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

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dkrause on DSKHT7XVN1PROD with $$_JOB286According to the announcement of the possible sale, ‘‘the improvedcapability, survivability, and reliability of newly retrofittedF–16A/B aircraft will greatly enhance the recipient’s ability to defendits borders.’’ 260In response to the arms sale announcement, Beijing quickly followedup on its previous warnings to the United States. Prior tothe announcement, China repeatedly expressed its opposition to thesale in several official venues, such as during Secretary Gates’ January2011 trip to China and during the May 2011 trip of ChenBingde, chief of the PLA General Staff, to the United States. 261 Immediatelyfollowing the announcement, China’s Ministry of ForeignAffairs spokesperson noted that:Paying no heed to China’s repeated solemn representations,the US side keeps selling advanced arms to Taiwan underthe pretext of the Taiwan Relations Act. Its action hasgrossly violated the three China-US joint communiqués, especiallythe principles enshrined in the August 17Communiqué. It constitutes a serious interference in China’sinternal affairs and severely undermines China’s nationalsecurity and reunification. It also impairs China-USrelations and the peace and stability across the TaiwanStraits. The Chinese Government and people will by nomeans accept it. The erroneous practice of the US will inevitablycause damage to China-US relations and bilateralexchanges and cooperation in the military, security andother fields, and the responsibility completely rests withthe US side. [emphasis added]. 262A day after the arms sales announcement, China’s foreign minister,Yang Jiechi, gave a speech in New York to the National Committeeon U.S.-China Relations and the U.S.-China Business Council,stating that:The Chinese side urges the U.S. side to fully recognize thatU.S. arms sales to Taiwan is a highly sensitive and harmfulissue. The Chinese side urges the U.S. side to take China’ssolemn position very seriously, correct the mistake ofselling weapons to Taiwan, immediately revoke the abovementionedwrong decision, stop arms sales to Taiwan andU.S.-Taiwan military contacts, and take real actions to upholdthe larger interest of China-U.S. relations and peaceand stability in the Taiwan Straits. 263A few days later, a senior State Department official provided detailsabout a September 26 meeting between Secretary of State HillaryRodham Clinton and Foreign Minister Yang. According to theState Department official, Foreign Minister Yang indicated to SecretaryClinton that China was ‘‘going to suspend or cancel or postponea series of military-to-military engagements’’ with the U.S.military, just restarted back in January 2011. The official alsowarned that more, unspecified retaliations may be forthcomingfrom China. 264With the Obama Administration’s announcement of the possiblesale of F–16A/B retrofits to Taiwan, Taiwan has two arms sales requestsstill outstanding: F–16C/D fighter jets and diesel-electricsubmarines. Since 2006, Taiwan has attempted to submit a LetterVerDate Nov 24 2008 13:46 Nov 10, 2011 Jkt 067464 PO 00000 Frm 00298 Fmt 6601 Sfmt 6601 G:\GSDD\USCC\2011\067464.XXX 067464
287of Request to the United States for the purchase of 66 F–16C/Dfighters from the United States to replace Taiwan’s aging aircraft,especially its 1960s-era F–5 fighters. However, to date, neither theBush Administration nor the Obama Administration has acceptedTaiwan’s Letter of Request, the first step in the foreign militarysales process. 265 Over the past year, Taiwan officials have repeatedlycalled for the United States to approve the sale of F–16C/Dfighters to Taiwan. During the Commission’s trip to Taiwan, for example,President Ma described how the sale of the F–16C/D fightersis critical in order to offset the shifting of the cross-Strait militarybalance in China’s favor. 266 Despite Taiwan’s repeated attemptsto submit a Letter of Request for the F–16C/D, its inabilityto submit the letter prevents any deliberation of an arms sale fromgoing forward and keeps Taiwan defense planners in suspense overthe possibility of a future sale of the F–16C/D. Immediately afterthe announcement of the potential sale of the F–16A/B upgradepackage, President Ma noted that his administration, while appreciativeof the F–16A/B upgrade, would continue to press for thesale of the 66 F–16C/D fighters. 267Recent Congressional Actions Related to TaiwanArms SalesOver the last year, Members of the U.S. Congress have expressedconcern regarding Taiwan’s ability to defend itself froma Chinese attack. In addition to a number of public statements,Members of Congress have taken the following steps in supportof U.S. arms sales to Taiwan:• On April 13, 2011, Representative Robert Andrews (D–NJ) introducedH.Cong.Res.39, which expresses the sense of Congressthat the president should move forward with the sale toTaiwan of new and upgraded F–16s.• On May 26, Senate Taiwan Caucus Co-Chairmen RobertMenendez (D–NJ) and James Inhofe (R–OK) sent a letter toPresident Obama urging the administration to approve thesale of F–16C/D fighters to Taiwan. The letter was signed by45 senators.• On July 20, the House Committee on Foreign Affairs passedH.R. 2583, The Foreign Relations Authorization Act for FiscalYear 2012. The bill contains language that would require thepresident to take immediate steps to sell to Taiwan both the66 F–16C/D fighters and the upgrade package for Taiwan’s F–16A/B fighters. The bill also requires the sale of the eight diesel-electricsubmarines once Taiwan has budgeted for them.This language was included in the bill through amendmentsoffered by Representatives Howard Berman (D–CA), Dan Burton(R–IN), and Gerry Connolly (D–VA) and passed by voicevotes.dkrause on DSKHT7XVN1PROD with $$_JOBVerDate Nov 24 2008 13:46 Nov 10, 2011 Jkt 067464 PO 00000 Frm 00299 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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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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215weapons or coorbital satellite w
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217Malicious Cyber ActivitiesDirect
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RECOMMENDATIONSChina’s ‘‘Area
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Page 297 and 298: 289fense, since its current fleet o
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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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