SPEAKERS CONTENTS INSERTS
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27–477PDF
2006
A RESURGENT CHINA: RESPONSIBLE STAKEHOLDER OR ROBUST RIVAL?
HEARING
BEFORE THE
COMMITTEE ON
INTERNATIONAL RELATIONS
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
MAY 10, 2006
Serial No. 109–225
Printed for the use of the Committee on International Relations
Available via the World Wide Web: http://www.house.gov/international—relations
COMMITTEE ON INTERNATIONAL RELATIONS
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HENRY J. HYDE, Illinois, Chairman
JAMES A. LEACH, Iowa
CHRISTOPHER H. SMITH, New Jersey,
Vice Chairman
DAN BURTON, Indiana
ELTON GALLEGLY, California
ILEANA ROS-LEHTINEN, Florida
DANA ROHRABACHER, California
EDWARD R. ROYCE, California
PETER T. KING, New York
STEVE CHABOT, Ohio
THOMAS G. TANCREDO, Colorado
RON PAUL, Texas
DARRELL ISSA, California
JEFF FLAKE, Arizona
JO ANN DAVIS, Virginia
MARK GREEN, Wisconsin
JERRY WELLER, Illinois
MIKE PENCE, Indiana
THADDEUS G. McCOTTER, Michigan
KATHERINE HARRIS, Florida
JOE WILSON, South Carolina
JOHN BOOZMAN, Arkansas
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J. GRESHAM BARRETT, South Carolina
CONNIE MACK, Florida
JEFF FORTENBERRY, Nebraska
MICHAEL McCAUL, Texas
TED POE, Texas
TOM LANTOS, California
HOWARD L. BERMAN, California
GARY L. ACKERMAN, New York
ENI F.H. FALEOMAVAEGA, American Samoa
DONALD M. PAYNE, New Jersey
SHERROD BROWN, Ohio
BRAD SHERMAN, California
ROBERT WEXLER, Florida
ELIOT L. ENGEL, New York
WILLIAM D. DELAHUNT, Massachusetts
GREGORY W. MEEKS, New York
BARBARA LEE, California
JOSEPH CROWLEY, New York
EARL BLUMENAUER, Oregon
SHELLEY BERKLEY, Nevada
GRACE F. NAPOLITANO, California
ADAM B. SCHIFF, California
DIANE E. WATSON, California
ADAM SMITH, Washington
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BETTY McCOLLUM, Minnesota
BEN CHANDLER, Kentucky
DENNIS A. CARDOZA, California
RUSS CARNAHAN, Missouri
THOMAS E. MOONEY, SR., Staff Director/General Counsel
ROBERT R. KING, Democratic Staff Director
DENNIS HALPIN, Professional Staff Member
JEAN CARROLL, Full Committee Hearing Coordinator
C O N T E N T S
WITNESS
The Honorable Robert B. Zoellick, Deputy Secretary of State, U.S. Department of State
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
The Honorable Robert B. Zoellick: Prepared statement
APPENDIX
Material Submitted for the Hearing Record
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A RESURGENT CHINA: RESPONSIBLE STAKEHOLDER OR ROBUST RIVAL?
WEDNESDAY, MAY 10, 2006
House of Representatives,
Committee on International Relations,
Washington, DC.
The Committee met, pursuant to notice, at 10:10 a.m. in room 2172, Rayburn House Office Building, Hon. Henry J. Hyde (Chairman of the Committee) presiding.
Chairman HYDE. This meeting will come to order. Deputy Secretary Zoellick, we are pleased to have you here today. You are well known as a leading architect of the Administration's China policy, and your extensive knowledge of trade policy is also germane to our hearing.
Many in Washington have been discussing the policy implications of a ''rising'' China. I see this phrase as a misnomer, and prefer the word ''resurgent.'' ''Rising'' implies that China is emerging for the first time on the world stage. However, an exhibit held 2 years ago at Chicago's Field Museum, titled ''Treasures of the Forbidden City,'' pointed out that while our Founding Fathers were waging their struggle for independence in 1776, China was already not only the most populous, but the wealthiest nation in the world.
From this apex of cultural, political, and economic influence, China plunged rapidly into two centuries of chaos involving war, famine, and revolution.
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Now as this new century dawns, China has reemerged into its traditional position of influence in Asia and the world. The Chinese people, while still suffering a sense of victimization from the periods of unequal treaties, the Opium War, the Nanjing Massacre, the Cultural Revolution, and the Tiananmen Massacre, look now to a new age. The Summer Olympics of 2008 is their symbol of this national reemergence from a dark cocoon of decline and isolation into the light of international recognition.
Yet we can't gloss over the many issues that continue to divide us from the leadership in Beijing. You, Mr. Zoellick, are famous for having coined the phrase ''responsible stakeholder'' last year with regard to American hopes for this resurgent China. Many in the Congress, however, retain a healthy skepticism as to whether this is possible. Some even fear that China instead will emerge as a robust rival.
Will Beijing assume the role of a responsible stakeholder when Iran's increasing nuclear recklessness requires the imposition of economic sanctions by Security Council permanent members, including China? Will Beijing put aside its quest for energy in Sudan to join the international campaign to stop the genocide in Darfur? Will China move beyond playing host at the ongoing meeting of the Six-Party Talks to put economic pressure on Pem Huang, its long-time ally? Will it ensure that North Korea makes a real commitment to end its nuclear program, to desist from counterfeiting American currency, to stop persecuting its own citizens, and to stop kidnapping citizens of its neighbors, including one with relatives in the State of Illinois? Will China suspend its missile buildup across from Taiwan as a confidence-building measure?
I fear the answer to all the above is no. Yet while China marches with increasing confidence onto the stage of the 21st century, America's attention is diverted. We have focused most of our military strength and spent much of our national treasure on the prolonged conflict with radical Islam. We all understand the implications of September 11 and what they require.
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My concern, however, is that in a few decades younger Americans will awaken, like a tired Richard the Lion-Heart returning from the battle for Jerusalem, to find themselves threatened on the home front as debtors at the mercy of creditors in Beijing.
The President mentioned in his State of the Union Address that America is addicted to oil. I would add that America is also addicted to the label, ''Made in China.'' We now have a negative savings rate for the first time since the height of the Great Depression. That was a time when, as I recall, jobless people lined up at soup kitchens.
Last year our trade deficit with China was a record: Over $200 billion transferred across the Pacific to pay for our national buying binge. This level of trade imbalance does not seem sustainable year after year without ultimately impoverishing our children. Yet according to reports, no concrete measures to address this critical trade issue came out of the recent White House meeting between President Bush and the Chinese President.
Well, if there is no action soon to alleviate this trade crisis, Congress will have to act. While we are distracted, Beijing is using a siren song of moderation to further isolate Taiwan.
Beijing is also playing the history card to great effect with South Korea. As a World War II veteran, I am well aware of the history of the Pacific War, and know that the truth will prevail. But Beijing should remember that people who live in glass houses should not throw stones. I am concerned that as a result, the ripe apple of South Korea could soon fall into the lap of China.
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I fear that a future American generation may awaken from its Pacific slumber to find our influence removed entirely from the Asian mainland. Then a politically-unreformed and assertive China could be calling the shots in the most vibrant economic region of the world.
I paint a bleak, but hardly implausible, picture. I would like to end on a more positive note.
Last month I met the new Pope, Benedict XVI, in Rome. The Holy Father's prayerful intention for the month of April was ''that the Church in China may carry out its evangelizing mission serenely and in full freedom.'' It is certainly the sincere wish of us all that China will have a new dawn, where human rights and religious freedom are fully respected.
Mr. Zoellick, we welcome your comments on how China can reemerge as a responsible stakeholder, and not as a robust rival of America and its values.
I now recognize my friend, Mr. Lantos, the Ranking Democratic Member, for any remarks he may wish to make.
Mr. LANTOS. Thank you very much, Mr. Chairman. Let me first commend you for a very thoughtful and substantive opening statement.
And before saying a few words about China, let me congratulate our distinguished witness, Deputy Secretary Zoellick, for his extraordinary work on Darfur. You have done extraordinary work with great personal commitment over a protracted period of time, Secretary Zoellick, and we are all in your debt.
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Mr. Chairman, the debate in Washington foreign policy circles as to whether China is a ''responsible stakeholder'' or a rising challenge presents a false dichotomy. Nearly three decades after we normalized relations, it is self-evident that China is both.
Beijing and Washington have a mature, evolving relationship with areas of both conflict and cooperation. But even if our inter-connectedness is assured, Mr. Chairman, decisions made in Beijing over the next few months will determine the tenure of our bilateral ties for years to come.
In fact, China's handling of a new Security Council resolution on Iran could well become the sine qua non of United States-China relations, and an indication of Beijing's willingness to be a responsible stakeholder.
China must support a strong, tough resolution demanding that Iran verifiably eliminate its nuclear weapons program. If it supports such a resolution, this will send a clear signal that Beijing recognizes that with global power and prestige comes global responsibility. If it is unwilling to tackle squarely the Ayatollah's nuclear aspirations, this decision will severely damage United States-China relations.
The North Korean nuclear issue will also determine whether President Hu receives an official state visit the next time he comes to Washington, or another downgraded official lunch.
China has hosted the Six-Party Talks, and is willing to use some of its economic leverage to force Pem Huang to the table. Both of these are good signs.
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On my two visits to North Korea last year I stopped in Beijing for consultations with senior Chinese leaders. In many respects the United States and China see the North Korea situation in a very similar light. We both seek a non-nuclear Korean peninsula, and are frustrated with the endless prevarications emanating from Pem Huang. But good intentions and shared goals are not enough.
Now that the Six-Party Talks are stalled, this is Beijing's moment to demonstrate that it is an international leader. The flow of non-humanitarian trade and assistance from China to North Korean must end until Pem Huang returns to the bargaining table, ready to give up its nuclear program in exchange for international recognition and assistance.
Cost rate relations will be another key factor in the United States-China relationship. The United States, under both Democratic and Republican Administrations, has done its part to promote peace by publicly and privately discouraging Taiwan from taking provocative steps toward independence.
But the PRC has done little to promote stability. The alarming buildup of missiles into Taiwan and the enactment of the so-called anti-secession law have dramatically heightened tensions between Taipei and Beijing.
China's new generation of leaders should use their creative energies to build bridges to Taiwan's democratically-elected government. They should not resort to schoolyard bullying tactics.
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Finally, Mr. Chairman, we will never have a fully normal relationship with China until there is measurable progress on human rights and religious freedom. Tibet is the perfect example of how Beijing could demonstrate its new role as a responsible stakeholder.
We are pleased that China has held five rounds of discussions with representatives of His Holiness, the Dalai Lama, regarding the future of Tibet. But our patience is wearing thin. The talks have not produced concrete progress, but only more talks.
Beijing should invite the Dalai Lama to visit China and Tibet in the near future. They should also negotiate a deal which preserves Tibet's unique cultural and religious heritage, while maintaining China's territorial integrity.
Religious freedom is a right to all Chinese, whether Tibetan, members of the Catholic Church, or the Falun Gong spiritual movement. Just last week the Chinese Government appointed two Catholic bishops without Vatican approval. The last time I looked, Mr. Chairman, it was the job of Pope Benedict XVI to select bishops, not Communist atheists in the politburo in Beijing.
The rights of Falun Gong adherents in China have similarly been denied. Tens of thousands have been locked away in psychiatric institutions, tortured and jailed, and even killed for refusing to denounce their faith. What a tragedy, Mr. Chairman.
It is even more unconscionable that some American companies would be willing participants in the systematic denial of human rights in China, but that is exactly the decision made by Google, Microsoft, and Yahoo!. The executives of these high-tech companies, by turning themselves into Internet censors and e-mail police, have truly lost their moral compass.
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Mr. Chairman, thank you for calling today's hearing, giving us all an opportunity to reflect on the United States-China relationship. It need not polarize the foreign policy establishment, for it is too complex to have only one dimension, as our witness today knows very well.
Secretary Bob Zoellick has earned all of our gratitude for his indefatigable efforts to negotiate the Darfur peace agreement, and we look forward to hearing his views on China. Thank you, Mr. Chairman.
Chairman HYDE. Thank you. The Chair will entertain very brief 1-minute opening statements from the Members, but we wish to get to the witness as quickly as possible and maximize the use of his time.
So if I could have the list. Mr. Leach. He yields.
Mr. Smith of New Jersey.
Mr. SMITH OF NEW JERSEY. Thank you, Mr. Chairman. Mr. Secretary, first of all, thank you for the extraordinary work you did to help broker the Darfur Peace Accord. Your personal interventions, your tenacity, your attention to detail, your focus, was crucial. And I truly believe without it, the hope of peace and reconciliation would have remained elusive.
Of course, as you have said just a moment ago, prudent follow-up and aggressive follow-up is critical. But I have no doubt that you and the President are certainly up to that task. But thank you for the work that you did.
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On the PRC, it is time, I believe, for both Congress and the Executive Branch to significantly ratchet up our profound concerns over China's horrific human rights record. Yesterday, not surprisingly but still shockingly, China was elected to the Human Rights Council, where it will continue what it has done so effectively for so long in the discredited Human Rights Commission: Run interference and suppress any meaningful scrutiny of its abysmal record.
As you know, prior to President Hu Jintao's visit, I chaired a hearing on China's human rights record. And our witnesses, including three survivors of the Laogai—Harry Wu, for example, who spent 19 years in the concentration camps—gave chilling testimony on the pervasive use of coercive population control and the issue of gendercide. There are 100 million missing girls in China as a result of coercive population control, the use of genocide against the Uighurs and the Tibetans as part of their family planning program, the systematic use of torture, religious persecution, and the suppression of workers' rights——
Chairman HYDE. The gentleman's time has expired.
Mr. SMITH OF NEW JERSEY. Thank you.
Chairman HYDE. Ms. Lee of California.
Ms. LEE. Thank you, Mr. Chairman. I want to thank you and our Ranking Member for this very important hearing. And I want to thank you, Deputy Secretary, for being here.
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Like all of my colleagues, I am concerned with a number of issues regarding United States-China relationship. And some include, of course, our exploding trade deficit with China, which now stands at over $205 billion, and, again, China's human rights record.
Additionally, I am also disturbed by our policy that engages China on one hand, yet embargoes Cuba on the other. So I would like to get your perspective with regard to this, what I consider very inconsistent, policy. And hopefully you will shed some light on that.
Finally, let me just say I, too, want to congratulate you, and thank you for your very diligent and committed and hard work on Darfur. I would like to hear from you what you think China's position has been with regard to the ongoing genocide, and, in fact, what their perspective is and their position is regarding the slaughter of hundreds of thousands of people. And I know you have some insight into that, and I would like to hear from you on that.
Thank you again, Mr. Chairman.
Chairman HYDE. Mr. Rohrabacher.
Mr. ROHRABACHER. Thank you very much, Mr. Chairman. First of all, let me associate myself with the remarks of Chairman Hyde, and of course Mr. Lantos, who is a great spokesman, as well as with Chris Smith on human rights.
As we go through this hearing today, let us note the Chinese people are freedom's greatest potential ally, and America's greatest potential ally. So no matter what we say about Communist China, we are not referring to the Chinese people. We recognize they are our allies. It is the Chinese Government that is the worst human rights abuser in the world, and hopefully we will be talking about their status as a rogue state, providing nuclear weapons materiel to Pakistan, to North Korea, and to others, in a way that threatens world peace.
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So what I also would like from the Administration, that I hope that you might address, I am very concerned when I hear the Administration is now asking the Director of NASA to go to China to talk about cooperation in space efforts. The last time we did that with this particular government, we had a transfer of technology that has put America in jeopardy. And we see Chinese rockets and missiles now with American technology components.
So we should not be treating a government with a human rights record of that of China the same as we would treat a democratic country.
Chairman HYDE. The time of the gentleman has elapsed.
Mr. ROHRABACHER. That is it. Thank you.
Chairman HYDE. Thank you.
Ms. BERKLEY. Thank you, Mr. Chairman. And thank you for holding this important meeting, and thank you for being here.
I have a hearing at 11 o'clock, so I am anxious to hear what you have to say. But I am hoping that you will incorporate in your comments to us information regarding the World Health Organization (WHO), and what the United States plans to do to help Taiwan obtain observer status in the WHO.
The second issue that I am particularly concerned about is, I would appreciate if you could tell me what the United States is doing to discourage our European allies from lifting the arms sales embargo to the PRC.
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And finally, given the fact that the Chinese National People's Congress passed the anti-secession law last year, and that, according to our Department of Defense, there are over 700 short-range missiles aimed at Taiwan from China, in light of the Chinese continued military buildup against Taiwan, what has the Administration done to urge the Chinese not to change the status quo unilaterally?
And I will look forward to all of your comments as soon as you are allowed to begin. Thank you very much for being here.
Chairman HYDE. Mr. Tancredo.
Mr. TANCREDO. Thank you, Mr. Chairman. Mr. Secretary, welcome. I just want to make sure that in either your comments or in the questions, we do get to the points specifically raised, or a couple anyway, raised by Ms. Berkley in terms of our relationship with Taiwan. I want to make sure that the policy of ''responsible stakeholder,'' as I think you have identified it, does not include a change in our policy, vis-a-vis Taiwan. That seems to be happening, seems to be occurring, as evidenced most recently by the humiliating treatment of President Chen when he was not allowed to lay over in the United States, except at the very end when he was allowed to refuel in Alaska or Hawaii, but was not allowed to leave the plane.
I mean, there has got to be an explanation for this. I am looking forward to hearing it. Thank you.
Chairman HYDE. Mr. Berman. Mr. Royce.
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Mr. ROYCE. Thank you. Mr. Secretary, you and I worked together on promoting trade with Africa, and the African Growth and Opportunity Act has been a success. But Africa needs all the attention it can get right now, and I appreciate what you are doing and your involvement in the Sudan issue.
I would just raise the point that many of us are becoming increasingly concerned about China's role in Africa, about China's role of support for the Sudanese Government that has worked in concert with the Janjaweed, China's role in the past selling a million machetes to the Hutu militia that were involved in the genocide in Rwanda. China's role also in backing Robert Mugabe, who is liquidating his country.
I just don't see any Chinese commitment to human rights, to the rule of law, and all the other positive things we are trying to encourage through the Africa Trade Bill, when Beijing is dealing with Africa.
And so I think the critical issue is that Africa is in the balance. I would like to know if the Administration thinks China, on balance, is a positive or negative on-the-ground influence in Africa. And I would like to know if you think we need a greater diplomatic presence in Africa, given this Chinese push.
Thank you, Mr. Secretary.
Chairman HYDE. Mr. Paul.
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Mr. PAUL. I yield back.
Chairman HYDE. Mr. Wilson.
Mr. WILSON. Thank you, Mr. Chairman. And Ambassador, thank you for being here. My association and appreciation for the people of China; my dad served in China during World War II with the Flying Tigers. And he told me of how wonderful the Chinese people are. And so I am very hopeful.
In fact, I visited China for the 60th anniversary of VJ Day, and I saw the great opportunities. I have been there several times, and I believe that we have more in common than differences.
But I also believe that a stable Taiwan is to the benefit of the People's Republic; a stable People's Republic is to the benefit of Taiwan. And so I am really looking forward to your efforts to build a better relationship between the United States and China.
Thank you.
Chairman HYDE. Thank you. We have no further speakers, so let me welcome Secretary Zoellick.
And let me just say by background, Secretary Zoellick holds degrees from Swarthmore College and several from Harvard University. I personally believe the Secretary symbolizes the bringing of good legal thinking to the Department of State, and that is very much respected.
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I think it is possible that you will be known for a picture more than words, however. And you are forgiven for loving pandas, if that is the picture of your life, with this panda, that has now gone around the world.
In any regard, I think also on behalf of the Committee, we must express our appreciation for your work on Darfur, especially in recent weeks.
Secretary Zoellick, the platform is yours.
STATEMENT OF THE HONORABLE ROBERT B. ZOELLICK, DEPUTY SECRETARY OF STATE, U.S. DEPARTMENT OF STATE
Mr. ZOELLICK. Thank you very much, Mr. Chairman, Mr. Lantos, Members of the Committee. And I very much appreciate your kind words, particularly about the work of the team we had in Abuja, Nigeria, dealing with Darfur. I will make sure I relay them to that hearty group.
And as a number of you mentioned, this is an opportunity for peace and hope, but there is a lot of work to do, and we are going to have to do that in close concert with the Congress. Whether it is getting food, whether it is the money for the African Union forces, helping out with the UN mission, and a number of other aspects. So I am sure we will have a chance to work closely on these items as I know we have discussed.
I prepared a PowerPoint which I thought might be a little more user-friendly to go through. And as a number of you mentioned, China is a country where you have such tremendous change taking place in a relatively short period of time. So the first page is just to give you some set of the context.
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First, the accomplishments. Per capita, GDP grew in China from 1979—well, I first had a chance to visit in 1980—from $275 to now $1,700. That is an average annual growth of 9.6% a year.
The GDP of the country is now $2.26 trillion. That is the fourth-largest economy in the world. The proportion of Chinese in poverty fell from 53% to just 8% over the course of 20 years. Total trade rose, from 1980, $38 billion to now $1.4 trillion, making it the world's third-largest trading nation.
In 2004 the total stock of foreign direct investment in China stood at about $250 billion, and the Chinese estimates are even higher. And Internet users, I know an interest of Mr. Smith and others, a key issue, are 111 million, 8.5% of the population.
But at the same time you have got huge challenges that are inter-connected with these accomplishments. The population is expected to grow about 8% between 2010 and 2025. Half of China's 1.3 billion people live on 8.2% of its land mass; that is about the size of Texas, so that is about having 650 million people in Texas, the size of Texas.
Only 13% of China's land is arable. You have a rising disparity, particularly between the coastal areas and the interior.
Even though progress has been made, you still have 160 million people living in poverty; that is less than $1.00 a day. You have 150 million rural migrants, most under 30, working in cities. The banking sector is about 25% to 30% non-performing loans, most of the decrepit state enterprises. Seven of the world's 10 most polluted cities are in China. There are great estimates for Chinese energy growth. And underneath all of this is a corruption that is very dangerous because it undermines the legitimacy of the government. China ranks 78th in Transparency International's global survey.
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Now, as a number of you mentioned, United States-China relations really have to operate at at least two levels. At the one hand you have China at a historic process of transition. It is not outside the international system. Quite to the contrary; it is a rising influence within it. It is not isolated from globalization; its whole development strategy is linked to it. And it is no longer promoting Communist revolution and ideological struggle; its focus is to pursue its interest in a very calculated way: With economic growth, political and military strength, and interstate relations.
So this is a different situation than the Soviet Union. In fact, the policy of China tends to be one of non-interference, which actually goes to some of the tensions that a number of you raise, whether it be Africa or Iran or others.
So United States-China relations have to recognize we have got these two inter-connected levels. One, we are both global powers, and we have an agenda globally. We have some shared security and economic interests, but also there are tensions, because China is a growing global footprint.
There are areas where we both have transnational threats to deal with: Disease, terrorism, environmental degradation. And one question, and the challenge is, If you could imagine any problem in the world, is it easier or harder to imagine dealing with that if you have China working with you as opposed to working against you?
So we have to manage our disagreements while focusing on shared interests.
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We both also have domestic considerations that are very important here. We have concerns on both sides about economics in trade and access to markets. As almost all of you mentioned, the United States has a very strong view about human rights, political reform, individual freedom, including religious freedom. And the United States-China, therefore, are more interdependent, but we have got uncertainty and concerns about the future.
Seeing Mr. Tancredo here, one of the other issues we deal with is, China is one of a large source of illegal immigrants. And so one of the things that Mr. Chertoff was doing is working to make sure he can return about 40,000 illegal Chinese immigrants. It gives you a sense of the inter-connections.
So as a number of you mentioned, and I think Mr. Lantos focused exactly right, the policy goal is to try to have China be a responsible stakeholder. And the challenge of this agenda is to try to set up the items that would demonstrate that it is being such.
Now, let me give you a little bit of the context of this idea that I outlined in a speech in September. As a number of you have mentioned, over the course of some seven Administrations over about 30 years, the goal of United States policy has been to integrate China into the international system.
But if you step back and you look at currency markets, capital markets, clothing, commodities, counterfeiting, you have to say China is integrated. There is not a part of the world market that China doesn't affect. It is now a part of the WTO, it is part of the UN Security Council, a series of other structures, including ones with nonproliferation, where we have got some serious work to do.
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But it prompts the question: Integration to what end? What is the purpose of this integration? How will China use this new influence?
It is not just a question of membership in the international system, but how does it exercise responsibility and a shared stake in this international system?
A number of you and Chairman Hyde actually started out with this point, many of you know who spent time in China, as Mr. Wilson mentioned, there is a very strong sense of history in China. And so if you look just at a short time span from their perspective—say, the last 200 years—you would see that it has been a pretty tough period.
They have gone to the end of a dynasty, they have gone to a civil war, then World War II, which for the Chinese started in the early 1930s. Then you had the revolution, Mao, with all the killings related to those policies, the Cultural Revolution.
In the 20th century, the only good period was the last 20 years in terms of growth and development. And those were years that were developed under the international system that the United States helped create and sustain after World War II. So the point here is to get the Chinese to recognize that it has a benefit in strengthening and perpetuating this system.
So this notion of a responsible stakeholder is a broader notion of national interest. Like the United States, like the European Union, Japan, and others, a more influential China has a greater capacity than most to try to help a peaceful, prosperous, more open international system.
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So United States-China relations are not just a question of bilateral discussions. We want China to see its own interest in working with the United States and others to deal with this set of issues. So some of the questions are: How will the United States and China deal with the region and the world?
Now, quite coincidentally, this has led to an active debate, and I think a very useful debate, in China. I wish I had said I thought of this, but it worked out fine. Since the word ''stakeholder'' had no easy translation in the Chinese, there ended up a whole literature to say, ''Well, what do they mean by this concept?'' And that actually helps create a debate in China which we want to try to encourage.
And what I have emphasized to the Chinese, and it is a point a number of you said, is the Chinese have talked about peaceful rise, peaceful development. Well, we encourage this, but they need to recognize that no country is going to bet their future on it. And that is where Chinese policy, Chinese transparency, Chinese action on human rights will be critically important. And I couldn't agree more with Mr. Lantos' point. Exhibit A will be: How does China react with dealing with Iran?
Now, let me move to slide five and just give you a brief sense of China's perspective, both internally and externally.
Internationally China asserts that it is committed to a process of peaceful development. And above all, what that means is, it wants to have a benign external environment because it has got so many challenges still on the inside.
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So it sees its international strategy as trying to support domestic political stability in the continued economic modernization. Keep in mind, if you are Wen Jiabao, the Premier, and you wake up in the morning and you have got 150 million people, half the size of the United States, moving between rural and urban areas, and you are not sure where they are going to spend the night, where you still have another 200 million people living in poverty, those are big challenges. And they want a benign external environment as they deal with it.
So they don't want China's rise to cause anxiety. They emphasize they don't want to overthrow the international system, as the Soviets did. But this is very important. As they grow more influential, they do want respect and acceptance of their larger role in the world.
So the leadership is cautious. It has concerns for its own vulnerabilities, instability, and unrest. And one thing I think it is always useful to keep in mind, right now China's political legitimacy is not based on democracy, and it is not based on an ideology of Communism. It is based on economic performance and nationalism. And that has some fragility, which you see in some of the actions.
Much of the population is still poor. As President Hu told President Bush, they need to create 12–14 million jobs a year to deal with people coming into the work force, the downsizing of uncompetitive state firms, and the rural migrants.
According to Chinese Government figures alone, they have had 87,000 incidents of unrest last year. And as I mentioned, and as a number of you mentioned, China's history has fostered a great sensitivity to their own sense of sovereignty. I know in the Congress this is often a point of concern; it is one in China, too. Because remember, in their recent historical past, they had the British, they had the Germans, they had the Japanese, they had others that basically started to take off pieces of the country. And there is a great aversion to the dangers of upheaval, whether it be the Taipeng Rebellion, the Boxer Rebellion, or others.
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And so this is in the back of their minds. And what they are emphasizing today is they say, ''Look, we don't want either blind xenophobia, a reaction to foreigners, or worshipping foreigners.'' So instead their goal—and it fits with what Chairman Hyde said—is rejuvenating Chinese civilization through innovation.
Now, you are now in the fourth generation of Chinese leadership. You had Mao, you had Deng Xiaoping, you had Jiang Zemin, and now you have got President Hu and Wen Jiabao, the Premier. And in the Chinese system it takes a little while to sort of develop your power base as you move forward.
And so I just want to draw your attention that this new leadership just developed a new 5-year program. And it is interesting. They are no longer calling it a plan, it is a 5-year program. And it is a slight difference from the past, and there are some things worth drawing attention to.
First, it is what they call a balance development model. They are trying to seek to redress some of the advantages that the cities had over the countryside, reliance on exports for growth as opposed to domestic demand, coast over the interior, growth without attention to the environment. They realize they are going to have to develop a social safety net to forestall unrest.
And this could have some important economic implications, because if you look at China and at the United States, we are at opposite ends of the spectrum. They have a very high savings rate and less consumption. As some of you mentioned, we have got a negative savings rate and greater consumption.
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And if China actually helps build a safety net, deals with questions like pension and healthcare, frankly there are probably less reasons for people to save. Right now they have to do it all on their own. You could probably get more domestic consumption, and that could be important in redressing some of the trade imbalance you talked about.
They are also going to focus on higher value-added sectors, such as knowledge industries. This, as many other things we talk about, is a double-edged sword. It makes them more attentive to IPR protections, but it also means you are going to have greater competition in these areas.
The imbalances among savings, consumption, and investment—the basic components of a GDP equation—are very much a challenge. And what they now recognize is this is not only a domestic problem, but it is an international problem. Because this trade imbalance you talk about is in part a function of those consumption and savings and investment imbalances. And this is going to require some very significant structural changes.
Well, now let us move to the U.S. perspective and start with economics and trade.
What, from the President on down, we have emphasized is to keep this trading system going that has benefitted them. It has been a key to their growth. We have to be able to show the American people that our economic relationship is a fair, two-way street with mutual benefits.
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Since China's accession in the WTO, United States exports have been booming: About 20% a year. They reached about $42 billion last year. That is their fastest-growing major trading partner. So if you talk to people in the aircraft industry or soybeans or cotton or some of the electronics, many in some of the service industries, there is great potential. But our imports from China are even coming in faster, at a 24% increase.
One thing to note about this is that if you look at the overall trade we have from Asia, however, the share of imports from Asia as our total share has actually come down over the past 10 years. And what this is partly telling you is China has become a massive assembly point for the whole region.
And so when we count the numbers of imports from China, we are counting the final product. Even though there are inputs, in a sense, they have to buy the amounts in between.
So Asia's share of our imports between 1995 and 2005 actually came down a little bit, from 40% to 34%. So it is important to consider how this fits in a global system.
In addition, now that China is a WTO member, we are actively using that to try to make sure they do follow the rules. When I was USDR, we started to bring the first case, dealing with some semi-conductor issues that I know was of particular interest to some in the California delegation. And China quickly came into compliance. Ambassador Portman threatened to bring a case dealing with craft linerboard, and the Chinese came into compliance. We are now doing one with auto parts.
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But an important point to recognize, and this is a change over the past couple years, China doesn't just have a big bilateral trade surplus with us; it also has a global surplus. So that means when you take everything they buy, as well as what they are exporting, they are getting a much greater overall set of reserves.
And frankly, that is one of the things that reflects these imbalances. And that is one of the reasons why you should have a currency adjustment, as well as other changes.
There are major concerns that remain. The ones we have stressed are things, market access, opening up the market, intellectual property rights. A number of you have mentioned currency, labor practice. And one I will just draw attention to the Committee that I have a particular concern about is, China actually gets a little wealthier. One has to be concerned about whether they start to use industrial policies, as some have in Asia. They could start to use some subsidies as they start to develop favored sectors.
For some of you who represent high-tech constituencies, this is an area of how they use standards, in particular. So this is going to be a major area we and others are going to have to focus on: What were some of the Chinese's responses to our concerns in this most recent visit?
Well, first, President Hu's visit tried to focus on expanding some of China's imports, emphasizing airplanes, software, auto parts, foam products, communications, and power station equipment, promoting IPR protection. They announced over $16 billion of purchases, and of course, what we emphasized is this has to be part of an ongoing set of a business exchange, it can't just be a series of one-off progress.
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At a meeting that the Secretary of Commerce and Ambassador Portman, USDR had, Secretary Guttierez, had something called the JCCT, which got some progress on software, beef, medical devices, express delivery, getting China to agree to make a formal offer for the Government Procurement Agreement and the WTO, telecommunications.
One modest point, but it is worth noting since we have Mr. Wilson here, too, is that the Chinese delegation also visited some of the places where they are starting to invest, including a higher plant in South Carolina, that I think emphasizes that two-way investment can create jobs on both sides.
And I think as many of you watched, there was a senatorial delegation that went to China, had a good session with the Governor of the People's Bank of China that emphasized a five-point plan to try to reduce this global current account surplus, including reforming its exchange rate and boosting imports.
The good news is the policy direction is clear, the question is the time frame and whether it will be fast enough.
Second, the importance of human rights and democracy, which I think almost all of you mentioned. What I want to make very clear is that this is a topic, as you know, that President Bush has very strong feelings about. He spoke very clearly to President Hu about our concerns.
We have seen in this picture of change in China greater economic openness, but generally poor human rights records and weak legal protection and individual freedom. The President has emphasized—when he was in China, and particularly here—his concern in the area of religious freedom.
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But there is a message that all of us need to convey to China, and it is something I incorporated in the speech I gave in September. We need to stress that freedom doesn't weaken China. Freer China will be a healthier China.
Free press helps create accountability and deals with this problem of corruption that is undermining the country. Independent labor unions would better help represent worker interests and mediate disputes more effectively. China now has some village elections; that is a good start. But you read about this unrest with the land redistribution. Well, if you have got greater opportunity for people to participate in their own local governance, you have got a better way to deal with those problems, as opposed to resorting to violence.
We believe, and I very strongly believe, that we need to press China to help turn human rights from a negative to a positive in our relationship.
Right now China uses what I will call rule by law, not rule of law. They use law as part of the overall control system. But there is a very important need for China to bring rule of law into the system, have a more rights-based society and institutionalized protections.
But there are going to be some serious questions remaining. When I was in China in January I met with a number of rule-of-law groups, some that we have sponsored, some in universities, NGO communities. But the big question that I take away with is: Even if you build better judges, even if you have better members of a legal profession, what happens when that runs into control of the Communist Party system? And the Internet censorship issue is a good one that sort of shows this today.
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So we need to continue to press China, frankly raise our differences, but also explain why, ultimately, one of the lessons that we have all learned over the past 5 or 6 years is that it is societies that do not deal with internal freedom that create cancers that cause problems for all of us.
Other aspects of China as a stakeholder are the security, political, and transnational issues. There is some evidence that China recognizes its growing stake in the system, seeks to work with us and others. On some of my visits I have emphasized the common interest we have in, say, Afghanistan and Iraq. Where China has put forward some aid, it hasn't delivered the aid. In the case of Iraq, it wants to have a good relationship with the next Iraqi Government, in part because of oil ties, so the Chinese said they will invite the new Iraqi Government to come. There are also areas, when we work on the UN Security Council.
As a number of you mentioned, however, there are some issues in the balance. In Sudan, as I think Mr. Lantos mentioned, others did as well, China, when it was President of the Security Council, put forward a President's Statement over the course of the past month that helped move us in the right direction. It abstained when we moved forward on the sanctions for some of the individuals. That is better than using its veto; it is not as good as support right now, as Secretary Rice this week was pressing to move ahead with the UN Security Council resolution to get a peacekeeping force in this.
I have a sense that if that is backed by the African Union, as I believe it will, that China will go along. China has actually committed to have some forces in Sudan as part of the North-South Accord, but it hasn't yet put them in place.
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So I think we are all emphasizing the same point here. We are watching. China can play a positive role, lean sometimes in the right direction, but there is a lot more to do.
China obviously sees Burma as partly the danger of narcotics trafficking and other problems. But at least it was encouraging that when Wen Jiabao went, the Premier, he emphasized the need for Burma to have a more inclusive political process.
Hamas. Some of you might have seen there was a report by the new foreign minister of Hamas for the Palestinian Government sort of saying he was going to go to China. I raised this with the Chinese promptly. Within 2 days the Chinese said they did not invite him.
And so this is where, again, a lot of this is going to take intensive work. Whether it is questions of Latin America, Africa, or Central or South and Central Asia.
Now, we probably want to get through these in the questions, but I just highlighted. Obviously, the core ones on the list are some you have mentioned: Iran, North Korea, terrorism, weapons of mass destruction, proliferation, fundamental threat to international peace and security.
During the Hu visit, President Bush had a chance to discuss a number of these items in some depth. In brief, you generally get a broad agreement on goals, take a run. China doesn't want Iran to have a nuclear capability. But a difference is on tactics and how to approach this.
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And let me just give you an example of where I think we need to be shrewd with China on this. Obviously the Chinese know that our bilateral relationship is critical, going to be determined by how they act in Iran in dealing with this nuclear issue.
When I was talking with some of the Chinese authorities, and they said, ''Look, we have got our own interests there; we have got energy security concerns,'' one of the points is, leave aside our interests. Consider China's own interests and energy security.
If you have got a country that believes Israel has no right to exist, that denies the existence of the Holocaust, has supported terrorism, and then develops a nuclear weapon, as I said to the Chinese, you have got to tell me if you think that is going to help energy security in the major energy-producing region of the world.
The Chinese recognize this. But what we are going to have to work on is to try to help us solve the problem.
So I think the way that it comes out with China is they want to be seen as sharing strategic interests with the United States. What we have to translate that into is common interests with complementary policies. And they may not always be the exact same policies. We don't have any energy ties with Sudan. China does. Okay, well, let us have China use some of that influence and recognize, as I know Mr. Smith knows as well, right now you also have a Government of Southern Sudan. There is a lot of oil there. So if China wants to be cooperative in developing that energy relationship, it can help us implement some of these accords.
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On the security and military issues, and I know Mr. Rohrabacher has focused on this, you have seen the Chinese military budget. It has had double-digit increases in the official budget for more than a decade. We believe, and RAND and others believe, that that is an understated amount. And the core question is, if you have got China on the rise, and you have got insufficient transparency on military spending, weapons procurement, strategic intentions, doctrine, people are going to be uncertain; they are going to react to that. And so China can serve its own interests by being more transparent.
There is a near-term military buildup, as a number of you said, focused on Taiwan. And one of the points that came out of, first, Secretary Rumsfeld's visit to China, and, then, the visit of President Hu, is we want to try to drive down some of these exchanges to a junior officer level, and we have agreed to have a dialogue on strategic nuclear forces. I believe Admiral Fallon of Peicong, who I have discussed a lot of this with, is actually in China this week to try to move some of this ahead.
A number of you emphasized the Taiwan issue, and we can go into this in greater depth. But obviously I think all of us share a pride in what the people of Taiwan have accomplished as a democracy. And it is very important to recognize, because I remember, when I was teaching in Hong Kong in 1980, my Chinese students were all excited about Deng Xiaoping's rise. And they said democracy, that is something for the West, it only exists in Japan in some unusual form.
Well, one of the benefits of age, one of the few, is that over 26 years you can see, you know, democracy in Taiwan, in South Korea, the Philippines, Indonesia, Thailand. And there is no reason why it can't come to China, if it is in Taiwan, as well.
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This Administration, like others, is governed by the one-China policy, the three communiques, the Taiwan Relations Act. I was pleased to actually, in President Bush 41's Administration, to work on bringing Taiwan, China, and Hong Kong into APEC. And, as U.S. Trade Representative, did the same with Taiwan and China in the WTO in 2001.
The United States has said that it makes defensive articles available to Taiwan, and we have stressed the need to have no unilateral change in status quo by either side of the Taiwan Strait. And we have encouraged a direct dialogue with the elected leaders of Taiwan.
There are other areas of mutual interest. And one that I know is very much on everybody's agenda is energy security. And look, this could go either way. You could have China and the United States at loggerheads, or you could have, actually, us working together. Our interests would suggest we should work together. Because what do we both want to do?
Well, first we want to expand non-oil and gas types of supply. Second, we want to have more diverse oil and gas supply so you don't have choke points. We want to lower demand and increase efficiency of usage. We have a strategic petroleum reserve; China is starting to develop one. As we saw in the Iraq War, that can be used effectively to deal with some fears and spikes in the market. And we want to have security of sources in transit. That is an agenda we can work on together, whether it is clean, cold technology or nuclear, or hydrogen gas and other items.
This is similarly the case in the environment. And we are working with China with some of the other Asian-Pacific partners on a program for clean development and climate that I think could help contribute the use of technology development for global climate change, whether it be hydrogen cell research, methane-to-markets, carbon sequestration, or other topics.
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Avian influenza is another critical issue we have cooperation in, education and science and technology changes, and also in the law enforcement area. This is the one I was mentioning to Mr. Tancredo, about the importance of whether it be aliens smuggling or illegal immigrants.
So in summary, I forgot whether it was Chairman Hyde or Mr. Lantos that said this, aside from dealing with the Islamic political radicalism and terrorism, how we deal with China's growing influence is probably the central question of the 21st century or for United States diplomacy. We need to try to make progress in the short term, while building a foundation for our long-term interests and cooperation.
And both countries have a dual agenda. We have got these domestic concerns, which they have in mind because they still see themselves developing. Obviously, we have in mind, too, but we also have global stakes. So we need to try to achieve concrete results on economic and trade, sustainable growth. We need to continue to press for rule-of-law development, political reform as essential elements of full development.
We need to lay the groundwork for enhanced cooperation on strategic foreign and security policy, the transitional issues. And where we disagree—and we will—we just need to point out our differences, discuss and manage them so they don't preclude cooperation elsewhere, and keep working at it, and set a stage for future efforts.
And one last and important point. The hearing is on China, but one can't see China without embedding it within the larger framework of our policies. So our positive relations with Japan, with South Korea, with India, with Southeast Asia, the EU, and our efforts—I think it was Ms. Berkley who asked the question about the EU arms embargo, or maybe it was Ms. Lee who obviously wanted to continue to keep that in place.
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So dealing with China is, in part, the bilateral relations, how we deal together with the world; but how we get the world to deal with China. And as one of the points that a number of you mentioned on human rights, there is a lot of human rights stylize going on now. And one of the things we are starting to do through something called the Burn Process is to try to coordinate these, and have a cooperative effort pushing on the core agenda of items.
So thank you, Mr. Chairman. And I am happy to take your questions.
[The prepared statement of Mr. Zoellick follows:]
[Note: Image(s) not available in this format. See PDF version of this file.]
Chairman HYDE. Thank you, Mr. Secretary, for that extraordinary review of United States-China relations, as well as China and the world.
I would just like to ask one question relating to the North Korean dilemma. If there are two places in the world where there is a possibility of great power confrontation, it is probably Taiwan and North Korea. As Mr. Lantos has noted, the Chinese have a major role in the North Korean circumstance. To some degree they have played a very constructive role, with hosting the Six-Party Talks.
But part of the future relations between the United States and China relates to the direction of change in China. Part of it relates to policy and potential change in direction of the United States policy, as well.
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And with regard to North Korea, I would first want to say by contrast I think this Administration's policy, vis-a-vis Taiwan, is extraordinarily thoughtful. I have not been as convinced with North Korea.
And so my question is, because it has a great deal to do with the United States-Chinese relationship: What new steps are we contemplating, vis-a-vis the North Korean dilemma? Or are we exclusively going to be resting our foreign policy on the foreign policy of China?
Mr. ZOELLICK. I know, Mr. Chairman, we had a chance to talk about this a little bit in another context. And what I would point you to is the Six-Party statement that China helped develop in September of last year.
While it is a brief statement, it actually provides the elements of a roadmap with North Korea. It talks about the importance of denuclearization. But it also talks about some of the other opportunities, whether it be in the energy area, whether it be in retrieving a peace regime, ending this cold-war conflict on the peninsula; whether it talks about trying to open up this society. Those are the core elements that, in my view, Mr. Chairman, really start to present a choice to the North Korean system.
One choice is where it could continue to be isolated and struggle along. The other—and this is where they differ a little bit—has to be North Korea's decision about whether it really wants to open up and perform itself. Does it want to be like China, circa 1980, under Deng Xiaoping?
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Now, a couple of little points on this. It was interesting to see Kim Jong Il's trip in China, which, not accidentally—those countries never pick itineraries accidentally—followed the Deng Xiaoping path.
Frankly, it is still unclear. Was that a feint, or was that a serious effort on North Korea's part to look toward an opening of economic reform?
Now let me connect this to China, which you alluded to and Mr. Lantos referred to. I think China has been cooperative, but frankly I think here is China's concern. It doesn't want North Korea to have nuclear weapons, but it is concerned about a collapse on China.
So I think, frankly, it is a little hesitant. It doesn't use those economic ties in the full sense because it is worried about what a collapse in North Korea might do.
So to pull that together, Mr. Chairman, I think what we can do and need to do with the Chinese and the South Koreans in particular, but also other partners, Japanese, is to make it clear to Kim Jong Il that there is a pathway if he wants to change the system. And we have offered, the President has made statements about the security issues. The statement about a peace regime in the peninsula is no small step if you consider, you know, what you have now after 1953 is just a cease-fire arrangement. You don't have a peace accord there. So I think that is the path to pursue.
The Presidents did discuss this somewhat. And one of the things I think we need to see is whether the North Koreans are willing to engage seriously.
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Where I think the Chinese are wrong is that they believe the status quo can hold. I don't believe it can, in part because you have got an illegal regime that is living off of counterfeiting and narcotics and others. And one of the differences that we have had is to say, ''Look, in our own self-interest, we have to protect our country. We can't allow people to counterfeit, use money-laundering, narcotics.''
And I think as one does those things, it is going to even force a choice more for the North Korean regime. So we need to give them a pathway, but ultimately it has got to be their choice. And I hope the Chinese can encourage them to take the right choice.
Chairman HYDE. Well, I am with you. And I will just conclude with the observation that I think our pathway is credible, but there is a great deal in international relations, as in personal relations, in psychology. And there does not appear to be a major American commitment that is very personal.
And I would strongly recommend that you consider a high-level demarche outside the Six-Party Talks, although maintaining the Six-Party framework that involves, personally, United States visits to North Korea.
Mr. Lantos.
Mr. LANTOS. Thank you, Mr. Chairman. Let me commend you, Mr. Secretary, for what the French would have called a four de raison. You covered the whole world, and you did so brilliantly.
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I just would like to add a footnote to what my friend, Jim Leach, was focusing on. One of the most useful things the Chinese can do to improve United States-North Korea relations is to explain the United States to North Korea. Let me be specific.
The Chinese have understood over the course of many years now that we are able to cooperate, even be very friendly, on issue A through X. But we are very negative and confrontational on five or six other issues.
The North Koreans took umbrage at our opposition to their counterfeiting of our currency. Now, the Chinese would have had a glorious opportunity to explain to them that the United States does, in fact, want to develop better relations with North Korea, but at the same time we will not be silent on the issue of their counterfeiting United States dollars. They haven't done so. They haven't done many other things.
And I think you put your finger on it. They think that the current status quo can continue ad infinitum. It can't. Relations with North Korea will either improve, or they will deteriorate. And it is in the Chinese interest to see to it that United States-North Korea relations improve.
I would like to ask you, by the way, in all of your presentation I found no single item that I would disagree with, except perhaps one. I would be grateful if you would go back and sort of explore your figures.
You have indicated, Mr. Secretary, that Asia's exports to the United States on a global scale have actually diminished. While I believe that to be true, I think it is overwhelmingly in the last year the result of the explosion of petroleum prices. So it is not a decline in Asian exports to the United States, but it is a function of the dramatically higher prices we pay for our energy imports from the energy-exporting countries, which are not in Asia.
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So I think it is a post-hawk agro-proctor-hawk fallacy that I know you will want to correct.
I would like to focus on Iran. Iran will be a touchstone of the tenure and quality of our relations. And I would be grateful if you could share with us the Department's recent reading on where China stands on this.
Secondly, I would like to ask you about Burma. China is a major financial backer of the ruthlessly authoritarian regime in Burma, which continues to jail Nobel Prize winner Aung San Suu Kyi. How seriously do they raise the Burma issue with the Chinese? And will China agree to a formal debate in the UN Security Council on Burma's threat to regional stability?
Finally, Mr. Secretary, I would like you to comment on the obvious: The two other great Asian countries are political democracies. We have a fundamental value affinity now with both Japan and India. Is China aware of the fact, in your many dealings with them, that the quality of our relations with them will have to be of a dramatically lesser order as long as they maintain the political and human rights-suppressing structure that they now have?
Mr. ZOELLICK. First, I think you made a very good point about the role of China explaining the United States to North Korea.
On the percentage, since I was U.S. Trade Representative, I have a slight advantage over you. It has gone up because of the oil numbers, is a good point. It was the case even before you had the run-up on oil. It is a relative point.
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On Iran, when I was in Beijing in January, this is one of the issues that I was trying to highlight all throughout the system in trying to help lay the groundwork for President Hu's visit. And the Chinese told me at that time, and they have emphasized again now, that they agree in principle; they don't want Iran to have a nuclear weapon, and they understand the danger of that process.
They have said to me that we may differ on tactics, and we are concerned, as I mentioned, about some of the energy security issues. They have been given a little bit of a cushion because of Russia. So again, I think this is connecting these items together, if we can bring Russia along with some of this, my own sense is that China will not be an obstacle in the process.
They have shown some cooperation. They voted for the IAE Board of Governors at the February 4 resolution to report Iran. They joined the rest of the Security Council on March 29 in adopting the Presidential Statement. They have sent senior officials to Iran, and they have reported back to us. And we have a sense of the message that they are trying to deliver.
Now, it is not a surprise that both they and the Russians will play themselves as a little bit of a mediator. But the Iranian total lack of cooperation has helped create an environment where we can try and bring others further along. And this is the process that Secretary Rice was engaged in this week.
As you start to try to do two things, maintain an international coalition and also gear up the pressure, you are going to get people who get more anxious. So the notion of a Chapter VII resolution suggests to some the possibility of a use of force. And they may want to be willing to ratchet up the pressure, but they are worried about that aspect. In part because of some of their own history, they get worried about the use of sanctions as you move forward. But that is one of the reasons why I think you see, as Secretary Rice was saying yesterday, while recognizing that we need to work with dispatch, we need to work the diplomacy of this as we go along.
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It is my sense, Mr. Lantos—but this is where I think we all can continue to stress this, and I appreciate your remarks—is that China recognizes the very important issue in the United States-China relationship; we need to keep stressing that.
But as my other comment said on energy security, we need to get them to understand their own interests in this. And one of the things that I have said to the Chinese is, ''Okay, you agree they shouldn't do this; if you have differences on how we do it, then how are you going to do it?'' And this goes to this notion of taking some responsibility.
So the last chapter on this isn't written, but you can see, I think, the focus of our effort on this.
You mentioned Burma. In the case of Burma, I think China historically is at a different position. It has a much broader relationship, obviously, with Burma than any we have, so it is in a position, I think, to use more influence.
We have emphasized that the regime's own sort of isolationism, non-inclusive political process, and crazy actions continues to isolate it, and that poses risk to the whole region. You have seen how some of the Ossiane countries have recognized this as well.
It is a good area where part of this, in the challenge of the diplomacy, is getting people to recognize how it is in their own self-interest to try to change some of these things.
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I mentioned in my opening remarks the slight shift in Wen Jiabao's statement to the Burmese. I don't want to make too much of this, but I think it is of some interest.
You asked particularly about the UN Security Council. China joined the consensus in December 2005 to discuss Burma in an informal consultation. However, they said this is a one-op exercise. So this is kind of the step-by-step of the process.
But all these together, in a sense, are good examples of what we are trying to develop with this deeper dialogue on a whole host of issues. We had the questions from Mr. Royce about Africa; it is the same thing there. I mean, right now much of Africa or the interest that you see in China is driven by economics, whether Latin America or others.
And frankly, I think what we need to point out to them is to say, ''Look, whether in your relations with us or the Africans or others, how you behave and how you act is going to make a difference.'' They won't do it exactly the way we would do it, but we can get, I think, greater cooperation on these items.
Chairman HYDE. The time of the gentleman has expired. The Chair would like to make a brief announcement. We have been informed that the Secretary must leave by 12:15. So as I go down the list, I am going to be pretty tight on time.
Mr. Smith.
Mr. SMITH OF NEW JERSEY. Thank you very much, Mr. Chairman. Let me just say, Mr. Secretary, thank you for your wonderful testimony, it was excellent.
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Pope John Paul II once said, ''If you want peace, work for justice,'' and at the core of what many of us do here is believing that. At the ground level, the Chinese love to talk about mutual respect; Hu Jintao said that during his visit.
Yes, government to government, there is that mutual respect. But it also needs to be vertical with the people, and that is where it has been lacking.
You mentioned dialogue on human rights. But I would respectfully submit that dialogue should be no substitute for deeds. And it has been my experience with the Chinese and with other dictatorships that they will talk, but we want to see tangible deeds, and they have been lacking. As a matter of fact, on virtually every area of human rights observance there has been significant regression year after year. And I find that very and profoundly disturbing.
I am also concerned that the rule of law is subjected to a dictatorship-friendly redefinition by the Chinese Government. And I like to call it the rule of unjust law, designed to repress, crush, and control the people of China under the veneer of law. And I am concerned that all too often, we, both on the corporate side and government side, acquiesce to the rule of unjust law.
And I would like to offer three brief examples and ask for your response.
On the corporate side, Cisco, Yahoo!, and Microsoft stood where you are in mid-February, and I was appalled when Yahoo! and some of the others said, ''Well, they are just following orders. Following the law locally.''
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Yahoo!, which obviously gave up several dissidents, including Shi Tao, who went to 10 years in the Laogai, I asked him: ''Under what terms, conditions, and circumstances do you give information about a person who has an e-mail with Yahoo! to the government?'' And he wouldn't answer it; he said it would break Chinese law. And yet, you know, is it just anybody who walks in the door and says we want information on so-and-so?
So they have acquiesced. And rather than changing China, they have changed these corporations.
Another example. Mr. Lee, a Chinese Christian, was arrested and tortured, and faced a prison sentence for belonging to an unregistered house church. He escaped to the United States and got asylum here. The INS appealed. In 2003, the Board of Immigration Appeals (BIA) reversed the judge's decision. The BIA found that Lee had honestly described how police beat him and tortured him with an electric shock device and forced him to sign a confession. But then, incredibly, it ruled that Lee was punished for violating laws on unregistered churches that it said China had the legitimate right to enforce.
Later BIA included failure to legal action or prosecution, not persecution. And I would just add parenthetically that is absolutely contrary to the International Religious Freedom Act. And that language was completely bypassed in all of these proceedings.
Eventually it went to a higher court, and still found that he was violating these laws about unregistered churches in China. Only after there was an uproar did justice finally prevail. This was a total miscarriage of justice, and he finally got his asylum.
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But it was amazing to me, in reading these cases, that they were saying, ''Well, that is Chinese law, and we need to follow it.''
The third and final example. One of my constituents, whose enterprise Motion Systems Corporation provides hundreds of highly-skilled manufacturing jobs in my district has been hit by unfair Chinese competition. He produces vital parts that go into high-tech products made for the Defense Department. For many of these contracts he doesn't even know what they are used for, because it is all classified.
He recently sued the Chinese for stealing his designs. He sued and won the first part of his case. The ITC ruled that he had suffered harm, and recommended quotas. But the USTR and the White House exercised their legal discretion to deny relief.
If such unfair competition continues, he will ultimately have to cease manufacturing those items, which could leave a number of people without jobs. As we all know, and you said it yourself, there are no labor unions. Collective bargaining rights do not exist there. Many of the Laogai—and there are about 1,100 of them—produce parts that eventually find their way into U.S. manufacturing and onto our shelves at retail outlets.
But in this specific case, here it was the ITC found in his favor. But it was then reversed, and it was clearly unfair. We are now bending to the rule of unjust law in all three of these cases, on the corporate side, as well as on the government side.
Your response.
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Mr. ZOELLICK. Well, let me start with the Internet freedom one, which I know is a strongly-felt issue in this Committee and many others. And it is an issue, and I am glad you brought attention to it, Mr. Smith, it is not only going to be a China issue; it is going to be an issue in lots of different places of the world.
On the one hand, the Internet offers some incredible possibilities for innovation and commerce and disseminating ideas in the world. And our goal as a country has to be to try to increase the freedom and flow of information and ideas.
One of the things that we are trying to do, I know with the encouragement of you and others here, is to try to embed this more into some of our diplomatic work. We can press governments on these restrictions, we can build coalitions, which is a key on a lot of these items, to try to have other countries help us with it.
There are going to be a lot of fights ahead of us in some of these international organizations. I know some of you have the scars about the free flow of information in some of these contexts. And we are going to start to include the Internet freedom issues in our human rights reports to try to institutionalize it.
At Secretary Rice's direction, Under Secretary Shiner, who I know many of you have worked with, helped create a global Internet freedom task force, where we are trying to work with companies, some of the same ones you met, NGOs, academics, and others. And one of the things that I think goes to your specific example, Mr. Smith, is whether it is in their interest to develop some best practices.
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If they are going to go and operate around the world, and I certainly see the benefits of them operating around the world, for example, transparency in policies. So what is your policy on censorship? What is your policy on giving up information? So that it is not something that people are unaware of.
And another one, and it may be a small step, but a useful step, is to make sure that if there is some required action, just as there would be in our country, for information, you have to follow a due process and a legal system. Because then it is forcing the government not to just lean on somebody, but to take the formal steps.
So I think this is a start in the process. I know you are deeply engaged in it. But I think you are right, it is a double-edged sword here. And I happen to believe that the spread of technology and information ultimately will be a good thing for these countries, but it certainly can be abused, as you pointed out.
In terms of the religious freedom issue, this is a topic that President Bush, Secretary Rice, and I all sort of personally stress, particularly on this issue that you highlighted. So I don't know about the prior court history, but what surprises me about it is that the Chinese have said, at our prodding, that there are possibilities for sort of private worship in homes—house worship—also education of minors. We have had, obviously, examples to the contrary. So that was one of the things that we were pushing that they should put this into a regulatory form.
And they have emphasized they would protect those. But it is going to be a point where we need to keep vigilant about making sure that this gets full attention. And all I can tell you is, in our system it starts with the President, he has got a very strong interest in this.
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It surprises me, but I will follow up with you——
Mr. SMITH OF NEW JERSEY. It was Lee v. Gonzalez, and it was appalling.
Mr. ZOELLICK [continuing]. Is that, you know, how they could base it on the Chinese law, when at least the Chinese tell us the rules are somewhat different.
And in your third case, the trade case, I am afraid I am not familiar with it. If you give me the information, we will check.
Mr. SMITH OF NEW JERSEY. If you can get back. And just let me conclude, Mr. Chairman. This man here is Bishop Shu of Baoding Province. I met with Bishop Shu in the early 1990s. He was then rearrested. He has spent more than 30 years in the Chinese prison camp. He has been tortured, mistreated, and his whereabouts and whether or not he is even alive now remain unknown.
You know, talk about religious freedom, this man had nothing but compassion for those who suppressed him and those who tortured him, yet when I met him, he had already spent more than two decades in Chinese concentration camps. And that is the reality.
Thank you so much.
Ms. LEE. Thank you, Mr. Chairman. Let me say I, too, was quite fascinated by your very excellent presentation and testimony, Mr. Secretary.
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And for the life of me I keep thinking, I can't understand why this same gentle approach toward China is not used with regard to Cuba. So that is the first question I want to ask you.
Secondly, just with regard to Latin America and the Caribbean, we have seen, of course, over the last couple of years a deepening of the relationship between Caribbean and Latin American countries with China. Of course, I believe we missed our opportunity, because we have, quite frankly, neglected much of the region. And China sees that as an opportunity.
So I would like to ask you with regard to what you see as the future. Will we ever become again the partner of choice for the region, the Western Hemisphere? Or have we lost that opportunity to China?
And finally, just with regard to Sudan. I often thought, through this entire terrible period of hundreds of thousands of people getting killed, why we weren't harder with China, given the trade preferences, given the relationships and our policy toward China. Why didn't we come down pretty hard on them, and try to help them understand why they should not engage with the genocidal regime in Khartoum?
Mr. ZOELLICK. Okay. On Cuba and China, I could add North Korea with Mr. Leach on this, I will take each one on its terms. And in a way your question reminded me of the dialogue that Mr. Leach started.
You see, the difference in China is that when China, in 1980, decided on a development course, it decided to open up to the world. And we may have differences on how far they have gone and how they are doing it, but they have taken a path that we believe is, and a number of Administrations have believed—seven—that it is important to try to encourage that integration, because we believe it will transform the system. It has clearly reduced poverty, but it gives other opportunities to open up to society.
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Castro hasn't done that. The fundamental difference——
Ms. LEE. But Mr. Secretary, let me just interject. The last time I looked, Cuba does have relations with the majority of countries in the world.
Mr. ZOELLICK. I don't think it is a question, Congresswoman, about whether it has relations. It is a question about whether its strategy is to open up. And I draw the analogy with North Korea.
We have a lot of obstacles with North Korea, as well. If North Korea is willing to open up, as China would in 1980, there can be transformation of relations.
I think the reality is that Castro has chosen a very different course for his country. And for many people here who are concerned about human rights, I would suggest that Cuba has got some serious problems, too.
The Caribbean. I agree that the Caribbean is a region that we always need to devote attention to. Secretary Rice just went down to a meeting of the CARICOM Ministers in the past month, even while she was running around doing these other things, to help emphasize it. When I was USTR I used to go down there a lot, because I realize that these are economies and societies that are very close to the edge. It doesn't take much in terms of a storm or something else to overwhelm them.
And they have a particular agenda. Some of it is of concern for narcotics, some of it is economic development, some of it is dealing with these natural disasters.
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We as a country, and this as a Congress, too, has tried to give the Caribbean a special place. They have special trade preferences that have been developed, starting in the Reagan Administration, that pretty much give them open access to our market.
As it links to China, you asked—and I think this is a broader question of Latin America—China's engagement with Latin America and the Caribbean is fundamentally based on one of two issues: One, just economics. It is buying things, it is investing; the second is Taiwan. We have a number of countries in Latin America and the Caribbean that still recognize Taiwan, and China wants to leverage that away.
As part of the discussions we have had with the Chinese, we have emphasized that while it has got a growing economic relationship, it is still much smaller that the United States' is, that it has got to use its power responsibly. And I believe the Chinese appreciate this. The Chinese will not want to undermine their core relationship to the United States for misuse in the region.
But it is one of the reasons, as a number of you mentioned, we need to have the discussion, because we want to make sure that they understand what we think—for example, Venezuela—may be sort of problematic areas.
Our Assistant Secretary for the Western Hemisphere, Tom Shannon, actually was just in Beijing in the middle of April on this sort of discussion, talking about regional stability, terrorism, transnational crime, some of the economic issues.
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And just to give you a sense of how this can work constructively, part of our peacekeeping operation in Haiti includes some Chinese forces.
So I think it is a challenge for us to say to the Chinese, ''Okay, your economic footprint is bigger, you are going to be in these places. Be careful how you use it, be careful how it is perceived in the United States, and let us discuss how it might be done more constructively.''
And I do think there are areas where we can cooperate, although on fundamental issues like human rights we are going to continue to have some differences with them.
All I can say on this is that I have had extensive discussions with the Chinese as part of this senior dialogue, and I have highlighted Sudan from the very start. And it is a good example of a number of things coming together, Congresswoman.
One is, their interest in Sudan was primarily driven by energy. And what I partly said to them is, ''Look, there may be sort of your state-owned energy companies that are going to Sudan because there are not other places that they feel they have available. But be careful about what impression it creates, not only in America, but in Africa.''
And so I have tried to say, ''You know, you may have your energy interests, but you can do it in a way that helps create peace, deal with the genocide, help us cooperate on some of these items.'' And I think we have made some headway on some of these issues.
And again, they have a different relationship with the Khartoum Government than we do, but maybe they can use that relationship to press the Government in Khartoum to take some of these steps.
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So it is a good example of how, whether it be Burma, whether it be Sudan, whether it be some of these other issues, at a minimum we need to make clear to the Chinese we are watching, and others are watching, if you want to have good relations in Africa over time.
I was in Nigeria for these negotiations. Shortly before that President Hu had been there, and some of the people that are causing trouble in the Niger River Delta were obviously focusing now on the Chinese.
The Chinese are going to have to be aware of this as they get a bigger footprint. It can backfire on them. And so they are better off trying to support some of the main objectives that we, the European Union, or others are trying to promote.
Chairman HYDE. Chairman Rohrabacher.
Mr. ROHRABACHER. Thank you, Mr. Deputy Secretary. And I will just note first that I think that this Administration treated President Chen, who is a democratically-elected leader, in a disgraceful way. And I will leave this to Mr. Tancredo to follow up on. But for us to throw ourselves on the ground in order to curry favor with a dictatorship by mistreating a democratically-elected leader doesn't lend itself to the type of respect from the dictatorship that will lead to the positive things that you are thinking about or talking about today.
I have been told over the many years that I have served here that if China prospers, and as China prospers, we can expect it to liberalize. And that has been used as an excuse by our corporations for investing huge sums of money there, and for us to have a policy that permitted the building of this great economy now that is booming in China.
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We have also been told that, as China prospered, it would mellow out internationally; become less of a force for instability, and more of a force for stability. I haven't seen any evidence of that. I called the first, of course—the idea that we are going to make a dictatorship prosperous, and that will make the dictatorship more freedom-oriented—I call it the hug-a-Nazi, make-a-liberal theory. I haven't seen any evidence of that.
Have you seen any evidence that opposition parties are being able to be organized? All the things that you told us about earlier in saying how China is progressing are all economic growth areas. And also the implantation of China into our international bodies, but not necessarily suggesting that that was, showing where that was, a positive movement.
Has there been any movement toward opposition parties or freedom of the press that permits people to criticize the Communist Party, for example, in China? We have heard evidence, I haven't seen any evidence of freedom of religion. In fact, we see a lot of evidence that there is actually some retreat from permitting people freedom of religion and labor rights, et cetera.
Am I missing something? Or has there not really been any movement? Although we have had this massive increase in economic power.
Mr. ZOELLICK. First, Congressman, on President Chen, which you raised, he had the opportunity to meet the First Lady and some of the congressional delegation just yesterday. One of my colleagues talked to him on the phone as he was leaving, talking about how we can continue to have a strong and good relationship with Taiwan, which we seek to have, within the terms of the Taiwan Relations Act and our One-China Policy.
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Mr. ROHRABACHER. Would the Taiwan Relations Act prevent us, in your position, from treating President Chen courteously and permitting him to refuel his airplane on a trip to other parts of the world?
Mr. ZOELLICK. He was offered an opportunity to refuel, and I know of no requirement that he couldn't get off the plane. You would have to talk with the Taiwanese about how they decided to schedule where they wanted to go. So I don't believe he has been treated in any——
Mr. ROHRABACHER. Well, I found his treatment unsatisfactory to a democratic leader in an attempt to curry favor with dictators and gangsters in Beijing.
But what about my other questions? Has there been any less restrictions on freedom of the press and religion in these last few years, that perhaps some of us have missed?
Mr. ZOELLICK. I think if you compare the China of 1980, when I first visited, with the China of 2006, I think it is a more open society.
Now, that is not to say that there aren't tremendous challenges which we have all listed to try to address. But I do think it has moved more in that direction.
Mr. ROHRABACHER. Well, certainly. And I would have to suggest to you that progress made in terms of liberalization, if there was any, happened before Tiananmen Square. But what only is significant to us now is what has happened since Tiananmen Square in terms of the trend of political and social freedom in China. And it seems to me that since Tiananmen Square they have gone the wrong way, but we have continued to build their economy.
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Mr. ZOELLICK. Well, I think there are a couple of elements, which I tried to touch on in my statement.
Number one is they tried to build their economy, they are going to build their economy. And it is a question of, Do we also want to have influence in that process? And getting a couple hundred million people removed from poverty is also, I think, a positive development for the world.
Secondly, as we discussed with some of your colleagues, we have worked with the Chinese, and we are going to set out an agenda of issues like Iran, North Korea, other topics.
But third, that doesn't at all dissuade us from making the point that you and others have made about pressing forward. At the same time that I set out these other concepts, actually the coverage of the speech I gave emphasized how I was pressing forward the democracy agenda, which I was doing. And I was suggesting that for their own interest, they should move from the village elections to provincial elections. They should move to a serious rule of law.
Mr. ROHRABACHER. But they haven't.
Mr. ZOELLICK. I think it is important to recognize and be fair, Mr. Rohrabacher, it is something we all have to push on together. It is not going to be an overnight issue. And you have to decide. Do you want to detach yourself from China, or do you want to try to work with it? I believe we should work with it.
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Mr. ROHRABACHER. Would you say that is true of all dictatorships?
Mr. ZOELLICK. No. It depends on the nature of the regime, and whether it is trying to head in a slightly different direction. In the answer I gave to Ms. Lee, I distinguished North Korean behavior from Cuban behavior from China behavior. So I think you have to take each one on its own terms.
Mr. ROHRABACHER. Well, Mr. Chairman, if I could, just one last note. We have created a Frankenstein monster. We are the ones responsible for building this enormous Chinese economy, sometimes at the expense of our own middle-class people who work in manufacturing, et cetera. And it has not worked out as we were told it would.
We do not now have a benevolent, liberalizing regime in China. Instead we still have the horrendous stories of repression of religion, of torture, and of political repression.
Chairman HYDE. Would my friend yield briefly? With all due respect, Mr. Secretary, many of us believe, and I believe it strongly, we have a more open Potemkim Village, not a more open society.
Mr. ROHRABACHER. Thank you very much, Mr. Chairman.
Chairman HYDE. Ambassador Watson.
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Ms. WATSON. Thank you so much. And very quickly, I want to follow up on something that Mr. Rohrabacher brought to our attention.
Just the day before yesterday we were in Costa Rica, and we met with President Chen of Taiwan. And he expressed the fact that his country felt disrespected, and he was hurt that we, our Administration, refused to allow his delegation to do an overnight transit stop in the United States. And he brought up the fact that we are dealing with China, and China is a Socialist country that denies human rights to its people.
And our delegation, led by Dan Burton, responded that we would ask for an explanation and apology for not treating them with the proper protocol in a transit visit on its way to celebrate the election of the new President of Costa Rica. You can respond after I give you my main question, but I wanted to follow up on that, and let you know that it might have been a deliverable to the Chinese after the Hu visit. We don't know. So you might want to expand on that in a moment.
But right now I have the Hollywood Chamber of Commerce waiting for me in the anteroom. And we are all concerned about the protection of intellectual property. And we know that there are violations on the part of China, and they continue to plague our relationship.
I represent Hollywood, and the entertainment industry represents a $500 billion industry. And a lot of our intellectual property is being stolen and sold on the street for a pittance. And that has a tremendous impact on our economy each year.
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And so we feel that China is the epicenter of worldwide IPR violations. And the United States Customs Service estimates that over 50% of all pirated goods it seizes originate in China. Nearly 100% of the DVDs made in China are now pirated. And China's IPR violations not only undercut the profitability of American companies, but also significantly complicate the ability of American companies doing business in China to play on a level playing field.
And we have made it, in this country, a major issue in the World Trade Organization. The Chinese Government has repeatedly agreed to boost enforcement of IPR by increasing criminal prosecution of offenders, and improving cooperation among Chinese enforcement officials, and between United States and Chinese IPR officials.
However, China has repeatedly failed to fulfill its pledges. Most recently the United States initiated a special process under WTO rules to request that China provide detailed information on its IPR enforcement efforts, and China responded by challenging the legal basis of this request. And so I would like you to comment.
And finally, are trade barriers an appropriate response given the level of the inter-transigency of China on IPR issues? And it is very important—not only to my district, my community, but to the United States as a whole.
Mr. ZOELLICK. Well, on your first one, it is a very important point. You used the term ''country,'' and the protocol attributed to a country.
Ms. WATSON. Excuse me, wrong wording. Let us just say Taiwan.
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Mr. ZOELLICK. That is my point, is that we have got to be real careful here about the protocol attributed. It is an economy. And there are big stakes here, Congresswoman, where lives could be lost.
We have had a One-China Policy since the time of Jimmy Carter. That policy is controlled by three communiques in the Taiwan Relations Act.
We—and I said this in my opening comments—owe a great deal of respect for what Taiwan has accomplished in terms of creating a vibrant democracy, a strong economy. And I also pointed out that in 1991/92, I am the person that got them into APEC, and in 2001 got them into the WTO. So it helps strengthen these economic relations.
I was a little disappointed after we did so that I then had to spend about 2 or 3 years getting them to follow through on their obligations. But as they started to do so, we did respond again. One of my deputies went there, and there is going to be another deputy from USTR going on the economic side.
But we have to be very careful, you see. And this is the balance, is that we want to be supportive of Taiwan, while we are not encouraging those that try to move toward independence. Because I am being very clear: Independence means war. And that means American soldiers——
Ms. WATSON. Would you yield for a minute, please?
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Mr. ZOELLICK. Pardon?
Ms. WATSON. Would you yield for a minute?
Mr. ZOELLICK. Yes.
Ms. WATSON. Your bottom line. Would we deny anyone an overnight transit visit on their way to somewhere else? Is that part of the agreement? I think that is a lack of protocol and respect for any leader of any country, when we allow other leaders to come in.
And I understand what you are saying. But would it be interpreted by Chinese, allowing them an overnight transit stop, would that be interpreted as more or less playing with Taiwan? That is what I would like you to——
Mr. ZOELLICK. Congresswoman, to go to your core point, we make our own decisions. We don't clear them with China, we don't negotiate them with China. So our decisions are our decisions.
We offered President Chen an opportunity to have an overflight stop. He, in the past, has had overflight stops, where he has stayed overnight, and he has had a series of broader discussions with people. Sometimes those have raised some of the questions that I have mentioned.
President Chen, in his inauguration, put forward five policy statements.
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Ms. WATSON. Let me cut to——
Mr. ZOELLICK. If you want to get into this, we will get into it. But I am honestly saying it is not——
Ms. WATSON. Excuse me for a minute. Would you yield? Let me cut through that. I am just repeating what he said.
Now, maybe we lost a lot in translation, because he was speaking, and his language was being translated into English. And he said that the Administration denied him a transit visit overnight in the United States. And that he felt hurt. And we were embarrassed. And we asked to follow up, and maybe give an apology. Because I think it would have been proper protocol to say yes, no meetings or whatever. But that was what he described as his treatment when he got here.
So if you will go on to my next point. I want to meet with my group out in the anteroom.
Mr. ZOELLICK. Well, indeed, you can mention me to your constituents, because I went out and visited them to try to help on this very issue, as Mr. Berman knew before, on the issue of IPR.
Ms. WATSON. Well, you can talk to them. They are watching you right now in the anteroom.
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Mr. ZOELLICK. And the core issue here is that—and again, I mentioned this in my earlier statement—there are tremendous problems with IPR violations throughout China.
The Chinese say they recognize this as they now move to a knowledge economy, but we still have tremendous problems, particularly in the enforcement area.
In the software area, and I know these industries tend to blur a little bit, there were some important improvements that they made. They agreed, for example, not to sell PCs that are pre-loaded with software, because you have tremendous piracy rights issues here.
But similarly, in the broader issue in terms of the entertainment industry, one of the things that Vice Premiere Wu Yi, who is in charge of all this area, put forward a series of steps which, in a similar way as we have talked on the foreign policy, may look good, but we have got to focus on the overall delivery. For example, special IPR courts, so it is not lost in another process. Setting up 50 locations around the country where you can be able to try to come and bring particular problems on issues. And this is true for small businesses, too, that some of your colleagues mentioned—trademark and other sorts of issues.
So it is an important issue. But then there is a third point that you alluded to, and that I want to draw out.
USTR has also said, trying to use the WTO provisions, that it wanted China to explain how it is using criminal penalties. China is part of this. The work we have done took other steps like destroying optical disks and others. But there is a requirement for being able to use criminal penalties. And China has not yet responded. That is a possibility that I think your constituents may have an interest in about how USTR can try to use the WTO procedures.
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And the challenge here, Congresswoman, is you have got these international rules in the WTO. We have to be careful, if we bring a case, that we bring a case that is framed in the basis so you can win, because some of these are generalized language.
I think what USTR has done here is a very, sort of, well-designed approach to try to focus on one element where the case looks strongest if China doesn't respond. And so I think that is how we are trying to use a little bit of the carrot-and-the-stick here in terms of encouraging China to try to take the steps, the type of things that I mentioned, but also say we will use the international legal process in the WTO to pursue it separately if they don't.
Ms. WATSON. Thank you very much. And what I am going to do is respond in writing to you, and let you know what we would like to recommend that might be helpful to our industry here.
And also I will try to clarify what I just said about President Chen of Taiwan, what he told us. And our Committee will be, I guess, contacting you and the Administration as well on that issue of the transit stop.
Mr. ZOELLICK. Well, and I don't know if you heard when I talked to Mr. Rohrabacher, one of my colleagues talked to President Chen yesterday.
Chairman HYDE. Thank you, Ambassador Watson. Mr. Tancredo.
Mr. TANCREDO. Thank you. Mr. Secretary, I do want to pursue this a little farther with regard to what happened with President Chen. And yes, I do understand that Mrs. Bush and other Members and somebody from the State Department talked to him. I mean, that was in Latin America; that was as a result of everybody being there in the same place for the inauguration of the new President.
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The Congress of the United States explicitly authorized the President of Taiwan and any other high-ranking official to visit the United States in Public Law 10346. We have subsequently passed resolutions in this Congress that supported that position.
Could you not have explained to the Chinese that snubbing the President, well, snubbing President Chen in the way we did—and certainly it was, first of all, taking so much time to actually answer their request for permission to transit, then saying that it had to be in either Alaska or Hawaii. And according to news reports, and that is all we took it from, that in fact he would not have been allowed to even leave the plane.
I just wonder, as I say, couldn't we have explained to the Chinese how the Congress would react to the situation, in that we have passed law here, passed legislation that specifically allows for them to do this?
And with regard to the five points that President Chen made in his inaugural speech, and then eventually scrapping the Unification Council. Wasn't that because those five points were predicated upon China never using force or the threat of force against Taiwan? And then, of course, China passed the anti-secession law, which did exactly that. It said that it would use force.
So there was a reason why that happened, and the way it happened. And it still seems to me that it causes enormous problems, and certainly again puts us into a position with China that is not all that clear. And that lack of clarity about our position, vis-a-vis Taiwan, is more dangerous, it seems to me, than anything else.
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And when we state that any other situation than the one we are in especially, where it is kind of ambiguous. And when we state our position via law about a President's ability to visit, how can that not be referred to as a reason for allowing it?
Mr. ZOELLICK. First, Mr. Tancredo, I think it is an important point. We don't feel we have a need to explain anything to China on this point, and I am not sure you really want us to feel that we have to explain to China. We make our own decisions on this.
Mr. TANCREDO. Well, it certainly seemed like it.
Mr. ZOELLICK. It is a separate, as a related point, and I think this may be what you are driving at. We certainly emphasize what Taiwan has accomplished as a democracy, as an economy, how the interest really should be to try to create a better relationship on both sides of the straits, including China's obligation to Taiwan to try to have dialogues not only with the opposition party, but also with the governing party.
So it is a distinction, but it is an important one. We don't want to be in a position where we have to explain how we deal with Taiwan's transits or people or economic contacts to China. We do that on our own, within the framework.
But we certainly do encourage China to recognize that this should be something that is in everybody's interest to try to develop a positive relationship with. And for economic reasons, as well as for their own culture and societies.
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On the five points, it is my understanding when President Chen made these points in 2000, in his inauguration speech, they said provided China doesn't use force to attack. Now, that may be a summary of it, but China hasn't used force to attack. You were correct about the anti-secession law, and I think that anti-secession law was something we and many other parties criticized. The Europeans criticized it, and that is one of the reasons why they didn't lift the arms embargo. It was not a wise step on their part.
I would also caution, at least from what we understand from the Taiwanese, they do not feel that they have abolished the Unification Council. They used another term for it. Because at least what President Chen has said to us is that his word is good, and that the things that he committed to the United States he has followed up on.
And pardon me if you will, but in the business that I am in, it is very important, if people do give their word, whatever their basis, that they keep it.
And so what I think you see here, and what is going on, is an effort to kind of erode sort of at the edge, and sand it off. And frankly, I think it is a good thing for U.S. diplomacy to hold people to their terms and word.
And in part, this actually goes to the clarity, Mr. Tancredo. One of the things that I have encouraged the Taiwanese to appreciate and recognize, you have a global system that, if anything, the regular interstate relations are becoming less important than some of the private sector opportunities.
There is a golden opportunity here for Taiwan to engage in the global system. But if it keeps trying to revisit the question that the United States made in the late 1970s about a One-China Policy, I think it is going to keep hitting into a wall.
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