HEARING ON CHINA'S RELATIONS WITH U.S. ALLIES AND PARTNERS IN EUROPE AND THE ASIA PACIFIC HEARING BEFORE THE U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION ONE HUNDRED FIFTEENTH CONGRESS SECOND SESSION THURSDAY, APRIL 5, 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 DR. KATHERINE C. TOBIN DR. GLENN HUBBARD MICHAEL R. WESSEL HON. JONATHAN N. STIVERS DR. LARRY M. WORTZEL HON. JAMES TALENT 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 April 27, 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 April 5, 2018 public hearing on “China’s Relations with U.S. Allies and Partners in Europe and the Asia Pacific.” 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: Erik Brattberg, Director, Europe Program, and Fellow, Carnegie Endowment for International Peace; Thomas Wright, Ph.D., Director, Center on the United States and Europe, and Senior Fellow, Project on International Order and Strategy, Brookings Institution, co-written testimony with Thorsten Benner, Director, Global Public Policy Institute; Christopher Walker, Vice President for Studies and Analysis, National Endowment for Democracy; Ankit Panda, Adjunct Senior Fellow, Defense Posture Project, Federation of American Scientists; Russell Hsiao, J.D., Executive Director, Global Taiwan Institute; Amy Searight, Ph.D., Senior Adviser and Director, Southeast Asia Program, Center for Strategic and International Studies; and Peter Mattis, Fellow, China Program, Jamestown Foundation. This hearing explored Beijing’s objectives in its relations with U.S. allies and partners in Europe and the Asia Pacific and the means by which Beijing seeks to achieve those objectives. It examined how Beijing employs and integrates various elements of its national power to influence these countries, these countries’ responses to Beijing’s efforts, and the implications for the United States’ interests and its relations with its European and Asia Pacific allies and partners. 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, APRIL 5, 2018 CHINA'S RELATIONS WITH U.S. ALLIES AND PARTNERS IN EUROPE AND THE ASIA PACIFIC Opening Statement of Commissioner Michael R. Wessel (Hearing Co-Chair) .........................................................................................................6 Prepared Statement ...........................................................................................................8 Opening Statement of Senator James Talent (Hearing Co-Chair) .........................................................................................................9 Prepared Statement .........................................................................................................10 Panel I: China’s Relations with U.S. Allies and Partners in Europe Panel I Introduction by Senator James Talent (Hearing Co-Chair) .......................................................................................................12 Statement of Erik Brattberg Director, Europe Program, and Fellow, Carnegie Endowment for International Peace ........................................................................................................................................14 Prepared Statement .........................................................................................................17 Statement of Thomas Wright, Ph. D. Director, Center on the United States and Europe and Senior Fellow, Project on International Order and Strategy, Brookings Institution ...............................................27 Prepared Statement .........................................................................................................30 Statement of Christopher Walker Vice President for Studies and Analysis, National Endowment for Democracy ..........37 Prepared Statement .........................................................................................................40 Panel I: Question and Answer............................................................................................48 Additional Question for Panel I .......................................................................................64 Panel II: China’s Relations with U.S. Allies and Partners in the Asia Pacific Panel II Introduction by Commissioner Michael R. Wessel (Hearing Co-Chair) .......................................................................................................65 Statement of Ankit Panda Adjunct Senior Fellow, Defense Posture Project Federation of American Scientists .................................................................................66 Prepared Statement .........................................................................................................69 Statement of Russell Hsiao, J.D. Executive Director, Global Taiwan Institute .................................................................80 Prepared Statement .........................................................................................................83 Statement of Amy Searight, Ph.D. Senior Adviser and Director, Southeast Asia Program, Center for Strategic and International Studies ....................................................................................................100 iv Prepared Statement .......................................................................................................103 Statement of Peter Mattis Fellow, China Program, Jamestown Foundation ........................................................114 Panel II: Question and Answer ........................................................................................117 Back to Table of Contents v CHINA’S RELATIONS WITH U.S. ALLIES AND PARTNERS IN EUROPE AND THE ASIA PACIFIC THURSDAY, APRIL 5, 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 9:00 a.m., Commissioner Michael R. Wessel and Senator James Talent (Hearing Co-Chairs) presiding. OPENING STATEMENT OF COMMISSIONER MICHAEL R. WESSEL HEARING CO-CHAIR HEARING CO-CHAIR WESSEL: Good morning. Our vice chair and co-chair of this morning's hearing, Carolyn Bartholomew, is unable to be with us this morning so I will be sitting in her place and will read her opening statement. Good morning and welcome to the fourth hearing of the U.S.-China Economic and Security Review Commission's 2018 Annual Report cycle. China is expanding its engagement in all regions of the world, not only in its backyard but far beyond. Europe and the Asia Pacific are two regions in