Hearing on “China's Belt and Road Initiative: Five Years Later”
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HEARING ON CHINA'S BELT AND ROAD INITIATIVE: FIVE YEARS LATER HEARING BEFORE THE U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION ONE HUNDRED FIFTEENTH CONGRESS SECOND SESSION THURSDAY, JANUARY 25, 2018 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: 2018 U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION ROBIN CLEVELAND, CHAIRMAN CAROLYN BARTHOLOMEW, VICE CHAIRMAN Commissioners: HON. CARTE P. GOODWIN HON. JAMES M. TALENT DR. GLENN HUBBARD HON. KATHERINE C. TOBIN HON. DENNIS C. SHEA MICHAEL R. WESSEL HON. JONATHAN N. STIVERS DR. LARRY M. WORTZEL 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. ii February 26, 2018 The Honorable Orrin Hatch President Pro Tempore of the Senate, Washington, DC 20510 The Honorable Paul Ryan Speaker of the House of Representatives, Washington, DC 20515 Dear Senator Hatch and Speaker Ryan: We are pleased to notify you of the Commission’s January 25, 2018 public hearing on “China’s Belt and Road Initiative: Five Years Later.” The Floyd D. Spence National Defense Authorization Act for 2001 § 1238, Pub. L. No. 106-398 (as amended by the Carl Levin and Howard P. “Buck” McKeon National Defense Authorization Act for Fiscal Year 2015 § 1259b, Pub. L. No. 113-291) provides the basis for this hearing. At the hearing, the Commissioners received testimony from the following witnesses: Nadège Rolland, Senior Fellow for Political and Security Affairs, National Bureau of Asian Research; Jonathan Hillman, Fellow and Director, Reconnecting Asia Project, Center for Strategic and International Studies; Randal Phillips, Managing Partner, Mintz Group; Ely Ratner, Maurice R. Greenberg Senior Fellow for China Studies, Council on Foreign Relations; Daniel Kliman, Senior Fellow, Asia-Pacific Security Program, Center for New American Security Joel Wuthnow, Research Fellow, Center for the Study of Chinese Military Affairs, National Defense University; Andrew Small, Senior Transatlantic Fellow, German Marshall Fund of the United States; Joshua Eisenman, Assistant Professor of Public Affairs, University of Texas at Austin; and Tobias Harris, Economy, Trade, and Business Fellow, Sasakawa Peace Foundation USA. The hearing assessed the status of China’s Belt and Road initiative five years on, focusing on its economic, military, and geostrategic drivers and implications, as well as regional reactions and competing visions. The hearing also explored how China’s Belt and Road initiative impacts U.S. economic and national security interests. We note that the full transcript of the hearing is posted to the Commission’s website. The prepared statements and supporting documents submitted by the participants are now posted 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 2018 Annual Report that will be submitted to Congress in November 2018. 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, Leslie Tisdale, at 202-624-1496 or [email protected]. Sincerely yours, Robin Cleveland Carolyn Bartholomew Chairman Vice Chairman cc: Members of Congress and Congressional Staff iii CONTENTS THURSDAY, JANUARY 25, 2018 CHINA’S BELT AND ROAD INITIATIVE: FIVE YEARS LATER Opening Statement of Commissioner Katherine C. Tobin (Hearing Co-Chair) .........................................................................................................6 Prepared Statement ...........................................................................................................8 Opening Statement of Commissioner Dennis C. Shea (Hearing Co-Chair) .......................................................................................................10 Prepared Statement .........................................................................................................11 Panel I: Mercantilism with Chinese Characteristics: Creating Markets and Cultivating Influence Panel I Introduction by Commissioner Katherine C. Tobin (Hearing Co-Chair) .......................................................................................................12 Statement of Nadège Rolland Senior Fellow for Political and Security Affairs, National Bureau of Asian Research .13 Prepared Statement .........................................................................................................15 Statement of Jonathan Hillman Fellow and Director, Reconnecting Asia Project, Center for Strategic and International Studies ............................................................................................................................23 Prepared Statement .........................................................................................................25 Statement of Randal Phillips Managing Partner, Mintz Group ....................................................................................38 Prepared Statement .........................................................................................................40 Panel I: Question and Answer............................................................................................46 Panel II: The Geostrategic and Military Drivers and Implications of the Belt and Road Initiative Panel II Introduction by Commissioner Dennis C. Shea (Hearing Co-Chair) .......................................................................................................64 Statement of Ely Ratner Maurice R. Greenberg Senior Fellow for China Studies, Council on Foreign Relations ........................................................................................................................................65 Prepared Statement .........................................................................................................68 Prepared Statement of Joel Wuthnow Research Fellow, Center for the Study of Chinese Military Affairs, National Defense University .......................................................................................................................77 Statement of Daniel Kliman Senior Fellow, Asia-Pacific Security Program, Center for a New American Security ..90 Prepared Statement .........................................................................................................93 Panel II: Question and Answer ........................................................................................102 iv Panel III: Regional Reactions and Competing Visions Panel III Introduction by Commissioner Katherine C. Tobin (Hearing Co-Chair) .....................................................................................................117 Statement of Andrew Small Senior Transatlantic Fellow, German Marshall Fund of the United States ................119 Statement of Joshua Eisenman Assistant Professor of Public Affairs, University of Texas at Austin .........................134 Prepared Statement .......................................................................................................137 Statement of Tobias Harris Economy, Trade, and Business Fellow, Sasakawa Peace Foundation USA ...............159 Prepared Statement .......................................................................................................162 Panel III: Question and Answer ......................................................................................177 v CHINA’S BELT AND ROAD INITIATIVE: FIVE YEARS LATER THURSDAY, JANUARY 25, 2018 U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION Washington, DC The Commission met in Room 419 of Dirksen Senate Office Building, Washington, DC at 9:45 a.m., Commissioners Dennis C. Shea and Katherine C. Tobin (Hearing Co-Chairs) presiding. OPENING STATEMENT OF COMMISSIONER KATHERINE C. TOBIN HEARING CO-CHAIR HEARING CO-CHAIR TOBIN: Good morning, and welcome to the first hearing of the U.S.- China Economic and