2011 report to congress - U.S.-China Economic and Security Review ...

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dkrause on DSKHT7XVN1PROD with $$_JOB206ing to a Commission-sponsored report on China’s science programs.269 The industrial giant primarily focuses on powerfullaunch vehicles and large satellites. 270 It includes entities suchas the China Great Wall Industry Corporation, the organizationthat markets launch services and satellite systems tointernational clients, and the China Satellite CommunicationsCorporation, which operates telecommunications satellites. 271• China Aerospace Science and Industry Corporation: Althoughsmaller than its counterpart, this corporation is composed of180 enterprises and employs over 100,000 people. It specializesin ‘‘tactical ballistic missiles, anti-ship and land attack cruisemissiles, air defense missile systems, direct ascent anti-satellite(ASAT) interceptors, small tactical satellites and associatedtactical satellite launch vehicles,’’ according to a report bythe Project 2049 Institute. The China Aerospace Science andIndustry Corporation appears to be the lead entity behind China’sefforts to develop an antiship ballistic missile program,which seeks the ability to target moving vessels at sea. 272 (Formore information on the antiship ballistic missile program,see the ‘‘Military Space Activities’’ subsection, below, as well assec. 1 of this chapter.)Most of these organizations operate within tightly controlled,vertically structured bureaucracies. Ad hoc steering groups, called‘‘Leading Small Groups,’’ composed of prominent individuals fromthe leadership of relevant Chinese Communist Party, Chinese government,and corporate organizations, provide guidance and makedecisions. 273 Chinese officials generally do not disclose the existenceof such groups or their membership. However, space-specific,leading small groups reportedly exist for ‘‘lunar projects, humanspaceflight, Earth observation satellites, and heavy-lift launch vehicledevelopment,’’ according to Ms. Krolikowski. 274Notable DevelopmentsChina’s civil space activities have progressed at a cautious butsteady rate. China’s leadership values manned missions and focuseson that area. According to Dr. Pace, ‘‘It is not a question ofwhether China will have a full range of human space flight capabilities,but a question of when and what they intend to do withthose capabilities.’’ 275 After successful manned missions in 2003,2005, and 2008, the last of which included a space walk, China’sspace planners have identified a range of increasingly ambitiousplans through the mid-2020s. China is currently developing a seriesof three small space laboratory modules that it plans to launchover the coming decade. The first of the series, ‘‘Tiangong-1,’’launched in September 2011. 276 These laboratories will conduct researchfor, among other things, a future permanent space station.Though modest in size and scope in comparison to the InternationalSpace Station, China’s planned space station will requiresubstantial capabilities to orbit. The station will be composed ofthree separate modules—slated to launch in 2020, 2021, and2022—that will need to rendezvous in space. 277 Like other aspectsof China’s manned space activities, the space station will be run bythe PLA. 278VerDate Nov 24 2008 13:46 Nov 10, 2011 Jkt 067464 PO 00000 Frm 00218 Fmt 6601 Sfmt 6601 G:\GSDD\USCC\2011\067464.XXX 067464
207China’s leadership also places a high priority on lunar missions,which it views as perhaps the most visible and prestigious spacerelatedaccomplishment. Chinese experts and foreign observers anticipateseveral breakthroughs in China’s lunar exploration activitiesover the next decade. Chinese planners describe lunar explorationin terms of three discrete stages. Stage one, which lastedfrom 2002 to 2007, involved orbiting the moon. Stage two, whichbegan in 2008 and is set to conclude in 2014, involves a moon landingand the use of a rover to collect data from the lunar surface.Stage three, scheduled to take place from 2015 to 2020, involvesthe collection of samples from the lunar surface and their returnto Earth. 279 A manned lunar mission (perhaps as ‘‘stage 4’’) mayalso take place as soon as 2024. 280 Dr. Pace testified that although‘‘China does not publicly have a formal program for sending humansto the moon,’’ they are ‘‘making progress toward acquiringthe capabilities necessary to conduct such missions.’’ *LimitationsChina’s civil space endeavors face various constraints, includingsubstantial bureaucratic and organizational inefficiencies. Chineseplanners have yet to complete major systemic reforms, the most recentround of which began in 2008 and sought to ‘‘inject greater civilianmanagement and innovation’’ into China’s space industries,according to Dr. Moltz. 281 However, according to China space expertEric Hagt, China’s space industries remain ‘‘dispersed, bloated,and located in geographically isolated regions.’’ 282 This is consistentwith other Chinese state-run industries that, according toDr. Moltz, ‘‘continue to suffer from legacy inefficiencies of the socialisteconomy.’’ 283 These characteristics limit the potential forChina’s space developments to benefit other Chinese industries. 284The Advantages of State ControlThe numerous reorganizations of China’s space sector indicatepersistent dissatisfaction with industrial performance. However,state control provides China’s space industrial base with certainadvantages. For example, the entire sector ‘‘has been insulatedfrom many of the pressures affecting the rest of the economy,mainly by its status as a strategic sector and its largely nonmarketinternal relationships,’’ according to Ms. Krolikowski.Benefits of this special status include ‘‘direct public investmentin research and development; fiscal, tax, and financial policies tosupport major national [science and technology] projects and indigenousinnovation; measures to improve market access;concessional pricing systems for land and utilities; and governmentoversight of mergers and acquisitions.’’ Finally, benefits extendto predictable procurement trends, which allow China’sspace industrial base to forecast staffing, investment, and researchand development needs. Ms. Krolikowski testified that:dkrause on DSKHT7XVN1PROD with $$_JOB* For example, China’s spacesuit ‘‘has boots with heels—and other features for walking on asurface as well as floating outside a spacecraft.’’ See U.S.-China Economic and Security ReviewCommission, Hearing on the Implications of China’s Military and Civil Space Programs, writtentestimony of Scott Pace, May 11, 2011.VerDate Nov 24 2008 13:46 Nov 10, 2011 Jkt 067464 PO 00000 Frm 00219 Fmt 6601 Sfmt 6601 G:\GSDD\USCC\2011\067464.XXX 067464
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12011REPORT TO CONGRESSof theU.S.-C
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U.S.-CHINA ECONOMIC AND SECURITY RE
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dkrause on DSKHT7XVN1PROD with $$_J
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CONTENTSPageTRANSMITTAL LETTER TO T
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23Figure 1:China’s Share of the U
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25The weakness in U.S. exports of a
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31Table 3:RMB Bond Issuances by Mul
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35of bilateral negotiations under t
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37Stonewalling the WTO: A Case Stud
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39that China’s existing system of
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41now. Because the structures of th
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43How Big Is China’s State Sector
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45Fortune Global 500, compared to j
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47panies are less profitable, after
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49erate primarily within state-cont
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57Figure 1: Chinese FDI Stock in th
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63U.S. firms with sensitive technol
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65Addendum I: SASAC Companies, Larg
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67Addendum I: SASAC Companies, Larg
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69dkrause on DSKHT7XVN1PROD with $$
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71January 2010, the heads of 19 U.S
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77cause Beijing had sought to exclu
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81China in Search of Western Techno
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83scious policy seeking to drive Ch
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89Like previous plans, the 12th Fiv
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95Consultative Conference National
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99panies account[ed] for fully 7 pe
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101Dr. Shih has testified before th
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103ment subsidies, which in turn wi
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105Addendum II: Figures 1-2Figure 1
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113drivers cited increased fuel pri
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123uating from college and hoping t
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131unfairly or unjustifiably harm U
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Page 169 and 170: 161gress, the DoD noted that China
Page 173 and 174: 165eral U.S. military policies, inc
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Page 207 and 208: 199trates the depth of China’s sp
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Page 229 and 230: RECOMMENDATIONSChina’s ‘‘Area
Page 247 and 248: 239320. Chang Xianqi, Military Astr
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257When asked by Commissioners abou
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281trade, and dispute settlement. 2
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287of Request to the United States
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289fense, since its current fleet o
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323mation Office. Day-to-day superv
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327Although the slogans change over
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335What Constitutes a ‘‘Core In
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339Selected CAIFC/CPD Track Two Exc
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341disseminated through diplomatic
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375ecutive Schedule under section 5
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APPENDIX IIIPUBLIC HEARINGS OF THE
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APPENDIX IIIALIST OF WITNESSES TEST
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393Alphabetical Listing of Panelist
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397In TaiwanU.S. Government• Amer
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APPENDIX VLIST OF RESEARCH MATERIAL
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401The National Security Implicatio
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APPENDIX VIACRONYMS AND ABBREVIATIO
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