SPEAKERS CONTENTS INSERTS
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51–801 CC
1998
CHINA AND ECONOMIC ENGAGEMENT:
SUCCESS OR FAILURE
HEARING
BEFORE THE
SUBCOMMITTEE ON INTERNATIONAL ECONOMIC POLICY AND TRADE
OF THE
COMMITTEE ON
INTERNATIONAL RELATIONS
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTH CONGRESS
SECOND SESSION
JUNE 24, 1998
Printed for the use of the Committee on International Relations
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COMMITTEE ON INTERNATIONAL RELATIONS
BENJAMIN A. GILMAN, New York, Chairman
WILLIAM GOODLING, Pennsylvania
JAMES A. LEACH, Iowa
HENRY J. HYDE, Illinois
DOUG BEREUTER, Nebraska
CHRISTOPHER SMITH, New Jersey
DAN BURTON, Indiana
ELTON GALLEGLY, California
ILEANA ROS-LEHTINEN, Florida
CASS BALLENGER, North Carolina
DANA ROHRABACHER, California
DONALD A. MANZULLO, Illinois
EDWARD R. ROYCE, California
PETER T. KING, New York
JAY KIM, California
STEVEN J. CHABOT, Ohio
MARSHALL ''MARK'' SANFORD, South Carolina
MATT SALMON, Arizona
AMO HOUGHTON, New York
TOM CAMPBELL, California
JON FOX, Pennsylvania
JOHN McHUGH, New York
LINDSEY GRAHAM, South Carolina
ROY BLUNT, Missouri
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KEVIN BRADY, Texas
RICHARD BURR, North Carolina
LEE HAMILTON, Indiana
SAM GEJDENSON, Connecticut
TOM LANTOS, California
HOWARD BERMAN, California
GARY ACKERMAN, New York
ENI F.H. FALEOMAVAEGA, American Samoa
MATTHEW G. MARTINEZ, California
DONALD M. PAYNE, New Jersey
ROBERT ANDREWS, New Jersey
ROBERT MENENDEZ, New Jersey
SHERROD BROWN, Ohio
CYNTHIA A. McKINNEY, Georgia
ALCEE L. HASTINGS, Florida
PAT DANNER, Missouri
EARL HILLIARD, Alabama
BRAD SHERMAN, California
ROBERT WEXLER, Florida
STEVE ROTHMAN, New Jersey
BOB CLEMENT, Tennessee
BILL LUTHER, Minnesota
JIM DAVIS, Florida
LOIS CAPPS, California
RICHARD J. GARON, Chief of Staff
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MICHAEL H. VAN DUSEN, Democratic Chief of Staff
Subcommittee on International Economic Policy and Trade
ILEANA ROS-LEHTINEN, Florida, Chairperson
DONALD A. MANZULLO, Illinois
STEVEN J. CHABOT, Ohio
TOM CAMPBELL, California
LINDSEY O. GRAHAM, South Carolina
ROY BLUNT, Missouri
KEVIN BRADY, Texas
DOUG BEREUTER, Nebraska
DANA ROHRABACHER, California
SAM GEJDENSON, Connecticut
PAT DANNER, Missouri
EARL F. HILLIARD, Alabama
BRAD SHERMAN, California
STEVEN R. ROTHMAN, New Jersey
BOB CLEMENT, Tennessee
TOM LANTOS, California
BILL LUTHER, Minnesota
MAURICIO TAMARGO, Chief of Staff
YLEEM D.S. POBLETE, Professional Staff Member
AMOS HOCHSTEIN, Democratic Professional Staff Member
CAMILA RUIZ, Staff Associate
C O N T E N T S
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WITNESSES
Hon. Frank Gaffney, Jr., Director, William Casey Center for Security Policy
Mr. Harry Wu, Executive Director, Laogai Research Foundation
Mr. Ross H. Munro, Director of Asian Studies, Center for Security Studies
Mr. Stephen J. Yates, China Policy Analyst, The Heritage Foundation
Mr. Gary L. Bauer, President, Family Research Council
Mr. Robert A. Kapp, President, U.S.-China Business Council
APPENDIX
Prepared statements:
Hon. Ileana Ros-Lehtinen, a Representative in Congress from Florida and Chairperson, Subcommittee on International Economic Policy and Trade
Hon. Frank J. Gaffney, Jr.
Mr. Harry Wu
Mr. Ross H. Munro
Mr. Stephen J. Yates
Mr. Gary L. Bauer
Mr. Robert A. Kapp
CHINA AND ECONOMIC ENGAGEMENT: SUCCESS OR FAILURE
WEDNESDAY, JUNE 24, 1998
House of Representatives,
Committee on International Relations,
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Subcommittee on International Economic Policy and Trade,
Washington, DC.
The Subcommittee met, pursuant to notice, at 1:44 p.m., in room 2172, Rayburn House Office Building, Hon. Ileana Ros-Lehtinen (chairman of the Subcommittee) presiding.
Ms. ROS-LEHTINEN. The Subcommittee will come to order.
Today, President Clinton goes to China, to become the first sitting U.S. President to visit this Communist nation since the massacres at Tiananmen Square. He goes under a cloud of doubts about U.S. foreign policy toward China, under a shadow of questions about American priorities overseas.
The primary message that Congress would like the President to take with him and remember throughout his travels: that diplomacy does not mean surrender. This is also the issue that we must underscore here today as we evaluate the policy of engagement, using China as the model.
And why China? In recent months there has been an intensification of criticism against a policy which is fundamentally the mirror opposite of engagement, that is, sanctions. Opponents of sanctions continue to refer to China as a concrete example of how economic engagement is a superior tool for bringing about change and opening up a closed society.
The time has come to test the validity of this claim. Has engagement met the overarching goal of changing unacceptable behavior by the Chinese Government? Are the Chinese people any freer now? Are they able to exercise their rights as individuals and as citizens of the State without reprisals?
Do American businesses have unlimited access to Chinese markets, or are they subject to barriers and widespread discrimination? Are they victims of piracy and other infringements upon their intellectual property rights? Are the American people any safer?
In a speech delivered in October 1996, President Clinton said that there is not a single, solitary nuclear missile pointed at an American child tonight. Not one. Not a single one.
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However, a new report by the Central Intelligence Agency shows that 13 of China's 18 long-range strategic missiles have single nuclear warheads aimed at U.S. cities. China also has an array of strategic missiles that U.S. military and intelligence officials say are targeted on U.S. forces deployed in Asia.
The question persists: What has U.S. policy accomplished? Further, which China should we focus on when formulating policy: the China that kills its own people, that arms rogue States, that fires test missiles near Taiwan? Or should the focus be on the China that is rapidly becoming the largest purchaser of U.S. agricultural products and one of the largest markets for American businesses?
Those who favor economic engagement and trade with China are impressed with what they see as China's growing economic and national strength and the opportunities that this affords the United States. They promote close U.S. relations with the Chinese Government as the best way to guide the newly emerging Asian and possibly global power into the international activities compatible with American interests.
This conclusion is based on the assumption that China is becoming increasingly interdependent economically with its neighbors and Western nations. Thus, it is viewed as unlikely that China would take any actions that would disrupt its advantageous commercial relationships.
As articulated by Administration officials, the logic behind this policy is that by locking China into certain international groups, it will be forced to modify its behavior on everything from trade barriers to human rights. However, some would argue that the Clinton Administration has perverted the policy by making trade an end in itself.
There are nuances in perception and approaches to China even within those who support engagement with the country. This raises the issue of degrees of engagement and types of engagement, an issue some of our witnesses will elaborate on here today.
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The issue of graduation or levels in turn raises the question of linkage. Earlier this month President Clinton submitted his annual recommendations to extend China's MFN status. Should MFN status for China and WTO accession be considered without conditioning it upon improvements in other areas which are vital U.S. interests?
Furthermore, while a policy of isolation may not be possible at this juncture, the question of U.S. unilateral sanctions on China is directly linked to the policy of engagement with China and one which goes directly to Congress' oversight responsibilities. Congress has passed numerous laws to set U.S. nonproliferation policy and enforce these treaties by using sanctions in response to violations. If there have been violations, sanctions should be considered.
Supporters of sanctions cite reports that China continues to transfer dangerous technology to Iran and Pakistan, and is actively involved in the transfer of nuclear, chemical and biological weapons and missiles to other rogue States. They equate trade with China as subsidizing Chinese missile and nuclear industries and prolonging the status quo.
Those who argue against the imposition of unilateral sanctions on China, including placing conditions on MFN trade status, focus on the harm of U.S. trade or business interests. They emphasize that such measures would harm American interests but would benefit European and Japanese rivals who would quickly fill the void left by a lack of U.S. presence.
In the end, one thing is critical: accountability. Accountability in the implementation of U.S. laws and accountability of Chinese actions. The Chinese Government cannot continue to act with impunity. The way a country treats its own people is a good indicator of how it intends to honor its international obligations. President Clinton should remember this as he meets with China's leaders. We must all remember this as we evaluate U.S. engagement policy toward China.
I would like to recognize the Members of our subcommittee for opening statements that they might have. Mr. Clement.
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Mr. CLEMENT. Well, thank you, Madam Chair, and we sure have a distinguished panel here today. I am pleased to be here, a part of this hearing today. I want to thank the Chairwoman for holding this hearing to discuss our trade policy with China, and thank our distinguished guests, as stated, for joining us.
With the President on his way to visit the world's most populous country, it is fitting that we are discussing the U.S. trade policy with China this afternoon. I commend the President for making this journey, and I am hopeful that his trip is successful in furthering and improving our relations with China.
The United States must continue to provide leadership in the world and in the global market. We cannot afford, politically or economically, to raise the walls of protectionism and isolationism. Soon we will be casting a vote on whether or not we should have normal trade relations with China. In my opinion, disengagement is not the approach to take with regard to China. More than ever before, the United States depends on international trade to keep our economy robust.
Clearly we must continue to encourage the Chinese Government to take steps to improve human rights and democracy for its citizens. I have a full-time person working in my office on religious persecution and religious freedoms in the world. I want every religion to respect every other religion, and I realize there are serious differences, not just between the United States and China but between other countries as well, when it comes to what we refer to as religious freedom. But I don't want to go back to the cold war. I don't want to go back to totally ignoring China as if they don't even exist.
And I realize we have had people in China that truly have suffered greatly, and have truly lost their lives fighting for freedom. I respect those freedom fighters, and I think and all of us believe very strongly that these people that have been the freedom fighters deserve our attention, deserve our recognition, and deserve our applause for what they mean to all of us.
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But we have to also understand that China is changing. It is changing. They may be talking about communism, but in much of China today they are surely practicing capitalism. Shanghai alone, I think they ought to change the name, their symbol of China, to the building crane, because 17 percent of all the building cranes in the world are in Shanghai alone.
So we do know that a lot of things are happening internally. And I realize that the political reform is not as far along as the economic reform, but I do believe the economic reforms can help to move China toward more freedoms, more democracy, and more religious respect and understanding in the world, because of the pressures from outside but mostly because of the pressures internally.
Thank you, Madam Chairman.
Ms. ROS-LEHTINEN. Thank you so much, Mr. Clement.
Mr. Blunt.
Mr. BLUNT. Thank you, Madam Chairman, and thank you for holding this hearing. I want to associate myself with your analysis of the situation as the President goes to China today, and irregardless of the timing of the trip or even the location of the events of the trip, I am certainly hopeful that the President takes every opportunity to encourage religious freedom, to encourage moving toward the rule of law, to encourage political freedom in China.
I appreciate the tremendous panel that you have put together for this hearing today, and I look forward to them testifying and answering questions.
I am concerned, as the President goes to China, that it is my understanding that no Republican has accompanied him on that trip. I think that says a lot about where we are with our division over our support for our China policy right now, and certainly hope that the Congress can work with the President, toward a China policy that has a broader base of support, has a broader base of understanding in the country, and has goals that are clearly defined.
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I look forward to the hearing today.
Ms. ROS-LEHTINEN. Thank you.
Mr. Rohrabacher.
Mr. ROHRABACHER. Thank you very much, and I appreciate you holding this hearing, Madam Chairman. The country needs to know and the people of China need to know that there are other voices in the United States other than that of the President of the United States.
Unfortunately, the President of the United States, who is supposed to be a spokesman and a champion of liberty and justice, is not fulfilling that expectation, as we see in this trip to the world's most abusive human rights power. There is no other country that abuses human rights of so many people as does the Communist dictatorship in China.
And we are always, those of us who are concerned about the nature of that regime and the nature of our relationship are constantly told, ''Well, you are a bunch of isolationists, and you are for isolating China and you are against engagement.'' Well, this false dichotomy is a tactic that is being used to stifle a legitimate debate as to what kind of engagement we will have.
The question is not engagement versus isolation, and the Administration, by portraying it as that, is being intellectually dishonest with the American people. The question is, how will we be engaged, and how should we be engaged with a country that still has a vicious dictatorship and is building up its military forces in a way that perhaps threatens its neighbors and eventually will threaten the United States of America?
When we talk about most-favored-nation status, those who oppose most-favored-nation status are not saying that we shouldn't been engaged with China. After all, even without most-favored-nation status, people will still trade with China. They can go over there and do so. What most-favored-nation status means is that there are not going to be any government guarantees for the businessmen that want to go over there and make a quick buck dealing with this dictatorship.
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There are many countries right now that are struggling to build a democracy. Russia, which has tried to have some free elections, they are struggling with democracy, they are trying to build a freer society. There are lots of obstacles in their society, but there are people in there dedicated to that end. In the Philippines they are struggling. In Bangladesh and other places they are struggling to build democracy.
In China there is no movement at all toward democracy. And yet we are, through the kind of engagement that we have had in these last 10 years and even before, but especially since Tiananmen Square, we are actually putting a greater emphasis on and putting more support behind people who will do business and economically build China than those countries like the Philippines who are struggling to build democratic institutions.
Of course, there is the feeling that if we treat a dictatorship like China the same way we treat the democracies, that in some way this dictatorship will become more democratic. Unfortunately, what we have seen instead is that by sacrificing our own standards and our own principles, instead of seeing a liberalizing and progress being made in the dictatorship of Communist China, we see instead that that country is corrupting our political processes.
So by abandoning our standards in order to help the Chinese develop democracy, they are not developing democracy at all. What they are is helping corrupt our own political system here, and we have seen that in the last campaign and even sometimes before.
So let me just close by saying that we have had an unfair trade relationship this last 10 years. It has been a bad political—it is bad strategically. Our relationship, our engagement with China has been bad strategically. It has been bad politically.
And it has even been bad economically, in the sense that we have goods—their goods are only tariffed at 3 or 4 percent that are coming here; our goods sometimes suffer as much as 30 or 40 percent tariffs. It leaves them with a $50-billion trade surplus every year, and what they are doing with that is building a military machine that some day could kill millions of Americans.
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This is insanity. It is an insane policy, and it is only by going back to the fundamental principles that democratic societies should be treated differently than dictatorships, and that America should be for the side of the oppressed and those who want freedom, rather than those dictatorships and strongmen who claim they are going to bring stability to the world, and in the end it is not stability that our people are looking for. The people who go to China are looking for a fast buck, and that is a sad commentary.
Ms. ROS-LEHTINEN. Thank you so much, Dana, for your remarks.
As my colleagues had stated, we are very blessed to have a wonderful set of panelists here today, and we welcome each and every one of you. Our first witness will be Frank Gaffney, who is the founder and current director of the Center for Security Policy in Washington as well as a columnist for The Washington Times.
In 1987 Mr. Gaffney was nominated by President Reagan to become Assistant Secretary of Defense for International Security Policy, and as a senior official he was responsible for policies involving nuclear forces, arms control, and U.S.-European defense relations. Prior to this position, Mr. Gaffney served as the Deputy Assistant Secretary of Defense for Nuclear Forces and Arms Control Policy from 1983 to 1987.
Thank you for being with us.
We are especially fortunate to have with us Harry Wu, who currently serves as the Director of the Laogai Research Foundation and as a research fellow at the Hoover Institute at Stanford University.
Mr. Wu was first arrested as a young man, a student at the Beijing Geology College, for criticism of the Chinese Communist Party. He served a sentence of 19 years in China's gulag until his release in 1979. While trying to legally enter the country in 1995, Mr. Wu was again arrested by the Chinese Government and sentenced to 15 years. He was finally expelled as a result of an international campaign launched on his behalf.
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And we thank Mr. Wu for being here with us.
Our third witness, Ross Munro, the Director of Asian Studies at the Center for Security Studies here in Washington. Mr. Munro is co-author of the recently published book, ''The Coming Conflict with China.'' Prior to his position at the Center for Security Studies, Mr. Munro served as Time magazine's bureau chief in Hong Kong, Bangkok, and New Delhi.
During his journalistic career, he has covered history-making events throughout China and has conducted extensive research on U.S.-Asia policy with an emphasis on China. His series of reports on human rights abuses in the country in October 1977 earned him the distinction of having his visa terminated by the Chinese Ministry of Foreign Affairs.
We thank you for being here, Ross, with us.
Next is Mr. Stephen Yates, a China policy analyst with The Heritage Foundation Asian Studies Center. Before joining The Heritage Foundation, Mr. Yates was a language analyst with the Department of Defense, and served in the Commerce Department Office of China, Hong Kong, and Mongolia. For 2 years Mr. Yates served as a full-time missionary in Taiwan. He has authored numerous papers on American policy toward China.
Thank you for being here with us.
Gary Bauer, a good friend of our subcommittee, president of the Family Research Council, joins us as well. He is a nationally known speaker and commentator on a wide variety of issues, including human rights and religious freedom around the world.
Prior to joining the Family Research Council, Mr. Bauer was appointed Under Secretary of the U.S. Department of Education under the Reagan Administration. He has also served as the Department's representative on the White House Cabinet Council for Human Resources, and as chairman of President Reagan's Special Working Group on the Family.
It is always a pleasure to see you, Gary.
And our final witness today will be Robert Kapp, who is the president of the U.S.-China Business Council, an organization of American companies engaged in trade and investment in China.
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Prior to joining the U.S.-China Business Council, Dr. Kapp served as president of the Washington Council on International Trade, as well as the executive director of the Washington State China Relations Council. Dr. Kapp is a member of the Council on Foreign Relations and the U.S. Department of State Advisory Committee on International Economic Policy. We look forward to hearing Dr. Kapp's testimony.
We thank them all for being here with us and for sharing their experiences and recommendations with us. And Frank, we will begin with you. Mr. Gaffney.
STATEMENT OF FRANK J. GAFFNEY, JR., DIRECTOR, WILLIAM CASEY CENTER FOR SECURITY POLICY
Mr. GAFFNEY. Thank you, Madam Chairwoman. I am deeply——
Ms. ROS-LEHTINEN. If I could say we are going to enter all of your testimony into the record, and feel free to summarize, and I will try to time you so that we can try to get as much testimony as possible before the bells start ringing. Thank you.
Mr. GAFFNEY. I am deeply honored to be asked to appear, not only because of the opportunity, I hope, to contribute to your deliberations, but because of the company you are allowing me to keep. I very much agree with many of the opening statements, and particularly want to salute you because I think you bring to this discussion a personal appreciation of what it is like to live under communism, and that really has to be very much the context in which everything else we discuss goes forward.
Thank you for including my full remarks. I tried to be comprehensive. To address three points that I think are particularly urgent in terms of an assessment of what is wrong with the policy of engagement as the Clinton Administration has defined it, I would like to concentrate on three items.
The first is the fact that Communist China continues to engage in proliferation of weapons of mass destruction, of the delivery systems for weapons of mass destruction, and a host of other military hardware and militarily relevant technology that I believe will cause us great grief in the future, and certainly cause grief to our friends and allies overseas.
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Second, I would mention activities that continue in the area of technology flowing from this country to China, a form of engagement that I think, again, will be very, very counterproductive.
And finally, an issue that has gotten too little attention, to my way of thinking, and that is the opportunity that engagement as practiced by the Administration has given the Chinese to penetrate our capital markets, and through that device not only to garner untold sums in undisciplined, nontransparent funds with which to conduct some of the other activities I have mentioned, but also to recruit thereby thousands, maybe tens of thousands if not hundreds of thousands of Americans into a vastly more formidable China lobby.
Turning quickly to my statement in each of these areas, I think it is important to remember, as the Clinton Director of Central Intelligence reported last year, that China remains ''the principal supplier of weapons of mass destruction and missile technology to the world.''
To be sure, thanks to past American complaints about this activity—and I have to emphasize here—and thanks to the sharing with Beijing of sensitive U.S. intelligence that the Administration foolishly believes is necessary to legitimate those complaints, there is less evidence of some of these transactions than there was in the past, but we should be under no illusion. The Chinese Government deems it to be in the PRC's vital interest to promote ties with rogue States from Iran to North Korea, and is prepared to share the weapons of mass destruction, missiles and other technology necessary to do so.
I would refer you to some of the very interesting, very troubling testimony of Dr. Gordon Oehler, who until recently was the Clinton Administration's chief of the CIA's Nonproliferation Center, who not only described some of this ongoing activity but described how the Clinton Administration was concealing or at the very least ignoring this data. It is a very troubling picture indeed.
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Specifically, Madam Chairwoman, I would urge this committee to look at five areas that I think bear close scrutiny at this time. First, is China involved in reverse engineering U.S. Stinger missiles and selling such advanced shoulder-fired surface-to-air missiles to State sponsors of terrorism and others who may use such weapons to shoot down civil airliners or other planes?
Second, is there reason to believe that negotiations are underway between China and Russia or entities of the two countries for the sale of Russian special nuclear materials, with the expectation that China would make these ingredients for nuclear weapons available to others?
Third, is China involved in the sale of semiconductor manufacturing technology, of American origin, perhaps, with direct relevance to weapons applications, to a country like Iran?
Fourth, is China selling a wind tunnel that could be used for advanced aerospace developments, missiles or aircraft, to Libya? Is it also providing advanced aerospace-related training to Libyan students?
And, finally, The Washington Times reported recently that we are monitoring closely the shipment of what are believed to be antitank missile components to the Pakistani nuclear weapons facility. Could this transfer be a cover for something worse?
These are questions that I entreat you to find the answers to.
Quickly, turning to the question of technology the Chinese are obtaining from——
Ms. ROS-LEHTINEN. If you could try to summarize your statement.
Mr. GAFFNEY. I will be very quick on this point.
Ms. ROS-LEHTINEN. Thank you.
Mr. GAFFNEY. In my testimony I identify a number of areas. Some of them have been brought to the Congress' attention by Dr. Peter Leitner, I think a very patriotic and courageous civil servant in the Department of Defense's Defense Technology Security Administration. Some of them have been brought to your attention by your colleagues in a hearing of this committee yesterday, reported on the front page of today's New York Times. Others have yet really to get much attention.
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But, taken together, it is clear we are selling the technology seed corn of direct relevance to the future military potential of China. Now I couldn't agree more with Congressman Rohrabacher that that is technology that we will find, I am almost certain, coming back to hurt us in the future.
And finally, Madam Chairman, I would just urge you to take a hard look at what China is doing to secure, as I said, undisciplined, unconditioned, and very large sums of money by buying—excuse me—by selling stocks or selling bonds on the U.S. capital markets.
All of these activities, the proliferation of weapons of mass destruction, the buildup of the Chinese military, the purchase of—or theft, for that matter—of American technologies, can be underwritten by this kind of funding, and it bears your very close attention and, I hope, your efforts to find out if there are ways to prevent at the very least the People's Liberation Army and its front organizations from getting their hands on such undisciplined funding from the U.S. citizenry.
Thank you very much.
[The prepared statement of Mr. Gaffney appears in the appendix.]
Ms. ROS-LEHTINEN. Thank you so much. Thank you. We appreciate it.
Mr. Wu.
STATEMENT OF HARRY WU, EXECUTIVE DIRECTOR, LAOGAI RESEARCH FOUNDATION
Mr. Wu. Madam Chairman, thank you very much for asking me to testify before your committee. I want to share three points.
The first point is, the people are telling us that engage with Chinese totalitarianism, that can make some difference. The question is, can economy booming change a totalitarian regime? From my view, just like you are trying to convince a tiger to become a vegetarian. So far we never heard in history that a totalitarian could be bought off by money.
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The second question relates to this issue that when we heard of human rights violations in Burma last year, America right away applied the sanction, and the people against you applied sanctions to the Chinese Government because they say it will hurt common Chinese. So we are hurting the Burmese and we are not trying to hurt Chinese common people.
It is true the living conditions and the financial situation of the common Chinese is much better than the last four decades, but this is only one side of the story. Let me tell some other side stories.
In 1997 foreign business employed 20 million Chinese in China, and you know that today the Chinese Government faces a very serious unemployment problem because the socialist State ownership system doesn't work. The unemployment rate is growing, and that is a political and unstable factor in the Communist regime. That is why we are solving the problem for helping the Chinese Government, Communist Government stabilize.
And the other statistic I want to share with you, on June 9, 1998, Chinese Xinhua news agency reported in 1996 that 12 percent of the total tax revenue collected by the Chinese Government is coming from foreign business. In other words, we are directly supporting a Communist regime in the world.
Of course, the Americans also make money, it is true, and it is true that it is a very good opportunity to do business in China, because in China there are no unions, no strikes, no civil rights movement. Don't worry about health insurance. Even the Chinese implement their so-called planned birth control policy, forced abortion, forced sterilization, and American companies never worry about it.
A couple of days, a couple of weeks ago I was in Rochester, had a meeting with Eastman Kodak. ''I heard that your company has a very good welfare package for your employees in the United States. Does that also include your employees in China?'' ''Oh,'' he said, ''I don't know.'' ''How come you don't know?'' Because Eastman Kodak employees in China, their insurance policy is controlled by the Communist Government, not controlled by the CEO or management in the United States. So the same people, the same human beings make profit for this company but have a different health insurance package.
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It is true if you have a very good relation with the government officials, if you help them set up a deposit account in an American bank or help their kids come to enroll in American universities, they maintain the order in your business. That is why our government today wants to see a stable China.
If we say business is OK, that will help the American economy and also help the Chinese economic situation, but why do we allow military business? There are a lot of military companies co-owned by the Chinese Government, operating their business in United States. What are they doing?
We never allow any Communist Government to operate a military business in the United States, but today we fully open for the Chinese military, the government military company doing business over here. Even they come over here selling mountain bikes, I heard they also are selling some condoms. It is fine, but every penny they earn from the United States goes directly back to the military facility. This is not normal business, and this is immoral business.
The final point I want to say, when you criticize engagement policy and then the people right away put in the comment, say ''Are you going to talking about isolation? Are you going to talking about containing?'' This is a very cheap argument. This is forced argument. Between the isolation with the engagement, there is something we really can do about it. But today the engagement is fully only based on financial interest, and as I said before, this is typical appeasement policy.
I remember 40-some years ago in the Congress there is a debate, who lost China? And I would say soon you will have another debate, who revived Communist China?
Thank you.
[The prepared statement of Mr. Wu appears in the appendix.]
Ms. ROS-LEHTINEN. Thank you so much, Mr. Wu.
Mr. Munro.
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STATEMENT OF ROSS H. MUNRO, DIRECTOR OF ASIAN STUDIES, CENTER FOR SECURITY STUDIES
Mr. MUNRO. Madam Chairman, thank you very much for inviting me to testify this afternoon, and it is really an honor to be here in this company.
Consistent with the terms of your subcommittee's invitation, I am going to focus on economic engagement in general and trade in particular. If you want my overall view of U.S.-China relations and the Clinton Administration's China policy, I do have an article on page 21 of today's Washington Times.
Ms. ROS-LEHTINEN. Buy your book, right?
Mr. MUNRO. Pardon?
Ms. ROS-LEHTINEN. And buy your book.
Mr. MUNRO. Yes, indeed.
Madam Chairman, the Clinton Administration's policy of economic engagement with China falls woefully short both in theory and in practice. I simplify the President's words only slightly when I say that he argues that economic growth leads inevitably to democracy, that a growing economy becomes a more pluralistic economy and, voila, one day you are going to have a democracy. And the President and his officials argue that with trade the United States can help that process along.
Now in my written testimony I go into some length of why this is bad theory, but let me just mention in passing that rich but authoritarian Singapore and poor but democratic India demonstrate that the relationship between economic development and democracy is a loose one.
And even if one were to accept the argument that democratization is inevitable as a society grows richer, there is still a problem, what is the timetable? If it were to take 50 years, for instance, for Chinese economic development to support a political democracy, if that was the equation, then that would have no policy implications for the United States at all. What would China be doing in the meantime?
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So the theory is woefully short. U.S.-China policies simply can't be grounded on the hope or the assumption that sometime in the future China may become a democracy.
Well, what about economic engagement as it is practiced by the Clinton Administration? Let me turn specifically to trade with China, which is, I understand, your focus today. The President declared last month, ''Trade is a force for change in China, exposing China to our ideas and our ideals.''
Well, presumably the President wasn't thinking of such operations as, say, garment factories in south China that are owned and operated by Hong Kong businessmen who send all of their product to the United States. I don't see where the U.S. influence is in that process. So I assume he is, talking primarily at least, about the United States selling its goods and service in China, and that way starting to transform the society.
If China today was flooded with U.S. goods and services, certainly the President could make his argument about the beneficial effects of trade much more strongly, but this is precisely where his argument starts to unravel, because China is a fiercely mercantilist nation that has tens of thousands of trade barriers to keep out American goods and services, and those barriers if anything are growing stronger, not weaker. While they reduce tariffs, they put up nontariff barriers in their place.
At the present time, each month, very roughly speaking, China exports about $5-billion worth of goods to the United States, and in turn, the U.S. exports only about $1-billion worth of goods and services to China. That is an unfavorable trade ratio, by the way, of 5 to 1. We never suffered anything approaching that with our democratic ally, Japan, even in the worst days of our trading relationship.
But think about $1 billion per month. That breaks down to about 85 cents per person in China, minuscule, and half or roughly half of our exports are raw commodities like cotton and fertilizers which, again, don't have any impact on how Chinese society evolves. So our impact, this great impact that the President is boasting about, is in fact minuscule.
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And where we do start to have an impact, the Chinese regime panics. It outlawed direct sales organizations at a time when Avon and Amway and companies like that had recruited 2 million Chinese into their direct sales organizations. And it is generally accepted that one of the reasons why those organizations were outlawed was that these were organizations that the regime could not control.
Now since 1994 the Administration has acknowledged that there is a serious problem with this deficit, and since 1994, they have called it unacceptable. But they blundered badly because the vehicle they chose to tackle that problem was to negotiate terms for China's entry into the World Trade Organization—terms that would open up China to world trade in goods and services.
And that was laudable, but those negotiations after 4 years have really gone nowhere. I know Mr. Kapp will disagree with that, but even Charlene Barshevsky this past weekend said she was there to try to pull something out of the hat for the President on trade. Those talks were a total failure. She came out and said, ''There's a lot of talk but China is not yet ready to walk the walk.''
Now part of the reason for China's resistance is the economic slowdown it is suffering. Part of it is the Asian economic crisis. But there is no doubt that it is the regime's fear of wide open market forces that are making it stop. This is not only a mercantilist nation but it is also a one-party dictatorship. I believe that the World Trade Organization accession negotiations are effectively dead, and that means we have wasted 4 years.
In 1992, the year before President Clinton took office, our trade deficit with China was $18 billion. This year, 1998, it is projected to be $60 billion dollars. Now today, even despite the enormity of that figure, that is not primarily an economic problem. It could turn into an economic problem very rapidly, but it is primarily a strategic problem. That deficit is a strategic problem for the United States.
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As has already been mentioned, foreign exchange generated by our trade deficit allows the Chinese to buy state-of-the-art weapons from Russia. It also is a strategic problem in the sense that China is underpricing its exports and pushing the products of our friends and allies in Asia out of the U.S. market.
Madam Chairman, China's share of all of Asia's exports to the United States since 1991 has gone from 9 percent to 18 percent. It has doubled. It has been squeezing out other countries. So it is a major strategic problem for us, this trade deficit, and we have got to recognize that the Clinton Administration strategy of trying to break open the markets through the World Trade Organization talks has failed, and that we have to start tough bilateral negotiations now to break down those barriers.
Thank you.
[The prepared statement of Mr. Munro appears in the appendix.]
Ms. ROS-LEHTINEN. Thank you so much, Mr. Munro.
Mr. Yates.
STATEMENT OF STEPHEN J. YATES, CHINA POLICY ANALYST, THE HERITAGE FOUNDATION
Mr. YATES. Thank you very much, Madam Chairperson.
As the least distinguished member of the panel, I will be the briefest in my remarks. I will try to glean some of the highlights from the arguments I would like to present on what I think would be a more meaningful engagement with China. I have submitted for the record a much longer explanation, so if questions arise, please feel free to consult the more elaborate arguments I make in that publication.
In short, I would like to address the question that you posed in the invitation for this hearing: Does engagement lead to change? And the most brief answer I could give to this question is, it may, that it is no guarantee but it may. I believe that there is a role for normal trade relations to play in our relationship with China, but I also disagree with the assertion made by President Clinton in his January 1997 press conference, that positive change is inevitable.
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I will first turn to the problems that I have with the policy called engagement, and then I will go back to the role that I think normal trade relations can play.
The President has put a false choice before the American people. As someone who does support the idea of normal trade relations with China, I think the President has not been honest, saying that we must accept his policy of engagement or we are therefore traveling down a dangerous path to isolation and containment. That is a false choice. Most Members of Congress know that. Most members of the public know that.
The real debate, most of us I think would agree, is over the terms of our engagement with China. Engagement in my view is a tactic, not a policy, and it has become an overused synonym for diplomacy.
There is a second false choice that has arisen in this debate, and it is the one between either promoting normal trade relations or protecting human rights and national security. This should not be an either/or decision. The United States can engage in trade with China and invoke targeted policy measures aimed at addressing specific concerns that no one could say really threatens our overall bilateral relationship with China. And I would also say that in the case of isolation, I think that only China is capable of isolating itself. I don't think that any one country is capable of isolating it.
The House of Representatives took an important first step in adding balance to China policy by considering the Policy for Freedom last November. Members will remember that a week after President Jiang Zemin was in Washington, nine measures came before the House for consideration. I considered these to be modest steps in an attempt to balance what had become a commerce-led policy of engagement. They passed by an average margin of 388 to 31. Those are impressive numbers, and hopefully the Senate will find a way to bring these measures up and add this balance to China policy.
I think that the two goals in U.S. policy toward China should be, first, protecting American security, and second, promoting freedom and democracy within China. It should be clear that national security is a first priority, and for me, though it may not always be popular, I think that trade and human rights come second to national security.
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At a minimum, for me, why we should have a normal trade relationship comes down to a few simple-minded reasons. At minimum, it puts more Americans on the ground in China. This at least affords us an opportunity of knowing what is happening on the ground in China. Even if some businessmen don't care about missionary work or national security, they at least make those of us who do care less conspicuous when we are there in China. At best, trade relations can put good people on the ground to try to forge relationships of trust with the people of China, organize churches, and try to support those who seek a transition from within.
I think that our main goal in trade relations with China should be to expand the fledgling private sector. My belief is that State control is meted out on the Chinese people through State-owned enterprises. The more we are able to expand the private sector, the more likely we are to free people from this State control. What are called voluntary regulations are indeed more or less forced upon people because they can't afford to give up their jobs, they can't afford to give up the benefits that they would receive if they choose alternative life styles like having additional children.
In conclusion, I think a more comprehensive policy that protects American security and promotes freedom and democracy in China is possible. I think that normal trade relations should be part of that policy, but trade alone cannot address the full range of national security and human rights problems in China. Targeted measures are necessary.
Thank you very much.
[The prepared statement of Mr. Yates appears in the appendix.]
Ms. ROS-LEHTINEN. Thank you.
Mr. Bauer.
STATEMENT OF GARY L. BAUER, PRESIDENT, FAMILY RESEARCH COUNCIL
Mr. BAUER. Thank you, Madam Chairman. Let me add my words to the others on the panel to say that it is an honor to be before your subcommittee. You have a long record in Congress, Madam Chairman, of understanding that the words of America's founding were not meant to only apply to Americans; that in fact those words apply to Cubans and to Poles and to North Koreans, and they also apply to the people of China.
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The question before us today, as has been repeated many times; is the policy of engagement a success or failure? My view is that it is clearly a failure, and it is a failure because it really isn't a policy of engagement. It is a one-dimensional policy. It puts all other American interests to the service of trade, and once we do that, once it is clear to the Chinese Government that trade will drag everything else, they then are able to defeat us on every other issue on the table.
The Chinese Government has referred to us in recent months as a ''moneybags democracy,'' and it may be one of the few things, I am afraid, that they are increasingly right about. I do believe that the policy we have is being driven by money and is being driven by the economic interests of certain segments of American society, but certainly not being driven by the values of the American people.
The argument that is made by those that favor the current policy, and it has been repeated over and over again, is that this policy of engagement will change China. I believe the evidence is overwhelming that our current policy is changing the United States, and I think the evidence of this is, in fact, overwhelming. Human rights is the best example of it.
Last year in Geneva we didn't even raise the issue of China's human rights abuses. First time in years. We were struck dumb about it because we were afraid to even raise the question at a U.N. meeting that would somehow insult Chinese sensibilities, and so it was left to poor little Denmark to carry the flag for human liberty and to suggest that Chinese human rights abuses were unacceptable.
I don't think anybody will forget 9 years ago in Tiananmen Square, when the students there and the workers there marched through the streets waving copies of our Declaration of Independence, building a papier mache model of our Statue of Liberty. Many of those people, the students and the workers there, died in defense of American values.
There is something terribly wrong when Chinese students and workers are willing to die in defense of our values, and the elites of America here in Washington, DC aren't even willing to make the intellectual case in defense of those values when no bullets are flying. All they have to do is remind America what the purpose of America is, why we are supposed to be a shining city upon a hill.
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As Frank Gaffney has written about so eloquently, this same policy that is changing us on human rights is changing us on national security. We have turned a blind eye time and time again as companies anxious for the market in China have pushed us to allow them to trade technology to China that has dual uses.
And time and time again we see the headlines in the paper: ''The Chinese army using our satellites to communicate among their bases.'' ''Chinese missiles now more accurate because of technology perhaps transferred by the Loral Corporation.'' These are extraordinary things, extraordinary scandals that will come back to haunt us.
I think the great irony here is that there are American workers at places like Loral and at Boeing, whose sons and daughters are serving in the 7th Fleet in the Pacific, and the weapons that the companies are making more accurate are aimed at our Navy in the South China Sea, where the sons and daughters of American workers are serving. What irony, that we put our own children more at risk in a desire for the almighty dollar.
Madam Chairman, this policy is going to fail ultimately, maybe not this year, maybe not in the next couple of years, but it is going to fail and it will be changed. And the main reason it will be changed is that it violates the most deeply held views of the American people.
We have new polling data that we will submit to the record today, done by the Wirthlin organization, that across the board, whether it is going to Tiananmen Square, whether it is renewing MFN, whether it is the emphasis on human rights, the American people remain a darn sight better than American leaders in Washington, DC. And eventually, as Lincoln said, the leaders will catch up with where the American people are.
[The prepared statement of Mr. Bauer appears in the appendix.]
Ms. ROS-LEHTINEN. Thank you so much. It is a wonderful end—pause, rather—to our presentation.
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Dr. Kapp, with apologies to you, we have three votes. We will come back. That is a wonderful thing. Democracy gets in the way. We wish that for the Chinese people soon.
So we will have three votes. We will momentarily recess, and we will come back and you will be our clean-up batter. Thank you. And we look forward to having the rest of our panelists stay around so we can ask you some questions, if we might.
Thank you so much. The Committee is briefly recessed.
[Recess.]
Ms. ROS-LEHTINEN. The Subcommittee is reconvened. Thank you so much for your patience. We are expecting, in about half an hour, another round of votes, so we will try to wrap up in that time.
Dr. Kapp, especially thanks to you for your patience. We will hear from you and then open it up for questions for all the panelists. Thank you.
Dr. Kapp.
STATEMENT OF ROBERT A. KAPP, PRESIDENT, U.S.-CHINA BUSINESS COUNCIL
Mr. KAPP. Madam Chairwoman, thank you for——
Ms. ROS-LEHTINEN. Gary Bauer said you really have nothing to say, so we will be sure to wrap it up and get to the questions.
Mr. KAPP. If Gary Bauer were as correct in his knowledge of me on that point as he were on all others, I think we would probably be great friends.
[Laughter.]
I am, however, going to ask that we start with 10 seconds or 15 seconds of silence, and in doing so, to think momentarily about the tragedy that recently occurred in Jasper, Texas.
[A moment of silence was observed.]
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My purpose in asking for a moment of silence, which you are welcome to count against the clock, Madam Chairman—I see you are a tough clockmeister, and I will do my best—is in fact to make a couple of simple points as I get started.
The first point is that deeply seated social maladies are very slow to change, and we need to remember that about every country, including our own, but also China.
The usual familiar lines are that it took 90 years before slavery was eliminated; it took until 1919 for women to get the vote; and so forth. But it is worth remembering, as we get into high gear on China, that in every large and complex society, deep-seated social maladies are slow and difficult to change.
The second point about that brief moment of silence is that there is a time and a place and a role for softer voices, not louder voices, in the U.S. domestic discussion of China and in the U.S. dialog with China itself; and that a continual raising of the voices, a continual inflation of the rhetoric, is not necessarily conducive to the realization of U.S. national interests or the improvement of the relationship with the Nation that embodies a quarter of the world's population.
I actually am here today, however, with a more optimistic message, and in contrast to much of what has been said by the other witnesses, I would like to just rehearse a few of the things that are in my own written testimony.
I would call your attention and that of other Members of the Committee to the appendix that I have attended, a quickly done translation of only the chapter headings from a fascinating book published in Chinese a few months ago. This is the kind of book that is appearing with greater and greater frequency in China now, as the domestic dialog inside China about where the country is going and the discussion about the enormous challenges and difficulties that the country faces continues to expand.
I found this book really quite remarkable, and I think that as we look at the China on which we are trying to do a policy analysis, it is worth remembering the degree to which debate over China's future is very much in play—in public play—in China today. I hope you find those translated comments interesting.
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I will mention in passing, because I consider it a sort of ''light'' challenge to the Congress, that the U.S.-China Business Council and a number of its members have now put together the U.S.-China Legal Cooperation Fund. Voluntary contributions from member companies have made it possible to create a small fund which we hope to use in furtherance of projects in the area of rule of law and legal cooperation with China, in support of and to give life to the commitment that President Jiang and President Clinton made last October to enhance cooperation in this crucial field.
The building-block, unglamorous, unspectacular work of finding greater harmonization and improving the transparency of China's laws and the impartiality of their administration is really close to the core of what the American agenda with China should be. We at our Council are trying to do our part from the private sector side. There is much room for Congress to do the same with small amounts of money to fund programs that are seeking your support, and I urge you to do so.
I have included words about the general role of business here. Time is passing quickly, so I will just make the point that we in American business are not in China to transform Chinese society, convert the Chinese people to any particular creed or world view, or for that matter re-make Chinese politics in the image of any other country.
On the other hand, it is not coincidental that the growth of American business activity in China, which of course is very large now, has corresponded with the rapid growth of China's modern economy and China's plunge into the mainstream of global commerce and ideas.
The central part, however, of what I am trying to say is this: you can't make policy with China and about China, first of all, spasmodically every spring around a Jackson-Vanik calendar. That is no way to make policy with China.
Second of all, you can't make successful, or I should say effective policy with China, unless you really spend time (and I mean every Member of Congress spend time) on where China has been, where it is now, and where it is going.
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In that regard, I took the liberty of saying something rhetorically colorful here: while the President declared China to be on the wrong side of history, in that remarkable press conference with President Jiang Zemin last fall, we are now at a time when the United States, in a burst of zeal and enthusiasm, could pitch itself onto the wrong side of history as well. We could in fact create a policy regime regarding China which started from an essentially mistaken image of China today, and thus put ourselves at the back of the train instead of the front of the train as China continues to evolve.
Let me develop this briefly.
I testified before the Senate Foreign Relations Committee last week, and took a lot of time to talk about the famine of 1958 to 1961 in which 20 million people died. Excess deaths, 20 million. That was 40 years ago. It was a famine engendered by the regime of that time. The regime created a set of policies, and carried them out with such fanaticism and with such bureaucratic complicity, that at the end there was a colossal social catastrophe, of which Mr. Wu was a personal witness, and which is known to many.
In my State testimony, I tried, by making a long analysis of that tragedy, then to turn to the fact that the China of those years (and the China of the Cultural Revolution which we all remember—little children beating Uncle Sam on the head with sticks, and the endless, endless, endless propaganda about ''American imperialism and Soviet revisionism'' and so forth), that China burned itself into American consciousness.
I tried, though, to come make a series of points about the China we are dealing with today, and to encourage Members as they contemplate legislation to recognize that we are not talking about the China of 1958 or 1966 right now.
A. No great leader, no single, semidivine ruler. Deng was no Mao, and the post-Deng leadership is a group of talented but ordinary mortals.
B. Doctrinal fanaticism—gone, all but dead. Marxism, Leninism, Mao Zedong Thought, as they call it, have lost their operational power.
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There are still true believers, and in fact one or two of the witnesses today have made the point that I would like to emphasize here: there is a stream in Chinese thinking and Chinese politics and Chinese life of nativism, xenophobia, antiforeignism, doctrinairism, ideological literal-mindedness, slavish obedience to some fundamentalist version of Marxism-Leninism. It is in there. It is not today in the ascendant. We should not be acting and making policy that would do anything to bring that strain in Chinese politics and Chinese life back into the ascendant.
C. Regime-inspired political mass movements, a la the 1950's and 1960's and 1979s—gone. Market economy arrived, not totally predominant but arrived. Just read the newspapers, read The Washington Post, read The New York Times over the last week, read about the privatization of urban housing, read about growing labor markets, in which American companies and foreign companies are so heavily involved, where no freedom to choose employment existed before.
D. The structure of law—not complete but vastly more elaborate than it used to be. And the structure of law as it grows reminds us of a strange truth: The United States has a strong interest in China's own preservation of a central government capable of governing and capable of ensuring that its laws, which are getting better and better, are in fact carried out and enforced around the country. If you think you have a problem with proliferation or with intellectual property now, think what it would be like if the central government of China were somehow deconstructed by our own efforts, as some witnesses might recommend, or as a result of its own misfortunes.
E. Self-isolation: The China that we came to know and fear in the 1970's, the China of the totalitarian ruler, the fanatical leader, the absolutely omnipotent party, the interference in every aspect of the life of every citizen, was also the China which was isolated from the rest of the world. The Chinese authority chose to enter the world after 1978. They chose to let the world into China, economically and in many, many other ways. They chose to come out to the rest of the world for study and opportunity. It is a passing point today that 70 percent of the vice ministerial and higher ranked officials in the Chinese Government today have spent at least 6 months in the United States.
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Madam Chairwoman, as I close this overly long battle with the clock, let me just turn to one theme that has come up in a number of testimonies today and suggest that we do have some terminological fallacies here. As far as I am concerned, ''engagement'' is a passing fancy. It is a term dictated by the needs of media, by the needs of American politics. You have to come up with a one-word phrase that you associate with what you are trying to do. I think frankly that this obsession with a single word has led us astray.
At the same time, if ''engagement'' versus ''isolationism'' is a false dichotomy (and I think most of your other witnesses have suggested that they feel that way), I would say that the tendency to dichotomize ''profits'' versus ''principle'' is the standard sound bite for that—is equally false.
We should no more accept the idea that we are facing some sort of ultimate moral decision as to whether we as Americans are committed to economic success or to principle than we should face the false dichotomy of engagement versus isolation. Certainly very few Americans would accept that economic success and principle are at odds with one another. They are not at odds with one another as we approach China, either.
I have taken much too long, and I look forward to commenting with other members of the panel, with Congressman Manzullo and Mr. Sherman and of course yourself. Thank you very much.
[The prepared statement of Mr. Kapp appears in the appendix.]
Ms. ROS-LEHTINEN. Thank you so much, Dr. Kapp. We appreciate it.
I will open this up to whoever wishes to respond, if you could respond to the argument that President Clinton's visit to Tiananmen Square will do more harm than good because it sends the message that the massacre is over, it is time to move on.
And as we know, President Clinton said that he accepted the invitation to go to Tiananmen Square to avoid offending the Chinese. What would be the ramifications if the United States would have declined this invitation from a Chinese leader? If you could respond in whatever way you wish, whoever would like to. Gary Bauer.
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Mr. BAUER. Madam Chairman, I think what is striking to me is, when the Chinese came here some months ago they set the terms for their visit. They went to American shrines of liberty, much to the chagrin of many of us. And when we go there, they set the terms of where the meetings take place.
It really is a kowtow policy, and I think if we are going to observe a moment of silence today, while we can observe it over Jasper, Texas, what we are all horrified by, even as grotesque, is an American President allowing the image of himself reviewing the troops in Tiananmen Square to be broadcast all over the world and to be broadcast, even more importantly, into the cells, the jail cells in China where good people are still suffering because they just want human liberty. That I think deserves more than 15 seconds of silence.
Ms. ROS-LEHTINEN. Mr. Munro, and then Mr. Kapp.
Mr. MUNRO. Madam Chairman, I want to respond very briefly to what Bob Kapp said. Bob Kapp was suggesting that those of us who are critical of China, critical of U.S.-China policy, have this vision in our heads of a Communist China that existed 20 years ago.
I lived in China when Chairman Mao ruled and I know what that system was like. I am willing to stipulate, Bob, that China isn't Communist at all anymore. I think it is more like a nasty, one-party, right wing dictatorship with economic and military policies that are fundamentally opposed to U.S. national interests.
And, Madam Chairman, I would add, by the way, I had the privilege not only of being educated about communism in China in the 1970's under Chairman Mao, but I also visited Cuba in the early 1980's, and I sensed the two societies were very much alike.
Now the China of today is, as Bob suggests, not the China of 30 years ago, but it is still very much a threat to our interests and to our values. Thank you.
Ms. ROS-LEHTINEN. Dr. Kapp.
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Mr. KAPP. Just to return to the subject that you asked us to comment on, and from which we have unfortunately strayed, Madam Chairman, if I am not mistaken, the issue of how Jiang Zemin was going to be handled in Washington—the issue on which it is said that we did it ''their way''—was whether the State dinner for President Jiang Zemin was going to be in a big tent on the back lawn at the White House. Is that not right, Gary? The Chinese held firm that they wanted exactly the same State dinner treatment that all other State visitors receive and thus that be done.
Now, I thought that the idea of the tent was a rather nice one, and in fact there was a pleasant concert in the tent after dinner; it was really a gracious thing to do. But as I understood that, and I may be wrong, the issue was that the Chinese were holding out for the absolute ritually perfect, standardized State visit treatment for their State visitor.
But again, Gary, correct me if I have missed something on that.
Mr. BAUER. I would be happy to. No, Bob, Madam Chairman, there was a whole list of things that were a matter of conflict about China's President's visit here, everything from the size of the State dinner, to would he get a 21-gun salute.
Something extraordinary happened that I had never seen in all my years in Washington. A screen was actually put up on the lawn of the White House so that the Chinese President's eyes would not have to actually see the demonstrators across the street. I mean, we went to extraordinary lengths to accommodate every demand they made.
In contrast, the Chinese actually demanded of President Clinton, a demand that was met, unbelievably, that he not stop in any other country on the way to China, that he not visit any American ally before he landed on Chinese soil, and we unbelievably agreed to even that.
I repeat, this is a policy that I believe is close to appeasement, and the message it sends to China is that there is nothing they can demand of us that we will not ultimately do if we think money is at stake.
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Ms. ROS-LEHTINEN. Thank you.
Mr. Wu, Go ahead, and I wanted to ask another question. You can respond to this as well.
There was a lot of press attention about the release of the Chinese dissidents Wang Dan and Wei Jingsheng a while back. Do you believe that this was a victory for the engagement policy, or is it merely in your mind a public relations move by Chinese officials? And do you think that the Chinese Government, along with other dictatorial, oppressive regimes, uses the release of dissidents and prisoners of conscience as trinkets to be bestowed upon visiting dignitaries?
Mr. Wu. I think, according to common knowledge, exile is a torture, exile is violation of the human rights.
Today, the Clinton Administration wants to say that the exile of Chinese dissidents is an achievement of engagement policy, and this is a kind of improvement of the human rights record in China.
But we never applaud, where during the cold war, we never applaud the former Soviet Union, Communist Poland, Communist Romania's exiled dissidents. We never say this is a kind of achievement or a kind of improvement from these Communist countries. But today we say this exile is achievement. It is out of my common knowledge.
I want to say, Bob said China is very different. Yes. Let me remind you of something. In 1955, Khruschev publicly condemned Stalin, and Khruschev policy until later, like Brezhnev, is very different from Stalin policy. But the West, including the United States, said no, this still is a Communist evil empire system.
Deng Xiaoping until this moment has never done it. He never publicly denounced Mao Zedong. Chairman Mao's portrait is still way up there in the gate. Maybe in the area of economics they change some policies because they have to allow Western capitalists to make investments in China, but the political system, fundamentally there is no change.
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When we say the Communist empire ended, it is in 1991 finally the statues of Lenin and Stalin were pulled down, and then we say the Soviet Union evil empire dismissed. We are too soon to say Chinese Communists fundamentally have been changed.
I want to quote another comment from our President. In March 1997, in a speech President Clinton made the following statement: ''One of those great, great questions is how will Russia and China, the two great former Communist powers, define their greatness in the next century.'' Former Communist power, this came from our President. I want to say this is really out of the common knowledge. Even, even the government leader in Beijing, they will laugh after it because they say, ''We are Communist. We are a Communist country.''
Mr. GAFFNEY. Just a point on both of these questions. I was privileged to attend a press conference that Harry and Gary and a number of others had on the occasion of the ninth anniversary of the Tiananmen Square massacre, and I was struck on that occasion by comments made by two people I don't usually agree with one of your colleagues, Congresswoman Pelosi, and Senator Paul Wellstone, who said, in about as many words:
''That heroic Chinese individual who stood before the tanks and stopped that column as it headed into the square better represented and was better exemplifying American ideals and principles and traditions than will our President when he stands in the square.''
And I think that is a crucial point. It is about symbolism, and I am afraid that we often hear in this town about people having tin ears politically. It is just hard to believe that the President of the United States could allow himself to exhibit the kind of deafness with respect to political symbolism as this President is doing.
And what makes this important is, as Gary is pointing out, it is really exemplary of the policy that allows China to believe it will get whatever it wants on anything, whether it is technology, whether it is bonds, whether it is access to and influence over our policies and political decisionmaking, whether it is our relationships with our allies.
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This is not conducive to a strategic partnership that will be worth anything from the U.S. point of view. To the contrary, I believe it is a formula for encouraging China to believe that it can press further.
And whether one calls this an authoritarian regime or a Communist regime—they certainly call themselves a Communist regime, as Harry says—we must understand they will see weakness on our part as an invitation for expansionism in one form or another, and I think that is not in the long-term interests of this country.
Ms. ROS-LEHTINEN. Thank you so much.
Mr. Sherman.
Mr. SHERMAN. Thank you, Madam Chairman.
I think there are a number of false dichotomies. One of those is engagement versus isolation. I don't think that is just a misstatement, I think it is basically designed to say that anyone who does not favor whatever the State Department wants with regard to China is a boob, an idiot, a xenophobe, or an isolationist. No one in my district thinks I look like Calvin Coolidge, but it is a tactic for the State Department and those who favor the current policy to try to castigate the intelligence and the open-mindedness of those who would disagree with them.
The second false dichotomy is that this is a dichotomy between those who want to make profits for the country as a whole, not for individual companies, but really want to help the American economy, versus those who care about human rights. You know, I would feel better if we were selling out our values for money. We are selling out our values for the opportunity to sell out our economy:
1996, a $40-billion deficit; 1997, a $15-billion deficit. Mr. Munro testifies that for 1998 we should expect a $60-billion deficit, and they call this normal trade relations.
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I don't know of a single trading relationship where the total trade is $75 billion, and that is composed of $62-billion of exports in one direction and $12 or $13-billion of exports in the other direction, and that is called normal. We are here trying to protect a mutant trade relationship, one that is profitable for those who import and for those very few that export.
But for the last 500 years, at least, countries have recognized that they have to export. The age of colonialism was an ill-founded attempt to capture markets. Many wars and conflicts occur because a country tries to push its exports. In the history of China, I believe, the Opium Wars were a little balance of trade problem; that the British decided to deal with their balance of trade problem by selling opium to China, since they couldn't find anything else to export, to pay for the imports of tea, et cetera. We seem to have ignored this, and we are told we have got to have normal trade relations.
The chief problem I have is that there is no alternative that is offered as far as a foreign policy. One foreign policy, you vote for MFN, now and then you do a moment of silence for those who are beaten or killed in China.
Mr. Wu, do you think anybody in China does anything more than giggle if they hear that the Congress passes a resolution saying, ''Oh, it's terrible''? Let's say upon the same day we were to approve MFN and then pass a resolution attacking human rights abuses in China. Would the resolution be regarded as comic relief?
Mr. Wu. Comic relief for the common people?
Mr. SHERMAN. No, behind the walls.
Mr. Wu. Behind the walls in Forbidden City?
Mr. SHERMAN. Yes.
Mr. Wu. And they will say American imperialist.
Mr. SHERMAN. Imperialist?
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Mr. Wu. Yes, because——
Mr. SHERMAN. So the answer is——
Mr. Wu. They will call you American imperialist.
Mr. SHERMAN. —they feel that the United States has no credibility to attack them. We are ''imperialists'', and whatever moral values we hold are not to be given much regard.
I would say there are those who tell us that, ''Oh, the things made in China cannot be made in the United States profitably.'' We need tennis shoes, so we need them to be made in China. And I would point out that if we were to shift, say, $62.6-billion of purchases of things like tennis shoes and garments and other items produced in low-wage countries to Honduras, Bangladesh, the Philippines, et cetera, I believe those countries, flush with $62.6 billion of American money, would probably buy more than $12.8 billion of American exports.
There unfortunately in this world is no shortage of people in poor countries, and it is possible that production in Bangladesh is 10 percent less efficient or 10 percent more costly, but that is a problem for the individual producer and importer. The fact is, from a balance of trade perspective there is no country in the world that would import so little from the United States if they exported $62 billion-plus to us.
The problem again I have is, I have got to vote on MFN, I have got to vote on this or that resolution condemning policy. I vote for both. Mr. Wu has described the reaction in Beijing. And we at this point are not in a position, at least, to just suddenly turn off MFN. That is not a policy I would recommend.
And so I would like to explore avenues. Now one of those is to deal with the extra goodies that we give countries in our trade relationship: special trade credits, OPIC, EXIM Bank, Department of Commerce, that type of thing. But I don't think it is really a sanction to say that we are not going to sell you special insurance.
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The possible sanction would be if we were to take each product, determine that a pair of tennis shoes, if MFN was completely withdrawn, would be subject to, say, a $4-tariff. We don't have or do not want to impose a $4-tariff right away, but we don't have to continue—let's say the tariff for MFN is $1—we don't have to grant full MFN. We could impose a tariff of $2 or $3, some intermediate step.
And I would start with Mr. Munro, but perhaps there are others that would comment. How would the Chinese react if we were to make what I will call the MFN benefit, the difference between tariffs without MFN and tariffs with MFN on their various products, if we were to make 10 percent of that benefit contingent on improvement of human rights, 10 percent of it contingent upon intellectual property protection, 10 percent of it contingent upon proliferation policy, 10 percent contingent upon them lowering their official tariff, and 10 percent of it contingent upon an overall reduction in the trade deficit, or some combination along those lines?
I gave you the most complicated version, just to entertain my colleagues. What would be the reaction to a smorgasbord approach to the MFN benefit?
Mr. MUNRO. Congressman, I have always been against specific, detailed linkage. I am against MFN for a variety of reasons, but I think the President got off on the wrong foot in 1993 when he tried to link MFN treatment to specific changes and progress toward more human rights, for instance.
I think that if we went even further and divided it up, the Chinese leadership in many ways actually would find that a wonderful propaganda target to attack, but I don't think you could get a consensus in this country for anything like that. And, again, it would smack of a form of American interference where we were basically judging them on these ten different criteria. I think it could be public relations disaster.
Mr. SHERMAN. Well, excuse me, Mr. Munro, but I have never heard that it was interference in a foreign country to insist that if we lower our tariffs, they lower their tariffs.
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Mr. MUNRO. You didn't put it that way. You talked about 10 percent on human rights, 10 percent on this, 10 percent on that.
Mr. SHERMAN. I talked about a number of things. Two of the items were trade, so let me abbreviate the issue and talk in terms of some diminution in their trade benefits of MFN status in return for at least trade concessions.
Mr. MUNRO. Oh, I think if we took a very tough line on MFN and tied it directly to trade, the initial reaction of the regime would be to scream and yell. But the fact is that they are very vulnerable on this point because 30 to 40 percent of their exports, total, come to this country. And I think if we had an administration that was willing to hang tough, the Chinese would soon be entering very serious negotiations over improving trade very quickly.
Mr. SHERMAN. I would point out that people not only focus on exports and imports but the balance. In 1997, China had a $43-billion trade surplus with the world. Forty-nine of that was with the United States. So the difference between running a trade surplus with the world and running a trade deficit with the world, a very substantial trade surplus or a modest trade deficit, is the U.S. market.
Mr. MUNRO. Yes, we are the patsy, Congressman, for China on this. And by the way, any classical economist will tell you that China right now, for this entire decade, should have been running a substantial trade deficit because it is a net importer of capital. And because it manipulates its trade, because it manipulates and controls its currency, it has been able to get away with this, particularly with the United States.
Mr. SHERMAN. Mr. Bauer, on the human rights front, do you believe it is enough to pass resolutions and to abstain from those special benefits of OPIC treatment and EXIM Bank?
Mr. BAUER. Right.
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Mr. SHERMAN. I know you would prefer us to eliminate MFN entirely, which is unlikely. Do you see the possibility of showing our displeasure with human rights policy by diminishing by some extent the MFN benefits that we award every year?
Mr. BAUER. Well, absolutely. A number of points, Mr. Sherman.
First of all, driving the debate on MFN is this rhetoric about the marketplace and how important the marketplace is. If the marketplace and if free markets are important, then the corporations that are going into China shouldn't expect the American taxpayer to bail them out or to guarantee their investments if things go sour. That is the marketplace, too. The marketplace may work if you are disadvantaged or you are advantaged.
On resolutions, obviously I would like to see more than resolutions passed. Right now we are not even, quite frankly, getting that from the Administration. As I pointed out earlier, in Geneva last year we didn't even raise the resolution, for the first time in years, about human rights violations.
But, you know, I would not want us to underestimate what a resolution can mean to those that are actually in prison. Congressman Frank Wolf visited some of the worst prisons in the gulag in the Soviet Union, and much to his amazement, he found out that somehow the prisoners in the gulag would find out when Ronald Reagan or a Senator or someone in the United States had made a speech about their plight and insisting that the Soviets treat them better. And somehow, miraculously, that word would even get through all of the barriers that were set up to isolate those prisoners in the gulag.
So if we can do nothing else but speak the truth about such violations, then speaking the truth is what we ought to do. I want us to do more. I understand MFN is a hard nut to crack. I would urge you and others to look at a piece of MFN, and that is, if we can do nothing else, can we not get a consensus that we should not be trading with companies controlled by the People's Liberation Army?
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One-on-one contact between Chinese citizens and American citizens in economic relationships is one thing, but doing business with the people that were in the tanks in Tiananmen Square, doing business with the people that have the missiles pointed at American cities, seems to me to be a bridge too far, and I would hope that both sides of the aisle might take a look at that after the MFN vote is over.
Ms. ROS-LEHTINEN. Thank you so much, and Brad, I apologize. We have a series of votes coming up and we do have two more Members who want to ask questions.
Mr. Manzullo, thank you.
Mr. MANZULLO. Thank you very much. I appreciate the opportunity.
I was in China this past December, and on the way from Xen Zen to Beijing we got waylaid in Inner Mongolia, and I was talking to a church back home, and the grandparents of one of the people who had been there acting as Christian missionaries were buried in Inner Mongolia. They had died naturalized. They had spent a long time over there.
And I am very much interested in advancing the role of human rights in China, but also I am a fervent believer in MFN. I side with Billy Graham on this issue, and also with the Dalai Lama.
One of the problems in not renewing MFN is that the Smoot-Hawley tariffs go up. That is tariffs anywhere between 50 and 100 percent on Chinese goods to this country. That spikes a trade war, and China then refuses to import our Boeing aircraft, our soybeans, and some of our electronics. And in the midst of this all-out trade war, the 15,000 to 18,000 U.S. missionaries in China become embroiled in this huge political fight, and I don't see anything accomplished because of what could happen from an outrageous trade war taking place.
I agree with Gary that this country should have a policy at every opportunity holding the Chinese feet to the fire in the area of human rights. I think the President was wrong going to Tiananmen Square. The President of Italy refused to be recognized there, and said he went there and prayed and laid a wreath. And I think if our President had said, ''Lookit, you know, I am still in favor of MFN but I want to make a statement, I don't want to be received in Tiananmen Square,'' I still think that the Chinese would have received him as the President of the United States in another place.
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So I think we are missing many opportunities to hold, as I said before, their feet to the fire. I have met with another member of the Chinese delegation in the office this past week, came to lobby on behalf of his country for MFN. Gave him a list that we had signed onto at the request of several Members who have been working to free some of the dissidents that have been jailed over there.
And I think it is extremely important that as a free trader, a person who believes in permanent MFN for China, that there has to be a simultaneous broadcast that goes on. The first broadcast is that we will engage in trade, and if there is dumping that takes place, such as happened in my district, where I encouraged a company to file a lawsuit with the ITC that stopped three Chinese companies from dumping brake parts into our district, saved about 400 jobs.
And whether we engage them head-to-head on dumping violations which is extremely important, or take every opportunity to inform them that we as Americans and I as a practicing Christian are extremely concerned over what is going on over there—when I met with several dissidents in Hong Kong, I was reminded—not dissidents, but the people who are working in churches over there, and they said, ''America forgets its Kent State. America forgets the fact that as an emerging nation you only allowed a handful of people to vote in the South of your country, until the civil rights bills were passed 30 years ago.''
And the Chinese with whom I was talking, many or some of those were trained in this country, and said, ''Lookit, this country was emerging from feudalism in 1911. It's 500 years behind Europe's experience. It's finding meaning for words such as democracy, freedom.'' And we asked them, ''Well, what should be the response of the U.S. Congress and the U.S. people?''
He said to continue the conversation, to continue to point out the areas of persecution, to continue to have Members of Congress travel over there, to continue to point out the inconsistencies, to continue to meet with the Religious Affairs Bureau Minister Ya, and to continue to keep a high profile in the area of religious rights.
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But it is also extremely important not to make this a religious issue. In other words, people of faith in this country can come down on either side of MFN, and his concern was that the debate over MFN in this country could end up splitting Americans, having Americans turn on each other over questioning one's spirituality based upon a broader MFN.
I am just sharing with you, these are people with whom I talked personally over there. Mr. Munro, is there a Robin Munro in——
Mr. MUNRO. Yes. We know each other but we are not related. We are two separate human beings.
Mr. MANZULLO. Because I met with him. He is with Human Rights Watch-Asia.
Mr. MUNRO. Yes, correct.
Mr. MANZULLO. And John Kaan, I met with him.
Mr. MUNRO. Yes.
Mr. MANZULLO. And it is interesting to see that as I met with people, their great concern is that the avenues of communication remain open. They feel that a trade war would simply stop it.
Mr. MUNRO. Congressman, you have twice now raised the specter of a trade war. I would just very quickly point out that China is waging a trade war against us and has been doing so for years and we have not responded. I have mentioned several examples in my testimony of how U.S. goods are barred by the Chinese.
They are fierce protectionists. Their protectionism has increased over the years, not decreased, and——
Mr. MANZULLO. I understand——
Mr. MUNRO. —there is no other country on earth that would tolerate this 5-to-1 unfavorable trade ratio.
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Mr. MANZULLO. I understand that one of the reasons—in fact Mr. Munro talked about possibly being admitted to the WTO, where there would be some rules by which they could live. But, I mean, I went to bat for one of my companies that was being dumped on by three Chinese companies. We have rules in this country under the International Trade Commission that could prohibit any company that dumps. There are rules that are set in place on it, and either you trade or you don't trade.
They are protectionist. We understand that. The kirametsus in Japan are terrible, what they do with trade. The French, with regard to the extent to which they subsidize their exports, they are actually terrible players, some of the worst players that could be on it.
Gary, I have a question I would like to ask you, and maybe you could clear this up. There was an article written about 4 weeks ago in U.S. News. It talked about Dr. Dobson. Thank God that he is back at work and he has recovered from that stroke. But it says that the Focus on the Family radio show is—well, let me read it—it says, ''Five hundred State-owned radio stations in China are about to begin the Focus broadcasts.'' Could you give me the background on that, or——
Mr. BAUER. You know as much as I do. He, as you know, has a daily radio show where he talks about family issues, how to raise recalcitrant teenagers, et cetera, and that show has a wide following all around the world.
Mr. MANZULLO. Is that by contract with Focus on the Family and the stations or——
Mr. BAUER. You know, I have no idea.
Mr. MANZULLO. Because if it is, I mean, that is engaging in business in China.
Mr. BAUER. Well, no. No, it isn't, because I can guarantee you that Focus on the Family doesn't make a profit.
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Mr. MANZULLO. No, you don't have to make a profit, because it is the business of information, it is the business of family values, it is——
Mr. BAUER. Well, Congressman——
Mr. MANZULLO. I am just saying that I——
Mr. BAUER. —please don't in any way insinuate that Dr. Dobson and Focus on the Family have changed their position on this issue. They remain very concerned about the number of pro-family Congressmen that continue, in their view, to not look at this issue with a consistent set of, I think, values, on one hand being pro-life, pro-family, et cetera, and then turning a blind eye to atrocities——
Mr. MANZULLO. I am not turning a blind eye to atrocities, Mr. Bauer.
Mr. BAUER. I am not saying you are. I am not saying that you are.
Mr. MANZULLO. You are not accusing me of that, are you?
Mr. BAUER. No, of course not.
Mr. MANZULLO. OK.
Mr. BAUER. You were not saying, however, a little while ago, were you—I couldn't tell if you were saying it or whether you were quoting somebody as saying that what happened at Kent State is somehow of moral equivalence to anything that is happening in China.
Mr. MANZULLO. I am saying that when I was talking to one of the leaders in the church over there, they were pointing this out, and I of course took issue with them.
Mr. BAUER. Good.
Mr. MANZULLO. And I said, ''Well, that was an official act, but the people who were obviously in charge of that didn't know what they were doing.'' And he pointed it out as saying that this was a slaughter that took place and it was very unfortunate, and does that mean that you stop trading? I mean, he raised these things because he was showing that America has had a pretty spotted civil rights, human rights issue for a long time.
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Ms. ROS-LEHTINEN. Thank you. We will just have one more comment, if we could, and then whoever else would like to respond to that.
Mr. MANZULLO. I just asked the question, because if it is not engaging at all in China, then if the radio show is furnished to these stations, that is engaging in a transaction that probably has nothing to do with that.
Mr. BAUER. Everyone at the table is in favor of engaging China, everyone. The question is, what are the terms of the engagement? Are the terms of engagement only trade, or are human rights and America's most deeply held values and our national security items to be engaged?
Mr. KAPP. Congressman, I know you have got a vote coming. Let me be very quick. It may seem heretical, but there actually is something to say about Tiananmen and Kent State.
Every country has its moments of defining political crisis. Some of us might think Kent State was; some of us might think Kent State wasn't. Some of us might think Watergate was; some of us might think Watergate wasn't. Every political system goes through periods of rending crisis that really are a social crisis of the highest order. Tiananmen was clearly that.
I think it is worth saying that while no one should forget what happened; and while the Chinese should get on with the task of reversing the verdict there, which I am confident they will, we should no more think of the 9 years since the last American President visited China as the years only since Tiananmen (and of China in the intervening 9 years as nothing but ''China since Tiananmen''), than we should say that the United States since 1963 is the ''United States since the assassination of John Kennedy.''
There is an issue of historical consciousness here. If we are going to make policy for the future with China, we have to recognize that the world is turning—that tragedies do need to be redressed, that people's lives need to be redressed, that there is a great deal left undone—but that time is passing, China is changing, we are changing——
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Ms. ROS-LEHTINEN. And speaking of the passage of time, thank you, Dr. Kapp.
Mr. Clement.
Mr. CLEMENT. Madam Chairman, I will keep my remarks brief, but this has been a very interesting session and I have enjoyed it immensely, learning as much as I possibly can about your feelings, your opinions, and where we should go from here.
You know, I am one of those that look at, for example, Russia and China, both of them having different types of communism, and I think probably most of you would agree with that. I would like to ask you the question, there is some feeling that the Russians moved too fast toward a market-oriented society, a capitalistic society as we enjoy in the United States, the free world has, where the Chinese have looked at it a lot differently and have moved much slower. But maybe they have had many more successes by resisting those changes, whereby the Russians moved so rapidly, not having the infrastructure that they probably needed to move toward a capitalistic society.
Do you agree or disagree? Mr. Wu?
Mr. GAFFNEY. Congressman, may I just add a point quickly. My own view is, both of them are now systems characterized by crony capitalism. What the Chinese have been more successful at, clearly, than the Russians, is penetrating the Western economies, most notably, as we have been talking about here, the United States. I think we are providing, to a considerable degree, life support for a system that could not otherwise survive in China.
Russia has not had that same safety net, though there is a considerable effort underway now, as you know, to try to get the IMF in and provide more life support for the Russian economy, too. But, truthfully, what we are up against here is not a market system. Ross and others have talked very eloquently about the fact that this is a system that is mercantilist, predatory.
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And I frankly find it mind-boggling when Members of Congress and others talk about free trade and their support for it. Anyone in favor of free trade cannot support the present practices of the Chinese Government. It is anything but free trade, and it will get worse, not better, as their economic situation deteriorates, which it is doing, and their need for further life support picks up.
Mr. CLEMENT. All right. Mr. Wu.
Mr. Wu. A country is like a bird. If the bird wants to fly upward, it needs two wings to cooperate. One is economic, with the other one politics.
The former Soviet Union birds use the politic wings very much. OK? And then the economy wing, at the time when Gorbachev and Brezhnev tried it, the bird crashed. So today the Soviet Union does not exist. Is Russia. Is a kind of non-Communist system. So they are paying a price to abandon the old Communist system. They have to pay the price.
The Chinese bird today is using the economic wings and not going to allow the politics wing free, but sooner or later you will find out how to solve the problem. If the political wing doesn't cooperate with the economy wing, the bird will still crash. We don't know yet. And also the economy wing has a problem, because the government wants to remain a so-called State ownership system. You know, this is the bedrock of the Communist regime. They were not going to allow to give it up, but economy as a capitalist system is booming, and sooner or later this fundamental contradiction has to be solved, and the Chinese will pay the price for it.
Mr. CLEMENT. Well, but the way I look at it, maybe I am mistaken about that, here you have got a China with one government but you have got two systems operating today, hopefully and peacefully that those two systems will merge.
Mr. Wu. I wish so, but I don't know, because those who control the power, they are not giving up their power, they are not giving up their political idea so far.
Mr. CLEMENT. I know you made the comment, Mr. Wu, earlier, I thought that was interesting, about you can't make a tiger into a vegetarian. I guess the same things applies to a rhinoceros. You can't make a rhinoceros a meat-eater, either, can you?
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OK. Gary Bauer, or doctor, any of you have anything to say?
Mr. KAPP. Very quickly, Congressman. I think Harry Wu is right, China is a nation in enormous flux.
The institutions of China collapsed at the end of the 19th century. The Nationalists tried to put them back together and they didn't manage to do it. The Communists tried to put them together in the 1950's and 1960's, with the ruthless system derived from the Soviet Union that we all know so well, and that didn't work well enough either. That is why they embarked on their reforms after 1978.
The institutions in China are very much in flux. That is what makes it hard for business; that is what makes it hard for people seeking to express their political views. They have got a long way to go and the end is not in sight.
The thing, though, that brings it back to a hearing like this is that we must ask ourselves: Is it within our power, and should we be—as I think Mr. Gaffney was suggesting—should we in the Congress and in the U.S. Government be acting in the belief that we can and should cause the restructuring of these Chinese institutions and the remaking of the Chinese political system?
I have argued in print before that we suffer from a malady. We want to tell China how to redo its political system or other domestic practices. We want them to do it the way we tell them to. And then we want them to say they did it because we told them to do it.
A great deal of the rhetoric that has burst into flame over the visit of the President to China has been over the question of whether the President should go to China, tell the Chinese Government to get it a certain way because that is the way we want them to and that is the way American values demand that they be; and expect that when China acts as an observer (which they may or may not) it will say it has done so because we told it to.
This will not happen, and it is an exercise in political rhetoric but, also an exercise in futility if we in private life, in congressional life, or in any other dimension of American life, persist in the mistaken assumption that we will tell them what to do, they will do it, and they will say they did it because we told them to.
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Mr. CLEMENT. Well, we Americans have a lot to learn from the Chinese, and the Chinese surely have a lot to learn from us, and I hope we can do it in peace, and God bless America.
Ms. ROS-LEHTINEN. Thank you. Thank you, Mr. Clement, and we thank our panelists for sharing your insight and your experiences with us, especially in this timely debate, as we consider trade sanctions and most-favored-nation status as well to China. Thank you, each and every one of you. The Subcommittee is now adjourned.
[Whereupon, at 4:26 p.m., the Subcommittee was adjourned.]
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