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

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U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSIONHon. WILLIAM A. REINSCH, ChairmanDANIEL M. SLANE, Vice ChairmanCOMMISSIONERSCAROLYN BARTHOLOMEWDANIEL A. BLUMENTHALPETER T.R. BROOKESROBIN CLEVELANDHon. C. RICHARD D’AMATOJEFFREY L. FIEDLERHon. PATRICK A. MULLOYHon. DENNIS C. SHEAMICHAEL R. WESSELLARRY M. WORTZELMICHAEL R. DANIS, Executive DirectorKATHLEEN J. MICHELS, Associate DirectorDANIEL HARTNETT, Sr. Analyst for Military–Security IssuesPAUL MAGNUSSON, Sr. Analyst for Economics–Trade IssuesThe Commission was created on October 30, 2000, by the Floyd D. SpenceNational Defense Authorization Act for 2001 § 1238, Pub. L. No. 106–398,114 STAT. 1654A–334 (2000) (codified at 22 U.S.C. § 7002 (2001), asamended by the Treasury and General Government Appropriations Actfor 2002 § 645 (regarding employment status of staff) & § 648 (regardingchanging annual report due date from March to June), Pub. L. No. 107–67,115 STAT. 514 (Nov. 12, 2001); as amended by Division P of the ‘‘ConsolidatedAppropriations Resolution, 2003,’’ Pub. L. No. 108–7 (Feb. 20, 2003)(regarding Commission name change, terms of Commissioners, and responsibilitiesof Commission); as amended by Pub. L. No. 109–108 (H.R. 2862)(Nov. 22, 2005) (regarding responsibilities of Commission and applicabilityof FACA); as amended by Pub. L. No. 110–161 (Dec. 26, 2007) (regardingchanges in annual report due date; submission of financial reports; printingand binding of Congressional reports; employee compensation and performancereviews; and applicability of House rules for travel by members andstaff).The Commission’s full charter http://www.uscc.gov/about/charter.php and StatutoryMandate http://www.uscc.gov/about/overview.php are available via theWorld Wide Web.dkrause on DSKHT7XVN1PROD with $$_JOBVerDate Nov 24 2008 13:46 Nov 10, 2011 Jkt 067464 PO 00000 Frm 00006 Fmt 0486 Sfmt 0486 G:\GSDD\USCC\2011\067464.XXX 067464(II)G:\GSDD\USCC\CONGRESS.#17
U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSIONNOVEMBER 9, 2011The Honorable Daniel Inouye,President Pro Tempore of the U.S. Senate, Washington, DC 20510The Honorable John Boehner,The Honorable Nancy Pelosi,Speaker of the U.S. House of Representatives, Washington, DC 20510DEAR SENATOR INOUYE AND SPEAKER BOEHNER:On behalf of the U.S.-China Economic and Security Review Commission,we are pleased to transmit the Commission’s 2011 AnnualReport to the Congress—the ninth major Report presented to Congressby the Commission—pursuant to Public Law 106–398 (October30, 2000), as amended by Public Law No. 109–108 (November22, 2005). This report responds to the mandate for the Commission‘‘to monitor, investigate, and report to Congress on the national securityimplications of the bilateral trade and economic relationshipbetween the United States and the People’s Republic of China.’’ Inthis Report, the Commission reached a broad and bipartisan consensus;it approved the Report unanimously, with all 12 membersvoting to approve and submit it.In accordance with our mandate, this Report, which is current asof November 9, includes detailed treatment of our investigations ofthe areas identified by Congress for our examination and recommendation.These areas are:• PROLIFERATION PRACTICES—The role of the People’s Republicof China in the proliferation of weapons of mass destructionand other weapons (including dual-use technologies), includingactions the United States might take to encourage the People’sRepublic of China to cease such practices;• ECONOMIC TRANSFERS—The qualitative and quantitative natureof the transfer of United States production activities to thePeople’s Republic of China, including the relocation of high technology,manufacturing, and research and development facilities,the impact of such transfers on United States national security,the adequacy of United States export control laws, and the effectof such transfers on United States economic security and employment;• ENERGY—The effect of the large and growing economy of thePeople’s Republic of China on world energy supplies and the rolethe United States can play (including joint research and developmentefforts and technological assistance), in influencing the energypolicy of the People’s Republic of China;• UNITED STATES CAPITAL MARKETS—The extent of access toand use of United States capital markets by the People’s Republicof China, including whether or not existing disclosure andtransparency rules are adequate to identify People’s Republic ofChina companies engaged in harmful activities;• REGIONAL ECONOMIC AND SECURITY IMPACTS—The triangulareconomic and security relationship among the UnitedStates, [Taiwan] and the People’s Republic of China (includingthe military modernization and force deployments of the People’sdkrause on DSKHT7XVN1PROD with $$_JOBVerDate Nov 24 2008 13:46 Nov 10, 2011 Jkt 067464 PO 00000 Frm 00007 Fmt 8486 Sfmt 6602 G:\GSDD\USCC\2011\067464.XXX 067464iii
Page 1: 12011REPORT TO CONGRESSof theU.S.-C
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Page 7 and 8: CONTENTSPageTRANSMITTAL LETTER TO T
Page 31 and 32: 23Figure 1:China’s Share of the U
Page 33 and 34: 25The weakness in U.S. exports of a
Page 39 and 40: 31Table 3:RMB Bond Issuances by Mul
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Page 45 and 46: 37Stonewalling the WTO: A Case Stud
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Page 49 and 50: 41now. Because the structures of th
Page 51 and 52: 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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239320. Chang Xianqi, Military Astr
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243woman Jiang Yu simply expressed
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245Table 1:Timeline of Sino-North K
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249China also provides economic sup
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251economic and social strains woul
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255Iran’s South Pars Gas Field af
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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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