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LOOKING WEST: CHINA AND CENTRAL ASIA HEARING BEFORE THE U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION ONE HUNDRED FOURTEENTH CONGRESS FIRST SESSION WEDNESDAY, MARCH 18, 2015 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: 2015 ii U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION Hon. WILLIAM A. REINSCH, Chairman Hon. DENNIS C. SHEA, Vice Chairman Commissioners: CAROLYN BARTHOLOMEW DANIEL M. SLANE ROBIN CLEVELAND SEN. JAMES TALENT JEFFREY L. FIEDLER DR. KATHERINE C. TOBIN SEN. CARTE P. GOODWIN MICHAEL R. WESSEL MICHAEL R. DANIS, Executive 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 the 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 Nol. 110-161 (December 26, 2007) (regarding responsibilities of the Commission, and changing the Annual Report due date from June to December); as amended by the Carl Levin and Howard P. “Buck” McKeon National Defense Authorization Act for Fiscal Year 2015, P.L. 113-291 (December 19, 2014) (regarding responsibilities of the Commission). The Commission’s full charter is available at www.uscc.gov. iii April 22, 2015 The Honorable Orrin Hatch President Pro Tempore of the Senate, Washington, D.C. 20510 The Honorable John A. Boehner Speaker of the House of Representatives, Washington, D.C. 20515 DEAR SENATOR HATCH AND SPEAKER BOEHNER: We are pleased to notify you of the Commission’s March 18, 2015 public hearing on “Looking West: China and Central Asia.” The Floyd D. Spence National Defense Authorization Act (amended by Pub. L. No. 109-108, section 635(a) and amended by Pub. L. No. 113-291, Section 1259 B) provides the basis for this hearing. At the hearing, the Commissioners received testimony from the following witnesses: Raffaello Pantucci, Director of International Security Studies, Royal United Services Institute for Defence and Security Studies; Marlene Laruelle, Ph.D., Director, Central Asia Program, Institute for European, Russian and Eurasian Studies, Elliott School of International Affairs, George Washington University; S. Frederick Starr, Ph.D., Chairman, Central Asia-Caucasus Institute and Silk Road Studies Program, Johns Hopkins University SAIS; Alexander Cooley, Ph.D., Professor, Political Science, Barnard College, Columbia University; Sebastien Peyrouse, Ph.D., Research Professor, International Affairs, George Washington University; Erica Downs, Ph.D., Senior Analyst, Eurasia Group; Michael Clarke, Ph.D., Senior Research Fellow, Griffith Asia Institute, Griffith University; Niklas Swanström, Ph.D., Director, Institute for Security and Development Policy; and Andrew Small, Transatlantic Fellow, German Marshall Fund of the United States. The hearing examined the drivers of China's engagement with Central Asia, its impacts on regional economic security and stability, and its implications for U.S. policy objectives in the region. We note that prepared statements for the hearing, the hearing transcript, and supporting documents submitted by the witnesses are available on the Commission’s website at www.USCC.gov. Members and the staff of the Commission are available to provide more detailed briefings. We hope these materials will be helpful to the Congress as it continues its assessment of U.S.-China relations and their impact on U.S. security. The Commission will examine in greater depth these issues, and the other issues enumerated in its statutory mandate, in its 2015 Annual Report that will be submitted to Congress in November 2015. Should you have any questions regarding this hearing or any other issue related to China, please do not hesitate to have your staff contact our Congressional Liaison, Reed Eckhold, at (202) 624-1496 or via email at [email protected]. Sincerely yours, Hon. William A. Reinsch Hon. Dennis C. Shea Chairman Vice Chairman iv v CONTENTS WEDNESDAY, MARCH 18, 2015 LOOKING WEST: CHINA AND CENTRAL ASIA Opening Statement of Vice Chairman Dennis C. Shea (Hearing Co-Chair) .......................................................................................................01 Prepared Statement .........................................................................................................03 Opening Statement of Commissioner Katherine C. Tobin, Ph.D. (Hearing Co-Chair) .......................................................................................................05 Prepared Statement .........................................................................................................06 Panel I: China’s Silk Road Policy Panel I Introduction by Commissioner Katherine C. Tobin, Ph.D. (Hearing Co-Chair) .......................................................................................................08 Statement of Dr. Marlene Laruelle Director, Central Asia Program, Institute for European, Russian and Eurasian Studies Elliot School of International Affairs ............................................................................09 Prepared Statement .........................................................................................................12 Statement of Dr. S. Frederick Starr Chairman, Central Asia-Caucasus Institute and Silk Road Studies Program Johns Hopkins University School of Advanced International Studies .........................22 Prepared Statement .........................................................................................................24 Statement of Mr. Raffaello Pantucci Director of International Security Studies Royal United Services Institute for Defence and Security Studies ...............................30 Prepared Statement .........................................................................................................33 Panel I: Question and Answer............................................................................................42 Panel II: Trade, Infrastructure, and Natural Resources in China’s Central Asia Engagement Panel II Introduction by Vice Chairman Dennis C. Shea (Hearing Co-Chair) .......................................................................................................61 Statement of Dr. Alexander Cooley Professor, Political Science, Barnard College, Columbia University ...........................63 Prepared Statement .........................................................................................................66 Statement of Dr. Sebastien Peyrouse Research Professor of International Affairs, George Washington University ...............73 Prepared Statement .........................................................................................................75 vi Statement of Dr. Erica Downs Senior Analyst, Eurasia Group ......................................................................................85 Prepared Statement .........................................................................................................88 Panel II: Question and Answer ..........................................................................................92 Panel III: China’s Security Engagement in Central Asia and the Question of Afghanistan Panel III Introduction by Commissioner Katherine C. Tobin, Ph.D. (Hearing Co-Chair) .....................................................................................................109 Statement of Dr. Michael Clarke Senior Research Fellow, Griffith Asia Institute, Griffith University ..........................110 Prepared Statement .......................................................................................................113 Statement of Dr. Niklas Swanström Director, Institute for Security and Development Policy ............................................128 Prepared Statement .......................................................................................................130 Statement of Mr. Andrew Small Transatlantic Fellow, German Marshall Fund of the United States ............................148 Prepared Statement .......................................................................................................150 Panel III: Question and Answer ......................................................................................157 1 LOOKING WEST: CHINA AND CENTRAL ASIA WEDNESDAY, MARCH 18, 2015 U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION Washington, D.C. The Commission met in the Russell Senate Office Building, Washington, DC at 9:00 a.m., Commissioners Vice Chairman Dennis C. Shea and Katherine C. Tobin, Ph.D. (Hearing Co-Chairs), presiding. OPENING STATEMENT OF COMMISSIONER VICE CHAIRMAN DENNIS C. SHEA HEARING CO-CHAIR VICE CHAIRMAN SHEA: Good morning and welcome to the third hearing of the U.S.-China Economic
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    Foreign Policy Review VOLUME 13 ALEXANDRA ZOLTAI & PÉTER KLEMENSITS: WHAT DO CHINA AND THE BRI MEAN TO ASEAN ECONOMIES? ZOLTÁN VÖRÖS & PONGKHAO SOMSACK: LAOS AND THE BELT AND ROAD INITIATIVE. AN INTERCONNECTOR HELPING THE CHINESE NEEDS? TEMJENMEREN AO: COUNTERWEIGHT TO CHINA? THE POTENTIAL OF ASEAN’S ECONOMIC RELATIONS WITH INDIA TAKESHI DAIMON-SATO: SINO-JAPANESE COMPETITION OVER THE “AID MARKET” IN ASEAN: POLITICAL TENSIONS AND CONSEQUENCES ANIKÓ MAGASHÁZI: GLOBAL AND REGIONAL SUPPLY CHAINS IN EAST-ASIA AND THE EVOLVING ASEAN REGIONALISM ZOLTÁN PÁLDI: THE EU-ASEAN TIES: A STRATEGIC PARTNERSHIP? ASSESSING THE DEVELOPMENT OF RELATIONS THROUGH THE LENS OF POLITICAL AND ECONOMIC COOPERATION TO MINH THU & HAN LAM GIANG: ASEAN’S FTA PROCESS AND PROSPECTS KATIGBAK JOVITO JOSE: REVAMPING FINANCE VIA FINTECH: PROMISES, PERILS, AND PRACTICES IN ASEAN DÁNIEL MOLNÁR & DIÁNA HORVÁTH & GÁBOR REGŐS: MONETARY POLICY IN THE FOUNDER COUNTRIES OF ASEAN Foreign Policy Review Volume 13 Volume Review Policy Foreign 2020 KÜLÜGYI ÉS KÜLGAZDASÁGI INTÉZET INSTITUTEINSTITUTE FOR FOR FOREIGN FOREIGN AFFAIRS AFFAIRS AND TRADEAND TRADE Institute for Foreign Affairs and Trade Budapest, 2020 This publication was financially supported by the Ministry of Foreign Affairs and Trade of Hungary. Foreign Policy Review Publisher: Márton Ugrósdy Editor: Péter Goreczky Layout and design: Tamás Lévárt Published by the Institute for Foreign Affairs and Trade H-1016 Budapest, Bérc u. 13-15. Phone: +36 1 279 5700 Fax: +36 1 279 57 01 Email: [email protected]; Web: www.kki.hu © Institute