ANNUAL REPORT

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334 China’s Arms Sales to Pakistan—Continued to Pakistan since 2014 have included antiship missiles, torpedoes, combat helicopters, a surface-to-air missile system, a patrol vessel, and most recently, eight air independent propulsion equipped diesel-electric submarines (half of which will be built in China; the other half will be built in Pakistan). 147 Pakistan’s first armed unmanned aerial vehicle, which conducted its first acknowledged operational strike in 2015, also appears to have been produced with China’s cooperation. 148 In 2016, IHS Jane’s reported that Pakistan appears to have taken delivery of two Chinese transporter erector launchers for its new Shaheen-III medium-range ballistic missile, allegedly conventional- and nuclear-capable with a range of 2,750 kilometers (1,700 miles). Transporter erector launchers are designated items covered by the Missile Technology Control Regime, which China is not party to, but which it has applied to join and pledged to abide by.* 149 The Sino-Pakistani defense relationship has left Islamabad greatly indebted to Beijing, 150 although it benefits Beijing as well. In addition to ensuring that India will always be too preoccupied with its ongoing rivalry with Pakistan to devote sufficient strategic energy and resources to countering China, Islamabad on occasion has offered China more concrete benefits, including access to advanced U.S. arms. For example, unexploded U.S. Tomahawk cruise missiles used in Afghanistan in the 1990s were acquired by the Pakistani military and passed to the PLA; reverse-engineered cruise missiles began appearing in Pakistani and Chinese arsenals shortly thereafter. 151 In 2011, Pakistan allowed Chinese analysts to examine the U.S. stealth helicopter that crashed in Abbottabad during the Osama Bin Laden raid. 152 China’s support for Pakistan’s defense has its limits. Beijing values Pakistan’s ability to act as a check on Indian power, but it also values stability in the region and thus is uninterested in enabling or encouraging Pakistan to instigate a major confrontation with India.† Beijing’s decision to provide Pakistan with the means to develop nuclear weapons would seem to contradict this, although Chinese officials would argue that helping Pakistan develop the bomb would create parity and strategic stability with India. 153 In 1975, at the height of China’s cooperation on Pakistan’s nuclear program and one year after India’s first successful nuclear test, China’s soon-to-be leader Deng Xiaoping remarked that China does “not advocate for nuclear proliferation at all, but we even more strongly oppose nuclear monopolies.” 154 As discussed * The Missile Technology Control Regime is a nontreaty association of 35 countries including the United States that aims to control the proliferation of missiles and related technologies. Member countries are to “exercise restraint in the consideration of all transfers” of designated items. Missile Technology Control Regime, “Missile Technology Control Regime (MTCR) Annex Handbook – 2010,” 2010, 12. † This was the case as far back as the 1971 war between Pakistan and India when, to Islamabad’s disappointment, China declined to intervene in the war on Pakistan’s behalf. Again in 1999, Chinese officials emphasized to their counterparts in Islamabad that China would not support Pakistan in an ongoing conflict over the India-Pakistan border. Andrew Small, The China-Pakistan Axis: Asia’s New Geopolitics, Oxford University Press, 2015, 14–16, 56–57, 59–61; Jeff Smith, Cold Peace: China-India Rivalry in the Twenty-First Century, Lexington Books, 2014, 131.
335 later, China’s enabling of Pakistan’s nuclear program could yet have major implications for regional stability, particularly if Pakistan’s nuclear weapons were to fall into the hands terrorists or rogue elements of the defense establishment. 155 China-Pakistan Economic Corridor China’s commitment to Pakistan has always been strategic in nature, driven by their mutual rivalry with India, with the economic dimension of the relationship lagging. Although China is Pakistan’s top source of imports and second-largest export market (after the United States), the amounts involved account for a negligible portion of China’s trade ($9.2 billion in exports and $2.7 billion of imports in 2014). 156 The potential game-changer for Pakistan is the $46 billion CPEC (see Figure 7). Figure 7: CPEC in Detail Source: Saeed Shah and Jeremy Page, “China Readies $46 Billion for Pakistan Trade Route,” Wall Street Journal, April 16, 2015.
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USCC 2016 ANNUAL REPORT
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1 2016 REPORT TO CONGRESS of the U.
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U.S.-CHINA ECONOMIC AND SECURITY RE
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• The safety of food, drug, and o
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CONTENTS Page TRANSMITTAL LETTER TO
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IX Page Recommendations ...........
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2 ernment’s “going out” strat
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4 economically and politically stra
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6 wage rates are determined by free
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8 while allowing a greater role for
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10 began construction on its first
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12 from—the People’s Republic o
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14 cluding cyber and human intellig
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16 exporter of manufactured goods,
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18 Pakistan’s economic and securi
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20 Beijing appears to remain skepti
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22 trends in Hong Kong with regard
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24 UNSCR 2270. However, in May and
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26 Korea, designating Dandong Hongx
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28 tional order—both before and a
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30 to examine China’s economic an
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32 debt, and jeopardizing long-term
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Introduction CHAPTER 1 U.S.-CHINA E
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37 Statistics with Chinese Characte
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39 up from 52.3 percent in the seco
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41 Early signs suggest President Xi
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43 Figure 4: China’s Total Debt b
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45 reserves to defend the RMB. 75 I
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47 The pace of U.S. export growth t
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49 The United States continued to r
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51 commitments, China has only take
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53 Table 3: Top Five Business Chall
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55 U.S. Tech Firms and Their Chines
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57 ment of Justice’s May 2014 ind
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59 Internet Censorship As a result
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61 on the future of U.S.-China rela
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63 Chapter 1, Section 2, “State-O
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65 Table 5: Failed Chinese Bids for
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67 • Accelerating Bilateral Inves
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69 cess capacity, which will share
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71 United States Challenges Chinese
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73 rulings of the DSB [Dispute Sett
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75 Conclusions • In 2015, the U.S
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77 Addendum I: WTO Cases Recent and
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79 ENDNOTES FOR SECTION 1 1. Lucy H
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81 55. Gabriel Wildau and Don Weinl
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83 119. American Chamber of Commerc
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85 and Espionage Operations, oral t
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87 217. Kane Wu, “Chinese Compani
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89 271. Office of the U.S. Trade Re
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dkrause on DSKHT7XVN1PROD with USCC
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93 Lardy, senior fellow at the Pete
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99 pany competitiveness and stimula
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105 Table 2: Select Chinese Overcap
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107 levels. 135 The situation is on
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109 Figure 5: China’s Monthly Cru
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111 Figure 6: U.S. Steel Industry Q
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123 Addendum I: Section 15 of China
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125 Addendum II: AD and CVD Investi
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141 dkrause on DSKHT7XVN1PROD with
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143 lifetime cost of bringing the e
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145 gets achieved). 57 Using satell
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147 cost of compliance,’’ and p
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151 boost the efficiency of China
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Table 1: 157 Chinese Attempted and
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Table 1: 159 Chinese Attempted and
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163 Figure 4: China’s Total Debt-
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173 weapons, opens the U.S. militar
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175 ests, and allow for greater vol
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177 Addendum I: Key Targets in Chin
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179 Addendum I: Key Targets in Chin
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195 The ultimate impact of the ruli
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197 Environmental Impact of China
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201 China’s Maritime Disputes in
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203 Reform and Reorganization of th
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207 • PLA Army Headquarters: Chin
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211 Figure 5: Type 072A Tank Landin
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215 Figure 7: JL-2 Missile Range Co
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221 Space-Tracking Facility in Arge
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223 Table 1: Significant PLA Bilate
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227 Nigeria will be the first expor
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231 tional annexes to the 2014 Noti
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233 Select U.S.-China Security-Rela
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257 China’s Core Interests—Cont
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259 guerrillas in Colombia and held
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271 stan. 109 In 2014, the PLA Air
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275 conflict Chinese expeditionary
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279 RECOMMENDATIONS Developments in
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Page 317 and 318: 303 nal U.S. discussions of issues
Page 319 and 320: 305 ENDNOTES FOR SECTION 3 1. U.S.-
Page 321 and 322: 307 29. U.S. Department of Justice,
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384 trade-based partner to an innov
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390 • China’s military moderniz
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410 Hong Kong’s Political Gossip
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414 moving up one place compared to
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418 Chinese Censorship of Prize-Win
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420 Hong Kong and the ‘‘Panama
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424 Table 1: Select PLA Hong Kong G
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428 sitive periods in Hong Kong, le
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436 150. Commission meeting with Ta
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442 Korea. The resolution also bans
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444 increase pressure on Pyongyang.
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446 pand China-South Korea ties. 54
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448 Technical Details of THAAD The
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456 Korea runs perpetual merchandis
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460 pressure is more likely to brin
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462 ty for sanctions violations, co
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479 sailors would be stationed in J
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485 Table 1: U.S. Goods Trade with
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489 basis for President Obama’s c
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APPENDIX II BACKGROUND OF COMMISSIO
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APPENDIX III PUBLIC HEARINGS OF THE
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537 June 9, 2016: Public Hearing on
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APPENDIX IIIA LIST OF WITNESSES TES
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541 Alphabetical Listing of Panelis
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APPENDIX IV LIST OF RESEARCH MATERI
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547 China’s Military Agreements w
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APPENDIX V ACRONYMS AND ABBREVIATIO
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551 OPM PBOC PLA PMI PPI PPP PRC QD
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553 2016 COMMISSION STAFF MICHAEL R
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