to go against the region when its interests 
are threatened.
    So, how do we respond to Chinese engagement in the western 
hemisphere? So, let me lay out a few things I think might be 
prudent for us.
    First, I think it is imperative that we disaggregate the 
good from the bad and resist labeling all Chinese activities as 
nefarious and antithetical to U.S. and regional interests. Not 
all Chinese engagement is designed to directly challenge the 
United States, and a great deal of it remains economic and 
opportunistic.
    This competition does not have to be zero sum. And I fear 
labeling it, labeling the entirety of Chinese engagement in the 
region is detrimental to our own regional interests and could 
entice a self-fulfilling prophecy.
    At the same time, we must be cautious in divorcing economic 
interests from political and security interests, and recognize 
that they are all very much interconnected. We should call it 
like we see it, and call out the Chinese--call out Chinese 
activities that we feel run counter to the short, mid, and 
long-term strategic interests of the region, while helping 
shape Chinese activities that benefit U.S. and regional 
interests.
    Second, we should bolster the governance capacity of our 
partners in the region. The U.S. should reinforce democratic 
institutions and values that create resiliency against China's 
ability to leverage its engagement to promote authoritarian 
alternatives.
    We should increase training in key areas such as human 
rights, transparency, anti-corruption, rule of law, and 
continue focusing on developing long-term, sustainable 
relations with key partners. This makes tools such as 
international military education and training, IMET, a key 
instrument in developing people-to-people connective tissue.
    Third, we must truly embrace a whole of nation approach 
that strengthens our competitiveness in the region. Ultimately, 
this is about what we do and what we stand for far more than it 
is about China. The rapid growth of Chinese engagement in the 
western hemisphere should serve as a call, should serve as a 
call to competition, not a call to arms for the United States. 
And competition is something we do incredibly well.
    But to borrow a sports analogy, you have to be on the field 
to compete. And that mean consistent presence, consistent 
presence and sustained engagement, a full court press of 
defense, diplomacy, and development efforts. The U.S. 
Government should also find new ways to foster greater people-
to-people contacts through exchanges among academic 
institutions, civil society, and of course, the American 
private sector.
    Strong personal relationships grounded in shared values are 
our greatest competitive advantage. That said, we must do 
better to guide, inspire, and support our private sectors into 
strategically important markets, especially in critical 
technology sectors. We should also evaluate the usage of the 
160 Bi-national Centers for Latin America throughout the 
region.
    Fourth, we should expand the franchise to include security 
engagement.
    And then, finally, we must compete better in the 
information domain. The United States should expose and exploit 
the contradictions in Beijing's policy and the divisions that 
exist between China and the region, such as cultural 
differences, political differences, political systems, and 
business practices, including over-promising commitments and 
labor practices. I know----
    Mr. Sires. You need to wrap it up, Mr. Fonseca.
    Mr. Fonseca. Yes, sir.
    I know the Congress and members of this committee in 
particular are waking up to the fact that we need to pay more 
attention to this region. Nature abhors a vacuum, and if we are 
not engaged the Chinese will.
    So, with that, I thank you for this amazing opportunity and 
I look forward to your questions.
    [The prepared statement of Mr. Fonseca follows:]
    
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    Mr. Sires. Thank you, Mr. Fonseca.
    Mr. Walker.

STATEMENT OF CHRISTOPHER WALKER, VICE PRESIDENT FOR STUDIES AND 
           ANALYSIS, NATIONAL ENDOWMENT FOR DEMOCRACY

    Mr. Walker. I would also like to thank the committee for 
the opportunity and privilege of presenting testimony on this 
timely and critical subject.
    China's economic engagement in the western hemisphere has 
been notable for its speed and breadth. In a remarkably short 
period of time, China has become a major investor and trading 
partner with a growing number of countries throughout the 
region.
    The central point I would like to emphasize, however, is 
that China's emerging relationship with countries in the region 
cannot be understood principally on the basis of dollars and 
cents. This is because China's engagement, under the direction 
of the Chinese party state, is multi-dimensional, and its 
interaction with countries in the hemisphere brings to bear a 
wide range of resources that include but also are beyond the 
realm of commerce and economics.
    Through the Belt and Road Initiative and other forms of 
engagement, China's leadership is placing increasing importance 
on exerting influence and shaping political operating 
environments overseas. In fact, over the past decade China has 
spent tens of billions of dollars to shape public opinion and 
perceptions around the world into areas typically associated 
with soft power, which is understood as the ability to affect 
others by attraction and persuasion. Such efforts have included 
thousands of people-to-people exchanges, extensive cultural 
activities, educational programs, notably the ever-expanding 
network of Confucius Institutes, and the development of media 
enterprises with global reach.
    Media and information are especially critical in this era. 
Although information is increasingly globalized and the 
internet is accessible to larger audiences, China and other 
authoritarian States have managed to reassert control over the 
realm of ideas. For too long, observers in the democracies 
interpreted authoritarian influence through an outdated lens, 
even as China embedded itself in democratic societies as part 
of autocratic regimes' broader internationalist terms.
    China's engagement tends to be accompanied by an 
authoritarian determination to monopolize ideas, suppress 
alternative narratives, and exploit partner institutions. This 
unanticipated authoritarian engagement by States like China to 
exert influence abroad has created a need for new terms that 
can adequately describe this new situation. Chief among these 
is what we have termed ``sharp power.'' This describes an 
approach to international affairs that typically involves 
efforts of censorship and the use of manipulation to degrade 
the integrity of independent institutions. And this was a term 
that we developed through a report we released in December 2017 
titled ``Sharp Power: Rising Authoritarian Influence.''
    And so, when we think about these issues we have to keep 
this framework in mind.
    So, let me just say a few words about China's engagement in 
Latin American, given the wider context. The media sector is 
critical. Beijing strategy in this respect is multifaceted.
    First, it seeks to disseminate its messages directly 
through its State media presence in the region. Chinese State 
media outlets Xinhua and Chinese Global Television, CGTN, do 
not openly disclose the number of staff or bureaus they have in 
the region, but clearly their presence is growing.
    Second, China State media are entering into partnership 
agreements directly with local media outlets in Latin America, 
which include placing paid supplementary materials in local 
media, content-sharing agreements, placing other content into 
the wider media landscape, content co-production and training 
and exchanges of editors, journalists, and documentary film 
makers. As documented in our sharp power report, Argentina and 
Peru are among the countries that have various media 
partnerships with China.
    In Peru's case, an agreement between CGTN and the National 
Institute of Radio and Television in Peru emphasizes joint 
collaboration in news exchange, co-production, technological 
cooperation, and personnel training and mutual visits.
    In Venezuela, CGTN and teleSUR maintain a joint cooperation 
deal.
    Technology is also critical. While a fuller picture of the 
technological reach of China in Latin America is only beginning 
to emerge, several recent reports have highlighted how Latin 
American governments are employing Chinese technologies in a 
variety of ways. Most notably, in Venezuela Reuters has 
reported how ZTE technology is powering the so-called 
``fatherland card.''
    In Ecuador, Foreign Policy magazine and The New York Times 
have recently described in striking terms how loans from China 
have enabled the Ecuadorian Government, under former President 
Rafael Correa, to purchase a nationwide network of 4,300 
surveillance cameras from Huawei. And there is more to that 
story, but I am going to leave it there.
    And let me just say a word about the Confucius Institutes, 
which get quite a bit of attention. But they are only one part 
of China's engagement in the education sector.
    The Confucius Institutes are controversial principally 
because of their opacity and their, the way in which they 
operate on university campuses. The Chinese Government's 
staffing and control of curricula ensures that courses and 
programming will subtly promote CCP positions on issues deemed 
critical or sensitive to the Chinese authorities, such as 
territorial disputes or religious minorities in China.
    So, I would just say in conclusion that we have not had a 
proper frame for understanding China's engagement with the 
world. And we have been slow to recognize that in an era of 
globalization, authoritarian regimes, including China, play by 
their own rules that are often predatory and are keen to remove 
the goalposts on the international level toward their 
authoritarian preferences.
    So, very quickly, just five quick ideas for how we respond.
    First, we have a pressing need to address the evident 
knowledge and capacity gap on China in Latin America and 
elsewhere.
    Second, we need to shine a spotlight on authoritarian 
influence so that these societies can better understand it.
    Third, we need to safeguard democratic societies in Latin 
America against undesirable Chinese party State influence.
    And, fourth, we need to reaffirm support for democratic 
values and ideals.
    And, finally, we need to learn from our democratic partners 
who have been more deeply engaged on these issues and can share 
essential learning with partners in Latin America that are in 
the earlier stage of their relationship with China.
    Thank you very much for your attention.
    [The prepared statement of Mr. Walker follows:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    

        
    Mr. Sires. Thank you, Mr. Walker. Now we will do members' 
questions.
    I will lead it by saying one of the concerns that I have is 
the fact that for years we have not really focused, Democratic 
and Republican administrations, in this region. And now you 
take a look at China and it went from $17 billion to $300 
billion. What is the total trade that we have with this region, 
about $800 billion?
    Ms. Myers. Eight hundred, for China?
    Mr. Sires. Yes. No, no, with this region, the western 
hemisphere. What is our trade?
    Ms. Myers. China and western hemisphere? Somewhere in the 
neighborhood of 500----
    Mr. Sires. No, our trade with the region.
    Ms. Myers. I do not know exactly the number of that.
    Mr. Sires. Anybody know? I think it is something like $800 
billion.
    Ms. Myers. Something of that nature.
    Mr. Sires. OK, I just want to get confirmed. I do not 
remember the number.
    My concern is if China went from 17 to 300, that is a 
sizable chunk. And I think we should be concerned on some of 
the things that they are doing.
    And in your comment, Ms. Myers, you did not seem to be too 
concerned about China in the western hemisphere. Did I get the 
wrong impression?
    Ms. Myers. No, I am concerned about what China is doing in 
the western hemisphere. But I would simply say that we need to 
be very careful about not characterizing the entire western 
hemisphere as being, you know, under the thumb of China 
necessarily. It varies considerably. And considering that the 
U.S. has very limited resources and needs to apply them 
effectively, we need to think best about how to, how to 
allocate those resources.
    So, we need to think about those particular countries that 
are under greatest threat of influence, nefarious influence in 
certain cases, and then those that are not, and then how to 
deal respectively with each of those nations.
    Mr. Sires. Well, I just get concerned how quickly they got 
there.
    Ms. Myers. Yes.
    Mr. Sires. So, the next thing is if we are not careful----
    Ms. Myers. It has been a remarkable rise, right.
    Mr. Sires [continuing]. It is going, the trade with China 
is going to be double.
    So, I was just wondering anybody else have any comment, how 
quickly this went from 17 to 300?
    Mr. Walker. So, I think what I would emphasize in this 
context is that the trade number has increased but so has 
engagement in so many other spheres. And I think in the same 
way that the United States has been slow to recognize the 
abrupt and rapid engagement on the trade and commercial side, 
we have also been slow off the blocks to recognize the larger 
implications of China's engagement more broadly. And I think we 
are only starting to engage.
    And I think this hearing and others that are happening in 
the next week or two are so important to start putting into 
perspective the scope of the challenge.
    Mr. Sires. And my other question, Mr. Fonseca, how can 
countries in the region avoid similar outcomes as the 
Ecuadorian experience with this dam and this now that they are 
exporting 90 percent of their oil to China?
    Mr. Fonseca. Chairman, that is an excellent question. And I 
think, again, it centers on governance. It centers on our 
ability, and again why I should have put the onus on to our 
engagement and how we are able to shape some of those outcomes. 
I think that governance is a key issue.
    If you look at that dam in particular, just about every 
Ecuadorian involved in that is now in jail on corruption 
charges. And so, you know, working that issue of governance, 
accountability, transparency, anti-corruption, I think those 
are really key in sort of creating environments that are more 
resilient to the types of Chinese economic activity.
    Mr. Sires. Yes?
    Ms. Myers. Might I add to that. Just we need to create or 
ensure a more inclusive environment at the very onset of the 
development of these projects. And that includes trying to 
ensure that civil society in particular is well advised and 
participating at, you know, the very earliest stages. Also, a 
strong media presence.
    As it turns out, a lot of Latin American countries have 
been very responsive to New York Times reporting on cases like 
Sri Lanka and are very aware also of the challenges associated 
in Venezuela. These are important cautionary tales for them. 
They take them seriously and I think will apply them, in not 
all cases, but in some cases in their own decisionmaking.
    Mr. Sires. You know, I recently read an article where China 
bought a piece of property in Panama because they have this 
idea that they want to become the Amazon of the western 
hemisphere. I do not know if you read that article. But to me 
it is, like, really reaching, trying to usurp the U.S. 
influence in the area.
    I am sorry, go ahead.
    Mr. Walker. So I think on these issues of how societies, 
open societies, democracies in Latin America can deal with 
engagement, which is really full spectrum engagement from 
China, is critical. And I think at this point, as I noted in 
the first kind of key issues is that until those societies have 
the ability to really understand China's foreign policy, the 
way in which its business operates, there will be at a 
strategic disadvantage.
    And I think one of the things that we can do with our 
partners is to provide the sort of support and assistance that 
helps them help themselves. Because over the long haul if civil 
society, and journalists, and editors, and the policy community 
in Ecuador, where they really did not have, as I understand it, 
a vigorous discussion about the ECU 911 investment by China in 
their security system, which meant that the society really was 
not prepared for the wider implications of how this technology 
would be used, until that sort of knowledge and understanding 
grows some roots in Latin American societies they simply will 
not be equipped to deal with this challenge.
    Mr. Sires. My time is up.
    Ranking Member Yoho.
    Mr. Yoho. Yes, I cannot tell you how much I appreciate your 
testimoneys. I mean, you guys are spot on pretty much on 
everything. There is a few I disagree with.
    But I think of right now this is probably being monitored 
in China through the CCT cameras or whatever. You know, we have 
a free society and so we value freedom of speech, freedom of 
thought, freedom of expression. They despise that. But, yet, 
here we are talking about them, so they know what our next 
strategy is.
    I do not know, I can only assume in China they do not have 
open meetings like this saying this is what we are going to do 
in South America, this is what we are going to do. And I think 
we need to change our game plan.
    We had that hearing yesterday and they were talking about 
the research and development that China does, these companies 
do. But those companies do not do that independently, it is the 
Chinese Government directing that, putting the money in that. 
And so, here we have the entrepreneurs, you know, the people 
out there creating. Yes, there is some government money in R&D, 
but we are solely dependent more, I think, on the entrepreneur. 
And I think we need to change a game plan here in the United 
States.
    My questions to whoever wants to first answer this, what 
type of countries is most likely to partner with China, type of 
leader, the economy, strength of judicial system and rule of 
law? Anybody?
    Mr. Fonseca. So, Congressman, I will take a first stab at 
it. I mean, for me, governments that are, you know, highly 
centralized, autocratic, have strong fear of opposition, you 
know, these are countries that seem to be aligned with China 
very early on.
    If you look at the countries that China has considered, you 
know, considerable support for, Venezuela, you know, Ecuador 
under Correa, Bolivia, I mean these are countries that there 
was a natural gravitation for China to engage in this region.
    And they are sort of like-minded. As I sort of referenced 
in my opening comments, I mean, there is a strategic interest 
in ushering in a global environment that embraces, accepts 
authoritarian political models.
    Mr. Yoho. All right, go ahead.
    Ms. Myers. I would simply say that China is most likely to 
engage with all of the countries in the region but in very 
different ways. So, I mean, it is a completely opportunistic 
model. And so when there are opportunities to engage on a 
government-to-government level, which is the preferred model, 
they are going to do that. And that has been the case in 
Ecuador. That has been the case in Argentina under Cristina 
Kirchner. It has been the case in Venezuela. And often there 
you have very little transparency and you have, you know, deals 
that do not turn out well.
    Mr. Yoho. Right.
    Ms. Myers. In other cases, Chile, there is a lot of 
engagement. And actually, frankly, I think some of that is a 
little bit worse than what we are seeing elsewhere because it 
is at the high, it is at the high tech level. It is going to 
ensure that China has a very critical place both in terms of 
establishing a presence for the renminbi in the region, but 
also in terms of as a sort of beachhead for technology 
application and expansion.
    But everywhere we are seeing things. It is just very, very 
different on a case by case basis.
    Mr. Yoho. Yes. Mr. Walker, do you want to add to that or 
are you pretty much the same?
    Mr. Walker. Well, I think it is not surprising that China 
has a certain form of relationship with governments that are 
operating in a similar way, which is to say prioritizing State 
power, marginalizing independent voices, suppressing free 
expression. That comes naturally.
    I think what is much more concerning in the last five to 10 
years is the engagement that China has with other open 
societies and how it uses the open space and exploits it for 
purposes that are more consistent with those animating 
principles that you would find in China. And I think this is 
something that we have not quite come to terms with yet, and we 
are only in the early stages of understanding but it is 
something we have to accelerate our learning on quickly.
    Mr. Yoho. All right, let me ask you this. When China comes 
to a country in Latin America do they bring their workers, 
material, build restaurants and hotels that they stay at and 
promote a Chinese economy? Or do they integrate the economies 
in those countries?
    Ms. Myers. That largely depends on the country and the 
regulations that they have and how much economic leverage they 
have in terms of negotiating.
    Mr. Yoho. But in a country where you have got a despotic 
leader that is open for corruption and all that, what do you 
see?
    Ms. Myers. Yes, in those cases, yes, you do see Chinese 
workers coming.
    Mr. Yoho. OK.
    Ms. Myers. Sometimes, or in small countries, you know, 
Bahamas, for example, that really do not have a lot of leverage 
in negotiations----
    Mr. Yoho. Right.
    Ms. Myers [continuing]. You will see that happening as 
well. In Brazil, not really at all.
    Mr. Yoho. OK. What is the attraction of partnering, 
countries partnering up with China, keeping in mind China is 
halfway around the world, versus partnering with the U.S.? Why 
China versus U.S.?
    Has it been our absence or has it been our demand for all 
the things we believe in this country after 200-plus years of 
rule of law, equality, and freedom of speech and all that? What 
do you guys find? Mr. Walker?
    Mr. Walker. I think I have to say right at the outset that 
we need to recognize that in places like Latin America, sub-
Saharan Africa, the Balkans, and elsewhere there is a real need 
for investment. It is a fact. And at a very basic level those 
societies are looking for investment, and China is offering it.
    I think that is one part of the discussion. I think what we 
are missing at this point is a more rounded discussion on the 
implications of Chinese investment in these settings and what 
open and free societies and investment from open and free 
societies have as a competitive advantage for our partners.
    And I do not think we have made that argument as vigorously 
as we can. And we need to do that because China is making 
another argument, and I am happy to talk more about that. I----
    Mr. Yoho. I am out of time. I would love to have another 
round if we get it. Mr. Chairman, thank you.
    Mr. Sires. Thank you.
    Joaquin Castro.
    Mr. Castro. Thanks, Chairman.
    It was mentioned earlier that several of the Latin American 
countries had signed on to China's Belt and Road Initiative. 
Where does Latin America fit into China's Belt and Road 
Initiative? Anybody.
    Ms. Myers. Thank you. Yes, so it was in 2018 during the 
China-CELAC Forum that Latin America became officially part of 
the Belt and Road Initiative. But it is unclear what precisely 
that means at this point.
    Mr. Castro. Sure.
    Ms. Myers. The Belt and Road has come to encomp--just 
simply encompass and define all of China's foreign policy.
    Mr. Castro. Right.
    Ms. Myers. An ambiguous construct.
    These 14 countries that have signed on now, I think most 
recently Peru, these are non-binding contracts, or they are not 
contracts at all, they are memorandums of understanding. But 
most importantly, I think, for China they indicate symbolically 
a support, a degree of support for China's broader foreign 
objectives and for China's presence in the region. So, at this 
point they are largely symbolic.
    What Latin American countries are hoping for, frankly, is 
an infusion of capital, especially in the----
    Mr. Castro. Sure.
    Ms. Myers [continuing]. Construction space.
    Mr. Castro. Let me ask you now, we have had a big debate in 
this country about privacy and the ability of both government 
and private companies to review people's data, personal 
information. There are parts of China where people basically 
live in a surveillance State. And they have helped deploy that 
technology in other countries, including in places like Africa. 
Have we seen that in Latin America at all?
    Mr. Fonseca. So, Congressman, I will take that one.
    We are seeing the proliferation of Chinese 
telecommunications surveillance technologies in the region. 
Several countries have bought onto it. Ecuador, Bolivia, 
Argentina, others have sort of inquired about engaging and 
acquiring those kinds of technologies. I am not, I am not 
finding any evidence in which, you know, China has, has 
breached any serious privacy issues there.
    I think one of the bigger challenges within this context of 
proliferation of technology is the actual security of the 
technology, of the technology itself. Right? Lots of 
independent studies out there sort of questioned the integrity 
of the systems, the cyber security components that are built 
into these technologies. You know, and so I think that is on 
one end.
    The other end is, OK, that still may give China access to 
information in the future though, again, some small cases out 
there globally that have indicated in some, you know, some 
intentionality of the Chinese to be able to have access to that 
kind of data.
    Mr. Castro. Well, it is clear that they are setting 
themself, themselves up in certain places to be able to collect 
data and keep that data and use it.
    Mr. Fonseca. Yes. I mean, in addition to the surveillance, 
you know, systems, also the big data centers that they, they 
have been, you know, engaging on throughout the region.
    So I think that, you know, it is hard to define the 
intentionality of it. We are not seeing evidence that it is 
actually occurring right now. But I do take your point, sir, 
that they are acquiring capability in the future that could be 
leveraged to acquire or breach privacy.
    Mr. Castro. Thank you. Mr. Walker?
    Mr. Walker. Congressman Castro, you alluded to Xinjiang and 
others in your, in your outset of your question. In essence, 
without any checks on the development of technology within the 
People's Republic of China they are developing what some call a 
digital totalitarian surveillance state. The capacity to do 
this is baked into the technology that is being shared. We are 
seeing versions of this in Africa.
    I think the Ecuador case is something that needs to be 
looked at very carefully because in the end it is not just 
about the technology, it is about the norms and standards that 
are around it. To the extent that the norms and standards that 
are being set within China tend to inform, say, the packages--
--
    Mr. Castro. Right.
    Mr. Walker [continuing]. That come to Ecuador, that is a 
problem for all of us.
    Mr. Castro. Well, it can become very tempting for 
governments when they have the capacity to surveil to actually 
engage in that deep surveillance.
    Mr. Fonseca. Sir, if I may add one other.
    Mr. Castro. Yes.
    Mr. Fonseca. I mean, it is also important to note that the 
way China views the internet is distinctly different than the 
way we and the rest of, you know, sort of, you know, western 
nations view the internet. There, so, digital sovereignty 
becomes a really serious question about the norms and behavior, 
as Chris is referencing, that, that are being promoted by 
China.
    Mr. Castro. Uh-huh.
    Mr. Walker. Just very briefly, this is a critical point and 
it is relevant to the region we are talking about but other 
regions. This, this argument that digital sovereignty should be 
paramount is a euphemism for State control of the internet. And 
what the United States and its allies in the democracies are 
fighting for is a multi-stakeholder approach not a multilateral 
approach that basically would keep independence in a multitude 
of voices involved in the internet and its governance. Whereas 
China's vision, along with countries like Russia and Saudi 
Arabia, is dramatically different.
    And this has massive implications for the hemisphere.
    Mr. Castro. Thank you all. I yield back.
    Mr. Sires. Congressman Michael Guest.
    Mr. Guest. Thank you, Mr. Chairman.
    It appears to me from your testimony, both oral testimony 
and written testimony, that China is using a multifaceted 
approach, if you will, to gain influence in Latin American 
countries, that by way of investment, whether it be direct 
investment or loans, technology, 5G, surveillance equipment, 
education that you spoke of in the Confucius Institutes. And we 
are also now beginning to see military sales as well as 
military training and military exercises between the Chinese 
Government and governments within Latin America.
    And, Ms. Myers, you spoke a few minutes ago that there are 
some countries that you feel that are at greater influence from 
China than others. And I am assuming that two of those would be 
Venezuela and Ecuador. What other countries in Latin America do 
you feel that are at greater threat to Chinese influence than 
others?
    Ms. Myers. Yes, I mean I was speaking from the economic 
perspective. And primarily it is those that are most 
economically dependent on China, either because they have a 
very, very small economy and are not receiving infusions of 
capital at all, or because they do not have access to 
international credit markets, as has been the case with 
Venezuela or Ecuador, Argentina in the past. Even Brazil has 
had some limited capacity there in recent years.
    Or those that have a really, really dependent trade 
relationship with China. Brazil is, you know, a primary example 
there. Peru to a degree, Chile. These countries, despite having 
been critical at times of Chinese policy and Chinese deal 
making, have, you know, consistently worked to build even 
stronger relations.
    You know, most recently we have seen Bolsonaro be very 
critical of, in Brazil be very critical of a lot of the deals 
that have been made in Brazil, and yet now we see most of 
Bolsonaro's cabinet and he himself talking fairly positively, 
positively about the relationship. And I think noting that this 
is one that is extremely important for Brazil and that they are 
not able to, to really change the fundamental value or, you 
know, the way in which they are engaging in China.
    Mr. Guest. And would you agree that based upon the dynamics 
of each country they are using different tactics, if you will, 
to gain influence?
    Ms. Myers. Yes. Chinese have an extraordinarily diversified 
approach to its engagement in Latin America. It is not at all a 
one-size-fits-all model. It depends on the type of governance 
that we see in a country, the structure of the economy.
    China has used major infusions of State finance in 
countries that do not have access to international credit 
markets, for example. In other cases it is competing actively 
through public/private partnerships, or negotiating with the 
government on a wider variety of sort of technology or 
innovation packages.
    But it really depends on the interests of the country and 
the various ways that they can achieve their own objectives 
there.
    Mr. Guest. Mr. Walker, let me ask you a question. In your 
written testimony you talk about technology, and we talk about 
China exporting, particularly to Venezuela, to some extent 
Ecuador, but probably more Venezuela, technology that enables 
countries to collect personal data and track citizens' 
behavior.
    Will you expand on that just a little bit, please?
    Mr. Walker. So, I think what is important to recognize is 
that the fundamental principles that China--and when I say 
China it is really important to emphasize meaning authorities 
in the Chinese party State--that they are developing a whole 
suite of technologies that are designed for what they call 
social management. And it is, again, a kind of catch-all for 
surveillance, personal control for controlling their citizenry. 
And in parts of the country this is already quite advanced.
    I think what is so concerning now is that in a country like 
Venezuela, given the extraordinary degree of repression there, 
it is very hard for civil society to hold their own government 
to account.
    Moreover, if we look at more open societies where there, 
there is an opportunity at least to have a meaningful 
discussion about what China calls the Digital Silk Road which 
they seem to be emphasizing more, it is in essence a piece of 
the Belt and Road Initiative but focused on providing loans and 
investments in the digital sector, I think we have to be 
incredibly vigilant in understanding the implications of this 
if we see more Ecuadors, if we see other countries that are 
adopting this technology. Because, as Congressman Castro 
alluded to, governments may be tempted to use these in ways 
that their own populations would not welcome.
    And in the absence of meaningful debate and discussion at 
the outset of agreements that bring this kind of technology 
into countries, it is very hard to unwind it and uproot it.
    Mr. Guest. Thank you. Mr. Chairman, I yield back.
    Mr. Sires. Congressman Espaillat.
    Mr. Espaillat. Thank you, Mr. Chairman.
    Ms. Myers, I want to ask regarding the access to capital, 
to financing, and the predatory practices that China has been 
engaging in with Latin American countries. In fact, many have 
considered that this is a sovereignty issue because they are 
sort of, like, strangled for decades financially.
    What are the--I have been asking this question and I have 
not gotten a clear answer from anybody--what are the actual 
provisions of those loans that are predatory in nature that 
will strap countries for decades financially, and maybe put 
their own sovereignty in jeopardy?
    Ms. Myers. Well, these loans in Latin America are 
structured very differently than what we saw in Sri Lanka and 
in some other worrisome cases in Asia. And so, for that reason 
this notion of sort of debt trap diplomacy does not apply as 
clearly in the Latin American context.
    Mr. Espaillat. Oh.
    Ms. Myers. That does not mean that these are not 
problematic though.
    One of the main features of the Chinese State loans, right, 
policy bank loans that we see in Latin America is that they are 
oil backed, a lot of them, not all of them. But to countries 
that, you know, have received a lot of them like Venezuela and 
Ecuador they are usually repaying these in oil. That was a way 
for China to mitigate its own risk. But it has become very 
problematic, you know, since oil, oil prices dropped a number 
of years ago.
    The model does not work so well when that happens. And as a 
result, we have seen, you know, Venezuela really struggle to 
repay these loans. And a lot of the oil that they are sending 
is destined, essentially, for, for China and also for Russia to 
a degree. And this puts Venezuela in a very difficult position, 
obviously, but also other countries like Ecuador which has a 
similar model.
    Also, in the case of Ecuador we have a very--there is a 
sovereignty question there in that Ecuador promised, received a 
lot of finance, promised a lot of oil in exchange, but that oil 
was not yet readily available. And so they had to make a 
decision to drill in a new area in the Yasuni, which is highly 
biodiverse, very controversial, in order to make that happen. 
And so that was something that was not forced upon them 
necessarily but was necessitated by this loan agreement.
    So that, I would say, certainly is a sovereignty question.
    And then overall, the debt, the debt issue is concerning 
just how much debt these countries have as a share of GDP. It 
is not all Chinese debt, though Chinese debt is a significant 
portion of it. And that, of course, has implications for long-
term stability.
    Mr. Espaillat. Thank you. Anybody on the Chinese presence 
in the Panama Canal? I think we have sort of, like, ignored 
that a little bit. And I think it is crucial and strategically 
crucial that their presence there could be negative for U.S. 
investment and trade in general.
    Anybody on their presence in the Panama? Mr. Walker or 
anybody? No one?
    Ms. Myers. The Panama case is I think a really fascinating 
one and one that we have to keep a very, very close eye on. It 
is kind of unclear how that is going to unfold. On the one hand 
we have, I mean there have been a slew of deals, as you all 
know. They have been well reported. It is shocking actually how 
much activity there is in Panama. But these are mostly 
construction contracts, they are not investments.
    Mr. Espaillat. OK.
    Ms. Myers. And Panama is not highly dependent from a trade 
perspective on China. So, I would not say that it has got this, 
you know, extreme dependency issue.
    Nevertheless, there is a lot of interest in Panama in 
striking new deals, and a lot of interest on the part of 
Chinese companies in becoming even more extensively involved in 
some critical assets in Panama.
    Mr. Espaillat. OK.
    Ms. Myers. And so, if that happens, I think it has major 
implications. Already we are seeing major implications in very 
strategic areas in terms of potential surveillance and 
potential control over really critical assets that are, of 
course, critical to the United States from a trade perspective.
    Mr. Espaillat. OK. Regarding surveillance, any, can anybody 
shed light on the 16-story antenna in Argentina and what role 
is it playing regarding surveillance? Anybody?
    Mr. Fonseca. Congressman, are you talking about the space--
--
    Mr. Espaillat. Yes, correct.
    Mr. Fonseca. So, we are kind of classifying it as a black 
hole--no pun intended--given the sort of the nature of it. But 
it is one of these really unique arrangements in which no one 
outside of the Chinese Government actually has access to the 
facility. Right? It is written for a 50-year agreement. There 
are provisions where you can put pressure, and that recently 
happened in Argentina where they were able to restructure a 
little bit of that deal.
    But, you know, my sort of, you know, my assessment on the 
ground is that Argentine Government officials cannot walk into 
that facility and get a good sense of what is going on. So, the 
speculation it is being used for things like intelligence 
collection, you know, but, but again there is, there is nothing 
out there really concrete that we can hang on outside of the 
fact that there is just a lot of privacy, you know, and sort of 
darkness surrounding that particular facility.
    Mr. Espaillat. Thank you. I am out of time. Thank you.
    Mr. Sires. Congressman Chris Smith.
    Mr. Smith. Thank you very much, Chairman Sires. And thank 
you, Mr. Yoho, for bringing up this very, very important 
subject of Chinese influence in Latin America.
    Let me just preface my question. Over the last several 
years I have chaired the China Commission. My Subcommittee, 
which I chaired for years, on Human Rights, we held a whole 
series of hearings on Confucius Centers. We petitioned and got 
the GAO to do a major study about how many and what are the 
terms and conditions of those Confucius Centers.
    I would ask that some of that be made a part of the record, 
if I could, Mr. Chairman, because it does underscore what is, I 
think, euphemistically called soft power. And there was an 
excellent piece in the National Endowment for Democracy called 
sharp power. Because the Chinese are really in a all-out surge 
for global domination.
    I think it is real. I see it all over Africa. I have been 
on the Africa subcommittee for much of my time on this 
Committee and chairing or being ranking member now with Karen 
Bass. And, of course, in Latin America we are seeing, as one of 
our famous New Jerseyans has said, Yogi Berra, it is deja vu 
all over again.
    Everywhere we look it is the same cookie cutter approach by 
the Chinese Government to influence other countries in this 
effort to, one, either fleece their raw materials as they have 
done so effectively at bargain basement prices, and that 
includes oil, wood, and other precious metals, but also to 
influence governments as you, all of you have made, I think, 
very clear.
    I would ask, if you would, my first question would be about 
these Confucius Centers. One member put it at 19 Confucius 
class--39 Confucius Institutes and 19 Confucius classrooms in 
20 Latin American countries. But what I think most people do 
not understand is that when these university presidents, 
including our State, Mr. Chairman, invite them in, the teachers 
are hand picked by Beijing. They are told there is no Tibet 
talk. There is no talk about Tiananmen. And there, you know, 
the three T's as they call it. And the bottom line is that any 
thought of human rights being discussed is a demonstrable no.
    So, our own students, Mr. Chairman, are being inculcated in 
a very, very non-transparent effort to give Xi Jinping's view 
of the world every single day at the--you know, they claim that 
it is a way of getting value added, you know, perhaps more 
language skills, but there is a communist government agenda 
that permeates the entire thing. And it is all over Latin 
America, all over Europe, all over Africa, all over the world.
    Their hope is to get to a thousand Confucius Centers in 
just a couple years. They are about halfway there. There are 
over 100 in our country.
    And I have asked hard questions. We had NYU here testifying 
because they have a center, a Shanghai campus. And what kind of 
influence is it when they give you the building, they give you 
just about everything and allow you to charge $46,000 per 
student, which is unbelievably high in China, and how much 
human rights talk will go on in the campus in Shanghai? And who 
hand picks those students?
    So, they are going all out in my opinion. The overarching 
question is about how they are trying to influence the elites, 
the academic community. And, you know, there is no academic 
freedom, I do not think, when you have a situation at the 
Confucius Center, certainly not within the confines of that.
    So, your thoughts on that.
    The issue of debt, which you have already delved into. But, 
again, I was running another hearing on Africa, Ethiopia to 
Djibouti and some of the other countries are so heavily 
indebted now, and if you could speak to it about the Latin 
American countries, because I think they are a little bit 
behind where Africa was. But they all said, what terms, what 
conditions. They are great. They got huge amounts of money and 
now they are, you know, it is like, like the Mafia, you know, 
the reasons why these loans went out were not just goodwill or 
even good business, it was influence.
    We know in Brazil the FAO is now Brazil has it, the 
director general. But China is now likely--they are supporting 
the Chinese Government in getting that important U.N. position. 
So, you might speak--I know I am going a little long here--you 
might speak to the issue of what the Chinese are doing to 
influence the Latin American countries vis-a-vis the U.N. 
because we know, you know, they are making an all out effort to 
get the FAO top job. And there will be others that will follow.
    So, if you could speak to those, I would appreciate it.
    Mr. Walker. So I might just say a word about the Confucius 
Institutes at the outset. And my understanding is that in 
Santiago, Chile, there is a one of its kind Confucius Institute 
Regional Center which provides training and support for all the 
Confucius Institutes in Latin America. So, this does not get so 
much attention but this is just a fact that you might find of 
interest.
    And I think, as you stressed, Congressman, the features 
that accompany the Confucius Institutes that I find most 
striking are the way in which they operate within what should e 
an open academic setting in open societies. And I will just 
stress one point to provide a pattern that emerges across a 
host of the issues you alluded to, and that is in virtually all 
of these instances the agreements that the Confucius Institutes 
have with the host institutions are confidential and not 
public. It is really a striking thing.
    And that does not necessarily mean that the content is 
problematic, but it does suggest that this absence of 
transparency raises some questions about what the conditions 
are and so forth. I would note that at a bare minimum in, 
certainly in open societies, we need a better way to bring into 
the light things that are not in the sunshine.
    And to the question that came up in the last round of 
questions on, on the satellite facility in southern Argentina, 
apart from all the other questions that are raised I think what 
is so striking, it was terribly difficult, as I understand it, 
for Argentine society to get a handle on what was really going 
on when that facility was coming online.
    And in the same way with the loan question, I think, again, 
separate and part from any other aspect of this, what we should 
focus on is what we do not know about the loan because what I 
am seeing now in sub-Saharan Africa is that independent civil 
society and investigative journalists are learning after the 
fact about elements of the loan arrangements that they find 
striking in terms of prospects of ceding sovereignty if the 
loan obligations are not met in way that we have seen in other 
places that have been alluded to, like Sri Lanka. The country 
like Montenegro is in a very precarious position. Of course we 
know the story in Ecuador.
    But I think this basic issue of transparency and how do 
societies that are engaging with China in the sphere of 
education, media, economics, technology have the ability for 
themselves to understand just the nature of these agreements 
and relationships?
    Mr. Sires. Thank you.
    Mr. Fonseca. May I just add? Oh, I am sorry.
    Mr. Sires. We just ran out of time.
    Congressman Levin.
    Mr. Levin. Thank you, Chairman Sires. And welcome, 
everybody, I appreciate your participation here.
    I wanted to explore further the implications of Chinese 
development projects for the people and environment of the 
Caribbean and Latin America.
    A 2015 New York Times report on China's investment in 
international development rightly noted that China has a 
``shaky record when it comes to worker safety, environmental 
standards, and corporate governance.'' And in Asian countries, 
projects that are part of China's Belt and Road Initiatives 
have been criticized for degrading the environment, displacing 
communities, and threatening workers' livelihoods.
    Ms. Myers, have we seen these sorts of effects in the 
western hemisphere with Belt and Road Initiative projects?
    Ms. Myers. We have, yes. I mean, whether they are called 
Belt and Road projects or not, they seem to be, you know, very 
characteristic of the, of the BRI, yes.
    Some of the most, I think, concerning elements of Chinese 
engagement with the region are on the environmental and social 
side. Also, because Chinese are accepting projects that are of 
considerable political interest occasionally to leaders in the 
region but maybe not of benefit broadly speaking to the 
population. And they are often projects, also, that have been 
rejected by multilateral development banks in the bank, Inter-
American Development Bank for example, or World Bank, for good 
reason, because they do not meet safeguards in place.
    And so as a result, you know, we have seen communities 
displaced. We have seen rather, you know, extensive 
environmental effects. And it is also because a lot of what 
China does is based in industry sectors that happen to have 
really extensive environmental impact extractive 
infrastructure.
    And without the right safeguards in place to mitigate that 
then, then the problems really are quite extensive. So, yes, 
absolutely.
    Mr. Levin. So, and if Chinese companies have been involved 
in these projects have they changed their behavior when there 
has been international criticism, if there have been pressures 
within the host countries, or local protests over whether it is 
environmental or labor, you know, practices?
    Ms. Myers. Yes, in some cases.
    I alluded to some interests on the part of certain 
companies in adopting corporate social responsibility 
standards. That is happening on a very limited basis. It is, 
you know, good and encouraging. And if we can encourage that, 
that is great.
    That usually happen when Chinese companies become publicly 
embarrassed and there is a reputational risk for China as a 
whole as a result. And usually that is the result of civil 
society intervention at whatever phase, or of media attention 
to a project gone wrong.
    Mr. Levin. And do you see the likelihood based on what the 
projects that are ongoing or in development of further backlash 
in the years ahead, in the months and years ahead there?
    Ms. Myers. There are a couple of projects in Ecuador, for 
example, that will probably encounter some backlash. There are 
also projects where countries, or rather companies have not 
done any sort of consultation with local affected populations 
that will probably run into some major trouble, too.
    And I would say any of the large-scale projects that have 
been proposed, the Peru-Brazil railway, things of that nature 
may not ever get off the ground because of the controversy that 
is associated with them. But if they were to would be, you 
know, focus of considerable attention.
    Mr. Levin. And let me just ask you and others another 
quick, broader question about U.S. policy. Going back then to 
Mr. Tillerson as Secretary of State, the Administration has 
expressed concern about China gaining a foothold in Latin 
America and so forth. And yet we are pulling back our own 
involvement, for example, proposing massive cuts in foreign 
assistance, and now cutting off our aid to the Northern 
Triangle countries.
    If China is indeed trying to gain a foothold in Latin 
America and the Caribbean, does it help or hurt their cause if 
the U.S. steps back and cuts foreign assistance to the region? 
How does this make sense, this policy of ours?
    Ms. Myers. I cannot imagine that less assistance or less 
attention from the United States will help our cause vis-a-vis 
China. We need to engage more extensively through the BUILD Act 
or other mechanisms at the human level across the board in able 
to sustain a strong relationship and have any chance of 
competing effectively.
    Mr. Fonseca. And, Congressman, I would just underscore 
that. I think it is vital that we remain persistent and engage 
with the region. I think this is vital to our interests.
    You know, as I sort of referenced in my opening comments, 
you know, if we are not there to fill that space the Chinese 
likely will.
    Mr. Levin. Thank you. I will just end, Mr. Chairman, by 
saying that I feel like this is, this committee is a bastion of 
bipartisanship, and I hope we can all work together to continue 
to aid and assist our friends south of the border here in this 
hemisphere. Thank you.
    Mr. Sires. Thank you, Mr. Levin.
    Mr. Phillips, Congressman Phillips.
    Mr. Phillips. Thank you, Mr. Chairman, and to our 
witnesses.
    The challenge we face vis-a-vis Chinese influence in Latin 
America I believe is both well articulated and well documented. 
And amongst the tools in our toolkit are, of course, the BUILD 
Act and the Americas Crece Initiative by the Administration. I 
am just curious from each of your perspectives, are either 
having any impact yet? And prospectively, are those two 
examples of initiatives in which we should be investing more 
heavily and more focused on?
    Mr. Fonseca.
    Mr. Fonseca. Yes, sir. Congressman, I think it is certainly 
the right approach. I mean, any way that we can continue to 
mobilize, guide, inspire, support our private sector engaging I 
think is really vital.
    One thing that I will sort of note that I did not have a 
chance to in opening testimony was, you know, the ability to 
differentiate our security engagement. This is something that 
does not get a lot of traction.
    I think we are best in class when it comes to mil to mil 
engagement; right? Where we are not really effective is in 
domestic law enforcement engagement and really 
institutionalizing our ability to bring law enforcement, you 
know, cooperation in any real meaningful way.
    And I only say that because that is one of the areas in 
which I see China differentiating itself from the United 
States, it is engaging in the region in a robust, local, 
domestic law enforcement environment. And the Chinese have 
stated that as a emphasis as part of their, you know, their 
2019-2021 plan, that they are going to continue to engage local 
law enforcement.
    That is one of those areas I think we can continue to sort 
of pivot and cover ground because we do not want to cede that 
local law enforcement space to the Chinese.
    Mr. Phillips. I appreciate that.
    Mr. Walker.
    Mr. Walker. This is a terribly important democratic 
governance question because, using the Ecuador case as an 
example, it was ostensibly domestic law enforcement that would 
be, that would have a privileged exclusive use of the ECU 911 
system that China shared. In the end it ended up diffusing 
beyond that scope.
    And so, in principle there is nothing to prevent that from 
happening in other countries in the region absent, in my view, 
the sort of deep-rooted local capacity to understand these 
problems and deal with them over time.
    Mr. Phillips. Ms. Myers? And specific comments about I want 
to know if there is any evidence of the BUILD Act already 
having any influence, if it is resourced appropriately. And if 
not, you know, what we should do.
    Ms. Myers. I do not know of any specific examples in Latin 
America, unfortunately. I know that we had a meeting yesterday 
and there was concern on the part of a Caribbean representative 
that it would be difficult because of the middle income status 
of some Caribbean countries to actually apply those funds. It 
is possible but requires a lot of bureaucratic work.
    And so any effort we can, you know, make, assuming that is 
an accurate statement, you all would know that, to make that an 
easier process and to really, you know, facilitate the quick, 
you know, application of these funds to needed areas I think 
would be particularly helpful.
    In addition, I think these are both great initiatives. They 
are critical. It is important to apply them.
    In addition to that, I think there is a need to work a 
little bit more behind the scenes on boosting regulatory 
capacity. I mean, if regulations are there they are followed, 
generally speaking, you know, if they are there and well 
implemented on helping civil society to understand this 
question a little bit better and on potentially talking to 
Latin American countries about investment review processes and 
how to implement those.
    Mr. Phillips. OK. One more question. Are any of you aware 
of any effort to compile an inventory of infrastructure efforts 
in Latin America and assess which ones might be vital to our 
security or economic interests?
    Ms. Myers. The Inter-American Dialogue I guess about 4 
months ago we put together a comprehensive list of transport 
infrastructure----
    Mr. Phillips. Right.
    Ms. Myers [continuing]. Projects in particular, assessing 
each one according to its level of completion. Who, what actors 
are involved, which ones? China Railway stands out as being the 
prominent example of, or prominent investor in the region in 
this space. And by type: road, rail, ports, bridge, you name 
it.
    What we found is that there are 150 projects that China 
has--transport infrastructure projects that China has expressed 
interest in since 2002. About half of those have materialized.
    Mr. Phillips. OK.
    Ms. Myers. But most of that over the past 5 years. So, 
definitely ramping up activity of late. And almost all of the 
really successful cases are in ports. Road and rail not as 
much, but there is some progress on that side as well.
    What we are looking to do now is look at each of those 
successful cases, right, of investment and try and understand 
what the implications are from the security perspective to the 
end, and economics.
    Mr. Phillips. Would you all agree, though, that it is in 
our best interests to identify comprehensively, not just 
transportation related, but comprehensively all infrastructure 
projects in Latin America, identify which ones are most 
impactful to us, and perhaps prioritize?
    Ms. Myers. Absolutely.
    Mr. Phillips. Mr. Walker.
    Mr. Walker. I would stress the technological dimension of 
this.
    Mr. Phillips. Yes, exactly.
    Mr. Walker. I think, if anything, Ecuador, Bolivia, and 
Venezuela are indicators that this can grow extensively and I 
just do not think we have a handle on it. So, it is a terrific 
point.
    Mr. Phillips. Thank you all. I yield back.
    Mr. Sires. Thank you. We will now go a second round of 
questions. Congressman Yoho.
    Mr. Yoho. Thank you, Mr. Chairman.
    Mr. Fonseca. Is that close? No. 1, thanks for being at FIU, 
it is an awesome university.
    I think you were the one that said we need to separate the 
nefarious from, the good from the bad with China. I wish I had 
that level of optimism as I am more in line with Mr. Smith and 
some of the other members here, that would be like me saying I 
have cancer and that is good because it helped me lose weight, 
but knowing it is going to kill me in the end.
    I just see nefarious things with China. I see no good with 
what they are doing. And I see their march around the world. 
And this goes back to, you know, studying this the last 7 
years, is China's goal is it primarily trade, economic 
development, or is it strategic, imports and minerals, or 
bringing down western democracies in your opinion? And that is 
for the whole board.
    Mr. Fonseca. So, Congressman, I will take a first shot at 
that. I think it is all of the above. And this is where I think 
it gets really tricky for us because, you know, I think we have 
to be careful in divorcing the economic from the security from 
the political. I think they are very much interrelated.
    I think, again, there is a hint of opportunism that goes to 
what China does in sort of the global environment, but it is 
just so overwhelming and so much, you know, that I think that 
we should at least consider to pause and just sort of 
disaggregate what is good, what is bad. You know, in terms of 
the tactical operational level engagement I think it is vital.
    If you look at, you know, and, Chairman, you referenced, 
you know, you know, north of $500 billion has been invested in 
the region in terms of economic activity from the Chinese. How 
is that, how is that investment actually changing the game in 
the region to promote good governance, to serve the----
    Mr. Yoho. Exactly.
    Mr. Fonseca [continuing]. Interests, you know, sort of 
that, you know, that we uphold? And so how do we engage China 
in a way that we can sort of shape some of that outcome and 
some of that behavior?
    I am just I am somewhat concerned about creating a self-
fulfilling prophecy.
    Mr. Yoho. I am open for suggestions if you have them. 
Because, as you brought up, you know, they are partnering up 
with law enforcement.
    Mr. Fonseca. Right.
    Mr. Yoho. Well, I know the way they partner up with law 
enforcement is, hey, here is a tool you can monitor your 
systems like we do, or your citizens like we do. And I just do 
not see that paying off for long-term democratic societies that 
have the freedoms that we believe in in the western hemisphere. 
And I see it working totally against that ideology.
    And I know China is offering their form of socialism with 
Chinese characteristics.
    Mr. Fonseca. Right.
    Mr. Yoho. Their characteristics are social monitoring, 
citizen scores, you know, the eroding of democracies and going 
to totalitarian and becoming a vassal State of China.
    If you can convince me differently I would feel better, I 
would sleep better. Anybody?
    Mr. Walker. I think I would respond on the following way. 
They are related but distinct questions of what the Chinese 
authorities' goal is, and what the effect and impact of their 
engagement is. So, I think some of the speakers who were on 
panels yesterday talking about these issues talked about the 
paramount goal being the Chinese Communist Party staying in 
power.
    And if you accept that presumption, it leads to a whole set 
of ideas beyond China's borders. But I think if we are talking 
about the impact and the effect, then it comes back to some of 
the things that you and your colleagues alluded to of how 
societies that are engaging with China safeguard their own 
freedoms when they may be encroached upon by China's 
engagement. And that is the question I think we have not come 
to terms with.
    Mr. Yoho. Right.
    Mr. Fonseca. Congressman, can I just do a quick followup?
    Mr. Yoho. Sure.
    Mr. Fonseca. Because I think it is an important question. 
You know, the engagement in the law enforcement space is 
largely because we are not there. You know, and I think that is 
an important sort of observation. They are engaging in that 
space because we are, frankly, not, not very effective in doing 
that.
    Mr. Yoho. When you say we are not there, I look at all the 
foreign aid we have given to countries in Latin America, it is 
over $5 billion in the last 10 years, and a lot of that goes to 
good governance, lack of or getting rid of corruption, and law 
enforcement. Is it not our absence but is it resentment maybe 
of our system that puts too much pressure on a country, and it 
is, like, I would rather go to China because that way I can 
control my people?
    Mr. Fonseca. I mean there may be some of those pressures 
there. You know, I suggest that sort of the technology itself, 
like surveillance systems themselves are not designed to go one 
way or the other, right, promote or not, you know, sort of 
autocratic behavior. It is really the governments that wield, 
you know, the power over those technologies. And this is where, 
again, it is space that if we can continue to engage our 
partners and shape those outcomes I think it is vital for 
regional and, you know, sort of U.S. national interests.
    Mr. Yoho. I think long term we are going to do fine. You 
know, an oak tree when you plant an acorn it grows straight up. 
People have a desire for liberties and freedoms. We provide 
that, they do not. Thank you.
    Mr. Sires. Thank you, Congressman.
    Congressman Smith.
    Mr. Smith. Thank you very much, Mr. Chairman.
    Mr. Fonseca, I would like it if you could respond. But let 
me just ask another question, too, you might want to speak to 
as well.
    In May 1994, President Clinton de-linked human rights with 
trade MFN with the PRC. He did it on a Friday afternoon. I held 
a press conference at about 6 o'clock. It is still on C-SPAN's 
archives. I worked along with now Speaker Pelosi in saying that 
there needs to be significant progress in the real of human 
rights or else MFN is a goner. Well, we lost that opportunity 
when the de-linking took place.
    And that has turned out to be the most false narrative 
ever, that if we somehow trade more, China will matriculate 
from a dictatorship to a democracy. It has not happened. They 
now pose an existential threat, I believe, to their neighbors 
and perhaps beyond. Who is their natural enemy that they are so 
fearful of? It is that outward expansion, like Putin, not in a 
protection strategy that they have embarked upon.
    When it comes to human rights they are a Tier 3 country on 
trafficking. And I wrote that law. They are an egregious 
violator of human rights, on human trafficking, sex and human 
trafficking. When it comes to religious freedom they are a CPC 
country, Country of Particular Concern. And it has gone from 
bad to work under Xi Jinping, as I think all of you know.
    On December 27th, the Washington Post published an op ed 
that I wrote called ``The world must stand against China's war 
on religion.'' And I would ask unanimous consent, Mr. Chairman, 
that that op ed could be made a part of the record.
    Mr. Sires. Without objection.
    [The information referred to follows:]
    
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    Mr. Smith. I appreciate that.
    And I point out in the op ed, and many China scholars fully 
agree with this, that the ruling Community Party has undertaken 
the most comprehensive attempt to either control or to destroy 
all faiths, Falun Gong, Christianity, Muslims, Uyghurs, across 
the board, Tibetan Buddhists. And I do not know how that 
mindset does not bleed into their bad governance model that 
they are trying to promote worldwide. It has to at some point.
    Their surveillance state, as we all know, is just every 
church now has to have a surveillance camera monitoring 
anything anyone might say.
    So, my question is since all of these leaders now, not all, 
but many in the Latin American countries are reaching out to 
get these loans which now makes them indebted and beholding to 
China, and other kinds of cooperation, who among them, if any, 
has spoken out against this horrific repression of human rights 
in general and religious freedom in particular?
    There is even a word for it, Sinicization, where everything 
that anyone of faith or faith body organization, they have to 
comport with and do everything according to the Communist 
model, even Christianity. You know, they are rewriting the 
Bible right now so that socialist principles will be embedded 
in the Bible, and whole parts of it are going to be excised out 
of the Bible.
    So, my question is: are any of these world leaders, any 
Latin American leaders speaking out against this religious 
repression?
    When Xi Jinping comes in, every leader should be saying, 
Hey, great to see you, but what are you doing on human rights? 
Look what you did to Liu Xiaobo who got the Nobel Peace Prize, 
he died in prison, never got attention for the cancer. They let 
him die from cancer. And I think that was an act of murder. And 
then simultaneously his wife was so maltreated as well.
    What a bad governance model. Somebody has to hold Xi 
Jinping to account.
    Please, and then Mr. Fonseca.
    Mr. Walker. So, I think we can broaden the question, 
Congressman. Who beyond the region is speaking out at a high 
political level from the democracies? And why are not they? I 
think it is a very good question.
    And it leads to something that we did not touch on, but I 
think it is so critically important, and it is actually 
integral to the concept of sharp power, it is things that are 
not said for one reason or another. And I think when, when 
China, when the Chinese party State engages beyond its borders 
it certainly cannot control the entire environment in an open 
society. That is not what it is all about. It is about 
minimizing and sidelining those things that they would prefer 
not to have heard.
    So, for a while it was the T's, it was Tiananmen, Tibet, 
Taiwan.
    Mr. Smith. Right.
    Mr. Walker. But I think there is some evidence to suggest 
that the space for sidelining discussions is growing. And this 
is something it is very hard to track. It is in essence trying 
to identify gaps, things that are not happening. But this is 
the preference I think you rightly identified of the leadership 
in Beijing.
    And I think precisely because our assumption for the last 
quarter century that deepening economic engagement would lead 
to political liberalization and, hence, put our policies on a 
track that was in line with that overarching assumption, we 
have now come to realize that that is not the case, at least 
for now. And at some point in the future, you know, hopefully 
that will prove to be different but for now it is not the case. 
And it is not just China.
    And I think as we come to grips with that we are trying to 
situate ourselves in terms of appropriate responses at a time 
when we are working at a disadvantage. And I think this is key. 
We are actually starting from a weaker position because we did 
not start to react, say, five or 10 years ago.
    Mr. Smith. Right.
    Mr. Walker. And it makes it more difficult to get civil 
society up to speed, to understand how the Chinese party State 
operates and so forth. And until we do that we are going to be 
at a disadvantage in meeting this challenge.
    Mr. Fonseca. So, Congressman, I will add, you know, that we 
are, to underscore Chris' point, at a severe disadvantage when 
it comes to our ability to mount information campaigns that can 
rival, you know, sort of China's charm offensive as it has 
become to be know.
    You talk at length about the Confucius Institutes and 
Confucius classrooms. You know, there are sort of Confucius 
Institutes well over 40, and this sort of notion of embedding 
Confucius classrooms in secondary educational institutions 
again is all designed to help cultivate a brand that China 
wants to wield as part of its portfolio soft power.
    The other thing I think is really interesting in our space 
in the region is part of the charm offensive is designed to do 
a few things. Certainly one is the further isolation of Taiwan. 
And we keep talking about that, about half of the countries 
that still recognize Taiwan reside, you know, reside in this 
region.
    The other is to continue to stomp out, neutralize dissident 
movements like the Falun Gong which is also, you know, sort of 
active in part of the region.
    The third is really to sort of counter pro-democracy 
movements, right, again ushering in this, this notion of 
acceptability of the autocratic, authoritarian political 
models.
    The other unique thing that is not, does not really get a 
lot of traction is about the large overseas ethnic Chinese 
communities. Right? And part of the role of Confucius 
Institutes and the charm offensive is teaching Mandarin 
language to overseas ethnic Chinese as a means of being able to 
communicate to and through these communities to continue to 
promote sort of Chinese domestic and foreign policy objectives.
    And so that is all sort of cast underneath the notion of 
this charm offensive in which China has really actively been 
pursuing this.
    Mr. Sires. Ms. Myers, I want to give you the last words 
before I close this meeting here.
    Ms. Myers. Thank you very much.
    I could not agree more. I mean, I think we can pretty much 
give up on the notion that China, due to its, you know, 
internationalization over these many years, is going to change 
its standards, its ways, its approach to human rights and 
other, and other issues. It is not an ideal partner especially. 
And, you know, is even an enabler, I think, of some bad 
practices in the region, especially among those countries that 
have weaker institutions.
    And that is why it is absolutely incumbent upon the Latin 
American countries themselves to have the right regulations, 
the right standards in place to guide China and to ensure best 
outcomes. And there are ways, I think, that the U.S. can ensure 
that those, those standards, those regulations are stronger at 
least than they are at the moment.
    Mr. Sires. Thank you. Before closing I just kind of find it 
ironic that the Communist Party has been bringing journalists 
from the region to China to sort of train them. It is a little 
bit ironic that such a closed society would actually tell the 
world that we are bringing journalists over to train them in 
journalism. Can you imagine that?
    Well, look, thank you very much for being here. It has been 
a great hearing. And thank you for all of your patience, and 
the members also. Thank you.
    [Whereupon, at 11:32 a.m., the subcommittee was adjourned.]

                                APPENDIX
                                
                                
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