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2.25.11Hearingtranscript CHINA’S INTERNAL DILEMMAS ROUNDTABLE: CHINA’S INTERNAL DILEMMAS AND IMPLICATIONS FOR THE UNITED STATES HEARING BEFORE THE U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION ONE HUNDRED TWELFTH CONGRESS FIRST SESSION _________ FEBRUARY 25, 2011 _________ Printed for use of the United States-China Economic and Security Review Commission Available via the World Wide Web: www.uscc.gov UNITED STATES-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION WASHINGTON : 2011 U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION Hon. WILLIAM A. REINSCH, Chairman DANIEL M. SLANE, Vice Chairman Commissioners: CAROLYN BARTHOLOMEW JEFFREY L. FIEDLER DANIEL A. BLUMENTHAL Hon. PATRICK A. MULLOY PETER T.R. BROOKES Hon. DENNIS C. SHEA ROBIN CLEVELAND MICHAEL R. WESSEL Hon. C. RICHARD D’AMATO LARRY M.WORTZEL MICHAEL R. DANIS, Executive Director KATHLEEN J. MICHELS, Associate Director The Commission was created on October 30, 2000 by the Floyd D. Spence National Defense Authorization Act for 2001 § 1238, Public Law No. 106-398, 114 STAT. 1654A-334 (2000) (codified at 22 U.S.C.§ 7002 (2001), as amended by the Treasury and General Government Appropriations Act for 2002 § 645 (regarding employment status of staff) & § 648 (regarding changing annual report due date from March to June), Public Law No. 107-67, 115 STAT. 514 (Nov. 12, 2001); as amended by Division P of the "Consolidated Appropriations Resolution, 2003," Pub L. No. 108-7 (Feb. 20, 2003) (regarding Commission name change, terms of Commissioners, and responsibilities of Commission); as amended by Public Law No. 109-108 (H.R. 2862) (Nov. 22, 2005) (regarding responsibilities of Commission and applicability of FACA); as amended by Division J of the “Consolidated Appropriations Act, 2008,” Public Law No. 110- 161 (December 26, 2007) (regarding responsibilities of the Commission, and changing the Annual Report due date from June to December). The Commission’s full charter is available at www.uscc.gov. ii CONTENTS _____ FRIDAY, FEBRUARY 25, 2011 CHINA’S INTERNAL DILEMMAS Opening remarks of Chairman William A. Reinsch (Hearing Co-Chair)………………..page 1 Opening remarks of Commissioner Robin Cleveland (Hearing Co-Chair)……………page 3 PANEL I: ROOTS OF PROTEST AND THE PARTY RESPONSE Statement of Dr. Elizabeth Economy, C.V. Starr Senior Fellow and Director, Asia Studies, Council on Foreign Relations, New York, New York………………………….page 5 Prepared statement…………………………………………………………………………………………..page 7 Statement of Dr. Martin K. Whyte, Professor of Sociology, Harvard University, Cambridge, Massachusetts…………………………………………………………………………………..page 11 Prepared statement………………………………………………………………………………………….page 14 Statement of Dr. Murray Scot Tanner, Asia Security Analyst, China Studies Division, CNA, Alexandria, Virginia……………………………………………………………………….page 21 Prepared statement…………………………………………………………………………………………..page 24 Panel I: Discussion, Questions and Answers………………………………………………………..page 27 PANEL II: MAJOR CHALLENGES TO CHINA’S INTERNAL STABILITY Statement of Dr. Yukon Huang, Carnegie Endowment for International Peace, and Former World Bank Director for China, Washington, DC………………………………page 50 Prepared statement…………………………………………………………………………………………..page 52 Statement of Dr. Steven Dunaway, Adjunct Senior Fellow for International Economics, Council on Foreign Relations, Washington, DC…………………………………..page 57 Prepared statement……………………………………………………………………………………………page 58 Panel II: Discussion, Questions and Answers………………………………………………………..page 62 ROUNDTABLE: CHINA’S INTERNAL DILEMMAS AND IMPLICATIONS FOR THE UNITED STATES Roundtable Participants: • Mr. James Mann, Foreign Policy Institute Author-in-Residence, Johns Hopkins University, SAIS, Washington, DC iv • Dr. Yukon Huang, Senior Associate, Carnegie Endowment for International Peace, Washington, DC • Dr. Steven Dunaway, Adjunct Senior Fellow for International Economics, Council on Foreign Relations, Washington, DC • Dr. Martin K. Whyte, Professor of Sociology, Harvard University, Cambridge, MA • Dr. Murray Scot Tanner, China Security Analyst, CNA, Alexandria, VA Discussion……………………………………………………………………………………………………………….page 84 v CHINA'S INTERNAL DILEMMAS ROUNDTABLE: CHINA'S INTERNAL DILEMMAS AND IMPLICATIONS FOR THE UNITED STATES FRIDAY, FEBRUARY 25, 2011 U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION Washington, DC The Commission met in Room 562 (Hearing) and Room 116 (Roundtable) Dirksen Senate Office Building, Washington, D.C., at 8:49 a.m., Chairman William A. Reinsch (Hearing Co-Chair), Daniel M. Slane, Vice Chairman, and Commissioner Robin Cleveland (Hearing Co-Chair), presiding. OPENING STATEMENT OF CHAIRMAN WILLIAM A. REINSCH HEARING CO-CHAIR CHAIRMAN REINSCH: Let's bring this hearing to order, please. Good morning. Welcome to today's hearing on "China's Internal Dilemmas." As this year's Chairman, I want to thank you all for joining us today. We appreciate your participation, and we encourage all of our guests in the audience to attend other hearings throughout the year. Today we're going to do something that's a little bit different format- wise. The morning is going to be devoted to a hearing in the traditional format. We have two panels of witnesses that you'll be hearing about shortly, but then we're going to break after that and go downstairs to a different room, 116, in this building, for a roundtable discussion whose participants will be most of our witnesses along with other outside experts and the members of the Commission. This session is also open to the public so those of you that are in the audience that want to join us, we're happy to have you do so. Regrettably, we cannot offer you lunch, but grab something on the way down. For our witnesses and participants at the table, we can offer you lunch. So I will be encouraging everybody to hurry downstairs after this part is over so we can move on to that phase. 1 This is an experiment for the Commission. It's an attempt to get more of an interactive dialogue between our experts and ourselves and get out of the formality of the hearing process. We'll see how it works. Maybe it will; maybe it won't. The hearing and the roundtable today will examine the social, economic and political roots of protest in China, and the Chinese Communist Party's response, the major challenges to stability in China, and the implications for the United States. This is a particularly interesting issue for me and has been since I was in graduate school because I think Chinese economic progress, in particular, which is extraordinary, needs to be viewed in the context of their domestic challenges and the government's response to those challenges, and particularly whether there are inherent contradictions in their system of governance that effectively doom them to failure in dealing with these challenges, or whether they'll be able to surmount the challenges and continue to move in the direction that they're going. So while most of what we do at the Commission focuses specifically on the bilateral relationship and various aspects of it, this hearing is an attempt to look at what's going on internally and to talk about the ability of the Party and the government to deal with that, and then to see if we can get a better understanding of how that then affects the bilateral relationship. We have a group of witnesses this morning who are experts in what is going on there and I think are going to provide us with some very insightful comments on the questions I've just raised. I'll ask our panelists to limit their opening statements to seven minutes each, please. A complete version of your testimony will be included in the hearing record automatically regardless of what you say. So you're already a prisoner of your written word. For those of you who are new to our hearings, we're a bipartisan Commission composed of 12 members, six of whom are selected by the Majority Leader and Minority Leaders of the Senate and six selected by the Speaker and Minority Leader of the House. Commissioners serve two-year terms. Congress has given our Commission the responsibility to monitor and investigate the national security implications of bilateral trade and economic relations between the United States and China. We fulfill our mandate by conducting hearings and undertaking related research as well as sponsoring independent research. We also travel to Asia and receive briefings from other U.S. government agencies and departments. We produce an annual report and provide recommendations to Congress for legislative and policy change. This is our second hearing this year. In the future, we will examine China's national security policy, China's investment policy, and China's foreign policy, among other things. Our next hearing will be on March 10. Finally, let me remind Commissioners we don't have auxiliary microphones this morning for a variety of reasons, so the only microphones are the ones that are installed. You must push to talk. If you don't push the little button to talk, our wonderful stenographer will interrupt you and tell 2 you to do so. So please try to remember to push to talk, and I'll do the same. Let me now turn it over to the Co-Chair for the hearing, Commissioner Cleveland. [The statement follows:] Good Morning. Welcome to today’s hearing on “China’s Internal Dilemmas.” As this year's Chairman I want to thank you all for joining us today. We appreciate your attendance and we encourage you to attend our other hearings throughout the year. The hearing and roundtable will examine the social, economic, and political roots of protest in China and the Chinese Communist Party’s response; the major challenges to stability in China; and implications for the United States. I would ask our excellent panelists to limit their opening statements to seven minutes, please. A complete version of the submitted testimony will be included in the hearing record. For those who are new to our hearings, we are a bipartisan Commission composed of 12 members, six of whom are selected by the Majority and Minority Leaders of the Senate, and six from the Speaker and the Minority Leader of the House.
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