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

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dkrause on DSKHT7XVN1PROD with $$_JOB266small groups to coordinate and direct local foreign relations.‡ 128Many provincial leaders also are powerful actors in the central government,and currently provincial leaders hold two of the nineseats on the Politburo Standing Committee and ten of 25 Politburoseats.§Under the stewardship of central government ministries, Chineseprovinces are empowered to be economic liaisons and internationaldealmakers, fulfilling China’s ‘‘going out’’ strategy* and creatingeconomic growth locally. Provincial leaders are responsible for creatingand implementing local foreign trade strategies and managingprovincial SOEs. 129 Border provinces such as Jilin andLiaoning (opposite North Korea), and Yunnan (opposite Burma,Laos, and Vietnam) create and implement policies to foster economicengagement across their borders, often with heavy politicaland financial support from the central government. Jilin is a leadingactor in support of China’s engagement policy toward NorthKorea. The province invests in open border cities, economic cooperationzones, joint ventures, and cross-border infrastructure andaims to advance national policies to secure resources, createwealth, and promote economic stability across the border.† 130Yunnan Province has similar trade-liberalizing policies along itsborder with Vietnam and Burma. 131 Reflecting on Yunnan’s role asan integral link to China’s southern neighbors, President Hutoured Yunnan in 2009 and declared the province a ‘‘bridgehead’’for China’s relations with South and Southeast Asia, a pronouncementthat inspired widespread investments in infrastructure andcommerce under the banner of a new ‘‘bridgehead strategy.’’ 132The provinces also are agents of China’s foreign policies relatedto security and defense, pursuing regional security goals, and maintaininginternal and external stability along China’s borders. Thisis especially the case in regard to North Korea, which could createa problem for China in the event of a human security disaster (includingthe possibility of refugees flooding into China). In such acase, provincial and local officials would be responsible for the‡ Provincial-level management of foreign relations under governors and provincial party secretariesis conducted by provincial Foreign Affairs Offices and Foreign Trade and Economic CooperationCommissions, which manage foreign diplomatic relations and foreign trade relations,respectively. Chen Zhimin, ‘‘Coastal Provinces and China’s Foreign Policy-making,’’ in Yifan Haoand Lin Su, eds., China’s Foreign Policy Making: Societal Force and Chinese American Policy(Aldershot, UK: Ashgate Publishing Limited, 2005), pp. 11–12. http://www.cewp.fudan.edu.cn/attachments/article/68/Chen%20Zhimin,%20Coastal%20Provinces%20and%20China%27s%20Foreign%20Policy%20Making.pdf.§ Liaoning and Shanghai are represented in the Politburo Standing Committee; Beijing,Tianjin, Jiangsu, Hubei, Guangdong, Xinjiang, and Chongqing are represented in the Politburo.Linda Jakobson and Dean Knox, New Foreign Policy Actors in China (Stockholm, Sweden:Stockholm International Peace Research Institute (SIPRI), Policy Paper 26, September 2010),p. 32. http://books.sipri.org/files/PP/SIPRIPP26.pdf.* China’s ‘‘going out’’ strategy was formally enunciated in 2002 by then Chinese PresidentJiang Zemin as a strategy to help China open up to the world, economically and diplomatically.U.S.–China Economic and Security Review Commission, 2008 Annual Report to Congress (Washington,DC: U.S. Government Printing Office, November 2, 2008), p. 236.† Jilin represents 38 percent of China’s accumulated foreign direct investment (FDI) to NorthKorea since 2000, and North Korea is the province’s fourth-largest trading partner. While thisheavy investment has contributed to economic growth in Jilin, it also makes Jilin particularlyvulnerable to North Korea’s unpredictable suspensions of cross-border trade. Bloomberg News,‘‘‘Dead Border’ Is Price of China Support for North Korea Regime,’’ June 14, 2010. http://www.bloomberg.com/news/2010–06–14/-dead-border-thwarts-growth-as-chinese-pay-price-for-backing-north-korea.html;Carla Freeman and Drew Thompson, China on the Edge: China’s BorderProvinces and Chinese Security Policy (Washington, DC: The Center for the National Interestand The Johns Hopkins School for Advanced International Studies, April 2011), pp. 36–39. http://www.cftni.org/China_on_the_Edge_April_2011.pdf.VerDate Nov 24 2008 13:46 Nov 10, 2011 Jkt 067464 PO 00000 Frm 00278 Fmt 6601 Sfmt 6601 G:\GSDD\USCC\2011\067464.XXX 067464
dkrause on DSKHT7XVN1PROD with $$_JOB267management of border control, fire fighting, internal security, managingdisplaced persons, and operating refugee camps, interalia. 133 (For more information on China’s security polices relatedto North Korea, see chap. 3, sec. 1, of this Report.) Similarly, inChina’s westernmost province of Xinjiang, the quasi-militaryXinjiang Production and Construction Corps plays a multifacetedrole in China’s political relationship with its Central Asian neighborsby managing border defense and meeting with foreign leaders.134 Provincial leaders and law enforcement personnel also arethe primary actors dealing with transnational threats like humanand drug trafficking, the spread of HIV/AIDS, and political crisesin bordering countries.* Coastal provinces also have provincialmaritime law enforcement programs, which add to China’s alreadyrobust maritime presence. 135 (For more information on China’smaritime policies in the South China Sea, see chap. 2, sec. 1, ofthis Report.)Nontraditional Chinese Foreign Policy ActorsAside from the official Chinese actors that are responsible forcreating and implementing Chinese foreign policy, a number ofnontraditional actors are increasing in importance. SOEs andstate-owned banks, Chinese academics and think tanks, and agrowing number of Internet users are all beginning to have a voicein foreign affairs and are seeking ways to become more influentialin the policy-making process.State-owned EnterprisesAs China’s SOEs have expanded their global reach, their influencein China’s foreign policy-making has grown as well. LargeSOEs dominate strategic industries, such as the energy and telecommunicationssectors, providing them with many connections toBeijing’s political elites. These companies influence foreign policyby virtue of their leaders’ access to official policy-making bodies,their expertise in national strategic industries, and their employmentof Chinese workers and provision of capital for Beijing. 136(For more information on China’s SOEs, see chap. 1, sec. 2, of thisReport.)Executives of SOEs, especially those in strategic sectors like petroleum,minerals, nuclear, and defense, often have membership inor access to official decision-making bodies in China. Heads of allmajor SOEs under the central government are appointed by theparty’s Organization Department and Ministry of Personnel, andsome of these individuals hold ministerial or vice-ministerial rankor serve as alternate members of the CCP Central Committee (forexample, the general managers of China’s three largest stateownedoil companies are vice ministers). 137 While these official positionsdo not give companies power to make important foreign pol-* Yunnan and Guangxi provinces also work to resolve transnational security problems throughparticipation in the Greater Mekong Subregion, a cooperation organization in which these provincesand five Southeast Asian nations work with the Asian Development Bank and other partnersto enhance cooperation in nine security, economic, cultural, technological, and environmentalsectors. Asian Development Bank, ‘‘Greater Mekong Subregion’’ (Manila, Philippines:July 22, 2011). http://www.adb.org/gms/; Carla Freeman and Drew Thompson, China on theEdge: China’s Border Provinces and Chinese Security Policy (Washington, DC: The Center forthe National Interest and The Johns Hopkins School for Advanced International Studies, April2011), pp. 71–73. http://www.cftni.org/China_on_the_Edge_April_2011.pdf.VerDate Nov 24 2008 13:46 Nov 10, 2011 Jkt 067464 PO 00000 Frm 00279 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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197ther moves toward independence,
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199trates the depth of China’s sp
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201Figure 2:Representation of Beido
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205ganization, modeled on the Europ
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207China’s leadership also places
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211[General Armaments Department] p
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213Table 2: Select Chinese Satellit
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Page 229 and 230: RECOMMENDATIONSChina’s ‘‘Area
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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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