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

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dkrause on DSKHT7XVN1PROD with $$_JOB352graph (United Kingdom), December 6, 2010. http://www.telegraph.co.uk/news/worldnews/wikileaks/8184216/WikiLeaks-Chinas-Politburo-a-cabal-of-business-empires.html; and Malcolm Moore, ‘‘Light Cast on the Man China’s Censors Have Been Tryingto Hide,’’ Sydney Morning Herald (Australia), January 5, 2011. http://www.smh.com.au/technology/technology-news/light-cast-on-the-man-chinas-censorshave-been-trying-to-hide-20110104-19f2t.html.130. Warren Sun (professor at Monash University) as quoted in John Garnaut,‘‘China’s Party Princelings Fight for a Chance to Go Back to the Future,’’ SydneyMorning Herald (Australia), May 24, 2011. http://www.smh.com.au/business/chinasparty-princelings-fight-for-a-chance-to-go-back-to-the-future-20110523-1f0pu.html.131. Strategic Forecasting, Inc. (STRATFOR), ‘‘Former President’s Son on Trackfor a Powerful Military Position,’’ July 23, 2011; and Willy Lam, ‘‘The MilitaryManeuvers of Xi Jinping,’’ Wall Street Journal, January 26, 2011. http://online.wsj.com/article/SB10001424052748704698004576103513580674214.html? mod=googlenews_wsj.132. In recent years, the CCP Central Military Commission has had either tenor 11 members, normally consisting of: a chairman (the civilian CCP paramountleader, currently Hu Jintao); two uniformed vice chairmen, one a politicalcommissar and the other a line officer (currently General Xu Caihou and GeneralGuo Boxiong, respectively); at some times, another civilian vice chairman (the CCPheir apparent leader, currently Xi Jinping); the heads of the four PLA general departments(Staff, Political, Logistics, Armaments); and the heads of the four PLAservice branches (army, navy, air force, and Second Artillery). The current PRC defenseminister, General Liang Guanglie, also sits on the Central Military Commission,apparently providing dual representation for the Defense Ministry and for theground forces.133. U.S.-China Economic and Security Review Commission, Hearing on China’sNarratives on National Security Policy, written testimony of Gilbert Rozman, March10, 2011. This tendency is particularly true of books published by senior officersthrough military publishing houses, which frequently include strident language andpredictions of inevitable conflict with the United States. Such writings do not reflectofficial policy, but they do reveal intense nationalist feeling and hostility to theUnited States within elements of the military as well as a receptive commercial audiencefor such ideas. See Chris Buckley, ‘‘China PLA Officer Urges ChallengingU.S. Dominance,’’ Reuters, February 28, 2010; and Peter Brown, ‘‘The PLA RaisesIts Voice,’’ Asia Times, March 8, 2010.134. John Pomfret, ‘‘In Chinese Admiral’s Outburst, a Lingering Distrust of U.S.,’’Washington Post, June 8, 2010.135. U.S.-China Economic and Security Review Commission, Hearing on China’sNarratives Regarding National Security Policy, written testimony of Abraham Denmark,March 10, 2011.136. For a discussion of this and other potential explanations for PLA nationalistcommentary, see U.S.-China Economic and Security Review Commission, Hearingon China’s Narratives Regarding National Security Policy, written testimony of AndrewScobell, March 10, 2011; and Andrew Scobell, ‘‘Is There a Civil-Military Gapin China’s Peaceful Rise?’’ Parameters (Summer 2009).137. Willy Lam, ‘‘The Military Maneuvers of Xi Jinping,’’ Wall Street Journal,January 26, 2011. http://online.wsj.com/article/SB10001424052748704698004576103513580674214.tml?mod=googlenews_wsj.K138. Website of the Institute for U.S.-China Issues at the University of Oklahoma,‘‘The Sino-American Security Dialogue.’’ http://www.ou.edu/uschina/SASD/index. htm; and Peter Gries (University of Oklahoma) e-mail communication withCommission staff, October 13–14, 2011.139. For only three examples out of many that could be cited: the Chinese People’sInstitute for Foreign Affairs is subordinate to the PRC Foreign Ministry, andthe China Association for International Understanding is subordinate to the CCPInternational Department [see David Shambaugh, ‘‘China’s Propaganda System: Institutions,Processes and Efficacy,’’ China Journal 57 (January 2007)]; and theChina Institutes of Contemporary International Relations, or CICIR, is subordinateto the PRC Ministry of State Security (Open Source Center, ‘‘Profile of MSS–AffiliatedPRC Foreign Policy Think Tank CICIR,’’ August 25, 2011. www.opensource.gov.)140. As an example, see the discussion of appointments to the Chinese Academyof Social Sciences in: U.S.-China Economic and Security Review Commission, 2008Annual Report to Congress (Washington, DC: U.S. Government Printing Office,2008), p. 292.141. According to Dr. David Shambaugh of The George Washington University,‘‘[i]t appears that [the China Association for International Friendly Contact] isVerDate Nov 24 2008 13:46 Nov 10, 2011 Jkt 067464 PO 00000 Frm 00364 Fmt 6601 Sfmt 6621 G:\GSDD\USCC\2011\067464.XXX 067464
dkrause on DSKHT7XVN1PROD with $$_JOB353linked to the Intelligence Bureau of the Liaison Department of the PLA’s GeneralPolitical Department . . . [with additional] ties to both the Ministry of State Securityand the Ministry of Foreign Affairs.’’ [See David Shambaugh, ‘‘China’s InternationalRelations Think Tanks: Evolving Structure and Process,’’ China Quarterly 171 (September2002).] In addition to serving as ‘‘a front for inviting and meeting with selectedforeigners in China,’’ the China Association for International Friendly Contacthas also served as a vehicle ‘‘for sending active-duty intelligence collectors abroadunder various kinds of cover.’’ [See David Shambaugh, Modernizing China’s Military:Progress, Problems, and Prospects (Los Angeles, CA: University of CaliforniaPress, 2002), p. 136]. For further commentary on the role of the GPD/LD [LiaisonDepartment] and the China Association for International Friendly Contact in sendingagents abroad, see also Howard DeVore, China’s Intelligence and Internal SecurityForces (Alexandria, VA: Jane’s Information Group, 1999), pp. 50–51; and NicholasEftimiades, Chinese Intelligence Operations (Annapolis, MD: Naval InstitutePress, 1994), pp. 103–104.142. The International Liaison Department of the PLA General Political Departmenthas traditionally borne responsibility for conducting propaganda and psychologicaloperations directed at other militaries. [See Howard DeVore, China’s Intelligenceand Internal Security Forces (Alexandria, VA: Jane’s Information Group,1999), p. 50–51; and Interagency OPSEC [Operational Security] Support Staff, IntelligenceThreat Handbook (2004), p. 23. http://www.fas.org/irp/threat/handbook/foreign.pdf.]The Liaison Department conducts its perception management operationsin accordance with centrally determined CCP propaganda narratives: As stated inthe mid-1990s by Nicholas Eftimiades, an analyst with the Defense IntelligenceAgency, ‘‘[P]olitical-military propaganda against foreign forces is a national functionunder the purview of the GPD’s [General Political Department] liaison department.Implementation of a specific theme of disinformation must somehow advance nationalpolicy objectives. It is therefore probable that the GPD formulates propagandain accordance with [Central Military Commission] military and policy decisions.Such campaigns are then implemented through the PLA’s overt and intelligencechannels under the supervision of political commissars.’’ [See Nicholas Eftimiades,Chinese Intelligence Operations (Annapolis, MD: Naval Institute Press, 1994), pp.92–93.]143. Survey performed by USCC staff of the international exchanges listed on theCAIFC website for the years 2009–2010. The list is not exhaustive but insteadshows a selected number of more prominent exchange activities. See Website of theChina Association for International Friendly Contact. http://www.caifc.org.cn. Materialtranslated by USCC staff.144. The Center for Peace and Development shares office space with the CAIFCin a compound in the northern part of Beijing. The institute conducts exchangeswith foreign academics and events with government officials and also publishes itsown bimonthly journal on foreign affairs, eponymously titled Peace and Development.For a discussion of the connection between CAIFC and CPD, see DavidShambaugh, Modernizing China’s Military: Progress, Problems, and Prospects (LosAngeles, CA: University of California Press, 2002), p. 136. Brief profiles of recentCPD exchanges with foreign academics and Chinese government officials may befound in the website of the Center for Peace and Development, ‘‘Scholarly ExchangeActivities.’’ http://www.caifc.org.cn/qk.aspx. Lists of tables of contents from selectedissues of Peace and Development, and abstracts of the articles, may be found onChina National Knowledge Infrastructure On-Line, profile for Peace and Development.http://www.acad.cnki.net/Kns55/oldnavi/n_item.aspx?NaviID=1&BaseID=HPFZ&NaviLink=.145. The ‘‘Sanya Initiative’’ is a series of track two dialogues between retired,senior-ranking flag officers of the U.S. and Chinese armed forces. On the Chineseside, the initiative is hosted by the China Association for International FriendlyContact. The exchanges commenced in February 2008 with meetings in Beijing andin the city of Sanya, on Hainan Island. The Sanya Initiative dialogues are not officialmilitary-to-military exchanges conducted by the U.S. Department of Defense.146. For two such examples, see U.S.-China Economic and Security Review Commission,Hearing on China’s Narratives Regarding National Security Policy, testimoniesof John Park and Abraham Denmark, March 10, 2011.147. U.S.-China Economic and Security Review Commission, Hearing on China’sNarratives Regarding National Security Policy, testimony of Abraham Denmark,March 10, 2011.148. Michael Pillsbury, ‘‘China’s Research Institutes’’ (paper written on behalf ofthe U.S.-China Economic and Security Review Commission, June 2001). http://www.uscc.gov/researchpapers/2000 _2003/pdfs/cri.pdf.149. Open Source Center, ‘‘Profile of MSS [Ministry of State Security]–AffiliatedPRC Foreign Policy Think Tank CICIR,’’ August 25, 2011. www.opensource. gov.VerDate Nov 24 2008 13:46 Nov 10, 2011 Jkt 067464 PO 00000 Frm 00365 Fmt 6601 Sfmt 6621 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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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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Page 383 and 384: 375ecutive Schedule under section 5
Page 395 and 396: APPENDIX IIIPUBLIC HEARINGS OF THE
Page 399 and 400: APPENDIX IIIALIST OF WITNESSES TEST
Page 401 and 402: 393Alphabetical Listing of Panelist
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Page 407 and 408: APPENDIX VLIST OF RESEARCH MATERIAL
Page 409 and 410: 401The National Security Implicatio
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APPENDIX VIACRONYMS AND ABBREVIATIO
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