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

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dkrause on DSKHT7XVN1PROD with $$_JOB336Corporation, has described the result as a dualistic Chinese strategicculture that ‘‘paradoxically tends to dispose Chinese leadersto pursue offensive military operations as a primary alternative inpursuit of national goals, while rationalizing these actions as beingpurely defensive and last resort.’’ 114 One example of this thinkingis PRC discourse on China’s 1979 invasion of Vietnam, which is invariablyreferred to as a ‘‘self-defensive counterattack’’ made in responseto Vietnamese provocations. 115More recently, the PRC’s assertion of a peaceful, defensive militaryposture has also been questioned due to increasing Chineseaggressiveness in asserting sovereignty claims in areas such as theSouth China Sea, 116 as well as to its increasing development of capabilitiesfor strike warfare.* Many of China’s neighbors in EastAsia are hedging against the possibility of China’s future intentionsbeing less peaceful than its narratives would attest, as is revealedin the most recent Japanese and Australian defense white papers117 and in summer 2011 exercises conducted between the U.S.Navy and naval vessels from the Philippines and Vietnam. 118These same concerns have also been displayed in South Korea’s effortsto strengthen its security alliance with the United States followingattacks from North Korea and the subsequent moves takenby the PRC to shield Pyongyang from any serious repercussions forits actions. 119Nationalist Rhetoric from the PLA Officer CorpsThe peaceful prospects of China’s military modernization havealso been called into question by hawkish comments from seniorPLA officers that clash with the official themes advocating peacefuleconomic development and international cooperation. 120 One of themost high-profile examples from the past year was provided byGeneral Liu Yuan, the political commissar of the PLA General LogisticsDepartment, and the son of former PRC head of state LiuShaoqi. 121 General Liu has emerged as a prominent voice amongthe group of ‘‘princelings’’—the children of high-ranking CCP officials—whoextol the virtues of the party’s past. 122General Liu has accused unnamed CCP leaders of selling out thecountry to foreign interests 123 and has called upon party membersto embrace revolutionary-era communist values, described as a returnto ‘‘New Democracy.’’ 124 General Liu’s comments are evocativeof the worrisome trend of a ‘‘Maoist revival’’ in some quarters of theCCP, with calls for assertive nationalism, a return to Marxist ideologicalorthodoxy, reinforced state control over the economy, andharsher repression of dissent. 125 General Liu has also praised waras a unifying and progressive force in Chinese history, 126 writingthat ‘‘[t]he state is an apparatus for the use of force, forged for vio-* Strike warfare is defined as ‘‘operations to destroy or neutralize enemy targets . . . includingattack against strategic and tactical targets such as manufacturing facilities and operatingbases from which the enemy is capable of conducting or supporting air, surface, or subsurfaceoperations against friendly forces.’’ See U.S. Department of Defense, Joint Publication 3–04:Doctrine for Joint Maritime Operations (Air) (Washington DC: July 1991), p. GL–5. http://edocs.nps.edu/dodpubs/topic/jointpubs/JP3/JP3l04l910731.pdf. For a discussion of the PLA’sincreasing capabilities for strike warfare operations, see U.S.-China Economic and Security ReviewCommission, 2010 Annual Report to Congress (Washington, DC: U.S. Government PrintingOffice, 2010).VerDate Nov 24 2008 13:46 Nov 10, 2011 Jkt 067464 PO 00000 Frm 00348 Fmt 6601 Sfmt 6601 G:\GSDD\USCC\2011\067464.XXX 067464
dkrause on DSKHT7XVN1PROD with $$_JOB337lence; history is written in massacres and blood sacrifices, and newcivilizations and new cultures often have their origins in warfare.’’127General Liu’s extreme language is not an authoritative reflectionof Chinese government policy. However, General Liu is a rising figurein the PLA and enjoys the favor of Xi Jinping, who is on trackto assume the role of paramount CCP leader in 2012. 128 Mr. Xi ishimself a princeling—the son of former PRC Vice Premier XiZhongcun—and has been described as a staunch supporter of promotingfellow princelings to senior government positions. 129 Thetwo men are also believed to share an orthodox interpretation ofCommunist ideology. 130 Some expert observers of Chinese politicsbelieve that Mr. Xi is laying the groundwork for General Liu to beappointed as a vice chairman of the CCP Central Military Commissionat the 18th CCP Party Congress in autumn 2012. 131 If thiswere to prove true, it would make General Liu one of the two mostsenior officers in the PLA, as well as its highest-ranking politicalcommissar 132 —thereby giving him a powerful platform for shapingboth the military’s internal political indoctrination as well as themessages that the PLA promotes beyond the ranks.General Liu also is not isolated in his views, as provocative nationalistcommentary from PLA officers became more prominentthroughout 2010 and 2011. 133 In one such example, in May 2010a U.S. delegation in Beijing received an angry, three-minute lecturefrom Rear Admiral Guan Youfei, deputy director of the Foreign AffairsOffice in the PRC Defense Ministry. Admiral Guan lambastedthe United States for treating China as an enemy (as proven byarms sales to Taiwan); for being a bullying ‘‘hegemon’’ of the internationalsystem; and for plotting to encircle China with strategicalliances. 134 Such commentary from senior-ranking officers hasgenerated concerns that nationalist impulses within the PLA maybe driving more aggressive behavior in PRC foreign policy 135 orthat elements of the PLA may be acting in a ‘‘roguish’’ fashion outsideof full civilian control. 136 It has also contributed to concernsthat political and personnel changes underway in the lead-up tothe 18th CCP Party Congress in autumn 2012 could serve to boostthe political influence of the PLA and amplify nationalist voices inthe PRC’s foreign policy decision-making process. 137Track Two Exchanges and PRC Messages Regarding Militaryand National Security PolicyThere are many ‘‘track two’’ exchanges between U.S. and Chinesehost institutions, which bring together scholars and former governmentofficials to discuss diplomatic, security, and economic topicsof concern to both countries.* Additionally, a number of ‘‘track 1.5’’exchanges have also appeared in recent years, which involve gov-* ‘‘Track two’’ diplomatic exchanges are those that take place between representatives of nongovernmentalgroups (think tanks, academics, retired senior political figures, or military officers,etc.) who may nonetheless be in a position to relay the results to active policymakers or to otherwiseinfluence government policy or public opinion in regard to particular issues in foreign relations.See Dalia Dassa Kaye, Talking to the Enemy: Track Two Diplomacy in the Middle Eastand South Asia (Santa Monica, CA: RAND Corporation, 2007).VerDate Nov 24 2008 13:46 Nov 10, 2011 Jkt 067464 PO 00000 Frm 00349 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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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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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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