China's Global Quest for Resources and Implications for the United
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CHINA’S GLOBAL QUEST FOR RESOURCES AND IMPLICATIONS FOR THE UNITED STATES HEARING BEFORE THE U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION ONE HUNDRED TWELFTH CONGRESS SECOND SESSION JANUARY 26, 2012 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: 2012 i U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION Hon. DENNIS C. SHEA, Chairman Hon. WILLIAM A. REINSCH, Vice Chairman Commissioners: CAROLYN BARTHOLOMEW Hon. CARTE GOODWIN DANIEL A. BLUMENTHAL DANIEL M. SLANE ROBIN CLEVELAND MICHAEL R. WESSEL Hon. C. RICHARD D’AMATO LARRY M. WORTZEL, Ph.D . JEFFREY L. FIEDLER 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). The Commission’s full charter is available at www.uscc.gov. ii March 20, 2012 The Honorable Daniel Inouye 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 INOUYE AND SPEAKER BOEHNER: We are pleased to transmit the record of our January 26, 2012 public hearing on “China’s Global Quest for Resources and Implications for the United States.” The Floyd D. Spence National Defense Authorization Act (amended by Pub. L. No. 109-108, section 635(a)) provides the basis for this hearing. At the hearing, the Commissioners heard from the following witnesses: Dr. Patrick Cronin, Dr. Elizabeth Economy, Ms. Sarah Forbes, Dr. Lyle Goldstein, Mr. Jeffery Green, Dr. Mikkal Herberg, Ms. Tabitha Mallory, Ms. Grace Mang, Dr. W. David Menzie, and Dr. Jennifer Turner. The Commission also received written testimony from Dr. Brahma Chellaney and the Environmental and Development Desk of the Central Tibetan Administration. The hearing explored China’s demand for and policies related to natural resources. Topics included China’s domestic and overseas damming activities; China’s energy security; China’s strategic mineral policies; and China’s international marine fishing activities. We note that the full transcript of the hearing plus the prepared statements and supporting documents submitted by the witnesses will be posted on the Commission’s website at www.uscc.gov, when completed. The prepared statements and supporting documents submitted by the witnesses are posted on the Commission’s website. Commissioners 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 the U.S.-China relationship and its 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 2012 Annual Report that will be submitted to Congress in November 2012. Sincerely yours, Dennis C. Shea William A. Reinsch Chairman Vice Chairman iii CONTENTS THURSDAY, JANUARY 26, 2012 CHINA’S GLOBAL QUEST FOR RESOURCES AND IMPLICATIONS FOR THE UNITED STATES Opening Statement of Chairman Dennis Shea..................1 Prepared Statement .......................................2 Opening Statement of Commissioner C. Richard D’Amato (Hearing Co-Chair) ......................................3 Prepared Statement .......................................5 Opening Statement of Commissioner Daniel Slane (Hearing Co-Chair) .....................................7 Prepared Statement .......................................8 Panel I: Administration Perspectives Statement of Dr. W. David Menzie Chief of Global Minerals Analysis National Minerals Information, U.S. Geological Survey ...10 Prepared Statement ......................................13 Panel I: Questions and Answers............................22 Panel II: Water Resources Introduction..............................................31 Statement of Dr. Elizabeth Economy Director of Asia Studies, Council on Foreign Relations ..32 Prepared Statement ......................................35 Statement of Grace Mang China Program Director, International Rivers ............41 Prepared Statement ......................................44 Statement of Dr. Jennifer Turner Director, China Environment Forum Woodrow Wilson International Center for Scholars ........55 Panel II: Questions and Answers...........................58 iv Panel III: Oil, Gas, and Minerals Introduction..............................................76 Statement of Dr. Mikkal Herberg Research Director, Energy Security Program National Bureau of Asian Research .......................77 Prepared Statement ......................................80 Statement of Sarah Forbes Senior Associate, World Resources Institute .............85 Prepared Statement ......................................87 Statement of Jeffery Green, Esq. President and Founder, J.A. Green & Company .............98 Prepared Statement .....................................101 Panel III: Questions and Answers.........................115 Panel IV: China’s International Fishing Activities Introduction.............................................132 Statement of Tabitha Mallory PhD candidate, Johns Hopkins School of Advanced International Studies ..................................133 Prepared Statement .....................................135 Statement of Dr. Patrick Cronin Senior Advisor and Senior Director of the Asia-Pacific Security Program, Center for a New American Society ....146 Prepared Statement .....................................148 Statement of Dr. Lyle Goldstein Associate Professor, China Maritime Studies Institute U.S. Naval War College .................................155 Prepared Statement .....................................158 Panel IV: Questions and Answers .........................171 v CHINA’S GLOBAL QUEST FOR RESOURCES AND IMPLICATIONS FOR THE UNITED STATES THURSDAY, JANUARY 26, 2012 U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION Washington, D.C. The Commission met in Room 562 Dirksen Senate Office Building, Washington, D.C. at 9:00 a.m., Chairman Dennis C. Shea, and Commissioners C. Richard D’Amato and Daniel Slane (Hearing Co-Chairs), presiding. OPENING STATEMENT OF CHAIRMAN DENNIS SHEA CHAIRMAN SHEA: Good morning, everyone, and welcome to the first hearing of the U.S.-China Economic and Security Review Commissi on's 2012 Annual Report cycle. As this year's Chairman, I want to thank all of you for joining Us today. We appreciate your attendance here and want to make a pitch to encourage you to attend our other public hearings throughout the year. I also want to acknowledge and welcome a couple of folks who we already know well: Bill Reinsch, who was recently appointed, who is the Vice Chairman of the Commission; and Dan Slane, who is the co -Chair of this hearing. Welcome aboard. And we'd like to also acknowledge our newest member of the Commission, Carte Goodwin, former Senator Carte Goodwin, always a senator, Carte Goodwin from West Virginia. So welcome and thank you for joining us. Our next hearing is scheduled for February 15th. At this hearing, we will examine China's state -owned and state-controlled enterprises and explore the competitive challenges that they may pose to the United States. Future hearing to pics this year will include EU -China relations, China's civil and military nuclear capabilities, and developments in cyberspace. More information about the Commission, its annual report, and its hearings is available on the Commission's Web site at www.us cc.gov. With that, I'll turn the hearing over to its co -Chair, Commissioner D'Amato, for his opening statement. 1 PREPARED STATEMENT OF C HAIRMAN DENNIS SHEA Hearing on “China’s Global Quest for Resources and Implications for the United States” Opening Statement of Chairman Dennis Shea January 26, 2012 Washington, DC Good morning, and welcome to the first hearing of the U.S.-China Economic and Security Review Commission's 2012 Annual Report cycle. 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 public hearings throughout the year. Our next hearing is scheduled for February 15th. At this hearing, we will examine China’s state-owned and state-controlled enterprises and explore the competitive challenges they may pose to the United States. Future hearing topics this year will include EU-China relations, China’s civil and military nuclear capabilities, and developments in cyberspace. More information about the Commission, its annual report, and its hearings is available on the