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China's Role in the World: Is China a Responsible Stakeholder? ______

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CHINA’S ROLE IN THE WORLD: IS CHINA A RESPONSIBLE STAKEHOLDER? HEARING BEFORE THE U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION ONE HUNDRED NINTH CONGRESS SECOND SESSION _________ AUGUST 3-4, 2006 _________ 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 : September 2006 U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION LARRY M. WORTZEL, Chairman CAROLYN BARTHOLOMEW, Vice Chairman Commissioners: GEORGE BECKER KERRI HOUSTON DANIEL BLUMENTHAL Hon. PATRICKA.MULLOY PETER T.R. BROOKES Hon. WILLIAM A. REINSCH Hon. C. RICHARD D’AMATO Hon. FRED D. THOMPSON THOMAS DONNELLY MICHAEL R. WESSEL T. SCOTT BUNTON, 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). The Commission’s full charter http://www.uscc.gov/about/charter.php and Statutory Mandate http://www.uscc.gov/about/overview.php available via the World Wide Web 2 CONTENTS _________ Thursday, August 3, 2006 CHINA’S ROLE IN THE WORLD: IS CHINA A RESPONSIBLE STAKEHOLDER? Opening statement of Vice Chairman Carolyn Bartholomew, Hearing Cochair … 6 Prepared statement………………………………………………………………. 7 Opening statement of Commissioner Daniel Blumenthal, Hearing Cochair……… 8 Prepared statement………………………………………………………………. 10 PANEL I: CONGRESSIONAL PERSPECTIVES Statement of James M. Inhofe, a U.S. Senator from the State of Oklahoma …….. 11 Prepared statement ……………………………………………………………… 14 Panel I: Discussion, Questions and Answers …………………………………….. 16 PANEL II: ADMINISTRATION PERSPECTIVES Statement of Dr. Thomas Christensen, Deputy Assistant Secretary of State for East Asian and Pacific Affairs, Washington, D.C…………………………………. 20 Prepared statement ……………………………………………………………… 24 Panel II: Discussion, Questions and Answers…………………………………..... 28 PANEL III: THE IMPACT OF CHINA’S DIPLOMATIC STRATEGIES ON U.S. INTERESTS Statement of Dr. Ernest J. Wilson, III, Professor of Government and Politics, Senior Scholar, Center for International Development and Conflict, University of Maryland, College Park, Maryland …………………………………………………………… 45 Prepared statement……………………………………………………………… 48 Statement of Dr. John Calabrese, Scholar-in-Residence, The Middle East Institute, Assistant Professor, American University, Washington, D.C……………………. 54 Prepared statement…………………………………………………………….. 56 Statement of Dr. Cynthia A. Watson, Professor of Strategy, The National War College, Washington, D.C………………………………………………………………….. 63 Prepared statement……………………………………………………………… 65 Panel III: Discussion, Questions and Answers…………………………………… 66 3 PANEL IV: CHINA’S INVOLVEMENT IN THE SHANGHAI COOPERATION ORGANIZATION Statement of Dr. Ariel Cohen, Senior Research Fellow, Russian and Eurasian Studies and International Energy Security, The Heritage Foundation, Washington, D.C…………………………………………………………………. 84 Prepared statement……………………………………………………………… 86 Statement of Dr. Dru Gladney, Professor of Asian Studies, University of Hawaii at Manoa, Honolulu, Hawaii……………………………………………………….. 89 Prepared statement……………………………………………………………….. 89 Panel V: Discussion, Questions and Answers…………………………………….. 89 PANEL V: CHINA’S ACTIVITIES AND DIPLOMACY IN ASIA Statement of RADM Michael McDevitt, USN (Ret.), Director, Center for Strategic Studies, the Center for Naval Analyses, Alexandria, Virginia…………………… 101 Prepared statement……………………………………………………………… 103 Statement of Dr. Robert Sutter, Professor of Asian Studies, Edmund A. Walsh School of Foreign Service, Georgetown University, Washington, D.C………… 110 Prepared statement…………………………………………………………….. 112 Statement of Dr. Karl D. Jackson, School for Advanced International Studies, Johns Hopkins University, Washington, D.C…………………………………………… 119 Prepared statement……………………………………………………………… 121 Panel IV: Discussion, Questions and Answers…………………………………… 126 PANEL VI: CHINA’S RELATIONSHIP WITH COUNTRIES OF CONCERN Statement of Mr. Jared M. Genser, Visiting Fellow, National Endowment for Democracy, Washington, D.C…………………………………………………….. 152 Prepared statement……………………………………………………………….. 155 Statement of Dr. Eric Reeves, Professor of Language and Literature, Smith College, Northampton, Massachusetts……………………………………………………… 155 Prepared statement………………………………………………………………… 157 Statement of Dr. William Ratliff, Research Fellow, Curator, The Hoover Institution, Stanford University, Stanford, CA…………………………………………………. 165 Prepared statement…………………………………………………………………. 167 Panel VI: Discussion, Questions and Answers……………………………………. 174 Friday, August 4, 2006 Opening Statement of Commissioner Michael R. Wessel, Hearing Cochair……. 198 Prepared statement………………………………………………………………. 199 4 PANEL VII: ADMINISTRATION PERSPECTIVES Ms. Katherine Ann Fredriksen, Principal Deputy Assistant Secretary, Office of Policy and International Affairs, U. S. Department of Energy, Washington, D.C……….. 200 Prepared statement………………………………………………………………. 203 Panel VII: Discussion, Questions and Answers………………………………….. 203 PANEL VIII: CHINA’S ENERGY REQUIREMENTS AND POLICIES Dr. Erica S. Downs, China Energy Fellow, The Brookings Institution, Washington, D.C…………………………………………………………………… 221 Prepared statement………………………………………………………………. 223 Panel VIII: Discussion, Questions and Answers…………………………………. 227 PANEL IX: CHINA AND THE GLOBAL PETROLEUM SUPPLY Dr. Amy Jaffe, Wallace S. Wilson Fellow in Energy Studies and Matthew E. Chen, Energy Research Assistant, James A. Baker III Institute for Public Policy, Rice University, Houston, Texas………………………………………………….. 244 Prepared statement………………………………………………………………. 246 Dr. Martha Brill Olcott, Senior Associate, Carnegie Endowment for International Peace, Washington, D.C…………………………………………………………… 249 Prepared statement………………………………………………………………. 252 Dr. David Gates, Senior Advisor, PFC Energy, Chatham, New Jersey Prepared statement……………………………………………………………….. 258 Panel IX: Discussion, Questions and Answers……………………………………. 258 5 CHINA'S ROLE IN THE WORLD: IS CHINA A RESPONSIBLE STAKEHOLDER? _________ THURSDAY, AUGUST 3, 2006 U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION The Commission met in Room 385 Russell Senate Office Building, Washington, D.C. at 8:37 a.m., Chairman Larry M. Wortzel and Vice Chair Carolyn Bartholomew, Commissioners Daniel A. Blumenthal and Michael R. Wessel (Hearing Cochairs), presiding. OPENING STATEMENT OF VICE CHAIRMAN CAROLYN BARTHOLOMEW, HEARING COCHAIR COMMISSION VICE CHAIR BARTHOLOMEW: Good morning, everyone. I'm Carolyn Bartholomew, the Vice Chairman of the Commission. Welcome to our panelists and our guests. Today we are focusing on China's role in the world. It is admittedly a big topic to fit into a day and a half of hearing. Rather than an exhaustive review, we hope to bring to the forefront a number of common questions and themes that are raised by Chinese government strategy and actions around the world. China is playing a greater and greater role on the world stage. As it does so, the scrutiny of its actions and its intentions is, not surprisingly, also growing. There is much to question. The Chinese government likes to characterize itself as engaging in a "peaceful rise." Yet, its active engagement with and assistance to countries which others in the international community have condemned as human rights abusers or threats to international peace raise serious questions about its intentions. And the world's understanding of China's intentions globally, like most of its governmental affairs, suffers from its lack of transparency. Today's experts will try to break through some of the lack of transparency, testifying on China's economic diplomacy, its energy diplomacy, and its engagement with pariah states. We will consider the nature of the relationships China is establishing with countries around the world and the impact of those relationships on U.S. interests. In Africa, for example, China seems focused on resource-rich states buying up oil, natural gas and other minerals from the Sudan, Chad, Nigeria, Angola, Algeria, Gabon and Equatorial Guinea. 6 In 2005, Chinese official sources reported total investment of $175 million in African countries, primarily on oil exploration and infrastructure projects. When China signs an oil contract, development aid often follows in the form of medical supplies, infrastructure investment, debt relief and lowered trade barriers. International organizations have reported more than a few cases where China has ignored standards of international law, humanitarian concerns, and human rights when these conflict with China's resource acquisition needs. How are Chinese investment practices affecting U.S. initiatives to increase the effectiveness of foreign assistance to promote transparency and accountability and to end human rights abuses? As part
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