Hearing of the House Armed Services Committee Subject: Report of the United States China Economic and Security Review Commission

HEARING OF THE HOUSE ARMED SERVICES COMMITTEE SUBJECT: REPORT OF THE UNITED STATES - CHINA ECONOMIC AND SECURITY REVIEW COMMISSION

June 16, 2004 Wednesday

CHAIRED BY: REPRESENTATIVE DUNCAN HUNTER (R-CA)

WITNESSES: ROGER W. ROBINSON, JR., CHAIRMAN, U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION; CAROLYN BARTHOLOMEW, COMMISSIONER, U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION

LOCATION: 2118 RAYBURN HOUSE OFFICE BUILDING, WASHINGTON, D.C.

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REP. RICK LARSEN (D-WA): Thank you, Mr. Chairman.

It's probably a good segue for my first question, I want you to get your pens and paper ready, because I'm going to provide some information, two questions on two separate issues, just ask them and then ask you to answer both. The first set is on education, and I guess I would urge the commission to find a nexus to your mandate to explore the implications of the national-I think it was the National Science Foundation's report last month about the relative lack of science, computer science and engineering graduates that the U.S. is producing relative to countries like China, like the United Kingdom, like Germany for instance, but certainly like China.

Specifically for two reasons, one is some economists say that 50 per cent of the GDP growth since World War 2 is related strictly to innovation, the ability to make good things better, and that comes from people being smart and making-finding out how to make things better so you've got the economic security issue. But the second one is the implication it may have for our ability to continue to modernize our military at the rate that other countries like China might be doing as well, so I think there is a Nexus and if you could provide perhaps a comment on that issue.

The second set of issues has to do with the national security issues, really, the North Korea. One person has said that when it comes to six party talks, we haven't approached North Korea but we lack an approach to our regional partners. That is our approach to North Korea is CVID, but we really don't have an approach to our regional partners to get them to have the urgency that we have for CVID and so I was somewhat surprised that in your report you didn't discuss the North Korean refugee issue and how that plays out with an interest-Chinese interest in the six party talks.

You said that China and Russia as well, but China specifically here certainly wishes to have a nuclear free peninsula, that doesn't mean to say that they want one or they care enough to really want one, so related to the refugee issue and Chinese interests in the six party talks, how do you think China defines security on the peninsula, and what can we do in terms of U.S. policy to create leverage to get them more interested in our definition of security on the peninsula?

So the first set of questions is commenting on trying to create a nexus to your mandate on the education issue, and if that's possible to do, and maybe see it reflected in your next report, and the second, so it's more of a broader comment I'd like from both of you, the second is specifically how do you think China defines security on the peninsula and how do we get definition closer to how we define security on the peninsula with regards to the six party talks?

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REP. LARSEN: This is my indulgence for the week, this particular hearing, so I'm looking forward to it.

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REP. LARSEN: Thank you, Mr. Chairman. With regards to the proliferation security initiative, you have about three or four paragraphs on it in your report and given its relative newness, I can imagine three or four paragraphs is about all-you can find three or four paragraphs on it. Maybe next year, we can see a little bit more on it.

One thing that strikes me is that the main point you make about it, separate from North Korea, is that China obviously hasn't agreed to participate although it's been asked. As well China did fight against the U.N. resolution and seek changes to the U.N. resolution passed in earlier this year on proliferation.

And just trying to think through this a little bit, perhaps looking at-perhaps for next year, looking at the reasons why perhaps China seems to be nervous about it.

Three quick points that I thought of, PSI does certainly mean an increased naval presence-U.S. naval presence in the region. Transshipment issues which you address elsewhere in your report, transshipment issues with regards to DPRK as well as perhaps China's own role in proliferation of technology. But if we could get some additional information, maybe we could explore that issue a little bit. As large as China is, it would be useful to have them as a partner in PSI.

And in the second set of issues, I don't want us to walk away without-we focused on cross-Strait issues. We focused on North Korea. We focused on capital flows. It was only mentioned a couple of times. I don't want us to walk away without, I think, again expressing concern about the potential of the EU's arms embargo. It could be left and we could be sure that we communicate that that is a very serious issue although we may not have explored it as deeply as other issues. I think it's still a critical one that we communicate.

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