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

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dkrause on DSKHT7XVN1PROD with $$_JOB242desire to prevent the collapse of the North Korean regime and thenegative impact this could have on China’s economic and social stability.As a result, China is of its own volition in a ‘‘mutual hostagesituation’’ where it feels forced to continue to support North Koreadespite, and increasingly due to, the North’s destabilizing activities.China’s diplomatic support for North KoreaThroughout 2010 and into 2011, China continued to support anddefend North Korea against international pressure despite NorthKorean activities that had the potential to cause a war in NortheastAsia. After North Korea torpedoed a South Korean naval vesselin March 2010, killing 46 sailors,* China refrained from condemningthe attack or implicating North Korean involvement. 1 Instead,China waited a month to respond publicly to the sinking, atwhich time China simply referred to the incident as a ‘‘tragedy.’’ 2When a multinational report concluded a few months later thatNorth Korea was indeed responsible, China refused to accept thefindings and instead continued to call the incident a ‘‘mysteriousnaval tragedy.’’ 3 Beijing also used its position as a member of theUnited Nations (UN) Security Council to dilute a UN statementthat would have condemned North Korea for the attack. 4 †In late 2010, China again defended North Korea from internationalcriticism despite the North’s provocative actions. On November20, 2010, Pyongyang revealed a previously unknown nuclearenrichment facility, developed in defiance of UN sanctions.‡In response to the revelation, Chinese Foreign Ministry Spokes-cut off exports of oil to North Korea—Asia—Pacific—International Herald Tribune,’’ New YorkTimes, October 30, 2006. http://www.nytimes.com/2006/10/30/world/asia/30iht-oil.3334398.html;Sunny Lee, ‘‘China cut off oil to stop N. Korea from retaliating against South,’’ Korea Times,January 19, 2011. http://www.koreatimes.co.kr/www/news/nation/2011/01/113_79966.html; andInternational Trade Centre, ‘‘Trade Map’’ (Geneva, Switzerland: September 30, 2011). http://www.trademap.org/light/Bilateral_TS.aspx.* On March 26, 2010, North Korea torpedoed a South Korean corvette, the Cheonan, killing46 sailors. Although not immediately identified as the perpetrator of the attack, a North Koreanminisubmarine was implicated as the attacker by a multinational study released a few monthslater. International Crisis Group, ‘‘China and Inter-Korean Clashes in the Yellow Sea,’’ Asia Report200 (Brussels, Belgium: January 21, 2011): 2–5.† Beijing did protest loudly, however, when the United States and South Korea announcedjoint naval exercises, partially in response to North Korea’s sinking of the Cheonan. Reactingto these exercises, China’s Ministry of Foreign Affairs stated that ‘‘we firmly oppose foreign warshipsand military aircraft carrying out activities in the Yellow Sea and other Chinese coastalwaters that affect China’s security interests.’’ China also subsequently held its own military exercisesin the Yellow, East China, and South China seas. International Crisis Group, ‘‘Chinaand Inter-Korean Clashes in the Yellow Sea,’’ Asia Report 200 (Brussels, Belgium: January 21,2011): I; Qin Gang, spokesperson for the Chinese Ministry of Foreign Affairs, July 9, 2010, citedin Bonnie Glaser and Brittany Billingsley, ‘‘US–China Relations: Tensions Rise and Fall, OnceAgain,’’ Comparative Connections 12:3 (October 2010); and Chris Buckley, ‘‘China denies militaryexercise aimed at U.S.,’’ Reuters, June 29, 2010. http://www.reuters.com/article/2010/06/29/us-china-military-idUSTRE65S1YU20100629.‡ On November 20, 2010, North Korea surprised the international community by revealing apreviously unknown uranium enrichment facility at the Yongbyon Nuclear Complex. Accordingto North Korean engineers, this facility produces low enriched uranium for fuel in a still-underconstructionnuclear power reactor. However, Sigfried S. Hecker, codirector of Stanford University’sCenter for International Security and Cooperation and the first outsider invited to visitthe facility, stated that the facility could produce either fuel for the nuclear reactor or, withmodifications, weapons-grade uranium. Both the newly revealed facility and the future nuclearpower reactor violate UN sanctions. Siegfried S. Hecker, ‘‘A Return Trip to North Korea’sYongbyon Nuclear Complex’’ (Stanford, CA: Stanford University, Center for International Securityand Cooperation, November 20, 2010), p. 1. http://iis-db.stanford.edu/pubs/23035/HeckerYongbyon.pdf; International Crisis Group, ‘‘China and Inter-Korean Clashes in the YellowSea,’’ Asia Report 200 (Brussels, Belgium: January 21, 2011): 11; and David E. Sanger, ‘‘NorthKoreans Unveil New Plant for Nuclear Use,’’ New York Times, November 20, 2011. http://www.nytimes.com/2010/11/21/world/asia/21intel.html.VerDate Nov 24 2008 13:46 Nov 10, 2011 Jkt 067464 PO 00000 Frm 00254 Fmt 6601 Sfmt 6601 G:\GSDD\USCC\2011\067464.XXX 067464
243woman Jiang Yu simply expressed ‘‘that all sides should exercisecalm and restraint, and maintain a responsible attitude to preventtensions from escalating, playing a positive role in preserving thepeace and stability of the peninsula.’’ 5 China’s first official statementexpressing concern over North Korea’s new enrichment facilityoccurred two months later, during Chinese President and CommunistParty Secretary Hu Jintao’s January 2011 visit to theUnited States. The joint statement from that visit noted that ‘‘theUnited States and China expressed concern regarding the DPRK’s[North Korea’s] claimed uranium enrichment program.’’ 6 Despitethis statement, in the following month China maneuvered withinthe UN Security Council to block an expert report about the revelationof the new facility. 7 Less than a week after revealing the nuclearenrichment facility, China again blocked international pressureon North Korea when the North Korean military shelled aSouth Korean island, killing four South Koreans.* Following the attack,China declined to criticize the North publicly and insteadcalled for ‘‘emergency talks’’ between North Korea and SouthKorea. 8 China also maneuvered within the UN Security Council tosuccessfully block a statement condemning the shelling. 9China has also sought to protect North Korea in light of its continuedproliferation attempts over the past year. Over the courseof the past year, several accounts of North Korean attempts to defyinternational sanctions have come to light. According to a 2010 reportfrom an expert panel established by the United Nations, NorthKorea may be involved in ‘‘nuclear and ballistic missile related activitiesin certain countries including Iran, Syria and Myanmar.’’ 10The New York Times reported that in defiance of UN SecurityCouncil Resolution 1874 North Korea smuggled, possibly throughChina, at least 19 intermediate-range ballistic missiles to Iran. 11However, when the United Nations established an expert panel toinvestigate North Korea’s continued attempts to proliferate weaponsof mass destruction, Beijing lobbied to delay the report’s release.12 Ultimately unsuccessful, Beijing then switched tactics andattacked the authority of the report itself, stating that ‘‘[t]his doesnot represent the position of the Security Council, and nor [sic]does it represent the position of the relevant Security Council sanctionscommittee.’’ 13Besides defending North Korea against international pressure,Beijing also has sought publicly to portray its relationship withNorth Korea as strong and getting stronger. According to expertsScott Snyder, director of the Center for U.S.-Korea Policy at theAsia Foundation, and See-won Byun, a research associate at thesame institute:dkrause on DSKHT7XVN1PROD with $$_JOB* On November 23, 2010, the North Korean military shelled South Korea’s Yeonpyeong Island,killing two South Korean civilians and two South Korean marines. This was the first artilleryattack on South Korean territory since the end of the Korean War in 1953. On August 10, 2011,North Korea again fired live artillery rounds into South Korea, this time in the maritime territoryaround the same island. John M. Glionna and Jung-yoon Choi, ‘‘North, South Korea ExchangeFire Along Tense Western Sea Border,’’ LA Times, August 10, 2011. http://articles.latimes.com/2011/aug/10/world/la-fgw-koreas-exchange-fire-20110810;and Peter Foster,‘‘North Korean attack on Yeonpyeong Island is worst against civilians in 20 years,’’ Telegraph(United Kingdom), November 23, 2010. http://www.telegraph.co.uk/news/worldnews/asia/southkorea/8153100/North-Korean-attack-on-Yeonpyeong-Island-is-worst-against-civilians-in-20-years.html.VerDate Nov 24 2008 13:46 Nov 10, 2011 Jkt 067464 PO 00000 Frm 00255 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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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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161gress, the DoD noted that China
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165eral U.S. military policies, inc
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167Figure 1:Territorial Disputes in
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171provides guidelines for dealing
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173network exploitations to facilit
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181ligence, surveillance, and recon
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187Therefore, the PLA maintains the
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189Of import, the PLA’s geographi
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Page 205 and 206: 197ther moves toward independence,
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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3190aRCRD&ss=Hong+Kong&s=News; Pete
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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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