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44–150 CC








APRIL 23, 1997

Printed for the use of the Committee on International Relations

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BENJAMIN A. GILMAN, New York, Chairman
HENRY J. HYDE, Illinois
CASS BALLENGER, North Carolina
EDWARD R. ROYCE, California
JAY KIM, California
TOM CAMPBELL, California
JON FOX, Pennsylvania
LINDSEY O. GRAHAM, South Carolina
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ROY BLUNT, Missouri
SAM GEJDENSON, Connecticut
TOM LANTOS, California
PAT DANNER, Missouri
WALTER CAPPS, California
BRAD SHERMAN, California
BOB CLEMENT, Tennessee
BILL LUTHER, Minnesota
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JIM DAVIS, Florida
RICHARD J. GARON, Chief of Staff
MICHAEL H. VAN DUSEN, Democratic Chief of Staff

Subcommittee on Asia and the Pacific
DOUG BEREUTER, Nebraska, Chairman
JAY KIM, California
JON FOX, Pennsylvania
JOHN M. McHUGH, New York
EDWARD R. ROYCE, California
HOWARD L. BERMAN, California
WALTER H. CAPPS, California
MIKE ENNIS, Subcommittee Staff Director
RICHARD KESSLER, Democratic Professional Staff Member
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DAN MARTZ, Counsel
HEIDI L. HENNIG, Staff Associate


    Mr. Jeffrey Bader, Deputy Assistant Secretary of State for East Asian and Pacific Affairs

    Dr. Merle Goldman, Boston University

Prepared statements:
Mr. Jeffrey Bader
Dr. Merle Goldman
Dr. James Przystup

House of Representatives,
Subcommittee on Asia and Pacific,
Committee on International Relations,
Washington, DC.
    The Subcommittee met, pursuant to notice, at 2:15 p.m., in room 2172, Rayburn House Office Building, Washington, DC, Hon. Doug Bereuter, presiding.
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    Mr. BEREUTER. The Subcommittee will come to order. We had hoped at this time, Ambassador Pete Peterson could make a few remarks on the Administration's Vietnam policy before he goes to Hanoi next week. I regret that we found out at 4 p.m. yesterday that the Administration would not permit Ambassador Peterson to appear before the Subcommittee—apparently because Secretary Albright is testifying on the Hill today. I am unhappy about this late notice for a cancellation and about the lost opportunity to hear and question Ambassador Peterson, our former colleague, before he leaves for Vietnam. Unfortunately, this is not the only time this year the Administration has failed to cooperate on our oversight responsibilities.
    We will now proceed with the Subcommittee hearing on the Sino-American Relations and U.S. policy options.
    It seems within the last several months, nearly everyone has put forward an opinion on what U.S. foreign policy should be concerning the People's Republic of China. An author, Ross Munro, in his book ''The Coming Conflict with China'' proposes a containment policy. Human Rights Watch Asia called on Vice President Gore not to go to China unless certain human rights conditions were met. Gary Bauer, president of the Family Research Council, says to say no to China MFN, and others urge the United States to restrict technology exports to China so we do not help the PRC to modernize its military.
    The number of voices calling for changes in our China policy are growing in both number and volume. No doubt, these voices, in part, result from a vacuum that was created when the Clinton Administration flip-flopped on its China trade policy linkage with human rights that was undoubtedly the product of the heat of the 1992 Presidential campaign.
    However, these calls for change lack serious analysis and are based on significantly flawed perceptions. The calls for containment do not seem to be driven by any strategic imperative; but, rather, by the inner need of some to have an adversary.
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    Asking Vice President Gore not to go to China is not a policy alternative but a sign of frustration in the human rights community. Calling for cutting off MFN, in my judgment, ignores the harm that such a policy would impose—not on China—but on American workers who are dependent upon both import- and export-related jobs with China. And finally, advocates on unilateral export controls ignore the fact that a starved-for-cash Russia is selling the Chinese complete military systems rather than the components that they might obtain from the United States.
    Nevertheless, these criticisms persist and occasionally jeopardize serious fundamental principles of U.S. policy, like normal trade relations or the promotion of our nonproliferation interests. Why do these criticisms persist?
    I think one reason these criticisms persist is because we do have some very serious policy differences with China. The PRC has selectively followed international norms on many issues and completely ignored them on others. For example, China's economy is far from being consistent with the free-market principles of the WTO, despite some of its new promises, and it has yet to sign the International Covenant on Civil and Political Rights. We are also rightfully concerned about some chemical precursors and components that have been sold to the rogue regime in Iran.
    Another reason for the persistent frustration, it seems to me, is because other countries seem more willing to let us do the dirty work. We have long known that the United States has been, by default, required to police adherence to these international norms. This is a thankless job which often puts U.S. interests at a disadvantage. For example, when the United States decided not to finance the Three Gorges project, a very controversial decision I might say in our Committee, for environmental and human rights concerns, the Swiss, the Japanese, the Germans, the French, the Canadians, and others were more than happy to take our place.
    Nevertheless, all of these proposals for changes in our China policy fail to take into account two fundamentally important facts. One, the United States and China currently cooperate on many matters, and such cooperation could be jeopardized by failing to prioritize appropriately America's foreign policy objectives. For example, should the United States be willing to jeopardize China's cooperation on North Korean and nuclear testing with confrontations over less important issues?
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    Or two, confrontation on certain issues is not necessarily going to alter behavior on China. For example, do we actually believe that religious persecutions in China will diminish if we just raise our tariffs on Chinese imports by several hundred percent by denying the normal tariff status that MFN provides?
    Those are some of the questions I would ask the critics of our current policy with respect to the PRC.
    Today, we are pleased to have Mr. Jeffrey Bader, the Deputy Assistant Secretary of State for East Asian and Pacific Affairs, to explain the Administration's current China policy. Mr. Bader has held several important posts at the State Department during his 21 years of service. Most relevant for our purposes today, he has served as a director of the Office of Chinese and Mongolian Affairs and was Deputy Principal Officer at the Consulate General in Hong Kong from 1992 through 1995.
    Then we will turn to our panel of experts to discuss the pros and cons of current policy as well as some of the proposed policies. Ambassador Winston Lord was a frequent witness before this Subcommittee when he was Assistant Secretary of State for East Asian and Pacific Affairs. We appreciated his keen insights so much then, that we have invited him back now that he is a private citizen. As a former ambassador to China, his knowledge and expertise will be particularly valuable for us today.
    Dr. James J. Przystup is currently the director of Asian Studies Center at the Heritage Foundation. Dr. Przystup's broad experience in the private sector and his government service at the Department of State and the Department of Defense enables him to speak knowledgeably on the whole range of U.S. interests in China including political, security, human rights and commercial issues.
    Finally, Dr. Merle Goldman is a professor of Chinese History at Boston University and a Research Associate at the Harvard University's Fairbanks Center for East Asian Research. She is a well-respected Sinologist who has written more books and articles on China than can be mentioned in a brief introduction here today. In 1993, Dr. Goldman was a public member of the U.S. Delegation to the U.N. Commission on Human Rights.
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    Ladies and gentlemen, in order to have a full discussion and allow for questions on important issues, we would appreciate it if you would limit your oral remarks to about 10 minutes each, maximum. Your written statements will be made a part of the record.
    I will now turn to Mr. Capps and other Members who might be in attendance to see if they have any opening statements.
    Mr. Capps.
    Mr. CAPPS. Well, I will make a very brief opening statement. I have been looking forward to the testimony because I know this is a critical topic from which we must find wisdom and exercise judgment. The scholarly journals and other publications are full of information about the relationship between the United States and China, and that is an ongoing evolving relationship. On the one hand, there are serious legitimate human rights concerns. That is only part of the picture. The real question is what strategy will be most effective, most successful in bringing about change in the areas where there needs to be change. How can we establish the kinds of relationships with China that build on trust rather than distrust? And to what extent do economic factors dictate and influence that relationship?
    So, I am looking forward very much, Mr. Chairman, to the testimony of these expert witnesses.
    Mr. BEREUTER. Mr. Capps, I am too, and thank you for your excellent opening summary.
    And now, Dr. Jeffrey Bader, Deputy Assistant Secretary of State for East Asian and Pacific Affairs, Department of State.
    Dr. Bader, welcome. Glad to have you here today for your testimony, and to take questions from the Subcommittee. As I mentioned, we would appreciate it if you could limit your remarks to about 10 minutes, and your entire statement will be made a part of the record. You may proceed as you wish.
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    Mr. BADER. Thank you, Mr. Chairman. I will excerpt my statement. I should be 10 minutes.
    Mr. Chairman, I welcome this opportunity to appear before you to discuss U.S. policy toward China. There is a vigorous debate in this country concerning the U.S.-China relationship. This hearing will make an important contribution to that discussion, and will help inform our policy decision.
    The current discussion of our China policy implicitly recognizes that the Sino-American relationship is one of the most important in the world, and is rapidly becoming even more crucial. Discussion of our China policy should properly start with our interests in the Asia-Pacific. East Asia has been our most important trading partner since the early 1980's.
    We have critical security interests in East Asia. Our commitment to regional security has provided the foundation upon which Asia's remarkable prosperity grew. We have five mutual defense treaties in the region. In recognition of these interests, 100,000 American troops are forward-deployed today throughout the Pacific.
    The People's Republic of China, in turn, is a key regional power in Asia. From the Korean Peninsula to the Spratley Islands, China is a major factor in regional stability. Its phenomenal growth rate means it would be prudent to assume it will become still more important. Its actions will be a pivotal factor for good or ill in affecting the area's stability.
    China also plays a global role. It is a permanent member of the U.N. Security Council. It is destined to be a major influence on the world's environment and energy use. In short, it is very likely that China will play a growing role in the world. That role can be helpful or harmful, and it is the task of American diplomacy to ensure that it is the former.
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    To accomplish our goals, we need a clear-eyed policy that firmly advances American interests and values. Such a policy must recognize our many shared interests, the benefits that have accrued to both sides when we have cooperated. It must recognize our differences and entail unhesitating assertion of our interests and views on such issues.
    But there are also things we must not do. We must not demonize China. Some Americans tend to think that because China is not a democratic friend, it is necessarily an enemy, and must therefore be opposed. That is a false choice, and one we would not be long in regretting if we made it. To treat China as an enemy is to ensure that it will behave as one.
    Some advocate a policy of containment toward China. Such a policy would forfeit the historic opportunity to enlist China's participation in meeting common challenges and would disrupt relations with our allies, none of whom see the wisdom of such a policy.
    Our policy of comprehensive engagement is designed to ensure cooperation with China where appropriate while opposing those Chinese actions and policies with which we disagree. We welcome a secure, prosperous and open China. Such a China would be a constructive member of the international community, in which we look to see China increasingly integrated, and a valuable partner for the United States.
    A very important area in our bilateral relations with the PRC this year is the reversion of Hong Kong to Chinese sovereignty. The United States has a strong interest in a successful transition, by which we mean a transition in accord with the 1984 China-United Kingdom Joint Declaration.
    We have important interests in Hong Kong: trade, investment, access for U.S. Navy port calls, cooperation on law enforcement, as well as protection of basic freedoms, rule of law, and democracy.
    Our role is to protect these vital interests. Through diplomatic contacts and in public statements, we have advocated the importance of maintaining Hong Kong's high degree of autonomy and protection of basic freedoms. President Clinton and Secretary Albright demonstrated publicly our commitment to the preservation of those basic freedoms in their meeting last week with Martin Lee, leader of the political party with most representation in Hong Kong's legislature.
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    We have fundamental disagreements with China's human rights practices, which do not meet international norms. The PRC continues to imprison dissidents for the peaceful expression of their views. We are concerned about the maintenance of Tibet's unique cultural, religious and linguistic heritage; we have urged Beijing to reopen negotiations with the Dalai Lama. We believe China should provide access to its prisons to international humanitarian organizations. We have urged it to sign and ratify the U.N. Covenants on Civil and Political Rights and on Economic, Social and Cultural Rights, and are pleased by Beijing's recent announcement that it will sign the latter covenant.
    We also stress to the PRC the importance of the freedom to practice religion; in particularly, we are disturbed by reports of heightened restrictions on religious freedom and increased harassments of religious groups.
    On the other hand, we should acknowledge the significant progress China has made on human rights concerns in the past 15 years. Today, the average Chinese enjoys greatly expanded freedom of choice in terms of employment, education, housing, travel at home and abroad, and greater access to information than ever in China's history.
    We have made mixed progress in recent years on nonproliferation issues. China's statement in May of last year that it would not provide assistance to unsafeguarded nuclear facilities is particularly important. China's evolving attitude toward nonproliferation norms is a welcome and significant change from its past actions.
    Unfortunately, there are other nonproliferation issues where progress has been disappointing. We have expressed our strong concerns about China's inadequate controls on the export of materials and technology that can be used in missile development and chemical and biological warfare; about shipments to Iran by Chinese companies that do use chemicals that could be used in the weapons program, and about its arms sales to Iran and Pakistan. If we determine these are violations of our laws, we will not hesitate to take appropriate action against those responsible, as we have done in the past.
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    We also have some recent accomplishments on trade issues. The June 1996 accord with China on its protection of intellectual property is an important achievement. Last February, we concluded a textile agreement that provides expanded access to the Chinese market for American textile producers. The contracts that Boeing and General Motors signed during Vice President Gore's trip to China last month illustrate both the current importance of the Chinese market and its vast potential. We have reinvigorated our discussions with China for its accession to the World Trade Organization.
    In spite of these achievements, we face a growing trade deficit with China. To combat this problem, we seek to remove the barriers confronting American exports to China. We are pursuing this goal with all the tools at our disposal, including WTO accession negotiations and continued bilateral trade efforts.
    As we look to the future on trade issues, I would particularly like to stress the importance of continuation of China's Most Favored Nation status. This Administration, like all others of both parties since 1979, believes that continuing China's MFN, that is, normal trading status, is critical to advancing our national interests with regard to China. We should remember that MFN status is, after all, not special treatments, but merely the ordinary tariff treatment we give to virtually every country in the world.
    Failure to continue MFN would severely damage our relations with China and our efforts to advance U.S. goals in important areas such as human rights, nonproliferation and trade. We should also bear in mind that failure to continue MFN would damage Hong Kong, whose economy is closely intertwined with that of the PRC, just at the time when it most needs our reassurance and support.
    One of the thorniest and potentially most volatile issues in our relationship is Taiwan. This Administration, like the five before it, is committed to a ''one-China'' policy. We maintain a robust unofficial relationship with Taiwan, and have made clear our expectation that Beijing will continue to adhere to a peaceful approach to the Taiwan issue. We will fulfill our commitments under the Taiwan Relations Act to provide Taiwan with the defensive arms necessary to maintain a sufficient self-defense capability.
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    We emphasize to both sides the importance of avoiding actions that the other could view as provocative. We are pleased by the reduction of tension in the Taiwan Strait in the past year, and urge the resumption of dialog between Beijing and Taipei.
    In sum, Mr. Chairman, our bilateral relationship with China is likely to be one of our most complex and important foreign policy challenges for many years to come. It encompasses a broad array of importance, sometimes vital, American interests. We see many problems, but we also see many achievements and many opportunities.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Bader appears in the appendix.]
    Mr. BEREUTER. Thank you very much, Dr. Bader, for your excellent testimony. There are a number of points that I certainly emphatically agree with, and wanted to break in on you and say so, but decided that there were too many.
    I am going to turn first to the Members, and then I will complete the questions at the end that I might have remaining.
    Mr. Manzullo.
    Mr. MANZULLO. Dr. Bader, I had to take a telephone call and missed most of your testimony, but I have had the opportunity to peruse it and thank you for it.
    I have a question on MFN. I take the position that the best way to bring about amelioration of reports of civil rights abuses is through engagement, and therefore I am a strong advocate of MFN; at the same time I believe in using every other diplomatic tool possible in order to curb the civil rights abuses that have taken place in China, and I think that you concur with my thought, and if so, if you could elaborate on that.
    Mr. BADER. Certainly, Congressman. I certainly do agree with both of the points that you made. First on engagements. I think that the arguments on engagements run through all aspects of the relationship. I will not go into that now, but just on the human rights aspect.
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    If you look at China before 1978, when China was isolated and was not engaged with anybody in the West, China had a horrendous human rights record, and certainly much worse than it has been for the last 20 years. What we have seen in the process of engagement between China and the West in the last 20 years has been the opening of China to the ideas, the values, the styles and the thoughts of the United States, of Hong Kong, of Taiwan, of the management styles, the political ideas of the West.
    This has not meant that China has become a democracy or that China protects civil liberties in anything like a satisfactory way, but it has meant a significant evolution in the lifestyle of the average Chinese and the options open to them. So I do not think there is any question that engagement enhances human rights, and that isolation detracts from human rights in China.
    As to the other half of your question, what other tools are at our disposal? Do we simply engage without doing anything else? I think the answer is clearly there are other things we must do.
    One thing we do is to shine the spotlight of international attention of human rights abuses in China, and the recent effort in the U.N. Human Rights Commission to pass a resolution criticizing China's practices served that purpose. Granted, it was a failure in the sense that the resolution was never voted upon and did not pass. But it still served, I think, as an important educational process. It focused world attention on human rights abuses in China. It is unfortunate it did not pass, but it still served a purpose.
    Additionally, we maintain the whole range of sanctions and limitations on our relations with China because of human rights. The 1990 legislation passed in the wake of Tiananmen imposes a whole range of sanctions on China which cannot be lifted unless there are significant improvements in their human rights conduct. Those are just two of the ways in addition to diplomatic contacts that we attempt to improve human rights in China.
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    Mr. MANZULLO. Well, I thank you for your thoughts, and I am just very much concerned over a new wave of isolationism that is hitting this country. I mean, granted that China does have a positive trade balance with this country, but normally the new and emerging countries will have a positive trade balance until such time as their economy kicks in, and the people are able to buy more exports from the United States.
    But I really would encourage you to continue to take that opinion. People think that the best way to deal with China is ''punish'' it. But there is a big difference between dealing with the government of China and dealing with the people of China. And I think that as we work toward trying to find some type of a working relationship with China, we have to take into consideration that normally it is the people there that will suffer more if we decide to disengage in trade. So I just wanted to thank you for your comment on that.
    Thank you.
    Mr. BEREUTER. Thank you, Mr. Manzullo.
    Mr. Capps.
    Mr. CAPPS. Thank you.
    Dr. Bader, I appreciated your testimony very much. I want to concentrate on just one area of it, and that has to do with Tibet and relationship between China and Tibet. And as you know, His Holiness the Dalai Lama is here, and has been to the Capitol even today, and is, I think, meeting with Vice President Gore.
    My own involvement in that story is somewhat minimal, but before coming here I was professor of comparative religion at the University of California where we are trying to establish an endowed chair in Tibet and Buddhism, and His Holiness has been helping us a great deal with that, so we have been hearing about the ongoing conflict between those two sovereignties.
    I think my question for you is, in your testimony you said, ''We have urged Beijing to reopen negotiations with the Dalai Lama.''
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    Is there anything the United States can do here specifically to urge that, or to break the deadlock?
    In other words, what I am asking is there any basis for hope that at some point in the not too distant future there can be, if not resolution, clarification or some way of advancing that conflict so we do not simply have to leave it like this over and over again? We wish it were otherwise, but it is not. I know there are so many American citizens who feel strongly about that, not only because of their high regard for Tibet or even for their knowledge of the situation, but because of their devotion to this Nobel Prize recipient, who has inspired so many people in so many other ways. Then they also become part of this legitimate cause that he is advancing.
    I would just like to hear some optimism there or some clarification. Thank you.
    Mr. BADER. Congressman, I am more likely to give you clarification than optimism, but let me try.
    First of all, as to what we can do. I think what we can do is to show the respect of the American people and the government for the Dalai Lama, and the affection that the Tibetan people have for him, which the American Government will be doing today and tomorrow. He will be seeing, as you mentioned, the Vice President. The President will see him as well in the context of that meeting. And he will see Secretary Albright tomorrow as well. So I think that sends a message to the Chinese government of our respect for the Dalai Lama.
    Beyond that, I cannot offer particular encouragement except to say I think we have to appeal to China's rational self-interest in this. China has not always shown itself to be obstinate on the question of discussions with the Dalai Lama. In the 1980's, after General Secretary Hu Yaobang visited Tibet and Lhasa in 1980, China pursued a more enlightened policy toward Tibet and more open toward negotiation. They began cracking down in 1987.
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    I think what Beijing has to understand, and I do not think that they fully understand it yet, is that negotiation with this Dalai Lama offers the best chance to reach accommodation and to a satisfactory settlement; that this Dalai Lama has the respect of his people. If the intention is to wait for another Dalai Lama, I do not think one can assume that another Dalai Lama, a subsequent Dalai Lama will necessarily have the same affection and support, and I would hope that Beijing would at some point make that calculation and decide it is in its self-interest to deal with this man who transparently has the affection and support of his people.
    But I do not know. I will give it some more thought. But I do not know that we have very much leverage beyond that appeal to rational self-interest, and what I have just described.
    Mr. BEREUTER. The gentleman from Florida, Mr. Hastings, is recognized.
    Mr. HASTINGS. I thank you, Mr. Chairman, and thank you for having this hearing, and I am especially appreciative of all of the witnesses and anxious to hear from Ambassador Lord and others as well, and appreciate Mr. Bader's comments.
    Mr. Bader, the basic law that China touts so actively and C. H. Tung refers to often and countless persons ranging from Martin Lee to others in Hong Kong cite to the basic law in a variety of ways encompasses in its body a provision regarding sedition.
    But more important than that, it seems that national security limitations on the rights of association and speech and in the broad sense civil liberties occurred very recently when Mr. Tung after the Chairman and the Speaker of the House and myself and other Members of the delegation had breakfast with him, we all went separately to Beijing. We—some of us at least—did not see him in Beijing. But no sooner than we landed in the United States a week following, boom, here come these restrictions.
    What are we going to do? I mean, you know, I read your statement, and I hear what you say about we are going to monitor, the Chairman is going to monitor, the Speaker is going to monitor. But what the hell are we going to do when they clamp down on these people?
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    Or just what is it that the Administration proposes to do to maintain, as you put it, ''the way of life in Hong Kong''?
    Mr. BADER. Well, Congressman, what you are referring to, I am sure, is the three statutes, the public order ordinance, the size ordinance and the amendment to the Bill of Rights that C. H. Tung has proposed for alteration.
    There is currently a consultation period in which the people of Hong Kong have a chance to comment on the proposal. So we do not know yet exactly what the ordinances will look like. I have spoken to Hong Kong people in the last few days, and there is apparently a very vigorous debate and all of the points that were in the original proposal are certainly not universally shared.
    So the ultimate proposal, the ultimate ordinance may look somewhat different from what has been out there. So, first of all, I do not want to prejudge that outcome.
    We were opposed to the annulment of the previous statutes, and we said so, we said so publicly, and we felt that they provided a perfectly good framework for protection of civil liberties in Hong Kong. They should not have been annulled. They have been. We hope that whatever is put in their place provides at least equal protection.
    As for what we will do, I think there are two parts to that question. One is, what will the ordinance ultimately look like, and we do not know just yet. And second, how will they be implemented and enforced. And, again, I have spoken to some Hong Kong people who say that the—you know, how shall I put it—the devil is in the implementation; that the statutes will be worse, are likely to be worse than the existing statutes, but they will be better than the statutes that were in effect in 1991, when they were revised.
    Now, the British for many years chose not to implement them in the Draconian way. There is, of course, concern post-1997 that they will be implemented differently.
    What I am saying is I think we have to see how they are implemented before we see how we react, but we are sorry they are changed.
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    Mr. HASTINGS. Let me cut across here just a minute.
    Mr. BADER. Yes.
    Mr. HASTINGS. Let me tell you where I think China is outfoxing us. First off, on Hong Kong. They have a 5-year window that they are operating on, and they seem to understand the dynamics of that 5 years. Beyond that 5 years, they also have a 50-year plan. We do not have a 1-year plan, and I am concerned to know just exactly when it is we are going to get around to that.
    But I would like to leave that subject and turn briefly to Taiwan and ask a very similar question. You assert in your testimony that, as enunciated in the Taiwan Relations Act, any attempt to determine the future of Taiwan by other than peaceful means would be of grave concern to the United States.
    Well, hoop-de-doo. You know, grave concern. What does that mean? I mean, what are we going to do if China decides that our so-called defensive weapons, which I agree that they are, are offensive in nature and do more than just have exercises in the Taiwan Straits, do take some restrictive measure? Are we prepared to do more than say, ''Oh, we have grave concerns''?
    Mr. BADER. The other relevant portion of the Taiwan Relations Act calls on the President to consult with the Congress on steps to take in reaction to the use of force or threat of use of force.
    I cited the Taiwan Relations Act, our policy is based on the Taiwan Relations Act. As you recall, Congressman, until 1979, we had a mutual defense treaty with Taiwan with clear provisions about what would happen in the event of an attack. As part of the conditions of normalization with the PRC, that treaty was terminated. The Congress chose to pass the Taiwan Relations Act, and there was active debate at the time as to whether language that declared an attack upon Taiwan as threatening the security interests of the United States would be added to that act. As I recall, that amendment was voted down in the Senate by 53/47 or thereabouts.
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    So the language that I used in my statement is, of course, drawn from U.S. law, and I think it would be presumptuous of me to assert what the President and the Congress might choose to do consistent with that law in the circumstances.
    Mr. HASTINGS. You know, in a genuine way, diplomatic speak is why we have fuzzy policy as it pertains to China. I urge that we be very clear. As you so rightly put it in your testimony, these are delicate balances that six Presidents previously have had to undertake, and this one and the successor to this one are going to have this problem—successors—for some time to come. We ought to be clear. You today, cannot tell me other than in vague and ambiguous diplomatic speak what America's real policy is toward China other than on the subject of MFN, and I think that is a mistake, and I will just pass it along for what it is worth.
    I have one final question if I would be permitted, Mr. Chairman.
    Mr. BEREUTER. Would the gentleman yield on that?
    Mr. HASTINGS. Of course, I will.
    Mr. BEREUTER. Would you agree that the House of Representatives has a straightforward policy on Taiwan?
    Mr. HASTINGS. I indeed do. I indeed do.
    Mr. BEREUTER. In fact, we have a fairly clear and enunciated policy on a bipartisan basis, as I recall, in China.
    Mr. HASTINGS. Without question.
    Mr. BEREUTER. In Beijing and Taipei.
    Mr. HASTINGS. Without question. My criticism is offered to the Administration.
    Mr. BEREUTER. I thank the gentleman for yielding.
    Mr. HASTINGS. And I mean it when I say it.
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    Mr. Bader, you mentioned our concerns about Chinese exports in the area of missiles and chemical and biological weapons. Could you comment briefly on China's role in helping Iran to develop nuclear weapons, and are they helping us to dissuade Iran in any way?
    Mr. BADER. Nuclear weapons—China has nuclear cooperation with Iran in the area of peaceful nuclear cooperation. We urge all countries not to cooperate with Iran because we believe that cooperation even for peaceful purposes can be fungible, can be diverted for other purposes.
    Nonetheless, China's cooperation is consistent with international law. Their cooperation is under the International Atomic Energy Association. So I mean, that is the answer basically—we have urged them to eliminate or curtail their cooperation. They have indeed curtailed their cooperation in the last year or two at our behest, but there is still some cooperation that we would like to see terminated.
    Mr. HASTINGS. Thank you very much, Mr. Chairman.
    Mr. BEREUTER. Thank you, Mr. Hastings.
    Dr. Bader, I have a number of questions I would like to put forth to you, and if you could answer them as briefly as possible and still feel that you are adequately covering it, I would appreciate it.
    First of all, regarding the possibility of a Presidential summit meeting with President Jiang Zemin. Are plans still underway for the president to visit the United States this year?
    Mr. BADER. Yes, they are.
    Mr. BEREUTER. And is it tentatively planned that President Clinton will visit China the following year, in 1998?
    Mr. BADER. There is no plan yet on the timing of President Clinton's visit. That is still not decided.
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    Mr. BEREUTER. Has there been discussion about this being an exchange of visits?
    Mr. BADER. Yes. What has been agreed to is that there will be an exchange of visits in 1997–98, and then President Jiang will visit in 1997.
    Mr. BEREUTER. Thank you.
    With respect to the sale of weapons, and there is an interesting and disturbing article in the New York Times this morning by Jeff Gerth related to the possible diversion of technology used for construction of aircraft, being used not for civilian but for military aircraft.
    I would like to go to the Russian sales. What is it, as far as you know, that the Russians have agreed to supply the Chinese in military weaponry, and how does it compare to U.S. dual-use exports in China? Are there any areas of overlap?
    I know this could logically go to the Defense Department, but perhaps you could provide some answers for the record here.
    Mr. BADER. In terms of major systems, the Russians will be supplying SU–27 fighter aircraft. The numbers are not clear, but perhaps somewhere between 70 and 100. They will be supplying at least Sovremenney destroyers. They will be supplying SA–10 SAM missiles. I think they have already supplied two kilo class submarines. Those are the main systems that I am aware of. There are other systems out there.
    Mr. BEREUTER. Do you think this implies any kind of a Sino-Russian relationship, or would these weapon systems be made available to anybody that had the hard currency to pay for them?
    Mr. BADER. I think it is mainly a function of hard currency availability. The Russian sales have been very substantial in recent years, but it is basically commercial, I think.
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    Mr. BEREUTER. And I interrupted. Are there other systems that you wanted to mention?
    Mr. BADER. No, those are the main systems.
    Mr. BEREUTER. What would you say about the concerns expressed in this country about the provision of dual-use technology to the PRC?
    Mr. BADER. In connection with that particular article or more broadly?
    Mr. BEREUTER. In general.
    Mr. BADER. Well, we have restrictions on dual-use technology, and of course they attempt to provide the balance between keeping us competitive commercially and preventing national security, risks to our national security in transfers of technology.
    We look at whether or not China could acquire the article in question from another source before making a decision. If it could acquire it from another source, we would generally make it available. We try not to disadvantage our American business in that respect.
    Mr. BEREUTER. What can you tell me about the Administration's recommendations or decisions related to President Lee's visit to Panama and the possibility of a request coming for a transit visa?
    Mr. BADER. As you know, Mr. Chairman, we have a policy on Taiwan leaders' visits, and a policy on Taiwan leaders' transits. The policy on transits is that we will consider transits, we will approve transits on the basis of safety, comfort and the convenience of the Taiwan leader. We have done that already with several Taiwan visitors in the last year or two, the Vice President and the Premier of Taiwan. We expect to continue to provide visas to leaders, and President Lee would be eligible as well.
    Mr. BEREUTER. Is it true that the Chinese and the Taiwanese have resumed direct shipping links, or have announced their intention to resume those direct links?
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    Mr. BADER. The Commercial Shipping Associations of the PRC and Taiwan have reached agreements. And in the last week two PRC ships have called on the Port of Kaoshiung. In the next several days we may see Taiwan ships calling on the ports in Fuzhou and Xiamen in Fujian Province. These are the first cross-strait ship calls in 40—50 years. It is an important event.
    But this has not—how shall we say—this is not direct trade between the two. It involves only transshipments through Taiwan, going in and out of the PRC.
    Mr. BEREUTER. Is this an important event? Does it say anything about the possibility of the resumption of a cross-strait dialog?
    Mr. BADER. Mr. Chairman, I think there have been two important events in the last couple of weeks. There is that, and there is also the Deputy Secretary General of Taiwan Strait's Exchange Foundation will be visiting the PRC for talks. It is on a minor subject. He is not at the top of the organization, but the fact is that this is the highest level of such visit to the PRC since June 1995. So I think we seen some softening intention. There is still very substantial distrust on both sides, however.
    Mr. BEREUTER. Thank you.
    Could I move to proliferation issues now, and ask you what clear evidence or hard evidence do we have, if any, that the PRC was providing ballistic missile technology or ballistic missiles to Pakistan?
    Mr. BADER. Well, of course, in 1994, Mr. Chairman, the United States—1994? 1993, the United States did sanction the PRC for provision of missile technology to Pakistan because of what we believed were components for M–11 missiles. So we did make a judgment that such transactions had occurred.
    You recall those sanctions were lifted in 1994, when the PRC made certain commitments about ground-to-ground missile sales.
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    Mr. BEREUTER. Now, is there not a subsequent argument between the PRC and the United States that certain shipments have been made which do not seem to be in question, but the PRC indicates that they are not in violation in making those shipments, and the United States has questions about whether or not that is accurate?
    Mr. BADER. That is correct, Mr. Chairman. The PRC has never acknowledged doing what we assert that they did.
    Mr. BEREUTER. Finally, I would like to ask some questions about the recent actions before the U.N. Human Rights Commission. It has been my hope that we could multilateralize pressure and sanctions instead of attempting to take the load and do it bilaterally because of the impact of our actions, and lack of impact.
    Now, this may be a rhetorical question, but is it true that France defected on this issue for a quid pro quo for airbus sales to China?
    Mr. BADER. I guess I—I do China and Asia. I expect if I tried to do France, I would hear from not only the French, but my European bureau. I guess I will not try to judge their motives.
    Mr. BEREUTER. Fair enough. I just wanted to ask the question, and say that I think that this Member, at least, wants to acknowledge and commend the Government of Denmark for having the courage to pursue the resolution when their larger neighbors seem to lack that courage, or be more interested in export sales.
    Mr. BADER. We share that judgment, Mr. Chairman. Mr. Chairman, we have so said.
    Mr. BEREUTER. Now, you have indicated we have lost this issue in a direct sense at least. I think that it is 7 years since we have tried to pursue this, and I know this Member and other Members, and I think almost bicamerally and bipartisanly have urged the continuation of our effort in the U.N. Human Rights Commission.
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    What do we try next, or what do we try to do better before the Human Rights Commission if we do not see progress on human rights issues with respect to the PRC?
    Mr. BADER. Well, in this particular connection, Mr. Chairman, as you know, this year we made it clear to the Chinese that we were not seeking a confrontation, and we made it clear that if they took certain steps that significantly altered their human rights record, that we would not proceed with a resolution. Unfortunately, they did not take the kinds of steps to the degree that we had hoped. That is one way in which we could proceed next year.
    Again, we could look to see if China would take some steps. Of course, they are going into a party Congress this fall, and that could affect their approach to domestic issues such as this. But, as I say, I think there is value in the exercise even if you do not win.
    Mr. BEREUTER. Finally, I understand that the PRC is considering allowing the ICRC prison inspections, and there is talk of them signing the International Covenant on Civil and Political Rights.
    What can you tell us about that, and whether or not those are live prospects?
    Mr. BADER. Well, first on ICRC, you will recall that they did have ICRC visitors in 1994. They discussed a possible prison accord. They did not reach agreement then. Now the PRC is talking again about inviting ICRC visitors for talks on an agenda that is not altogether clear at this point.
    It is very hard to say at this point, Mr. Chairman, if what we are seeing is a sincere attempt to reach agreements or if what we are seeing is an attempt to deflect international opinion by repeating the 1994 exercise.
    On the International Covenants, the Chinese have said that they will sign the International Covenant on Economic and Social and Cultural Rights this year. On the Covenant on Civil and Political Rights, which I think from our point of view is the more important covenant and the one to which we adhere, they have said that they are actively, and seriously, those two adverbs, studying the covenant. You know, we went down this road on the ICRC in 1994, and it did not result in a successful outcome. One hopes that these actively, seriously, and positively will lead to ratification, but that is all we have so far.
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    Mr. BEREUTER. Thank you.
    Any of my colleagues have further questions?
    Well, Dr. Bader, I thank you for coming and testifying today and for taking questions.
    In your statement on page four you warn us about the possibility of demonizing China and the impact. And I think you are absolutely right about that. I am concerned that we can make an adversary out of China. We do not necessarily have to find ourself in that position. It is not inevitable. And I am reminded of President Eisenhower in one of his statements often quoted, warning us about an industrial military complex that moves us toward war and military confrontation.
    Today, I think he would not frame it the same way because it is not the military that I see pushing us, and the industrial complex has more interest in selling domestic-related exports to China than they do in producing military hardware since that is a small part of their operations now with respect to almost every particular firm. It seems to me we have more to fear from ideologies who want to sell magazines or get attention for their news columns or for partisan ideological reasons are pushing us, consciously or unconsciously, to a confrontation, to find a new enemy, and I just think that the people that do that for their own particular ends may some day have to answer their consciences about whether or not they are responsible for the fact that we now have a new cold war, even worse, a hot war, that costs thousands and thousands of American and other nationalities' lives.
    And, I think we are in a period of time that we have a very dangerous pressure to make China into an adversary. So I am hoping the Administration can have a clear, precise and productive policy that enunciates with respect to Sino-American relations.
    Thank you very much for your testimony.
    Mr. BADER. Thank you, Mr. Chairman.
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    Mr. BEREUTER. Now, to call for our second panel ambassador, Winston Lord, Dr. Merle Goldman, and Dr. James Przystup. I hope they are all here. I have not seen all of them.
    I would say to our second and distinguished panel that I have already given some biographical information about you. Perhaps not all of you were in the room at this time, but I do want to welcome you. The Subcommittee will appreciate having your testimony and the questions answered that they might pose to you. Your entire statement has been made a part of the record, and you may proceed if you wish. If possible, I would appreciate it if you keep your comments to 10 minutes or less so that we could have time for questions.
    First, we will hear from Ambassador Winston Lord, formerly Assistant Secretary of State for East Asian and Pacific Affairs. And, I think the first time I had a chance to chair a subcommittee during the 104th Congress, you were our most frequent person being at the testimony table, and I want to thank you for that again, and for more recently, good advice as we were preparing for a trip to Asia with the Speaker and the bipartisan delegation.
    But today I am expecting unusual candor from you since you are now back in the private citizen's category.
    Ambassador Lord, you may proceed as you wish.
    Mr. LORD. Mr. Chairman, it is a pleasure to be back before this Committee. You, Mr. Chairman, and your colleagues have conducted over recent years a series of hearings that have been noteworthy for their constructive and educational nature, and I commend you on it.
    I will be speaking from rough notes, and I will keep my comments circumscribed in length.
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    In terms of hearings, this is, of course, particularly timely, not only because of the general debate on our policy, but the fact that the Speaker and yourself and other colleagues have recently been to China. I commend you for the general line that you all took, the Speaker took in Hong Kong, Taiwan and Beijing. The Vice President has been there recently. The Chinese Foreign Minister is coming this weekend. The Chairman of the Joint Chiefs is going next month, and, of course, we have the prospect of summit meetings as well.
    Let me say at the outset it will not surprise you to hear, since I was recently a member of this Administration, that I support the general approach and most specifics, indeed, as well, set forth by Mr. Bader in his previous testimony, and I think he had an excellent opening statement.
    U.S.-Chinese relations are a complex challenge in any event, but they are even more so right now because of the mood in both countries. As I think you know, Mr. Chairman, I have dealt with the Chinese for 25 years. This is the single most difficult, prickly, and complex mood in China that I have seen in that 25 years, for a variety of reasons. I can elaborate later if you would like, but it has to do with dealing with the outside world as equals in only a short space of time, either having been No. 1 or having been humiliated by foreigners; the fact that they are emerging on the world scene as a new power, and they are dealing with us as a status quo superpower; the fact that during a transition no leader can afford to look soft on sensitive issues.
    Moreover, they are appealing more and more to nationalism, which reflects their growing economic and military strength and replaces Marxism as ideological glue. They have looked at the events in the Soviet Union and have concluded, wrongly, in my opinion, that you cannot afford political freedom as well as economic advance or you lose party control, and you lose control of your empire; they have been cracking down on dissidents and ethnics. There is no single leader like Deng and Mao that can direct U.S. policy in general. They are very suspicious of the United States, believing that we are out to contain, divide and subvert them. So for all these reasons we face a very complex scene in China.
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    But I want to emphasize at the same time that nevertheless the Chinese want good relations with the United States in their own self-interest for two basic reasons, economics and geopolitics. The obvious economic ones: We take a third of their exports. It is a $40-billion surplus in their favor. They need our technology. They need our investment. They do not want to depend on Japan or Europe or any single source for all these elements.
    And second, geopolitically for at least the next couple of decades until they get stronger and more self-sufficient, they still see some utility in dealing positively with the far barbarian to balance off the near barbarians, their historical and potential future antagonists.
    So they do want to improve relations with us, but it is going to be difficult. Perhaps after the party conference in October when I expect Jiang Zemin to be reaffirmed as the first among equals in a collective leadership, he and his colleagues will feel stronger and perhaps can be more flexible in their relations with us. I think it is clear that they put off any summit meeting until after their party conference, and let us hope that will give them a more solid base.
    But if the mood is difficult in China, it is also very complicated here in the United States. You have the general breakdown of the consensus on U.S. policy for many decades because of Tiananmen Square, because of the disappearance of the Soviet treaty, and because of Chinese actions. More recently is the heating up of the debate that you just referred to in your recent remarks a few minutes ago, and the allegations on fund raising, influence peddling, et cetera.
    Let me address U.S. policy in the remainder of my remarks against this backdrop. As I said, I support and indeed helped to shape the present general approach of engagement. The fact is that the debate in this country has become extremely distorted. It is simplified as being for engagement on the one hand, which is represented by some as rolling over for the Chinese, and containment by others which suggests we should move to all-out hostility.
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    The fact is we need a middle course. The fact is that China is going to be a great power in the next century no matter what we do. And so therefore the challenge is to try to tip the odds in a direction that China will be a more cooperative and benign power on the world scene rather than a disruptive and hostile one. We cannot guarantee that, but we can help try to influence the odds.
    In my view, the policy of containment, never very well defined by the way, is totally misguided on many fronts. First, it is a self-fulfilling prophecy, as you just alluded to. The best way to find an enemy is to look for one. We cannot assume that China is going to be hostile in the 21st century. We cannot assume that China is going to be cooperative in the 21st century. We just do not know.
    But to assume that they are hostile now is to make sure that they are. It would also mean shifting our resources, diplomatic, economic and military, in order to carry out our policy of containment, a cost to other objectives. It would mean forfeiting Chinese cooperation on a range of issues. They will continue to pursue parallel policies on some because it is in their self-interest, but on others where they have become more cooperative because of engagement we would lose out.
    And finally, and most fundamentally, and Mr. Przystup pointed this out in his paper, unlike during the cold war we would be totally alone. With the Soviet Union, we had NATO, Japan and many other alliances containing Moscow and its expansionist policy. There is no question there is growing concern and apprehension in Asia about China's growing power, and that is why our friends in every case want us to remain there as a forceful presence. They do not wish, however, to seek out containment at this point. They too realize that may be necessary in the next century.
    So not only would we be alone in this policy of containment, and therefore it would be ineffectual, we would have, in addition, frictions with Japan, with the rest of Asia, with Europe, as they would be forced to choose between us.
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    Now, I am therefore for engagement, but this does not mean, I repeat, rolling over. As Senator Nunn recently put it, we do not have to choose between rigid hostility and unconditional friendship. Engagement as practiced by the Administration, is firm and hard-headed, in my view. Engagement means speaking out forcefully on human rights; meeting leaders like Martin Lee and the Dalai Lama at the highest levels; tough negotiations in various areas, including the economic area; the threat of the largest sanctions in American trade history in order to get good implementation of the intellectual property rights agreement, as well as the similar process on textiles; sanctioning China twice on nonproliferation; sending aircraft carriers into the Taiwan Straits to deter Chinese use of force; and, above all, keeping our powder dry, maintaining and bolstering our alliances, for example, the President's very successful trips to Japan and Australia, as well as our other alliances; and maintaining our force levels in Asia of 100,000; the single most important thing we could do, I am delighted that Secretaries Cohen and Albright have already preempted the budget review of the Pentagon and have said that we will maintain that force level for the future. Finally, we should work closely with our allies.
    Mr. BEREUTER. If I may interrupt, there is a resolution this Member authored with the chairman of the National Security Committee, asking us to keep it at that level, which will be marked up by the Full Committee this week or next week.
    Mr. LORD. I am delighted to hear that. It is crucial for our policy in the Pacific. It is also crucial as part of a hard-headed engagement with China.
    And thus, we should be working with others to try to integrate China into world and regional institutions so that we can tame any adventurous impulses emanating from Beijing through interdependence and their self-interest. We should seek to give them a stake in, and also to incur upon them, obligations and international norms and rules. They not only have to accept these, but they certainly have a right to help shape them as well.
    I will not go into great detail on specific issues because of time limits. I am prepared to do that in the question and answer period. But let me just say engagement involves the broadest possible agenda, including these high-level visits that have been established, both to expand areas where we have cooperation, and to try to reduce areas where we have differences.
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    And in staccato form, the differences include human rights, where we should speak out, meet with the kind of visitors that I have suggested; pursue resolutions in Geneva, whether or not we lose; and strongly support Radio Free Asia, which I think is a very important innovation, a lot of initiative coming from the Congress. We should also make it clear to the business community that in their own self-interest they should be helping the Administration and the Congress on this issue instead of cutting across their interests in many respects. It is very short-sighted of the business community not to understand the importance of a free press and the rule of law and other elements, whether it is in Beijing or in Hong Kong.
    Nonproliferation is a mixture of some progress in certain areas, and some concerns in others, and we can get back to that.
    On trade, I, of course, support the continuation of MFN. As far as permanent MFN, that I would use as leverage in WTO negotiations. It looks like it is going to be difficult given the present climate, in any event. There has been progress in those negotiations, even since I left office as I understand it, but we should not let China in unless it makes a decent offer of opening up its markets and commitments to implementing the rules of the WTO. It would be useful to have them in but not at any price.
    On Taiwan, where the Speaker was particularly effective wanting both sides not to be extreme, we should continue to support Taiwan, strengthen our unofficial ties, sell defensive weapons. We should urge it also not to be provocative and drag us into some confrontation, even as we deter China not to resort to the use of force, not only through rhetoric but, if necessary, the use of assets as we did in the crisis in the Straits. We should urge the two sides to talk to each other directly, and insist that any resolution be worked out between them, but that it be peaceful.
    Hong Kong is the big wild card. Let me just state that China has every self-interest in making Hong Kong work, but they have shown every indication that they might strangle it. I am not writing off Hong Kong. There are many positive elements there. But if Beijing's attitude does not change on Hong Kong, I am very concerned about Hong Kong's future. I think Speaker Gingrich was particularly helpful in his remarks there, and what he said to the American business community.
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    These are the problems with Beijing, but what does not get attention in the media and the public, and should, is our positive agenda as well, whether it is Korea, Cambodia, regional security, the environment, crime, refugee, drugs, the nonproliferation treaty, the comprehensive test ban treaty, the chemical weapons convention, the lack of vetoes in the United Nations on key issues. There are many areas that we are working with China where we can expand, and these deserve vigorous attention, and more publicity along with the problems that we have.
    So, in conclusion, Mr. Chairman, there is no more important and complex foreign policy challenge, not only in this region, but in the world, for this Administration and for succeeding Administrations in the coming decades. I commend this panel once again for holding these hearings.
    Thank you.
    Mr. BEREUTER. Thank you very much, Ambassador Lord, for your excellent statement.
    Next, we will hear from Dr. Merle Goldman, a professor at Boston University, Research Association of Fairbanks Center for Asian Studies at Harvard University.
    Dr. Goldman, welcome. Glad to have you come to testify today. You may proceed as you wish.
    Ms. GOLDMAN. Thank you.
    I am going to say a few things that I think are very similar to what Winston just said, but maybe emphasize different aspects.
    My view is that because of China's history, its population and its increasingly important economic role, especially in the world community, I think it is going to be very difficult to influence China one way or the other. I think our influence can only be marginal. When China changes, it will be done by the Chinese people, not because we have imposed anything on them.
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    However, I think there are ways to influence China in this marginal way. They can be done in Congress. They can be done in various international forums, and I will give you examples of what I mean.
    I do not believe economic sanctions work. They are counterproductive. They only antagonize the Chinese. They inflame our relationship. They particularly inflame the nationalist feeling among the Chinese youth today. However, I am against granting China permanent MFN. I believe there is great value in reviewing MFN every year.
    In other words, what I am saying is it is the threat of the process rather than the act itself that is important. And China does respond to threats. The only way in which we can continue to bring pressure on China is through this yearly review.
    It will not stop human rights abuses. It will not stop the erosion of political institutions in Hong Kong, but it might limit them, and I feel that is as far as we can go.
    I am also a great believer in dealing with China in multilateral contexts, through forums, and particularly the U.N. Commission on Human Rights. I was a member of the U.S. delegation in 1993–94 to the U.N. Commission, and I saw how terribly important that was to China. They sent a huge delegation. They were very sharp young people; all spoke English very well. They lobbied morning, noon and night to prevent a resolution critical of China on human rights issues. So it is very important to them.
    My criticism is that we ourselves have not put on a similar show. We only got moving in Geneva this year in the middle of the meeting itself. For months before, China campaigned to ensure that a critical resolution would not pass.
    And, again, I do not necessarily want to see it pass, but the threat of its passage is very important in limiting China's human rights abuses.
    And, third, today's China is a very different China than the China of Mao Zedong. Mao Zedong, from 1949 to 1976, did not much care what the outside world thought of China, as long as he could do his own thing.
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    China in the post-Mao era cares very much what the outside world thinks of them. They want to be part of the establishment. They want to be accepted, and they want to join international organizations. Therefore I am a supporter of their joining the WTO, as long as they play by the rules. And it seems to me the more we get China involved in these international organizations, the more we can bring pressure on them to abide by the rules. Again, however, this is a limited response, there is no question about that, but I think that is as far as we can go.
    I have a colleague who says of the U.S. relationship with China: ''We want to engage but that does not mean we want to endorse.'' In other words, I think we should engage China on every issue we can possibly engage them on so that we do not isolate China. But we should also criticize. We can use rhetoric. They are shamed by being criticized in an international arena. They just do not want that to happen.
    So I guess my advice would be that we speak out strongly on China's human rights abuses and on what I believe is this gradual erosion of Hong Kong's political institutions that is underway right now. If we speak out constantly and publicly and call attention to what is happening, but that does not mean we want to isolate China. So, I guess my advice is to continue the present U.S. policy of using the carrot and the stick. And frankly, I think that it has worked well, but we may need more criticism publicly of China's actions in eroding Hong Kong's political institutions.
    Mr. BEREUTER. Thank you very much, Dr. Goldman.
    [The prepared statement of Dr. Goldman appears in the appendix.]
    Dr. Goldman, I mentioned her credentials, and I very much appreciate your testimony.
    Dr. James Przystup, director, Asia Studies Center, The Heritage Foundation, is our next witness. You may proceed as you wish.
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    Mr. PRZYSTUP. Thank you, Mr. Chairman.
    I have prepared a relatively brief statement which I have clocked between 8 and 9 minutes, so I will try and replicate that here. Thank you.
    China's emergence as a great power will be one of the defining events of the 21st century. Given its size, economic dynamism, and military potential, the way in which China integrates itself into the international system, or fails to do so, promises to shape the very nature of the international order in the coming century.
    For the United States, and for members of the international community, the challenge will be to structure an environment in which China will view this integration, based on existing norms, as beneficial and in its own international interests. Within this context, a central goal of the U.S. policy should be to expand the scope of freedom and the pace of political change in China.
    The opportunity: In 1978, in the aftermath of the two disasters of Maoism, the Great Leap Forward and the Cultural Revolution, Deng Xiaoping launched China on a national strategy of economic reform and modernization. Deng recognized that success would require access to international markets and finance. He also recognized that this opening of China would bring with it eternal influences. As he put it, an open window will allow in some flies.
    In abandoning Maoist calls for revolution, Deng ordered China's diplomacy toward developing the stability necessary for sustained economic growth. China normalized relations with Singapore, Indonesia, Vietnam, and the Republic of Korea—of nations with whom it had a long and troubled history. China moved from its longstanding support for the Khmer Rouge to embrace the Paris Peace Accords, which ended the civil war in Cambodia; and abstained in the U.N. Security Council vote which authorized the United States to use all possible means to expel Iraq from Kuwait.
    China has also demonstrated an interest in greater international integration, joining APEC and making entry into the World Trade Organization, a major foreign policy objective. Similarly, Beijing signed the Comprehensive Test Ban Treaty last September, and recently declared an end to nuclear testing.
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    At the same time, Beijing has evidenced a willingness to use force to advance its interests—against Vietnam; in the South China Sea, and most recently near Taiwan in 1995 and 1996. Likewise, Beijing has accelerated its military modernization program with an emphasis on acquiring power project capabilities.
    Internally, China remains a one-party dictatorship that represses the political, religious, and human rights of its 1.2 billion citizens. The State Department's annual Human Rights Report stands as testimony to this reality. And as the Speaker has abundantly made clear in his recent trip to China, these issues are of major concern to the United States.
    China's complexity, however, raises fundamental questions about its nature as an emerging great power and its relationship to the United States and the international system.
    For example, is China a revolutionary or revisionist power seeking to transform the very nature of the international system? Or is it an assertive but basically status quo power? Does it represent a global, ideological adversary like the former Soviet Union? Or is it like Germany in the 1890's, a rising expansionist power prepared to challenge the international status quo? Or is it perhaps a Gaullist-like France, using cultural nationalism and independence to restore national purpose while remaining a status quo power?
    There are, of course, no appropriate historical models. Reality is much more complex. And in all likelihood, China's conduct will not be a predictable black or white, but some shifting shade of gray. It will likely be both cooperative and assertive on a wide range of issues, undoubtedly seeking to shape, to its own advantage, the terms and conditions of its engagement with the world. This will complicate the lives of policymakers in Washington.
    Ideally, China will evolve into a modern, rule-based society, supportive of international peace and stability—and there are powerful forces in China moving it in that direction. But that outcome is not inevitable, and we must be prepared for other future.
    Unfortunately, there is no bumper sticker for China policy. To deal with China, the United States needs to move beyond the now sterile engagement versus containment debate. Quite simply, this is a false choice.
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    Containment worked against the Soviet Union for a number of reasons which do not apply to China today. The Soviet Union represented an ideological and expansionist military threat to the very existence to the United States and democracies across the globe. This allowed Washington to build and sustain an alliance coalition against Moscow. China does not at present represent a similar challenge. At the same time, the Soviet Union was an autarchy, closed to external trade and investment. China, on the other hand, is the world's third largest economy, open to foreign trade and inviting to foreign investment. Foreign competition for these markets is intense.
    As for engagement, in reality, the United States has never not been engaged with China. For example, in the early 1950's we fought against China on the Korean Peninsula; through the late 1960's we tried to isolate and contain China; and, following President Nixon's and Ambassador Lord's historic trip to China, the United States evolved a strategic, quasi-alliance relationship with China to contain the Soviet Union. Thus, the real issue is not engagement per se, but the nature of quality and purpose of engagement.
    What is needed is to clear away the fog of the present debate and to get back to basics, to focus on a realistic strategy which relies on both diplomacy and deterrence to protect and advance American interests. For want of a better bumper sticker, I would like to call this the Hans Morgenthau or common sense strategy.
    Far too many years ago, in a classroom far, far away at the University of Chicago, Hans Morgenthau observed to his students, of whom I was one, that generally good foreign policy is nothing but good common sense, and generally good common sense makes good foreign policy. I think that is a good starting point for today's discussion.
    Thus, policy must be consistent and diplomacy ordered toward clearly understood objectives, or national interests, and those interests must be pursued in a coherent fashion. The twists and turns over the recent years, the linkage of MFN and human rights, over Taiwan, over protection of American commercial interests, and over nonproliferation must be avoided.
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    These twists and turns have failed to communicate a clear understanding of American interests to the Chinese leadership. And they have risked misunderstanding and miscalculations in Beijing.
    For example, the Clinton Administration's failure to respond forcefully when Beijing first staged military exercises against Taiwan in the summer of 1995 may have caused the Chinese leadership to believe that a similar U.S. response would greet renewed Chinese exercise at the time of Taiwan's Presidential election. Those exercises led to the Taiwan Straits crisis of March 1996.
    The two U.S. aircraft carrier battle groups sent to the waters off Taiwan underscores the essential need for diplomacy to be backed by deterrence. This will continue to remain true. Deterrence must remain an essential component of any successful strategy. In Asia, this starts with the maintenance and strengthening of the U.S. alliance system and extends to the provision of missile defenses to protect U.S. forward-deployed forces as well as American allies and friends.
    Likewise, American diplomacy must be used to advance the cause of human rights in China. As Newt Gingrich demonstrated, American leaders can have productive meetings with the Chinese leadership and still promote American values of freedom and human rights. Indeed, American policies must aim at advancing freedom in China and use every opportunity and means to do so.
    In this regard, let me close with a few words on the coming MFN debate.
    As you may know, The Heritage Foundation has consistently supported the extension of MFN treatment to China. As The Heritage Foundation's president, Ed Fuelner argued in his op-ed in the April 14 edition of the Washington Times, we do so because we view commerce and the American presence in China as an instrument for expanding the frontiers of freedom for countless thousands of Chinese. By drawing them into the private sector and away from the State-controlled economy, American companies have lessened the degree of State intrusiveness in the day-to-day lives of their employees. Likewise, we believe the growing number of American nongovernmental organizations in China also serve to attenuate State intrusiveness and to expand the areas of freedom.
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    As long as the door to change remains open in China, we should continue to expand its opening. We do this best by going through that door, not closing it.
    Finally, I think the Chairman's bill, not to curry favor, is a good step in keeping the door open and advancing other American interests at the same time.
    Thank you.
    [The prepared statement of Mr. Przystup appears in the appendix.]
    Mr. BEREUTER. Thank you very much, Dr. Przystup. Thanks to all of our panelists for their contribution here. As we begin the question period, I would like to tell my colleagues that I am not using the 5-minute clock here because I want to have you receive an opportunity for follow-up questions and perhaps to generate some dialog among our witnesses here today as we seem to have the time to do this if the bell does not ring, and I think we ought to take advantage of that.
    Mr. Manzullo, the gentleman from Illinois is recognized.
    Mr. MANZULLO. Thank you very much.
    I appreciate the testimony. What I did not have the opportunity to hear I read, and Ambassador Lord, I am sorry, I did not have the opportunity either for you, but you have been our guest several times. As a Member of this Committee, I have always appreciated your testimony.
    You know, I would like each of you to give us in as practical, economic terms as possible what if the United States does deny MFN to China? I mean, what will that mean to American jobs, because that issue is not getting out? I mean, are we going to suffer massive layoffs? How is that going to hurt the people? If we could take the argument and counter it in terms of not what MFN will do to China, but what will it to do the United States, I think that perhaps is how we can do it. I would encourage anybody to start, and then dialog among the three of you; however you want to do it.
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    Mr. LORD. I might begin with a few comments. I do not pretend to be an expert on specific impacts economically, but let me take a whack at this issue.
    First, I would point out, although that is not the thrust of your question, that we would hurt China. There is no sense denying that this is a lot of leverage if we want to use it. They have got a third of their exports coming here, and they have got a $40-billion surplus. So even those of us who strongly recommend continuing MFN have to acknowledge that China would be badly hurt if we cut it off.
    Having said that, it is still a bad idea. First, on the economic front, the thrust of your questions, it, of course, would hurt American consumers. I cannot give you figures but many of these are lower-income Americans who buy textiles and toys and other things of that nature, although China's exports are moving up the scale in electronic, electrical machinery, and so on. It would contribute presumably to inflation. It would decrease American consumer choices and raise the cost of consumer goods, although some of this you could get from Mexico and elsewhere.
    It would hurt American exporters certainly. There is no question in my mind that China would retaliate. To what extent, I do not know. It depends whether it was total MFN revocation or partial revocation on the U.S. side, but clearly our exports would be hurt. And we can be sure of one thing: that none of our allies would be with us so they would gobble up whatever advantages they could at our expense. Europe, Japan and the others would all take over whatever markets they could.
    It would also have a devastating impact, of course, on Hong Kong. You have got to look at this not just in economic terms. I know that is your thrust, but all of us are concerned about the future of Hong Kong. Even someone who is as unpopular in Beijing as Martin Lee, has come out strongly for continuation of MFN because of the devastating impact on Hong Kong at any time, particularly now at a time of transition. It would hurt Taiwan, another friend, as well, although not quite as severely, and it would hurt the reformers and the process of reform in China.
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    So, to the extent one is looking for arguments here, you can make the economic arguments. I cannot give you the precise statistics. It would hurt us. I, frankly, think it would probably hurt China more in strictly economic terms, but I think you have to look at this issue in much broader terms than that.
    Ms. GOLDMAN. I would like to second what Winston just said. Provide the largest market for China; it would be very difficult for China to find a market as large as our market. But at the same time it is not only lower-income Americans, it is middle-income Americans, even upper-income Americans who buy Chinese goods. One of my friends said to me the other day, ''Tell me—can you find anything not made in China to buy today?'' She looked and looked and looked, and she could not. So Chinese goods are really in almost every sector of our economy.
    What really is worrisome is that the Chinese are very good at playing off one nation against the other. Just one example is China buying from Airbus in competition with Boeing. We find that Chinese strategy in many areas. So I think that both sides would be hurt very much by withdrawal of MFN; I just do not think it is a realistic option.
    Mr. PRZYSTUP. I think the number that was used last year by the U.S./China Business Council——
    Mr. MANZULLO. Doctor, I have got to go vote on banking, so I have to run. Thank you for your sophisticated answer.
    Mr. BEREUTER. Does that mean I have to go, too?
    Mr. MANZULLO. I will leave you the number.
    Mr. PRZYSTUP. In any case, the number used last year in the U.S/China Business Council, I guess some people would disagree with it, was 190,000 jobs. We at Heritage took a look at it, and came out with close to 200,000, a little over 200,000.
    And I think these are real jobs. These are people working, and as we try to shrink the welfare roles, I think it is very important to understand that jobs are jobs. And if that takes people off welfare, this is important from our perspective.
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    In terms of China itself, I think the impact would certainly hurt the entrepreneurs and the people who are trying to move toward the market, and I think this is just the wrong strategy. It does not advance the areas of freedom and openness that would want to advance in China.
    Mr. BEREUTER. Four Members of this Subcommittee, all Republicans, are involved in a Banking Committee markup, including myself, but I am not leaving unless the vote is crucial. So Mr. King, Mr. Leach, Mr. Manzullo and I are all supposedly involved in that markup, and we may see a recess, if necessary, here.
    The gentleman from California, Mr. Capps, is recognized.
    Mr. CAPPS. I am not involved in the banking markup. But I found the testimony very helpful and very fascinating. Also, in trying to think through these matters, I often get to the point of real frustration, and it has to do with the subject of human rights, but I am not going to ask you what you think about that because you have already told us what you think about that.
    But I thought, Mr. Lord, the way you introduced this by focusing on mood, I thought that was really instructive. I am really tantalized by that because I think when we are dealing with difference in mood we are also really signaling difference in world view, difference in the way the cultures organize information, the kind of priorities that people have because of the way they have been trained culturally and socially.
    I mean, to get right to the point here, if the Chinese thought that violation of human rights was evil in all respects according to their world view, they would not be doing it. I mean, there is a way to condone in that world view that kind of behavior.
    Now, I am not an expert on China by any means, but I have been there recently. When I tried to bring up questions about human rights, which I did not lead with, by the way, because it is not a good starting point, I found much more willingness to talk about a topic which translates in English to spiritual civilization. You know, values. And that is a broader base for talking about human rights.
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    I was also looking for common ground in a discussion of spiritual civilization or these kinds of values. And, as nearly as I could tell that had to do with civility, the family values, with protecting the society against some of the negative values that have entered from the Western World. There was an example of trying to maintain some kind of calm in cities by not licensing everybody to drive motorcycles.
    When I began asking questions about how well known is the philosophy of Confucius, I could not really tell the answer to that. I think there might be an interest in Confucius now that had not been there in the recent past. I found a number of students at Peking University who were interested in Lao-Tzu and the I Ching.
    But see, I am not quite sure what my question is here except that I like to push to the next step, in this kind of conversation, if we can do it. Is there a way of bringing up questions about human rights, that is not simply scolding them for their violations of it? Where you can really appeal to some shared sense of what is right, and how we treat one another so that it is not as if we have got the jump on them on this? You know, this is what we believe in and they do not, and therefore we are scolding them, and until they measure up we are not going to deal with them in all the ways that would be appropriate for us.
    Ms. GOLDMAN. I would like——
    Mr. LORD. Go ahead.
    Ms. GOLDMAN. I would like to respond to that. I have written about it. And I happen to agree with you. The problem is when
China's leaders talk about spiritual civilization, especially the traditional background, they are talking about their authoritarian background, their hierarchical background. They want a sense of order and stability. They want things to stay the way they are.
    But there are aspects of Confucianism that one can point to that I think overlap with our ideas of human rights, and I will just give you a few examples, but they are different from the leadership's emphasis.
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    For example, in Confucianism, it is the responsibility of any educated person to criticize the government when it abuses its power. That is a basic fundamental—Chinese do not use the word ''right.'' They call it obligation. They do not have that sense of a ''right'' guaranteed by law, but it is an obligation, and so there is an overlap. But that is not what the leaders are emphasizing right now.
    Another aspect of Confucianism is that people should be treated fairly and justly. Now, I am not saying they are treated fairly and justly, but the leaders put great emphasis on economic and social rights; that people have a decent standard of living to take care of their family. That they deal with.
    The real problem is that this particular leadership is not concerned with the aspects of their civilization that overlap with Western Civilization. They are much more concerned with reenforcing, I believe, the authoritarian hierarchical aspects of their traditional civilization.
    Mr. LORD. I agree completely with that, and I would add some other comments. I think it is a very thoughtful observation and question, by the way.
    However, I think there is a tendency in this country and elsewhere to let the Chinese off the hook with what I believe is a phony debate about eastern values versus western values. I consider this demeaning to the west, suggesting those in the west do not care about family, community, self-discipline. And it is certainly demeaning to Asians to suggest that they do not care about individual liberty. So we should not let China off the hook here.
    When they invoke spiritual civilization, or whatever it is, it is partly along the lines of what Merle has said. It is partly to have some justification, and they are not the only ones in Asia who do this, of suggesting somehow we are trying to impose our values on them.
    As I say, I think we have seen universal aspirations, all over Asia, whether it is Mongolia or Cambodia, as well as the more obvious examples that people think of such as South Korea, Taiwan, the Philippines and so on. So I do not buy this thought that somehow the Chinese and Asians do not care about individual freedom. There is a danger here they are trying to cover up repression along the lines that have been suggested.
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    But there are many eloquent Asian spokesmen, not just people like the Dalai Lama and Aung San Sun Kyi, but someone like the Deputy Prime Minister of Malaysia, who has hit this head on. He has pointed out how Confucianism does stress some of the same values, and he has said being Asian does not mean you have to see a faceless community where the individual is swallowed up.
    Now, to get to your basic question about how to carry out our approach, I do think we have to guard against, and this is part of your comment, looking arrogant, looking like super missionaries, looking like we have a monopoly on wisdom or morality in our tone. I think we can point out several themes which I think are more effective.
    First, I think we should, and we do, point out that whatever one's views are on values there are some universal obligations that China has assumed under the U.N. Charter and other obligations to carry out. It is not a matter of East versus West or any other kind of debate to torture somebody or lock them up, or flout the other universal obligations that are in the U.N. Charter and elsewhere.
    Second, I think that we can have a debate with China on what constitutes stability. They invoke repression and other elements of their system and their values because they say they have got to keep stable, they cannot have problems like the Soviet Union, and if there is too much dissent, they will have chaos. They appeal to the Chinese historical fear of chaos.
    I think if you bottle up dissent and you do not allow free expression, at some point you are going to have more instability. So I do not think it is in China's own self-interest to define stability as its leaders do.
    But, third, and finally and most importantly, I think we should appeal to the Chinese self-interest, whether it is in China, or whether it is in Hong Kong, that in the age of information and technology and Internet and faxes and computers and satellites you cannot develop an economy without a more open political system. Maybe you will get away with it for awhile. Maybe you can play Singapore for awhile, but even in Singapore they observe the rule of law and so on.
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    But over time you just cannot develop that economy in China or maintain it in Hong Kong if you are trying to control the Internet, if you are trying to control debate about complex economic issues, if you do not have a free press which is a key way to get at corruption, and if you break the rule of law, which is the only way to maintain investor confidence.
    So China has got to learn in its own self-interest it is going to pay a price economically, and therefore in terms of political stability, if it does not loosen up that system.
    These are the kinds of arguments that I think are the most effective. The Chinese are not monolithic even in their leadership. Some of their leadership understands this more than others, whether it applies to China or Hong Kong, and we should engage them in this kind of debate. I would not hold your breath about immediate progress in the near future, however.
    Mr. PRZYSTUP. Just to follow on that, I think the emphasis on the values being universal is very important, and I think we have seen this evolve in Asia over the past 50 years; that political liberalization, political openness, and ultimately democracy have evolved in societies in Asia: Republic of Korea, the Philippines, Japan, and most recently, Taiwan. So these are universal values. They are not simply Western values; they are Asian values. They really are universal.
    And, I agree completely with the Ambassador and Professor Goldman earlier on. I think if change is going to come from China, it is going to be not through external pressure. It is going to be through the Chinese seeing things in their own self-interest, and moving in that way. I think the Chinese almost have an unerring instinct to respond to what they perceive to be their self-interest, and I think part of the challenge is to frame the debate so that they understanding that what we are proposing is really something that is in their interest, and the idea of keeping an open system, you cannot grow an economy in this age without having access to international information. To me, that is the way you structure the debate. Try to pitch it to them that it is in their interest.
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    Mr. CAPPS. I have a quick followup. I ask Dr. Bader this, about the situation with Tibet with the Dalai Lama being here, right here in the Capitol today.
    Do you know a way to make the same kind of appeal to self-interest to bring about an end to the deadlock in the clash between China and Tibet?
    Mr. PRZYSTUP. Well, I think you can make the appeal that in terms of this is an ongoing point of friction in terms of China's own internal affairs, and in terms of China's own relationship with the international community. And so this is one way—you can try that approach. But, again, in this case I would agree with the Ambassador that I would not want to hold my breath on their picking up on this one very quickly.
    Ms. GOLDMAN. I have one suggestion. With the move to the market, China has become increasingly decentralized economically as well as politically. So that when directives come down from Beijing they are not carried out down at the local level. The local levels are becoming more and more separated from the center.
    It can be called an informal form for Federalism. One way to deal with this would be to institutionalize some kind of representative system so that the regions can have some kind of representation at the center in order to express the views coming from the provinces. It sounds convoluted, but Federalism can lead to a representative or a parliamentary system, whatever you want to call it. It is really in China's own self-interest to institutionalize this informal Federalism because the center is losing control over the country.
    Mr. LORD. I would also underline a point that Jeff Bader made. The Dalai Lama with considerable political courage has ruled out independence, at least on the agenda for his immediate talks with the Chinese. A couple of years ago that was the only Chinese precondition for talks, and using the cliché, they have moved the goal posts. The Dalai Lama has received criticism from among his own followers who want to keep him more radical. He has agreed to put aside independence and talk about autonomy and cultural identity, and the Chinese continue to stiff him.
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    They are not going to get someone else with the prestige and affection of the Dalai Lama and therefore somebody that can deliver on a compromise with Beijing. They are apt to get someone much more radical. So that is another argument in addition to the ones that have been noted, but the Chinese do not seem to be listening to that.
    Ms. GOLDMAN. A Federalist system could also tie Taiwan, Hong Kong, and Tibet to China in a much more equitable way.
    Mr. BEREUTER. The Dalai Lama repeated that distinction last night in an interview on the Jim Lehrer news hour, and it would seem like the possibility of two systems, one country, that they are attempting to apply to Hong Kong, and which could apply to Taiwan, could also be subject for negotiations with respect to Tibet in the future. He just made the distinction we are not trying to set our own foreign policy or our own security policy. We understand that would be the responsibility of the central government of the PRC, but we are asking for this semi-autonomous role within China.
    I turn now to my colleague from Florida, Mr. Hastings.
    Mr. HASTINGS. Thank you, Mr. Chairman.
    As a segué to what you just said, I guess it would be one country, four systems. and, you know, sometimes I think we ignore in our society the fact that we are one country, 49 systems and Mississippi.
    Mr. HASTINGS. I like to needle them a little bit. I have a colleague that I get on there.
    For background purposes or for the very enlightened panel that has been most helpful in describing a significant number of issues, as my colleague from California said and the Chairman has noted, your presentation has just been outstanding, and I appreciate all of you in that regard as one policymaker are here.
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    For purposes of background, I went to China for the very first time in my life in January with 22 Members of Congress, the largest delegation, I believe, certainly since I have been here to go anywhere. And then I had the good fortune after traveling with that totally bipartisan delegation, 11 Democrats and 11 Republicans, to return with the Chairman of this Committee and the Speaker of the House in March, and I do not know too many policymakers, other than perhaps the Chairman, that make two visits to China.
    If I did not learn anything else, it is that I am not an expert on China, after having visited there a short time. And I want to ask a couple of rather mundane things, and Dr. Goldman, with you first.
    Help me, and perhaps as an empirical data gathered, Mr. Przystup, if you have information along this line, you could help as well. We bandy about statistics that say that 40,000 or more Chinese students are studying in the United States of America, and less than 2,000 American students are studying in China. Where are we on that? Is there any data that can reflect more accurately so that when I am speaking publicly I will be talking with a good understanding about the numbers there?
    Ms. GOLDMAN. Well, I think the number of Chinese students studying in America is much higher than 40,000.
    Mr. HASTINGS. I heard 60,000.
    Ms. GOLDMAN. It is much higher, 80,000, 100,000. About 20 percent returned to China so far. That does not mean the other 80 percent will not return, but they are extremely good students in American universities. They are the people who work in our labs, particularly in the scientific areas; people want them in class because they are very, very good. So there is demand for them. They have the skills, they have the work ethic, they have the sense of responsibility that just wows people in academic life.
    Mr. HASTINGS. How about the reverse, or students there?
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    Ms. GOLDMAN. As to American students in China, the 2,000 you talk about would be a fair estimate. I do not have the definite figures on that, but they are primarily studying about China. They are not going to China to find out about science or computers or any other areas of academic life. They are primarily interested in China, whether it is politics, history, archaeology, and so forth. So it is a very unequal equation.
    But Chinese students are very much welcomed in American universities. They really raise the level of our universities. We do not lose by taking in these students.
    Mr. HASTINGS. Right.
    Mr. PRZYSTUP. Can I just follow up on that?
    Mr. HASTINGS. Of course.
    Mr. PRZYSTUP. This is a comment not directly in terms of the Chinese students, but again to the point that Professor Goldman made earlier about how change comes to China, that it is going to be affected in China by Chinese themselves.
    When I was in school at the University of Chicago, I had a classmate from Taiwan, and he had a great job. He came out and was a professor at Notre Dame, and in about the early eighties he called me up and said he is going home. And I said, ''Jesus, you're leaving Notre Dame to go back to China?'' He said, ''Yeah, absolutely.'' He said, ''Got a great job, but I'm going to go back and I'm going to push the envelope.'' And 12 years later we have seen democracy evolve in Taiwan. This is the kind of change that is lasting change that is brought about by the people themselves.
    He came here. He studied. He was imbued with our values. He went back, and helped transform his own society. His son is now studying at the University of Chicago. And so you see the process repeating. This is what we want to do. I think that is how you change, by going after societies, by engaging them, by staying with them, not pulling back.
    Mr. HASTINGS. Well, as a followup to that, in the social and cultural arena, the exchange programs that we have, in the last 5 years have they been decreased or increased?
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    Ms. GOLDMAN. They have been increasing in the last 5 years, and I suspect they will continue to increase.
    Mr. HASTINGS. All right.
    Mr. PRZYSTUP. One further point I just wanted to make in terms of the kind of students who go to Asia. Speaking for my own family background, my mother was absolutely stunned why was I going to Japan to study Japanese, and what was wrong with Polish and Russian. That is where she started.
    Mr. HASTINGS. Yes.
    Mr. PRZYSTUP. I think one of the things that I found in terms of the American students who do go to Asia, you find people who are truly dedicated. This is very difficult for Americans to operate in the culture and society.
    Mr. HASTINGS. Totally different environment, yes.
    Mr. PRZYSTUP. I felt when I first went to Tokyo, I remember writing back to my mom and saying, ''You know, it is about the closest you can come to the moon and stay on the earth.'' Everything is 180 degrees backwards in terms of culture, how you do things. I think it is a real challenge. People who go out there are really challenging students.
    Mr. HASTINGS. And it undergirds the point that I am trying to make with the questions that I am putting. In my view, Americans do not understand enough about the fact that this next century is going to be the Asian century.
    Mr. PRZYSTUP. That is right.
    Mr. HASTINGS. And somewhere along the line we are going to suffer, and in the area, and that is my next question, about language speakers, particularly in Mandarin, do we have any numbers? Is that increasing? And I am not talking about from a business perspective. I am talking about from academia. Is that increasing or decreasing?
    Ms. GOLDMAN. You would be amazed at what is happening in the universities today. I spoke to the head of the Modern Foreign Language Department at Boston University. She said, ''We could teach Japanese, Chinese, Spanish, and a bit of Russian. That is all we need.''
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    I asked my class at the beginning of the course how many knew Chinese; there are Asians in my class, but there are many more Americans. I would say two-thirds of the class raised their hands. They are either studying it or they already know it. The Chinese language classes are growing. Four years of Chinese and Chinese literature are being taught in most well-known universities.
    I would not worry about that. The demand is there, and the students are responding. But they are responding for a number of different reasons. One being, of course, China is where the action is, not necessarily because they are interested in Chinese culture.
    Mr. HASTINGS. My final comment for the new Chair is more directed toward us than it is you as persons who have expertise that is well developed, and as folk like the Ambassador that have been in the arena, I offer an observation in the ''for whatever it's worth'' department, and that is, let me give you an example.
    The Vice President preceded us to Beijing, us meaning the trip with the Speaker, and he was in the Asian theater, for lack of a better expression, at the same time, and yet we did not have any real coordination, other than the limited wire, that was going on. I think that is a mistake. I think when we take these trips, the academics ought to be represented, the business community ought to be represented, the policymakers ought to be represented, the executive branch ought to be represented, and at the very least these delegations would be more reflective of us being unified when we are making the kinds of suggestions about engagement with the Chinese that we do. And I might add I think the military, aside from their overall responsibilities, ought be a definite part of those delegations.
    It is a mistake for us to continue to send out so-called people, and then even on the plane, had there been all the categories that I just talked about on either of the delegations with us, our plane talk would have enhanced our understanding and we would have had more sharing and interfacing going on. We are going to make a big mistake if we keep doing what we have been doing the same way we have been doing it, and I will say this to the Clinton Administration and others who I hope my voice falls on sufficiently that they make some significant changes.
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    Thank you so much.
    Mr. LORD. Can I pick up on a couple points that have been made in the last few minutes? I think it has been a very healthy exchange, and I agree really with all the points that have been made, including the importance of the Chinese students going back and their impact on Chinese evolution.
    First let me assure you, Mr. Congressman—someone who has just started visiting China—a China expert, in my view, is an oxymoron or just a plain moron. So beware of China experts. There is no such thing. People do not really understand what is going on there. So that is the first thing.
    Second, I want to pick up on a point that you mentioned, and I think it is very important. And that is the importance of Congresspeople going over to China, going to Asia, going to the world in general. I say this because with recent allegations of influence peddling and fund raising, and who is funding your trips and boon-doggles, which is an old hobby horse, I would be very upset if we do not see Congressmen going overseas. I know it is not the best way always to get reelected.
    But, in my experience as ambassador and back here in Washington, the vast majority of Senators and Congresspeople who go over there work very hard and they are much more constructive when they come back. Particularly with the Congress now, there are so many new Members who by their own admission do not know much about the world, or have not been that exposed. Thus, travel is absolutely essential; no more importantly than in China where it is so complex. I am happy something like 15 or 20 percent of all the people up on Capitol Hill have been there in the last year or so.
    I have already seen some evidence of people canceling trips because of funding or other allegations. Of course, it ought to be done correctly and people ought to work hard when they get there, but I would be very disturbed if this trend is reversed. It is very important for all of you to get over there.
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    Finally, in terms of preparing ourselves for dealing with an Asian century and so on, exchanges have been going up. The languages have been going up. This is mostly in the private area, and that is the most important. I do think this gets to the whole question of resources for foreign policy, that we have cut our resources too far. I believe we have to cut them to make us lean and meaner, and when Americans are sacrificing on domestic programs to have a balanced budget. But we have really got down to the low point, and we have got to work between the Congress and the Administration to preserve some funding for some of these programs that are so essential for our national interest.
    Mr. MANZULLO. I had to run to the Banking Committee where we are having a markup, and I got back and there was a voice vote, and so I did not have the opportunity to listen to your testimony. But when we end this, I would like to give you a call and talk to you on the phone.
    I would throw this on the equation of MFN. There is a company back home, huge manufacturing company that imports the base of its product from China; adds to it American labor at a high paying wage, in components that are made in the United States, and exports those to Japan. I have not talked to the company to see if—I am willing to make that public, I am sure it will in a very short period of time.
    And there is another company back home that manufactures a product and saw a devastating loss in its work force because of Chinese, same type of product being manufactured in China. And what that company did was to team up with a Chinese company. The Chinese company makes the exact same product as the American company, sends the product to the American manufacturer, obviously the country of origin is stamped upon each unit, but because of that partnership with the American and the Chinese it saved 140 jobs back home because they simply integrated the Chinese product, and with the U.S. product it sold in the stores, and incidentally, it is the same quality. It is the same thing.
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    And the whole debate on the issue of MFN has gotten religious beyond Kavil, putting people against each other, and questioning people's spiritual values as to whether or not we should engage in MFN. That is extremely unfortunate because it is judgmental. The MFN and the people who are trying to take what they call the high road or the moral road do not understand base one of international trade.
    As I see it, the more we engage in trade, the more we become involved in dealing with a country that is already involved. It is not isolated as Russia was, when we tried to isolate Russia, and there was a joint effort around the world to contain it. But the more we stay engaged with China, the more transparent that country becomes. And the more opportunities for United States to invest, the more ''Western'' the work ethic and conditions become for those Chinese who are involved in companies that have Western participation.
    Like it or not, we are inextricably tied in with numerous countries around the world in our economy. And I had an interesting conversation with the Trade Council General from China, who visited Rockford, Illinois. Rockford is the tool and die center of the world. Fifteen percent of all U.S. exports of tool and dies come from the city of Rockford.
    My congressional district, which stretches from the Mississippi River to within one county of Lake Michigan, has 1500 manufacturing facilities. A thousand of those are located in a city that has less than 150,000 people. And when the recession hit in 1981, the city of Rockford led the Nation with 27 percent unemployment. We lost 100 factories, and 10,000 highly skilled jobs. I was practicing law at that time in a town 30 miles away, and at any given time had no less than 50 or 60 pending bankruptcies.
    It has been my belief that to withdraw from international finance and exports means that in the event there comes a domestic downturn at a time when the international market still may be viable means that there will be a quicker and more broad-based impact upon the American workers. And I really think that those of us who support MFN for China have to look at it in terms of what devastating consequences will happen to the U.S. economy.
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    I know the three of you are not economists, and the answers that you gave were all, I think, absolutely outstanding, but I think the debate that we have to make has to be in terms of what will denying MFN mean to the fellow who gets up at the crack of dawn each morning, packs his lunch box, gets his kids off to school, and perhaps his wife goes off to work, gets in his car, drives to work. Then comes back and helps his kid with his homework, and sits down with his wife on Friday night to balance the checkbook, put in both checks, and to write the checks.
    I mean, there is a very practical implication. I could tell you what it would mean to a lot of folks back in Rockford, Illinois. There is going to be massive unemployment because the Chinese, even though, I guess, one-third of China's exports come here, as Ambassador Lord stated, will enter into an incredible retaliatory scheme.
    We have a company back home called W. A. Whitney that about 2 1/2 years ago shipped a metal cutting machine. It was not a plasma cutting machine or a laser machine, but just a simple metal cutting stamping machine to China, and the Trade Council General from China had the opportunity to look at that machine before it went to China.
    Now, we deny MFN to China, what is that going to mean to those people that pack their lunches at the crack of dawn each day, and build that machine for China?
    I mean, there is a very humanitarian argument to the fact that millions of Americans' jobs depend upon our engagement with China, and I think it is in error, as all of you believe, to think that the only humanitarian argument would be to deny normal trading relations with China.
    Well, Walt, did you want to add to that? The Chairman advised he will not be coming back. He had several questions that he wanted to ask, and will be sending those to you in person.
    We want to thank you all for coming, and anything that you can add to the MFN debate in terms of what has been brought up here so that the American people can take a look at this in practical terms, we would appreciate it, and I thank you for coming this afternoon.
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    This Subcommittee is adjourned.
    [Whereupon, at 4:12 p.m, the Subcommittee was adjourned.]


    Insert "The Official Committee record contains additional material here."