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THE CAUCUS PAPERS A Conversation on China

INSIDE: U.S.-China Relations: Where it’s heading The 411 on China’s Military Modernization China’s Race for Energy and What it Means for the U.S. Who’s Who in China’s Government

The Office of Congressman J. Randy Forbes


INTRODUCTION CONGRESSMAN J. RANDY FORBES ARMED SERVICES READINESS SUBCOMMITTE CHAIRMAN As the final seconds of the year 2010 counted down, most Americans could not help but wonder what changes the New Year would bring. This was especially true of those who carefully watch U.S. – China relations. The final weeks of 2010 brought news that the country that owned over a quarter of the U.S. foreign debt had just developed a second missile system designed to attack our aircraft carriers; unfortunately, we had not developed a defensive capability to stop the first system, much less the second one. Within days of that news, we heard the Chinese were planning to have double-digit increases in its military spending to add to the 339.8% increases they had made in the last ten years. As if this news was not bad enough, pictures soon surfaced of China’s new stealth aircraft, the J-20. This plane was a rival to the F-22 and decisively superior to the F-35. At the same time, Congress was contemplating increasing our debt ceiling, the Secretary of Defense had stopped production of the F-22, and the Department of Defense announced $78 billion of cuts to our national defense. Although events that might unfold in the New Year were uncertain, one thing was indisputable. The Chinese know far more about us than we know about them. This booklet, “The Caucus Papers,” was designed to be a clearing house of information to assist policy makers in understanding the issues facing the United States as it struggles to find the right relationship with China. We hope it will provide you with a foundation to better evaluate those decisions.



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TABLE OF CONTENTS

4 China: An Overview 10 China’s Economy (& the Instant Pudding Mindset) 22 China’s Military (& the 1941 Malayan Bicycle Blitzkrieg) 48 Energy & Natural Resources in China (& the Anasazi Effect) 60 Technology & Education in China (& the Decline of the Boy Scouts) 70 China’s Government (& the Mirror Image Syndrome) 88 Important Reading

FEATURED: Scan the QR codes with your smartphone for additional reading. Additional reading can also be found at forbes.house.gov.

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CHINA: AN OVERVIEW GEOPOLITICS Contemporary China could be viewed as an island. Although China is not surrounded by water, which borders only its eastern flank, China is bordered by terrain that is difficult to traverse in virtually any direction. This phenomenon protects its major cities – Beijing, Shanghai, Chengdu, and Chonqing.

called the 15-inch isohyet, east of which more than 15 inches of rain fall each year and west of which the annual rainfall is less. The vast majority of Chinese live east and south of this line, in the region known as Han China. More than a billion people live in this area, about half the size of the United States.

Internally, China is divided into two parts: the Chinese heartland (Han China) and the non-Chinese buffer regions surrounding it. There is a line in China

CHINA AS AN ISLAND

15-INCH ISOHYET & CHINA POPULATION DENSITY



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NATIONAL SNAPSHOT SIDE -BY- SIDE

Area of Country

9,826,675 sq km 3rd Largest in world

9,596,961 sq km 4th Largest in world

Population

310,232,863 3rd largest in the world

1,330,141,295 Largest in the world

Age Structure of Population

0-14 years: 20.2% 15-64 years: 67% 65 years and over: 12.8%

0-14 years: 19.8% 15-64 years: 72.1% 65 years and over: 8.1%

Population Growth Rate

0.97%

0.494%

Urban Population

82% of total population

43% of total population

Ethnic Groups

white 79.96%, black 12.85%, Asian 4.43%, Amerindian and Alaska native 0.97%, native Hawaiian and other Pacific islander 0.18%, two or more races 1.61% (July 2007 estimate)*

Han Chinese 91.5%, Zhuang, Manchu, Hui, Miao, Uighur, Tujia, Yi, Mongol, Tibetan, Buyi, Dong, Yao, Korean, and other nationalities 8.5%

Religions

Protestant 51.3%, Roman Catholic 23.9%, Mormon 1.7%, other Christian 1.6%, Jewish 1.7%, Buddhist 0.7%, Muslim 0.6%, other or unspecified 2.5%, unaffiliated 12.1%, none 4% (2007 est.)

Officially Atheist, Daoist (Taoist), Buddhist, Christian 3%-4%, Muslim 1%-2%

coal, copper, lead, molybdenum, phosphates, uranium,bauxite, gold, iron, mercury, nickel, potash, silver, tungsten, zinc, petroleum, natural gas, timber**

coal, iron ore, petroleum, natural gas, mercury, tin, tungsten, antimony, manganese, molybdenum, vanadium, magnetite, aluminum, lead, zinc, uranium, hydropower potential (world’s largest)

English 82.1%, Spanish 10.7%, other Indo-European 3.8%, Asian and Pacific island 2.7%,

Standard Chinese or Mandarin (Putonghua, based on the Beijing dialect) (official), Yue (Cantonese), Wu (Shanghainese), Minbei (Fuzhou), Minnan (Hokkien-Taiwanese), Xiang, Gan, Hakka dialects, minority languages

Natural Resources

Languages

*The US Census Bureau did not include a separate listing for Hispanic in the 2000 Census; about 15.1% of the total US population is Hispanic. ** The US has the world’s largest coal reserves with 491 billion short tons accounting for 27% of the world’s total.


The ring of non-Han buffer regions that surround this heartland – Tibet, Xinjiang province, Inner Mongolia and Manchuria – were historically under Chinese control when China was strong and have broken away when China was weak. Today, there is a great deal of Han settlement in these regions – a cause of friction. Yet, when China controls the buffer regions it is an insulated state with defensible borders, making it virtually invulnerable to attack.

most vulnerable point was its coast. Since then, China’s three overriding geopolitical imperatives have been: (1) Maintain internal unity in the Han Chinese regions; (2) Maintain control of the buffer regions; and (3) Protect the coast from foreign encroachment.

Thus, since the 15th century, China’s strategy has remained constant: the slow and systematic assertion of control over these outer regions to protect the Han from foreign incursion. With the arrival of Europeans in the western Pacific in the mid-19th century, it became clear that China’s Read more: The Geopolitics of China, www.stratfor.com

CHINA PROVINCES AND BUFFER REGIONS



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The vast majority of Chinese live in the region known as Han China. More than a billion people live in this area, about half the size of the United States.

Photo Credit: Andrew Donahue


TERRITORIAL DISPUTES With China’s proximity and involvement in many of the sovereign rights and jurisdiction over the relevant world’s “flashpoints” such as North Korea, the Spratly waters as well as the seabed and subsoil thereof.” Islands, the Senkaku Islands, Afghanistan, and Pakistan, China’s leaders hope to China’s leaders hope to prevent regional prevent regional instability from spilling instability from spilling across its borders across China’s borders and thereby and thereby interfering with economic interfering with economic development or development or domestic stability. domestic stability. Changes in regional security dynamics—such as perceived threats to China’s ability to access and transport China and India: Despite increased political and foreign resources, or disruptions on the Korean economic relations between China and India over the Peninsula—could lead to shifts in China’s military years, tensions remain along their shared 4,057 km development and deployment patterns, likely with border, most notably over Arunachal Pradesh, which consequences for neighboring states. China asserts is part of Tibet and therefore part of China, and over the Askai Chin region at the western end of the Tibetan Plateau. In 2009, both countries The East China Sea: The East China Sea contains approximately 7 trillion cubic feet of natural gas and stepped up efforts to assert their claims. China tried to block a $2.9 billion loan to India from the Asian up to 100 billion barrels of oil. Japan maintains that an equidistant line from each country involved should Development Bank, claiming part of the loan would separate the EEZs, while China claims an Extended have been used for water projects in Arunachal Continental Shelf beyond the equidistant line to the Pradesh. This represented the first time China sought Okinawa Trench (which almost reaches Japan’s to influence this dispute through a multilateral shore). In early 2009, Japan accused China of institution. The then governor of Arunachal Pradesh violating a June 2008 agreement providing for joint announced that India would deploy more troops and exploration of oil and natural gas fields, and claimed fighter jets to the area. An Indian academic also noted that in 2008, the Indian military had recorded that China unilaterally drilled beneath the demarcation line and extracted reserves from the Japanese 270 border violations and nearly 2,300 cases of side. China and Japan continue to dispute possession “aggressive border patrolling” by Chinese soldiers. of the nearby Senkaku Islands. However, both sides Read more: “Annual Report to Congress: Military and have said that this dispute should not undermine their Security Developments Involiving the People’s Republic overall relationship. of China.” www.defense.gov

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The South China Sea: The South China Sea plays an important role in Northeast Asia and Southeast Asia security considerations. Northeast Asia relies heavily on the flow of oil and commerce through the South China Sea shipping lanes, including 80 percent of the crude oil to Japan, South Korea, and Taiwan. China claims sovereignty over the Spratly and Paracel island groups—claims disputed in whole or part by Brunei, the Philippines, Malaysia, Indonesia, and Vietnam. Taiwan, which occupies Itu Aba in the Spratly Islands, also claims all four island groups in the South China Sea. In 2009, China protested claims made by Malaysia and Vietnam and reiterated it has “indisputable sovereignty over the islands in the South China Sea and the adjacent waters and enjoys



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CHINA’S DISPUTED TERRITORIES

Although not exhaustive, three of China’s major ongoing territorial disputes are based on claims along its shared border with India and Bhutan, the South China Sea, and with Japan in the East China Sea.

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China’s Economy Photo Credit: Marmotta


Step 1: Beat pudding mix into 2 cups cold milk with wire whisk. Step 2: Pour at once into 4 individual serving dishes. Pudding will be soft-set and ready to eat within 5 minutes. America is suffering from an instant pudding mindset. We have grown accustomed to the harried pace and minimal effort of quick solutions and fast results. But the outcomes, in many cases, have been devastating. Breaking America’s dependence on deficit spending, righting our insolvent or soon-to-be-insolvent entitlement programs, unleashing a nimble and skilled labor force, and reordering our federal government will require long bouts of disciplined exertion. To catch up, meet, and exceed Chinese economic momentum, America must reorder its mindset. We must focus on the long-haul. Make difficult decisions. And do the hard work. There will be no instant pudding solutions to these challenges.

THE INSTANT PUDDING MINDSET


CHINA’S ECONOMY Since the launch of economic reforms and trade liberalization 30 years ago, China has been one of the world’s fastest-growing economies and has become a major economic and trade power. China’s rapid economic growth has dramatically improved Chinese living standards. Trade and foreign investment flows have been major factors in China’s booming economy. Foreign direct investment has fueled this rapid growth and, combined with large trade surpluses and large-scale purchases of foreign currency – specifically dollars – China has become the world’s largest holder of foreign exchange reserves. Yet, despite a largely positive outlook for its economy, China faces challenges to its future economic growth and stability including an ineffective banking system, government corruption and a lack of rule of law.

ECONOMIC GROWTH After three decades of growth averaging nearly 10 percent a year, China passed Japan in the first half of 2010 to become the world’s second-largest economy, after the United States. Although the gap between China’s $5 trillion economy and the nearly $15 trillion economy of the United States (at the 2009 official exchange rate) remains very large, China’s advancement is remarkable for a country whose gross domestic product (GDP) was just half as much five years ago. China’s per capita income has increased from $930 in 2000 to $3,600 in 2009. China’s consumption as a share of GDP has fallen from 46 percent in 2000 to below 36 percent in 2009. In contrast, personal consumption in the United States has hovered around 70 percent of GDP for the last decade. China’s government policies limit the ability of foreign companies to obtain Chinese government procurement contracts and to make sales to China’s state-owned enterprises, most recently through China’s new “indigenous innovation” policy. Companies in the United States and Europe have protested this discriminatory treatment.

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ECONOMY SIDE -BY- SIDE

GDP (2009 purchasing power parity)

$14.256 trillion 2nd in the world*

$8.818 trillion 3rd in world

GDP (2009 official exchange rate)

$14.12 trillion

$4.985 trillion

GDP (2009 real growth rate)

- 2.6%

9.1%

GDP (2009 per capita)

$46,000

$6,700

GDP (2009 composition by sector)

agriculture: 1.2% industry: 21.9% services: 76.9%

agriculture: 10.3% industry: 46.3% services: 43.4%

Labor force

154.2 million 4th largest in the world

813.5 million Largest in the world

Investment (gross fixed; records total business spending on fixed assets, which provide the basis for future production.)

12.2% of GDP 145th in the world

46.3% of GDP Largest in the world

Budget

revenues: $2.104 tril. expenditures: $3.52 tril.

revenues: $1.002 tril. expenditures: $1.111 tril.

Rate of Inflation

- 0.3% 22nd in the world

- 0.7% 14th in the world

Market values of publically traded shares

$11.740 trillion Largest in the world

$5.011 trillion 4th largest in the world

Unemployment rate (Dec. 2010)

9.8%

4.2%**

Population below poverty line**

12%

2.8%***

Current account balance Industries

Industrial production growth rate

- $378.4 billion 190th in the world leading industrial power in the world, highly diversified & technologically advanced; petroleum, steel, motor vehicles, aerospace, telecommunications, chemicals, electronics, food processing, consumer goods, lumber, mining - 5.5% –117th in the world

$297.1 billion 1st in the world mining, ore processing, iron, steel, aluminum, coal; textiles, apparel; petroleum; cement; chemicals; fertilizers; consumer products; transportation equipment; ships, aircraft; telecommunications equipment 9.9% – 4th in the world

* European Union has the world’s largest GDP of $14.43 trillion. ** Official data for urban areas only; including migrants may boost total unemployment to 9%; substantial unemployment and underemployment in rural areas . *** 21.5 million rural population live below the official “absolute poverty” line (approximately $90 per year); an additional 35.5 million rural population live above that level but below the official “low income” line (approximately $125 per year) (2007)

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THE ECONOMIC SLOWDOWN The global economic crisis began to impact China’s economy in late 2008. After growing by 13 percent in 2007, China’s real GDP slowed to 9.0 percent in 2008 and to 7.1 percent in the first half of 2009. China’s trade and inflows of FDI diminished sharply, and millions of workers reportedly lost their jobs. The Chinese government sought to boost the economy by implementing a $586 billion economic stimulus package, largely aimed at infrastructure projects, establishing easy money policies to boost banking lending, and providing assistance to various industries. Such policies were relatively successful in stabilizing China’s economy; real GDP was expected to grow by over 8 percent in 2009—far higher than the expected growth of any other major economy at the time. In contract, US stimulus packages focused on social spending expended high costs for minimal positive impacts. While the United States and the European Union (EU) are continuing to struggle in the wake of the global financial crisis, China has continued to grow: in the first quarter of 2010, China posted growth of 11.9 percent at an annualized rate.

Although growth has been moderating since (10.3 percent in the second quarter at an annualized rate), China’s economy is forecast to expand about 10 percent in 2010—continuing a remarkable, threedecade streak of double-digit growth on average.

RMB MANIPULATION China manipulates the value of its currency, the RMB, by requiring its citizens, businesses, and exporters to trade their dollars for RMB. By limiting the dollars in circulation within China, the government can then set a daily exchange rate between the RMB and the dollar. China maintains an artificially low value for the RMB that is estimated to be between 20 percent and 40 percent lower than it would otherwise be if it were allowed to respond to market forces. Since June 19, 2010, the RMB appreciated by just 2.3 percent against the dollar (as of October 2010). The RMB remains substantially undervalued against the dollar, which subsidizes Chinese exporters to the detriment of U.S. domestic producers. China’s undervalued currency also helps attract foreign companies to locate production in China.

Photo Credit: Andrew Donahue

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U.S.–CHINA TRADE IN GOODS ($ BILLION), 2000 – 2009 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

U.S. Exports

16.3

19.2

22.1

28.4

34.7

41.8

55.2

65.2

69.7

69.5

U.S. Imports

100.0

102.3

125.2

152.4

196.7

243.5

287.8

321.5

337.8

296.4

Balance -83.7

-83.1

-103.1

-124.1

-162.1

-201.6

-232.5

-256.3

-268.04 -226.9

Source: Bureau of Economic Analysis, U.S. International Transcations Accounts Data: China (Washington, DC: U.S. Department of Commerce, June 17, 2010).

TRADE For the first eight months of 2010, China’s goods exports to the United States were $229.2 billion, while U.S. goods exports to China were $55.8 billion, with the U.S. trade deficit in goods at $173.4 billion, an increase of 20.6 percent over the same period in 2009 ($143.8 billion). This constitutes a four-to-one ratio of Chinese exports to its imports from the United States.

largest among U.S. trading partners, 45 percent of the total in 2009 and 41.5 percent of the total for the first eight months of 2010. The dominance of the dollar in international markets is more pronounced when measured by currency transactions. The dollar was used in 85 percent of international currency transactions, while the euro was involved in fewer than half as many currency swaps—39 percent.

The U.S. trade deficit with China is a major drag on the U.S. economy. Despite the global financial crisis, China gained an even Despite the global financial crisis, China greater share of the U.S. trade deficit, gained an even greater share of the U.S. while the overall U.S. trade deficit trade deficit, while the overall U.S. trade declined. The deficit in goods with deficit declined. China is by far the largest among U.S. trading partners: 45 percent of the total in 2009 and 41.5 percent of the total for the first eight Since China’s accession to the WTO in 2001, the months of 2010. annual U.S. current account deficit with China has grown from $89 billion in 2001 to $264 billion in As the global recession reduced U.S. demand for 2009. Predictions of a more balanced trade imports, the U.S. trade deficit with the world and with relationship between the two countries as a result of China declined in 2009. However, the relative porChina’s membership in the WTO have proven false. tion of China’s share of the U.S. global trade deficit Since China’s entry into the WTO, the United States actually grew. In August 2010, the U.S. trade deficit has run a cumulative deficit in goods with China of with China ($28 billion) hit its highest level on over $1.76 trillion. record. The deficit in goods with China is by far the

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TRADE SIDE -BY- SIDE

Exports

$1.069 trillion - 4th in the world

$1.204 trillion - 2nd in the world

Export-commodities

agricultural products (soybeans, fruit, corn) 9.2%, industrial supplies (organic chemicals) 26.8%, capital goods (transistors, aircraft, motor vehicle parts, computers, telecommunications equipment) 49.0%, consumer goods (automobiles, medicines) 15.0%

electrical and other machinery, including data processing equipment, apparel, textiles, iron and steel, optical and medical equipment

Export partners

Canada 19.37%, Mexico 12.21%, China 6.58%, Japan 4.84%, UK 4.33%, Germany 4.1%

US 20.03%, Hong Kong 12.03%, Japan 8.32%, South Korea 4.55%, Germany 4.27%

Imports

$1.575 trillion - 2nd in the world

$954.3 billion - 4th in the world

Import-commodities

agricultural products 4.9%, industrial supplies 32.9% (crude oil 8.2%), capital goods 30.4% (computers, telecommunications equipment, motor vehicle parts, office machines, electric power machinery), consumer goods 31.8% (automobiles, clothing, medicines, furniture, toys)

electrical and other machinery, oil and mineral fuels, optical and medical equipment, metal ores, plastics, organic chemicals

Import partners

China 19.3%, Canada 14.24%, Mexico 11.12%, Japan 6.14%, Germany 4.53%

Japan 12.27%, Hong Kong 10.06%, South Korea 9.04%, US 7.66%, Taiwan 6.84%, Germany 5.54% (2009)

Stock of direct foreign investment-at home

$2.41 trillion - 1st in the world

$473.1 billion - 11th in world

Stock of direct foreign investment-abroad

$3.367 trillion - 1st in the world

$229.6 billion - 15th in world

Investment (gross fixed): Records total business spending on fixed assets, such as factories, machinery, equipment, dwellings, and inventories of raw materials, which provide the basis for future production. It is measured gross of the depreciation of the assets. Industrial production growth rate: Gives the annual percentage increase in industrial production (includes manufacturing, mining, and construction). Current account balance: Records a country’s net trade in goods and services, plus net earnings from rents, interest, profits, and dividends, and net transfer payments to and from the rest of the world during the period specified. These figures are calculated on an exchange rate basis. Debt - external: Gives the total public and private debt owed to nonresidents repayable in internationally accepted currencies, goods, or services. These figures are calculated on an exchange rate basis. Stock of direct foreign investment - at home: Gives the cumulative US dollar value of all investments in the home country made directly by residents - primarily companies - of other countries as of the end of the time period indicated. Direct investment excludes investment through purchase of shares. Stock of direct foreign investment - abroad: Gives the cumulative US dollar value of all investments in foreign countries made directly by residents - primarily companies - of the home country, as of the end of the time period indicated. Direct investment excludes investment through purchase of shares.


U.S.–CHINA TRADE BALANCE (QUARTERLY, 2000 – 2010 (THROUGH 2010 Q2)

2010:1

2009:3

2009:2

2008:3

2008:1

2007:3

2007:1

2006:3

2006:1

2005:3

2005:1

2004:3

2004:1

2003:3

2003:1

2002:3

2002:1

2001:3

2001:1

2000:3

$0

2000:1

$20

(U.S. $ billions)

- $20

- $40

- $60

- $80

Balance on goods Balance on services Balance on current account

- $100

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U.S. FOREIGN DEBT Of the $7.5 trillion in publicly held U.S. Treasury securities at the end of March 2010, $3.9 trillion, or 52 percent, was held by foreigners.

The Chinese government, through its central bank, has become the single largest foreign purchaser of U.S. government debt to finance the federal government’s budget deficit. In July 2010, for example, China and Hong Kong together held $982 billion of the outstanding, officially registered U.S. Treasury securities. Thus, China accounted for a quarter of all the publicly held Treasuries owned by foreigners and about 12 percent of the

overall publicly held Treasury debt. The growing U.S. debt held by foreign governments, particularly that of China, has raised the fear that if foreigners suddenly decided to stop holding U.S. Treasury securities or decided to diversify their holdings, the dollar could plummet in value and interest rates would rise.

The People’s Bank of China holds, in dollardenominated debt securities, an estimated 70 percent of its self-reported $2.65 trillion in foreign exchange reserves, or $1.85 trillion. As the holder of the world’s largest stock of foreign exchange reserves ($2.65 trillion as of October 2010), Beijing has questioned the role of the U.S. dollar as the global reserve currency and has led the drive for greater representation on global bodies, such as the International Monetary Fund (IMF) and the World Bank. Read more: “Annual Report to Congress, 2010,” www.uscc.gov. “China’s Economic Conditions,” Congressional Research Service. “Foreign Holdings of Federal Debt,” Congressional Research Service.

Major Foreign Holders of U.S. Securities (December 2009) Total: $2.7 Trillion

Thailand

All Others

France

Japan

Singapore Korea, South Ireland Canada Germany Switzerland Taiwan Luxembourg Russia China Brazil

Carib Bnking Ctrs

Oil Exporters United Kingdom

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A BRIEF LOOK AT DEBT & CURRENCY U.S. Current Account Balance with China and the World (U.S. $ Billions) Year

U.S. balance with world

U.S. balance with China

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

-

-

$417 $393 $459 $522 $631 $748 $803 $718 $669 $378

$88 $89 $110 $132 $172 $219 $261 $295 $308 $264

China’s share of U.S. global trade deficit 21% 22% 24% 25% 27% 29% 33% 41% 46% 70%

Source: Bureau of Economic Analysis, U.S. International Transactions Accounts Data (Washington, DC: Department of Commerce, September 14, 2010).

Global Currency Composition of Official Foreign Exchange Reserves(U.S. $ million) 3,500,000 3,000,000

2,931,094

2,500,000

2,000,000

1,500,000

1,249,776

1,000,000

500,000 156,373 0 U.S. dollars

Euros

Japanese yen

International Monetary Fund Statistics Department, Currency Composition of Official Foreign Exchange Reserves Database and International Financial Statistics (as of second quarter 2010) (Washington, DC)


TRANSPORTATION SIDE -BY- SIDE

Airports

15,079 - 1st in the worldÂ

502 - 15th in the world

Pipelines

petroleum products 244,620 km; natural gas 548,665 km

gas 32,545 km; oil 20,097 km; refined products 10,915 km

Railways

226,427 km - 1st in the world

77,834 km - 3rd in the world

Roadways

6,506,204 km - 1st in the world

3,583,715 km - 2nd in the world

Waterways

41,009 km - 4th in the world

Merchant marine

418 total - 26th in the world

110,000 km navigable - 1st in the world 2,010 total - 3rd in the world

Merchant marine – by type

barge carrier 6, bulk carrier 58, cargo 58, carrier 3, chemical tanker 30, container 87, passenger 18, passenger/cargo 56, petroleum tanker 45, refrigerated cargo 3, roll on/roll off 27, vehicle carrier 27 foreignowned: 86 (Australia 1, Bermuda 5, Canada 1, Denmark 34, France 4, Germany 3, Malaysia 2, Norway 10, Singapore 17, Sweden 5, UK 4) registered in other countries: 734 (Antigua and Barbuda 6, Australia 2, Bahamas 100, Belgium 2, Bermuda 25, Cambodia 4, Canada 9, Cayman Islands 54, Comoros 2, Cyprus 7, Georgia 1, Greece 7, Hong Kong 31, Indonesia 2, Ireland 2, Isle of Man 2, Italy 21, Liberia 39, Luxembourg 3, Malta 35, Marshall Is. 168, Netherlands 15, Norway 9, Panama 102, Portugal 4, Saint Kitts and Nevis 1, Saint Vincent and the Grenadines 19, Sierra Leone 1, Singapore 33, South Korea 8, UK 11 (2010)

barge carrier 6, bulk carrier 571, cargo 639, carrier 5, chemical tanker 98, container 204, liquefied gas 55, passenger 9, passenger/ cargo 83, petroleum tanker 271, refrigerated cargo 35, roll on/roll off 9, specialized tanker 1, vehicle carrier 24 foreignowned: 18 (Germany 1, Hong Kong 15, Japan 2) registered in other countries: 1,623 (Bahamas 4, Bangladesh 1, Belize 64, Bermuda 13, Cambodia 203, Comoros 1, Cyprus 6, France 5, Georgia 11, Germany 2, Honduras 2, Hong Kong 432, India 1, Indonesia 1, Kiribati 28, Liberia 10, Malta 11, Marshall Is. 16, North Korea 1, Norway 25, Panama 574, Philippines 4, Saint Kitts and Nevis 1, Saint Vincent and the Grenadines 82, Sierra Leone 12, Singapore 26, South Korea 9, Thailand 1, Togo 2, Tuvalu 9, UK 7 (2010)

Ports and terminals

Baton Rouge, Corpus Christi, Houston, Long Beach, Los Angeles, New Orleans, New York, Plaquemines, Tampa, Texas City

Dalian, Guangzhou, Ningbo, Qingdao, Qinhuangdao, Shanghai, Shenzhen, Tianjin

Investment in High Speed Rail

8 billion (2008)

100 billion (2008)

Miles of High Speed Rail

413

4,680


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China’s Military


It was 1941 - the outset of World War II - and the Imperial Japanese Army was outnumbered by as much as three to one on the Malay Peninsula. Yet in the days that would follow, the Japanese would launch a daring offense on the British forces: the conquest of the 700-mile Malay Peninsula in 70 days and the taking of the British Far East stronghold of Singapore. Central to their unparalleled accomplishment: bicycles. Calculating for the intense heat and impassable jungle, Japanese military leaders equipped their infantry with bicycles rather than horses to move troops and materials. On bicycles, the Japanese foot soldiers traveled farther, faster, and with less fatigue over the vast number of rivers on the Malay peninsula. Despite the British burning over 250 bridges on their retreat, the Japanese infantry continued their unbroken advance, wading across the rivers carrying their bicycles on their shoulders, or crossing on log bridges held up on the shoulders of engineers standing in the stream. The British could not escape the troops on bicycles. They were overtaken, driven out of the villages and into the jungle, and forced to surrender. After their relentless pursuit through the expansive peninsula, the Japanese Army invaded the island of Singapore on February 7, 1942 and took the island days later. Their victory would ultimately mark the end of the British Empire in Asia and the psychological impact of the defeat would stay with Britain throughout the entire war. Stepping into the new century, America’s military forces are stretched across the globe, military budgets are shrinking, infrastructure is decaying, and security challenges are steady. On paper, American military strength is strong, but are we prepared to face resourceful, innovative enemies prepared with asymmetric tactics? Does America risk bicycle blitzkrieg?

1941 Malayan Bicycle Blitzkrieg


CHINA’S MILITARY “I have moved from being curious to being genuinely concerned [about China’s military programs]” - Admiral Michael Mullen, the Chairman of the Joints Chiefs of Staff, Asia Society Washington’s Annual Dinner, June 2010 The Department of Defense (DOD) and other observers believe that the near-term focus of China’s military modernization effort has been to develop military options for addressing the situation with Taiwan. Consistent with this goal, observers believe that China wants its military to be capable of acting as a so-called anti-access force—a force that can deter U.S. intervention in a conflict involving Taiwan, or failing that, delay the arrival or reduce the effectiveness of intervening U.S. naval and air forces. DOD and other observers believe that China’s military modernization effort, including its naval modernization effort, is increasingly oriented toward pursuing additional goals, such as asserting or defending China’s claims in maritime territorial disputes, protecting China’s sea lines of communications, displacing U.S. influence in the

Pacific, and asserting China’s status as a major world power. On March 4, 2010, Beijing announced a 7.5 percent increase in its military budget to approximately $78.6 billion. This increase continues more than two decades of sustained annual increases in China’s announced military budget. Analysis of 2000-2009 data indicates China’s officially disclosed military budget grew at an average of 11.8 percent in inflation-adjusted terms over the period, while gross domestic product (GDP) grew at 9.6 percent. The announced increase in the military budget for China in 2010 is the smallest annual increase since 1995. Budget growth tends to slow in the last year of each Five-Year Program, and the defense budget growth is still higher than central government budget growth. This has now changed with recent rumors of double-digit expansion of China’s defense spending.

China’s Annual Real GDP and Military Budget Growth, 2000 - 2009 160

Billion 2009 US$

140 120 100 80 60 40 20 0 1996

1997

1998

1999

2000

2001

2002

PRC Military Budget

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2003

2004

2005

2006

2007

2008

2009

PRC Military Expenditure Estimate

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China relies on foreign technology to advance military modernization. In the case of key national security technologies, controlled equipment, and other materials not readily obtainable through commercial means or academia, the PRC resorts to more focused efforts, including the use of its intelligence services and other-than legal means, in violation of U.S. laws and export controls. China has become the number one espionage threat to the United States.

• Another case involved a former U.S. Pacific Command liaison official, who was charged in May 2009 with knowingly passing classified and unclassified information, including U.S. policy documents, to a PRC agent. • In July 2009, a former professor at the University of Tennessee was sentenced to four years imprisonment for a case involving the export to PRC nationals of controlled technical data related to a restricted U.S. Air Force contract to develop plasma actuators for an unmanned aerial vehicle (UAV).

• In July 2009, PRC national Chi Tong Kuok was indicted for violating U.S. export laws after allegedly attempting to obtain The PRC resorts to more focused efforts, sensitive cryptology equipment that including the use of its intelligence services would have allowed the PRC to and other-than legal means, in violation of monitor U.S. military communications. U.S. laws and export controls.

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Arms Sales Beijing is using arm sales to enhance foreign relations and to generate revenue to support its domestic defense industry. From 2005-2009, China sold approximately $8 billion worth of conventional weapons systems worldwide. PRC companies sell primarily to developing countries, where China’s low-cost weapons are able to achieve market access. In other instances, arms sales serve to cultivate relationships with important strategic partners, such as Pakistan. China’s Worldwide Arms Sales 2005-09

11%

Asia/Pacific Europe

26%

Latin America

53%

Middle East & North Africa SubSaharan Africa

8%

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2%

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MILITARY DOCTRINE China does not publish equivalents to the U.S. National Security Strategy, National Defense Strategy, or National Military Strategy. Rather, China uses “white papers,” speeches, and articles as the principal mechanisms to communicate policy and strategy publicly. The study of PLA views on strategy remains an inexact science, and outside observers have few direct insights into the formal strategies motivating China’s force build-up, the leadership’s thinking about the use of force, the contingency planning that shapes the PLA’s force structure or doctrine, or the linkages between strategic pronouncements and actual policy decisions, especially in crisis situations.

NAVAL WARFARE China’s naval modernization effort, which began in the 1990s, encompasses a broad array of weapon acquisition programs, including anti-ship ballistic missiles (ASBMs), submarines, and surface ships. China’s naval modernization effort also includes reforms and improvements in maintenance and logistics, naval doctrine, personnel quality, education, training, and exercises.

PRC President Hu Jintao called China a “sea power” and advocated a “powerful people’s navy” to “uphold our maritime rights and interests” during a 2006 speech at a Navy CCP Congress. Other civilian leaders, PLA Navy officials, government writings, and PLA journals have argued that China’s economic and political power is contingent upon access to and use of the sea, and that a strong navy is required to safeguard such access. Despite increased consideration of missions farther from China, the Navy’s primary focus will remain on preparing for operations within the “first and second island chains,” with emphasis on a potential conflict with U.S. forces over Taiwan. This is likely to remain true until there is a resolution of the Taiwan issue on terms Beijing finds acceptable. According to the testimony of Admiral Robert F. Willard, Commander of the U.S. Pacific Command, China has increased its number of ships to 290, bypassing the current number of U.S. ships for the first time in any of our lifetimes. This is an increase of over 30 ships since the Department of Defense last released research on the size of China’s navy in March of 2009.

The First and Second Island Chains. PRC military theorists conceive of two island “chains” as forming a geographic basis for China’s maritime defensive perimeter. www.defense.gov


Major Naval Units, www.defense.gov

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Status of Aircraft Carrier Developments China has an aircraft carrier research and design program. Beginning in early 2006, PRC-owned media reported high-level government and military official statements on China’s intent to build aircraft carriers. In April 2009 PRC Navy Commander Admiral Wu Shengli stated that “China will develop its fleet of aircraft carriers in a harmonious manner. We will prudently decide the policy [we will follow with regard to building aircraft carriers]. I am willing to listen to the views of experts from the navies of other countries and to seek opinions from our country.” While meeting with Japanese Defense Minister Yasukazu Hamada in March 2009, PRC Minister of Defense General Liang Guanglie stressed that China is the only big nation that does not have aircraft carriers and stated that “China cannot be without aircraft carriers forever.” The PLA Navy has reportedly decided to initiate a program to train 50 navy pilots to operate fixed-wing aircraft from an aircraft carrier. Both government and outside analysts project that China will not have an operational, domestically produced carrier and associated ships before 2015. However, changes in China’s shipbuilding capability and degree of foreign assistance to the program could alter those projections. In March 2009, PLA Navy Admiral Wu Huayang stated that “China is capable of building aircraft carriers. We have such strength. Building aircraft carriers requires economic and technological strength. Given the level of development in our country, I think we have such strength.” The PLA Navy is considering building multiple carriers by 2020.

The PLA Navy is at the forefront of efforts to extend operational reach beyond China’s regional waters. The PLA Navy’s investment in platforms such as nuclear powered submarines and progress toward its first aircraft carrier (a refurbished ex-Russian Kuznetsov-class carrier) suggest China is seeking to support additional missions beyond a Taiwan contingency. The PLA Navy has the largest force of principal combatants, submarines, and amphibious warfare ships in Asia. China’s naval forces include some 75 principal combatants, more than 60 submarines, 55 medium and large amphibious ships, and roughly 85 missile-equipped patrol craft. China has an active aircraft carrier research and development program. Observers anticipate that the PRC shipbuilding industry could start construction of an indigenous platform imminently, if not already. China is the second largest shipbuilder in the world.

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China is interested in building multiple operational aircraft carriers with support ships in the next decade. The PLA Navy has reportedly decided to initiate a program to train 50 pilots to operate fixedwing aircraft from an aircraft carrier. The initial program, presumably land-based, would be followed in about four years by ship-borne training. The PLA Navy is improving its over-the-horizon (OTH) targeting capability. OTH radars could be used in conjunction with imagery satellites to assist in locating targets at great distances from PRC shores to support long range precision strikes, including by anti-ship ballistic missiles. China continues production of its nuclear powered ballistic missile submarine (SSBN). China may field up to five new SSBNs. China is further expanding its current force of nuclear-powered attack submarines and may add up to five to the inventory in the coming years.

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MILITARY OVERVIE W SIDE -BY- SIDE

Annual Defense Budget

4.06% of GDP

4.3% of GDP

Annual Percent Growth in Defense Budget

0% (2010)

7.5% (2010)

10-Year Percent Growth in Defense Budget (2000-2010)

75.5%

339.8%

Military branches

United States Armed Forces: US Army, US Navy (includes Marine Corps), US Air Force, US Coast Guard*

People’s Liberation Army (PLA): Ground Forces, Navy (includes marines and naval aviation), Air Force (Zhongguo Renmin Jiefangjun Kongjun, PLAAF; includes Airborne Forces), and Second Artillery Corps (strategic missile force); People’s Armed Police (PAP); PLA Reserve Force (2010)

Military service and obligation

18 years of age (17 years of age with parental consent) for male and female voluntary service; maximum enlistment age 42 (Army), 27 (Air Force), 34 (Navy), 28 (Marines); service obligation 8 years, including 2-5 years active duty (Army), 2 years active (Navy), 4 years active (Air Force, Marines)

18-22 years of age for selective compulsory military service, with 24-month service obligation; no minimum age for voluntary service (all officers are volunteers); 18-19 years of age for women high school graduates who meet requirements for specific military jobs; in 2010, a decision was made to allow women in combat roles (2010)

Manpower available for military service

males 16-49: 73,145,586 females 16-49: 71,880,788

males 16-49: 381,747,145 females 16-49: 360,385,629

Manpower fit for military service

males 16-49: 60,388,734 females 16-49: 59,217,809

males 16-49: 314,668,817 females 16-49: 298,745,786

* Coast Guard administered in peacetime by the Department of Homeland Security, but in wartime reports to the Department of the Navy


MILITARY OVERVIEW SIDE -BY- SIDE CONT...

Navy - active personnel

329,390

215,000

- aircraft carriers

11

0

- cruisers

22

0

- destroyers

56

25

- frigates

21

49

- principal amphibious ships

31

2

- strategic submarines

14

1*

- attack submarines

57

60

- naval bombers

0

50

- unmanned aerial vehicles

42+

0

Air Force - active personnel

334,342

330,000

- fighters

11

0

- bombers

22

0

- unmanned aerial vehicles

56

25

Army - active personnel

553,044

800,000

- main battle tanks

5,850

6,550+

- armored personnel carriers

19,637

3,300+

- artillery

6,270+

17,700+

- attack helicopters

1,035

126

- unmanned aerial vehicles

4,034

Uncertain number

Marines - active personnel

204,261

10,000

- tanks

403

100+

- fighters

354

0

- attack helicopters

145

0

- unmanned aerial vehicles

32

0


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A BRIEF LOOK AT CHINA’S MIILTARY Select PLA Modernization Areas, 2000 - 2009 60

2000

2004

2008

2009

Percent Modern

50

40

30

20

10

0 Naval Surface Forces

Submarine Forces

Air Force

Air Defense Force

PEOPLE’S REPUBLIC OF CHINA (MILLIONS OF US $) FISCAL YEAR: 2008 Total Active Forces

Reserve Forces

Militia

Amount

Percentage

Training & Mainternance

175

0

20,125

33.47

18,599

247

1,149

19,989

33.24

Equipment

19,677

187

158

20,022

33,29

Total

58,221

608

1,307

60,136

100

Personnel

19,950

Notes: • Data drawn from China’s July 2009 report to the UN. • Personnel expenses cover salaries, allowances, food, clothing and bedding, insurance, welfare benefits and pensions for officers, non-ranking cadres, enlisted men, and contracted civilians. • Training and maintenance expenses cover troop training, institutional education, and running and development of daily work and activities. • Equipment expenses cover research and development, procurement, maintenance, and transportation and storage of weaponry and equipment. “Annual Report to Congress: Military & Security Developments Involving the People’s Republic of China,” www.defense.gov


AIR WARFARE Expert witnesses testified to the United States China Commission that by 2020, China’s Air Force will have transformed from a poorly equipped and trained service into one of the foremost in the world. The PLA Air Force is one of four major services and arms in the PLA and is responsible for conducting offensive and defensive air operations in and around China. With over 1,600 combat capable aircraft, it is the third-largest air force in the world (after the United States and Russia) and the largest in Asia. The PLAAF continues its conversion from a force for limited territorial defense to a more flexible and agile

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force able to operate off-shore in both offensive and defensive roles. Over the past decade, the PLA Air Force has simultaneously decreased the overall size of its fleet while increasing the number of modern fighters. According to the U.S. Department of Defense, in 2000 only two percent of China’s combat fighters were considered modern 4th generation and improved 3rd generation fighters. Today, the percentage has climbed to almost 25 percent. Read more: “Annual Report to Congress, 2010,”www.uscc.gov. “Annual Report to Congress: Military & Security Developments Involving the People’s Republic of China, 2010,” www. defense.gov.

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China’s Peaceful Pathway? In a significant departure from prior language, China’s 2008 Defense White Paper maintains that: “China has become an important member of the international system and the future and destiny of China have been increasingly closely connected with the international community. China cannot develop in isolation from the rest of the world, nor can the world enjoy prosperity and stability without China.” Nonetheless, there are forces— some beyond the control of China’s leaders—that could reinforce a relatively inward focus, or that could divert China from a peaceful pathway: Nationalism: Communist Party leaders continue to rely on nationalism, based on China’s economic achievements and increased international profile, to improve the legitimacy of the Party. China’s leaders have stoked patriotic sentiment to manipulate public opinion and deflect domestic criticism of the CCP. Economics: Continued economic development remains the foundation of the Party’s popular legitimacy and underwrites its military power. Unexpected increases in resource demand, global resource shortages or price shocks, or restricted access to resources, could affect China’s strategic outlook and behavior, and might force its leadership to re-examine its resource allocation priorities, including those for the military. Domestic Political Pressures: Regime survival and the maintenance of CCP rule shape the strategic outlook of China’s leaders and drive many of their choices. The Communist Party continues to face long-term popular demands for improved government responsiveness, transparency and accountability, which weakens its legitimacy. Environment: China’s economic development has come at a significant environmental cost. China’s leaders are concerned that these problems could undermine regime legitimacy by threatening economic development, public health, social stability, and its international image.

AIR AND CONVENTIONAL MISSILE CAPABILITIES China’s rapid and comprehensive transformation of its armed forces is affecting regional military balances and holds implications beyond the AsiaPacific region. Of particular concern is that elements of China’s military modernization appear designed to challenge our freedom of action in the region. Admiral Robert F. Willard, commander of the U.S. Pacific Command, in testimony to Congress in March 2010. Since at least 2000, China has been improving its conventional ballistic missile capabilities. Ten years ago, China had only one brigade of conventional short-range ballistic missiles (roughly 24–36 launchers). Today, the number has increased to seven brigades. In addition to increasing the number of missiles, China is also extending their range, improving their accuracy, and increasing their payload. China’s conventional ballistic missiles can be divided into two types: short-range ballistic missiles and mediumrange ballistic missiles.

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China is also expanding its land-attack cruise missile capabilities. The PLA has two types of land-attack cruise missiles, both first deployed within the last ten years. The first, the Second Artillery’s DH–10, is China’s premier long-range cruise missile, with an estimated range of over 1,500 km. In addition, the PLA Air Force employs a new, air-launched, land-attack cruise missile, the YJ–63. As a component of its overall desire to field a modern military, China is modernizing its air and missile forces and improving its capabilities to conduct offensive air and missile operations. These improvements have expanded China’s ability to operate outside its borders and reach U.S. regional allies, such as Japan, as well as U.S. forces in the region. China has the most active land-based ballistic and cruise missile program in the world. It is developing and testing several new classes of offensive missiles, forming additional missile units, qualitatively upgrading certain missile systems, and developing methods to counter ballistic missile defenses.

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China is developing an anti-ship ballistic missile (ASBM). The missile has a range in excess of 1,500 km and is intended to provide the PLA the capability to attack ships, including aircraft carriers, in the western Pacific Ocean. China is modernizing its nuclear forces. In recent years intercontinental range ballistic missiles (ICBM) have entered service. One such missile, the DF31A, has a range in excess of 11,200 km and can reach most locations within the continental United States. China’s current and projected force structure improvements will provide the PLA with systems that can engage adversary surface ships up to 1,000 nautical miles from the PRC coast. These include

• Anti-Ship Ballistic Missiles: MRBMs designed to target forces at sea, combined with overhead and over-the-horizon targeting systems to locate and track moving ships. • Conventional and nuclear-powered attack submarines: KILO, SONG, YUAN, and SHANG attack submarines capable of firing advanced ASCMs. • Surface Combatants: LUYANG I/II, SOVREMENNYY-II, guided missile destroyers with advanced long-range anti-air and anti-ship missiles. • Maritime Strike Aircraft: FB-7 and FB-7A and the SU-30 MK2, armed with ASCMs to engage surface combatants.

PLA Conventional Ballistic Missiles Missile Name

Number of Missiles

Number of Launchers

Estimated Range

Short-Range Ballistic Missiles (<1,000 km range) DF-11

700-750

120-140

300km

DF-15

350-400

90-110

600km

Short-Range Ballistic Missiles (<1,000 km range) DF-3

15-20

5-10

3,000+ km

DF-21C

85-95

75-85

1,750+ km

DF-21D

Under development

1,750+ km

Sources: USCC staff compiliation baed on the Secretary of Defense Annual Report to Congress: Military and Security Dveelopments Involving the PRC, and Global Security.org, “Weapons of Mass Destruction - China - Theater Missile Systems.”

PLA’s Advanced Cruise Missiles Missile

Type

Number of Missiles

Number of Launchers

Estimated Range

DH-10

Ground Launched

200-500

45-55

1,500+ km

YJ-63

Air Launches

unknown

unknown

200+ km?

Source: Office of Secretary of Defense Annual Report to Congress: Military and Security Dveelopments Involving the PRC; Capabilities of the Chinese People’s Liberation Army to Carry Out Military Action in the Event of a Regional Military Conflic; Ballistic and Cruise Missile Threat.

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PLA Conventional Missile Capabilities Against U.S. Air Force Bases in East Asia Base

Distance from China

Osan Air Base, South Korea

400 km

Kunsan Air Base, South Korea

400 km

Kadena Air Base, Japan

650 km

Misawa Air Base, Japan

850 km (1,000 km without overflight rights from Russia)

Yokota Air Base, Japan

1,100 km

Andersen Air Force Base, Guam

3,000 km

PLA Nonnuclear Missile Capabilities 480 theater ballistic missiles; 350 ground launched cruise missiles 48 theater ballistic missiles; 350 ground launhced cruise missiles 80 theater ballistic missiles; 350 ground launched cruise missiles 80 theater ballistic missiles; 350 ground launched cruise missiles 80 theater ballistic missiles; 350 ground launched cruise missiles Currently free from theater ballistic missile threats; could face threats from medium-range ballistic missles, submarine luanched ballistic missiles, and air-launched cruise missiles

Source: USCC staff, based upon testimony of Jeff Hagen. U.S.-China Economic and Security Review Commission, Hearing on Chinaâ&#x20AC;&#x2122;s Emergent Military Aerospace and Commerical Aviation Capabilities.

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BUILDING CAPACITY FOR CONVENTIONAL PRECISION STRIKE Short-Range Ballistic Missiles (< 1,000 km). As of December 2009, the PLA had somewhere between 1,050–1,150 SRBMs. The later versions have greater ranges, improved accuracy, and a variety of conventional payloads. Medium-Range Ballistic Missiles (1,000-3,000 km). The PLA is acquiring conventional MRBMs to increase the range at which it can conduct precision strikes against land targets and naval ships, including aircraft carriers, operating far from China’s shores. Land-Attack Cruise Missiles. The PLA is developing air- and ground-launched LACMs for precision strikes. Ground Attack Munitions. The PLA Air Force has a small number of tactical air-to-surface missiles as well as precision-guided munitions including all-weather, satellite-guided bombs, anti-radiation missiles, and laser-guided bombs. Anti-Ship Cruise Missiles. The PLA Navy has or is acquiring nearly a dozen ASCM variants. The pace of ASCM research, development and production within China and procurement from abroad—primarily Russia—has accelerated over the past decade. Missle Flight Trajectory with Terminal Guidance

This graphic of an anti-ship ballistic missile’s use of mid-course and terminal guidance to strike an aircraft carrier appears in a 2006 article from the Second Artillery Engineering College. www.defense.gov

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CATEGORIES OF MISSILES SIDE -BY- SIDE

Strategic Nuclear Missiles - Intercontinental ballistic missiles

- Submarine-launched ballistic missiles

Minuteman III: 450 launchers; 500 warheads

Trident: 336 launchers; 1152 warheads

• DF-4: 10-15 launchers; 10-15 warheads • DF-5: 20 launchers; 20 warheads • DF-31: <10 launchers; <10 warheads • DF31A: 10-15 launchers; 10-15 warheads JL-1: 12 (on one Xia-class SSBN of uncertain operational status) JL-2: under development for deployment of 12 SLBMs on each of the new Jin-class SSBN with six submarines expected M-9: 350-400 missiles

Short-range ballistic missiles

M-11: 700-750 missiles Medium-range ballistic missiles

Under the Treaty on the Elimination of Intermediate Range and ShorterRange Missiles (INF Treaty) with the Soviet Union, the United States eliminated by 1991 all groundlaunched ballistic and cruise missiles with ranges between 500 and 5,500 km.

Anti-ship ballistic missiles

DF-21: 85-95 missiles

DH-10: 200-500 missiles

Land-attack cruise missiles Air-to-Surface Missiles and Air-to-Air Missiles

DF-3: 15-20 missiles

Air Force: 41,422+ (26,422+ air-to-ground missiles, airlaunched cruise missiles, and high-speed anti-radiation missiles; and 15,000+ air-to-air missiles)

Air Force: 4,500+ air-tosurface and air-to-air missiles

DF-21D: under development of the world’s only ASBM, could target aircraft carriers and other ships operating 1500 to 2000 km from sites along China’s coast


This Page: Medium and Intercontental Range Ballistic Missiles. China is capable of targeting its nuclear forces throughout the region and most of the world, including the continental U.S. Newer systems, such as the DF-31, DF-31A, and JL-2 will give China a more survivable nuclear force. www.defense.gov Opposite Page: Conventional Anti-Access Capabilities. The PLAâ&#x20AC;&#x2122;s conventional forces are currently capable of striking targets well beyond Chinaâ&#x20AC;&#x2122;s immedaite periphery. Not included are ranges for naval surface- and sub-surface-based weapons, whose employment at distances from China would be deteremined by doctrine and the scenario in which they are employed. www.defense.gov


GROUND WARFARE The PLA has about 1.25 million personnel in its ground forces. In addition to the active ground forces, China has a reserve force of some 500,000 (as of 2008) and a large militia that can be mobilized in wartime to support the war effort within their home provinces. All males between 18 and 35 years of age not currently serving in the military are technically part of the militia system. PLA ground forces are transitioning from a static defensive force to a more offensive and maneuver-oriented force organized and equipped for operations along China’s periphery. Service (and select strength) Strategic Nuclear Forces Active Personnel Reserves Militia

People’s Liberation Army Total launchers: 50-60 Total warheads: 175 1,355,000 500,000 8-10 million*

United States Military Total launchers: 880 Total warheads: 2,152 1,421,037 855,000 0

* All males between 18 and 35 years of age not currently serving in the military are technically part of the militia system. Congressional Research Service.

SPACE WARFARE China is developing the ability to attack an adversary’s space assets, accelerating the militarization of space.

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Beijing launched a navigation satellite in 2009, and plans to have a full network to provide global positioning for military and civilian users by 20152020.

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PLA writings emphasize the necessity of China is developing the ability to attack an “destroying, damaging, and interfering with adversary’s space assets, accelerating the the enemy’s reconnaissance ... and communications satellites,” suggesting that militarization of space. such systems, as well as navigation and early warning satellites, could be among initial targets of China recently launched its 6th reconnaissance attack to “blind and deafen the enemy.” satellite orbited since 2006. PLA analysis of U.S. and Coalition military operations states that “destroying or capturing satellites and other sensors … will deprive the opponents of initiatives on the battlefield and [make it difficult] for them to bring their precision guided weapons into full play.” The PLA Air Force (PLAAF) celebrated its 60th Anniversary in 2009. In an interview on the occasion of the anniversary, PLAAF Commander General Xu Qiliang said that the trend of military competition extending to space is “inevitable” and emphasized the transformation of the PLAAF from a homeland defense focus to one that “integrates air and space,” and that possesses both “offensive and defensive” capabilities.

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In 2007, China successfully tested an anti-satellite (ASAT) weapon against a PRC weather satellite, demonstrating its ability to attack satellites in lowEarth orbit. China continues to develop and refine this system, which is one component of a multidimensional program to limit or prevent the use of space-based assets by potential adversaries during times of crisis or conflict. China is expanding its space-based intelligence, surveillance, reconnaissance, navigation, and communications satellite constellations. In parallel, China is developing a multidimensional program to improve its capabilities to limit or prevent the use of space-based assets by potential adversaries during times of crisis or conflict.

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Profile of a Chinese Information Warfare Militia Unit

In March 2008, the PLA established an information warfare militia unit in Yongning County, in Ningxia Province. The establishment ceremony for the unit was publicized by the local government and included a number of prominent local figures. According to a concurrent Web posting made by the county government, the duties of an information warfare militia unit include “[s]trengthening research and exercises related to network warfare, and continuously improving methods for network attacks. . . In peacetime, extensively collect information from adversary networks and establish databases of adversary network data. . . . In wartime, attack adversary network systems, and resist enemy network attacks.” According to a press release about the establishment ceremony for the unit, the Yongning Militia Information Warfare Unit will have approximately 80 personnel divided into three detachments, focused on network warfare, information collection and processing, and network defense. The unit was constructed according to ‘‘standardized requirements,’’ with facilities including an operations center, a generator room, the commander’s office, an activities room, and a set of charts and other necessary materials. The same source indicated that individual unit personnel would undergo 10 days of foundational military training, including basic military skills and general knowledge of network warfare. Finally, the local government announcement also underscored concern for the loyalty and political reliability of unit members, stating that their efforts would build “a unit that is steadfast in political belief, that has pure ideology and morals, that has a superior quality of professionalism . . . that performs propaganda for the Party, that benefits the people, and that can provide effective strength to the military for winning future wars under informationized conditions.”


CYBER WARFARE In May 2009, President Obama labeled cyber Grumman that implicates the Chinese government in attacks “one of the most serious economic and extensive malicious cyber activities against the United national security challenges” that the country faces. States: As a means of enhancing its military modernization and economic development, China has been heavily •China is likely using its maturing computer network involved in conducting human and cyber espionage exploitation capability to support intelligence collecagainst the United States. The quantity of malicious tion against the U.S. government and U.S. defense computer activities against the United States industries by conducting a long-term, sophisticated, increased in 2008 and rose sharply in 2009; much computer network exploitation campaign. of this activity appears to originate in The PLA views computer network warfare China.

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as both a key enabler of modern warfare and a critical new spectrum of conflict in its own right.

Joel Brenner, former director of the Office of the National Counterintelligence Executive, has identified China as the origin point of extensive malicious cyber activities that target the United States. Malicious activities directed against Defense Department computers in 2009 were running at a rate of 240 every day, costing as much as $200 million to repair the damage.

The PLA views computer network warfare as both a key enabler of modern warfare and a critical new spectrum of conflict in its own right. Chinese analysts also describe computer network warfare as a critical tool that can be exploited by a weaker military force to level the playing field against a stronger opponent.

•The depth of resources necessary to sustain the scope of computer network exploitation targeting the US and many countries around the world coupled with the extremely focused targeting of defense engineering data, US military operational information, and China-related policy information is beyond the capabilities or profile of virtually all organized cybercriminal enterprises and is difficult at best without some type of state-sponsorship. •The type of information often targeted for exfiltration has no inherent monetary value to cybercriminals like credit card numbers or bank account information.

According to a study for the U.S.-China Economic Security and Review Commission by Northrop

The Role of the “Patriotic Hacker” The Role of the “Patriotic Hacker”

Another category of actors involved in cyber activities directed against the United States consists of privately organized groups of Chinese computer hackers, sometimes referred to as “patriotic hackers.” Another category of actors involved in cyber activities directed against the United States consists of privately Motivated both by a desire to test their hacking skills as well as an anti-western sense of Chinese organized groups of Chinese computer hackers, sometimes referred to as ‘‘patriotic hackers.” nationalism, such in many high-profile “hacktivist” or Motivated both by groups a desire have to testbeen their involved hacking skills as well as an anti-western sensedefacements of Chinese nationalism, distributed denial of service attacks directed against U.S. Web defacements sites. such groups have been involved in many high-profile ‘‘hacktivist’’ or distributed denial of service attacks directed against U.S. Web sites.

These have most frequently occurred during times of strained Sino-American relations, such as in the These have frequently occurred during times ofofstrained Sino-American relations, in the aftermath aftermath ofmost the accidental May 1999 bombing a People’s Republic of China such (PRC)asembassy annex the accidental 1999 a People’s Republic of China (PRC)aembassy annex in Serbia by U.S. inofSerbia by U.S. May forces, or bombing followingofthe April 2001 collision between U.S. Navy surveillance aircraft forces, or following the April 2001 collision between a U.S. Navy surveillance aircraft and a PLA Navy fighter and a PLA Navy fighter aircraft over the South China Sea. aircraft over the South China Sea.

Many Chinese hacker organizations operate quite openly on the Internet, maintaining their own Web Many Chinese hacker organizations operate quite openly on the Internet, maintaining their own Web pages, pages, recruiting new members, and boasting of their hacking exploits. In the past, these groups have recruiting new members, and boasting of their hacking exploits. In the past, these groups have generally been generally been tolerated by the Chinese government, as long as their hacking activities were directed tolerated by the Chinese government, as long as their hacking activities were directed abroad. abroad.


The PRC is also recruiting from its growing population of technically skilled people, including those from the private sector, to increase its cyber capabilities. It is recruiting skilled cyber operators from information technology firms and computer science programs into the ranks of numerous Information Warfare Militia units. A 2008 study by the Internet security research firm iDefense identified 33 probable cyber militia units in China, mostly located within government research institutes, information technology firms, or university computer science departments. 94% of those selected are members of either the Chinese Communist Party or its Communist Youth League.

being found in the computer systems of oil and gas distributors, telecommunications companies, [and] financial services industries.” In 2009, numerous computer systems around the world, including those owned by the U.S. government, continued to be the target of intrusions that appear to have originated within the PRC. These intrusions focused on exfiltrating information, some of which could be of strategic or military utility. It remains unclear if these intrusions were conducted or endorsed by the PLA or other elements of the PRC government. However, developing capabilities for cyberwarfare is consistent with authoritative PLA military writings.

In written testimony to the U.S. China Economic and Security Commission, a senior fellow with The Technolytics Institute (an information security consultancy) warned of Chinese computer exploitation and cited “reports of malicious code

Read more: “China Naval Modernization: Implications for U.S. Navy Capabilities,” Congressional Research Service. “Annual Report to Congress, 2009,” www.uscc.gov.

Department of Defense Reported Incidents of Malicious Cyber Activity, 2000-2009, with Projection for 2010 80000

NUMBER OF INCIDENTS

70000 60000 50000 40000 30000 20000 10000 0 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Sources: U.S.-China Economic and Security Review Commission, testimony of Gary McAlum, May 20, 2008; Staff member, U.S. Strategic Command, telephone interview, August 28, 2009; Staff member, U.S. Cyber Command, email interview, August 17, 2010.

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Prominent cyber attacks with likely Chinese nexus •

2006: Computers in the U.S. House of Representatives were penetrated by hackers using Chinese addresses.

June 2007: The Office of the Secretary of Defense took its information systems offline for more than a week to defend against a serious infiltration that investigators attributed to China.

May 2008: The National Journal reported that Chinese cyber attacks may have been responsible for blackouts in 2003 and 2007 in New York and Florida, respectively.

March 2009: A renowned cyber think tank in Canada released a report implicating China in an extensive campaign of worldwide cyber infiltration, which they called “GhostNet.” GhostNet infected 1,295 host computers in 103 different countries around the world, many of them belonging to embassies, ministries of foreign affairs, and other high-profile government targets, including the personal office of the Dalai Lama; the Tibetan governmentin-exile in Dharamsala, India; and Tibetan government-in-exile offices in New York, Brussels, and London. GhostNet “command” and “control” servers were located in China. GhostNet network control interface used Chinese (Mandarin).

March 2009: Canadian researchers uncovered an electronic spy network, apparently based mainly in China, which had reportedly infiltrated Indian and other nations’ government offices around the world. More than 1,300 computers in 103 countries were identified.

April 2009: Reports surfaced that attacks on defense contractor information systems in 2007 and 2008 allowed intruders—probably operating from China—to successfully exfiltrate “several terabytes of data related to design and electronics systems” of the F35 Lightning II, one of the United States’ most advanced fighter planes.

Early 2010: Reports emerged of a large-scale cyber attack against Google’s operations in China. In January, Google’s chief legal officer announced that in mid-December 2009, Google had ”detected a highly sophisticated and targeted attack on [its] corporate infrastructure originating from China that resulted in the theft of intellectual property.” Evidence from the ensuing investigation suggested that another “primary goal of the attackers was accessing the [Google e-mail] accounts of Chinese human rights activists.”


In January 2010, Google’s chief legal officer announced that in mid-December 2009, Google had “detected a highly sophisticated and targeted attack on [its] corporate infrastructure originating from China that resulted in the theft of intellectual property.”


Energy and Natural Resources in China Photo Credit: Vmenkov


The Anasazi were amazing architects. A thousand years ago in what is now the American Southwest, the Anasazi built dramatic adobe dwellings. In Chaco Canyon, the center of Anasazi civilization, the pueblos rose four to five stories high and housed nearly 1,200 people â&#x20AC;&#x201D; an astounding achievement for the time. The Anasazi civilization thrived making dramatic advances in agriculture, transportation, and architecture. Yet from A.D. 1125 to 1180, very little rain fell in the region. Between 1270 and 1274 there was another long drought, followed by another period of normal rainfall. In 1275, yet another drought began. This one lasted 14 years. When this cycle of drought began, Anasazi civilization was at its height. Communities were densely populated. Even with good rains, the Anasazi were using their land to its limits. Without rain, it was impossible to grow enough food to support the population. Widespread famine occurred. People left the area in large numbers to join other pueblo peoples to the south and east, abandoning the Chaco Canyon pueblos and, later, the smaller communities that surrounded them. Anasazi civilization began a long period of migration and decline after these years of drought and famine. By the 1300s, Anasazi civilization had all but died out. While not facing droughts like the Anasazi, both America and China will face futures marked with challenges involving energy sources, natural resources, and food supply. How will the Anasazi Effect impact our cultures, our relationships, and our intertwined futures?

The anasazi effect


ENERGY AND NATURAL RESOURCES IN CHINA Since 2000, China has doubled its consumption of energy and, according to the International Energy Agency, “Prospects for further growth are very strong considering the country’s low per-capita consumption level and the fact that China is the most populous nation on the planet.” In a study commissioned by the National Foreign Trade Council, the law firm of Dewey & LeBoeuf LLC noted: China’s continued economic growth—and stability—ultimately rests upon the availability of adequate supplies of energy. . . . At present rates of extraction, China will run out of domestic sources of petroleum, natural gas, and coal in an estimated 7, 22, and 75 years, respectively.

China’s push for rapid economic development will dominate global energy markets and be the single biggest force in spurring higher oil prices and carbon emissions over the next quarter-century. Over the last decade, China’s energy demand has doubled and, in the future, Chinese energy demand is expected to soar 75 percent by 2035, accounting for more than a third of the growth in global consumption.

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China is already a net energy importer. In 2006, it became the world’s third-largest net importer of oil, with over 50 percent of its oil coming from overseas. And, despite having one of the world’s largest coal reserves, in 2009, China became a net importer of coal.

China’s consumption of fossil fuels, especially coal, has made it the world’s largest emitter of carbon dioxide, emitting 8.1 billion metric tons in 2009, or 21 percent of the world total.

}

China’s push for rapid economic development will dominate global energy markets and be the single biggest force in spurring higher oil prices and carbon emissions over the next quarter-century.

In a recent report, China’s Ministry of Environmental Protection announced that environmental accidents had increased by 96 percent in the first six months of 2010. One of these accidents, an acid leak at a copper mine in Fujian Province, killed enough fish to feed 72,000 people for a year.

Photo Credit: Mark Schweiss

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COAL: China’s coal consumption between 2000 and 2008 accounted for three-quarters of the global growth in coal demand. China is also the world’s largest producer and consumer of coal, with about half of its coal use being for electricity generation. Coal provides over 70% of China’s current electricity needs, and fuels much of the new power generation capacity being built. GREEN ENERGY: With $735 billion in investment plans over the next decade in nuclear, wind, solar and biomass projects, China is becoming a world leader in low-carbon energy output. NUCLEAR ENERGY: China has set a goal of building 20 nuclear power plants by 2020, which would increase its nuclear capacity at least fourfold. If achieved, China will account for 57 percent of all new nuclear power plant construction globally between 2007 and 2020. WIND POWER: Wind power is central to China’s plans for non-fossil energy to provide 15 percent of the country’s energy supply by 2020. Although wind currently accounts for less than 1 percent of China’s total electricity consumption, the country has been adding capacity aggressively in recent years. Read more: “Annual Report to Congress, 2010,”www.uscc.gov. “World Energy Outlook, 2010 - Executive Summary,” www.worldenergyoutlook.org.

CHINA’S PRIMARY ENERGY DEMAND, 1980 - 2030 4,000 3,500

Mtoe

3,000 2,500 2,000 1,500 1,000 500 0

1980

1990 Coal

Oil

2005 Gas

Renewable

2015

2030

Nuclear

Adapted from International Energy Agency, World Economic Outlook 2007: China and India Insights (Paris, France: Organization for Economic Cooperation and Development, 2007), p. 289. www.uscc.gov

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Military and Security Aspects of Beijing’s Regional Energy Strategy Beijing has constructed or invested in energy projects in more than 50 countries. The majority of China’s external energy related projects and investment since 2003 remains linked to securing long-term energy resources (primarily oil and gas) to sustain economic and industrial development. Oil currently contributes about 20 percent to national energy consumption. China meets 70 percent of its total energy needs through coal. In 2008, China imported 56 percent of its oil. Conservative estimates of future oil are 80 percent by 2030. A part of Beijing’s foreign energy strategy is the development of land-based pipeline corridors that avoid sensitive Sea Lines of Communication (SLOC). For instance, in 2008, over 80 percent of China’s oil imports transited the Strait of Malacca. In 2006, a crude oil pipeline from Kazakhstan to China became operational. In May 2009, construction began on a spur pipeline from Siberia

to Daqing. Another proposed pipeline would transport crude oil from Kyuakpya, Burma to Kumming, China, bypassing the Strait of Malacca. With these projects, China has become a major economic contributor in several states. However, Beijing has not used oil as a foreign policy lever on the international stage. This is because China remains dependent on oil to support its own industrial and economic development, which makes it a less attractive foreign policy tool. The increasing presence of Chinese oil companies around the world cannot be discounted as a future tool of Beijing’s influence, though. Nevertheless, evaluation of proven global oil reserves indicates that China’s future energy needs can only be met through suppliers in the Persian Gulf, Africa, and North America—all extraction points that will continue to require maritime transport along SLOCs.

China’s Top Crude Oil Suppliers 2008 Country Saudi Arabia Angola Iran Oman Russia Sudan Venezuela Kuwait Kazakhstan UAE Other TOTAL

Volume 728 599 427 292 233 210 130 118 114 92 639 3582

% 20 17 12 8 7 6 4 3 3 3 3 17

Volumes are in 1,000 barrels per day Figures have been rounded www.forbes.house.gov

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ENERGY SIDE -BY- SIDE

Electricity – production

4.11 trillion kWh 1st in the world

3.451 trillion kWh 2nd in the world

Electricity – consumption

3.873 trillion kWh 1st in the world

3.438 trillion kWh 2nd in the world

Electricity – exports

24.08 billion kWh

16.64 billion kWh

Electricity – imports

57.02 billion kWh

3.842 billion kWh

Oil – production

9.056 million bbl/day 3rd in the world

3.991 million bbl/day 5th in the world

Oil – consumption

18.69 million bbl/day 1st in the world

8.2 million bbl/day 3rd in the world

Oil – exports

1.704 million bbl/day 13th in the world

388,000 bbl/day 32nd in the world

Oil – imports

11.31 million bbl/day 1st in the world.

4.393 million bbl/day 4th in the world

Oil – proved reserves

19.12 billion bbl 14th in the world

20.35 billion bbl 13th in the world

Natural gas – production

593.4 billion cu m 1st in the world

82.94 billion cu m 8th in the world

Natural gas – consumption

646.6 billion cu m 1st in the world

87.08 billion cu m 9th in the world

Natural gas - exports

30.35 billion cu m 9th in the world

3.32 billion cu m 31st in the world

Oil - proved reserves: This entry is the stock of proved reserves of crude oil in barrels (bbl). Proved reserves are those quantities of petroleum which, by analysis of geological and engineering data, can be estimated with a high degree of confidence to be commercially recoverable from a given date forward, from known reservoirs and under current economic conditions.


Over the last decade, Chinaâ&#x20AC;&#x2122;s energy demand has doubled and is expected to soar 75 percent by 2035.

Photo Credit: Rehman


A BRIEF LOOK AT CHINA & ENERGY

Coal-fired electricity generation by region in the New Policies Scenario

Incremental primary energy deman by fuel & region in the New Policies Scenario, 2008-2035


Chinaâ&#x20AC;&#x2122;s important transit routes/critical chokepoints and proposed/under construction SLOC bypass routes. www.defense.gov

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Chinaâ&#x20AC;&#x2122;s share of the projected net global increase for selected indicators in the New Policies Scenario

Rare Earth Metals China produces as much as 97 percent of the worldâ&#x20AC;&#x2122;s supply of rare earth elements (REEs), which are critical components in weapons systems and other electronics such as cell phones, portable DVDs, and laptops. Recently China has introduced measures aimed at restricting exports to foreign markets, to the detriment of foreign producers of a variety of cutting-edge technologies, such as the United States. Such export restrictions provide an unfair advantage to Chinese technology producers.

electric vehicles, generators for wind turbines, and numerous medical devices. There are important defense applications, such as jet fighter engines, missile guidance systems, antimissile defense, and space-based satellites and communication systems.

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The concentration of production of rare earth elements outside the United States raises the important issue of supply vulnerability. While more abundant than many other minerals, REEs are not concentrated enough to make them easily exploitable economically. The United States was once self-reliant in domestically produced REEs, but over the past 15 years has become 100% reliant on imports, primarily from China, because of lower-cost operations. Some of the major end uses for rare earth elements include use in automotive catalytic converters, fluid cracking catalysts in petroleum refining, phosphors in color television and flat panel displays (cell phones, portable DVDs, and laptops), permanent magnets and rechargeable batteries for hybrid and

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}

The U.S. was once self-reliant in domestically produced REEs, but over the past 15 years has become 100% reliant on imports, primarily from China, because of lower-cost operations.

World demand for rare earth elements is estimated at 134,000 tons per year, with global production around 124,000 tons annually. The difference is covered by previously mined above-ground stocks. World demand is projected to rise to 180,000 tons annually by 2012, while it is unlikely that new mine output will close the gap in the short term. New mining projects could easily take 10 years to reach production. In the long run, however, the USGS expects that global reserves and undiscovered resources are large enough to meet demand.

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The Zambezi Valley: China’s First Agricultural Colony? China’s search for new land has led Beijing to aggressively seek large land leases in Mozambique over the past two years, particularly in its most fertile areas, such as the Zambezi valley in the north. The Zambezi valley is the richest region of Mozambique possessing some of the most fertile land in the world, as well as substantial resources below ground, such as coal, gold, and precious stones. Chinese interest in the Zambezi valley started in mid-2006, when the Chinese state-owned Exibank granted $2 billion in soft loans to the Mozambican government to build the Mpanda Nkua mega-dam on the stretch of the Zambezi in Tete province. Since then, China has been requesting large land leases to establish Chinese-run mega-farms and cattle ranches. A memorandum of understanding was reported to have been signed in June 2007, allowing an initial 3,000 Chinese settlers to move to the Zambezi valley to run farms along the valley. A Mozambican official said the number could eventually grow to 10,000. China is committed to transforming Mozambique into one of its main food suppliers, particularly for rice, the basic element of Chinese diet. An analysis of China’s activities in the valley in the past two years provides some strong indication of China’s long term intentions. In addition to building a major dam, China has offered to finance three other dams, build new roads, and modernize two harbors. This investment in infrastructure is clearly designed to maximize production and facilitate the rapid export of foodstuffs to China while also giving lucrativecontracts to Chinese companies.

Food Security China is the world’s largest agricultural producer in terms of volume. Yet, China has less than 10 percent of the world’s arable land to support almost 22 percent of the world’s population. Beijing considers grain self-sufficiency a matter of national security. To ensure grain security, China set a “red line” to guarantee its arable land never shrinks to less than 1.8 billion mu (120 million hectares). According to statistics from China’s Ministry of Land and Resources (MLR), the country is already edging dangerously close to its “red line,” with just 1.826 billion mu available at the end of last year. Bank of America estimates that China’s arable land could decrease to 117 million hectares by 2015. Rattled by rapidly rising global grain prices, China is looking at strategies to ensure long-term food security for its 1.3 billion people such as procuring farmland overseas and opposing the formation of any international grain price–fixing monopolies.

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The Asia Times indicates Chinese farming companies, likely backed by the government, are buying and leasing tracts of land in Africa and Latin America to grow crops. One estimate from the Chinese Ministry of Commerce puts the number of Chinese experts in Africa at over 1,100 and the number of farm laborers at over 1 million, dispersed throughout 18 countries. These Chinese experts help maintain at least 11 agricultural research stations and no less than 63 agricultural investment projects scattered over southern and eastern Africa. The Economist has estimated that China could have signed 30 agricultural co-operation deals around the world covering over 2m hectares since 2007. Read more:”Rare Earth Elements: The Global Supply Chain,” Congressional Research Service. “China’s eye on African agriculture,” Asia Times, www.atimes.com/atimes/China_Business/KJ02Cb01.html. “Outsourcing’s third wave,” The Economist, www.economist.com/node/13692889.

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Technology and Education in China


On To To To -

my honor, I will do my best do my duty to God and my country and to obey the Scout Law; help other people at all times; keep myself physically strong, mentally awake and morally straight. The Boy Scout Oath

They have over 70 million current members. They are known for patriotic duty and lofty ideals. They are well-educated, temper themselves, and strive for moral integrity. But they are not the Boy Scouts. They are the Communist Youth League of China, a mass organization of advanced youth under the leadership of the Communist Party whose purpose is to build the next generation of Chinese socialist leaders. Members of this League are particularly loyal to the Chinese Communist Party and, with increasing regularity, the Communist Party is looking towards the CYLC for recruits for its cyber militia, to join the Chinese intelligence services or to take on positions within the communist government. By contrast, as Boy Scouts of America enters its 100th year, fewer and fewer American boys are joining their ranks. Recent reports show a steady and significant decline in men in their 20s and 30s reporting to having been in the Boy Scouts than their fatherâ&#x20AC;&#x2122;s generation. Americaâ&#x20AC;&#x2122;s premier youth organization known for driving the next generation towards personal excellence, for preparing them for stewardship and leadership and for instilling patriotic service is facing a rapidly decreasing membership. Does the decline of the Boy Scouts represent a cultural paradigm shift in America one marked with an erosion of national connection, innovation, purpose, or personal achievement? And, if this shift exists, how will it affect the next generation of education, innovation, and technology?

the decline of the boy scouts


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TECHNOLOGY AND EDUCATION IN CHINA EDUCATION In response to disappointing international standardized test scores that left many American educators in shock, Secretary of Education Arne Duncan spoke the hard truth that America is being “out-educated”—chiefly by China. Although the United States has a higher literacy rate and longer terms of school enrollment during primary and secondary terms, China has made significant gains in higher education and in critical subject areas like math and science. The Programme for International Student Assessment (PISA) test scores show these gains in the starkest of terms: First in Reading, Shanghai; First in Math, Shanghai; First in Science, Shanghai; Thirty-first in Math; Seventeenth in Reading; Twenty-third in Science, United States. Although these results highlight a particular region of China in contrast to the average population of the entire United States, they nonetheless demonstrate that China is investing in education and where it is investing—science and engineering—there is marked progress. Between 1998 and 2006, the number of bachelor degrees awarded in science and engineering doubled, while those in the United States have remained relatively flat.

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China is investing in education and where it is investing—science and engineering—there is marked progress.

In the United States, about five percent of all bachelor degrees are in engineering while over 33– percent of all bachelor degrees awarded in China are engineering degrees.

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Of the more than four million university degrees awarded in science and engineering in 2006, students in China earned about 21 percent, those in the European Union earned about 19 percent, and those in the United States earned about 11 percent. China replaced the United States to become the world’s top producer of doctorate holders in 2008. The number of PhD students in China reached 246,300 in 2009, about five times the figure in 1999. As a result of this high number of doctoral candidates, Chinese universities have struggled to meet increasing enrollment demands with adequately trained faculty. Based on 1,392 questionnaires, the book, China Doctor Quality Survey, by Zhou Guangli, a professor at the Huazhong University of Science and Technology, shows that China’s doctoral supervisors are heavily loaded, with 46 percent of the respondents supervising seven doctoral candidates at the same time. Thus, the quantity of China’s doctorate degrees does not translate to quality. A 2009 report of the Institute of International Education reveals that for the academic year 20082009, the number of foreign-born students in the United States increased by 8.0%, the largest recorded increase since 1980. The growth of students from China contributed significantly to the increase. NSF data reveal that in 2006, the foreign student population earned approximately 36.2% of the doctorate degrees in the sciences and approximately 63.6% of the doctorate degrees in engineering. 33.5% of all non-U.S. citizens awarded doctorates in Science and Engineering were Chinese nationals. Read more: “PISA 2009,” National Center for Education Statistics, www.nces.ed.gov. “Science, Technology and Education News from China,” www.sinoptic.ch.

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EDUCATION SIDE -BY- SIDE

Literacy

99% of population age 15 and over can read and write

91.6% of population age 15 and over can read and write

School life expectancy (primary to tertiary)

16 years

11 years

Education expenditures

5.5% of GDP

1.9% of GDP

PISA Test Ranking: Math

31st

1st

PISA Test Ranking: Science

23rd

1st

PISA Test Ranking: Reading

17th

1st

Bachelor Degrees in Science and Engineering

1,502,922

1,726,674

Doctorate Degrees in Science

19,733

8,785

Doctorate Degrees in Engineering

7,634

12,130

Total Doctorate Degrees

49,562

50,000

Number of Scientists and Engineers

1.6 million (2007)

1.224 million (2007)

School Life Expectancy: School life expectancy is defined as the total number of years of schooling which a child of a certain age can expect to receive in the future, assuming that the probability of his or her being enrolled in school at any particular age is equal to the current enrollment ratio for that age. PISA: The Program for International Student Assessment (PISA) is a system of international assessments that focuses on 15-year-oldsâ&#x20AC;&#x2122; capabilities in reading literacy, mathematics literacy, and science literacy. PISA also includes measures of general or cross-curricular competencies such as problem solving.


TECHNOLOGY & INNOVATION In 1872 the American essayist Ralph Waldo Emerson (1803-1882) had remarked in one of his lectures: “If a man can write a better book, preach a better sermon, or make a better mousetrap than his neighbor, though he build his house in the woods, the world will make a beaten path to his door.” China is undoubtedly committed to technological advancement, or this making “better.”

research institutes, with a noticeably raised public awareness of innovation.

Although a variety of factors, including cheap labor and abundant resources, explain the beaten path to China’s door, the Chinese government has also taken an active role in fostering technological innovation. A range of government agencies, including Ministry of Science and Technology, Ministry of Finance, and Ministry of Education, have launched a nationwide campaign for technology innovations; Shanghai has been made an experimental site for the innovation initiative.

As a result, Shanghai’s R&D expenditure will hit 3.0 percent as a proportion of its GDP, with an industrial R&D expenditure at 70 percent, substantive breakthroughs in key and core technologies, per million person/year invention patent grants reaching 245 in number, a proprietary technology possession rate at 32%, and accelerated commercial applications of new technologies.

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By 2012, Shanghai intends to create a technology innovation system dominated by industry, and guided by the marketplace, taking advantage of the combined strength of industry, universities and

This Chinese student, a Communist Youth League Member, built the following model when asked to create something that “inspires him.” www.forbes.house.gov

}

By 2012, Shanghai intends to create a technology innovation system taking advantage of the combined strength of industry, universities and research institutes.

By that time, Shanghai’s major high tech industrial output will reach $160 billion, with a raised proportion of total industrial output up to 30 percent.

Photo Credit: Andrew Donahue

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Shanghai plans to focus on the following areas in read to boosting technological innovation and achieving national strategic objectives:

4) Strengthen the capacity building of technology innovation contingents;

1) Incubate more innovation enterprises. By 2012, innovation businesses in Shanghai shall reach 500 in number; 2) Establish strategic alliances for technology innovation. By 2012, technology innovation alliances shall be established in 60 areas, including large airplane, semiconductor illumination, laser display, electronic tagging, next generation broadcasting and TV network, new energy, intelligent power grid, new energy autos, antibody drugs, medical instruments among many others; 3) Establish and perfect industrial technology innovation service platforms. By 2012, 15 national and municipal service platforms will be established for industrial technology innovation activities, raising the efficiency of technology innovation;

5) Establish an S&T banking system, allowing the banking industry to play a role in supporting innovation businesses; and 6) Establish high tech industrialization bases and innovation parks, accelerating the construction of Zhangjiang Proprietary Innovation Demonstration Park, and Yangpu as an innovation district. China has the most Internet users in the world, reaching 420 million by mid-2010—including 364 million with broadband connections. The Chinese government continues to maintain a sophisticated Internet filtering system to restrict freedom of speech. Beyond filtering, the Chinese government has increasingly sought to direct public discussion over the Internet. Beijing outsources much of its censorship activities to the private sector.

Internet Users in China and the United States, 1995 - 2010* 90

Percentage of the Population

80 70 60 50 40 30 20 10 0

1995

1996

1997

1998

1999

2000

2001

2002

CHINA

2003

2004

2005

2006

2007

2008

2009

2010*

UNITED STATES

Although China’s population of Internet users is far greater than the entire population of the United States, Internet access as a percentage of the population is still substantially lower in China. The graph excludes mobile devices. Numbers for 2010 are accurate through June. Sources: International Telecommunications Union; China Internet Network Informatino Center; State Council Information Office White paper, “China’s Internet Stats,”; Central Intelligence Agency, CIA World Factbook.

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TECHNOLOGY SIDE -BY- SIDE

Telephones – main lines in use

150 million - 2nd in the world

313.68 million - 1st in the world

Telephones – mobile cellular

270 million - 3rd in the world

747 million - 1st in the world

Internet Hosts

439 million - 1st in the world

15.251 million - 6th in the world

Internet Users

231 million - 2nd in the world

Broadcast media

Four major terrestrial television networks with affiliate stations throughout the country, plus cable and satellite networks, independent stations, and a limited public broadcasting sector that is largely supported by private grants; overall, thousands of TV stations broadcasting; multiple national radio networks with large numbers of affiliate stations; while most stations are commercial, National Public Radio (NPR) has a network of some 600 member stations; satellite radio available; overall, nearly 15,000 radio stations operating

All broadcast media are owned by, or affiliated with, the Communist Party of China or a government agency; no privately-owned television or radio stations with state-run Chinese Central TV, provincial, and municipal stations offering more than 2,000 channels; the Central Propaganda Department lists subjects that are off limits to domestic broadcast media with the government maintaining authority to approve all programming; foreign-made TV programs must be approved prior to broadcast

High Tech Indicators Rating (2008)

76.1

82.8

R&D Spending

2.7% of GDP

1.5% of GDP

Patent Applications (domestic)

221,784 (2006)

470,342 (2006)

Patents Granted (domestic)

89,823 (2006)

223,860 (2006)

Number of Researchers

1,447,718

1,423,381

420 million - 1st in the world

High Tech Indicator’s Rating: Georgia Tech’s “High Tech Indicators” study ranks 33 nations relative to one another on “technological standing,” an output factor that indicates each nation’s recent success in exporting high technology products. Four major input factors help build future technological standing: national orientation toward technological competitiveness, socioeconomic infrastructure, technological infrastructure and productive capacity. Each of the indicators is based on a combination of statistical data and expert opinions.


Shanghai has been made an experimental site for the innovation initiative.

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SPACE China’s first spacewalk was in 2008. China continues its manned space program, including both manned and unmanned docking, with the final goal of a permanently manned space station by 2020. China has been developing a significant military and civilian space capability since 1955.

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China has been launching satellites since 1970. Most of the launches are of Chinese communications, weather, remote sensing, navigation, or scientific satellites. Some of those satellites may be for military applications, or are dual use. Some were commercial launches for foreign countries or companies, primarily placing communications satellites into orbit.

numbers of U.S. satellites in low earth orbit (LEO), upon which the U.S. military heavily depends. Chinese officials have been quoted discussing a three-step human spaceflight plan: send humans into Earth orbit, dock spacecraft together to form a small laboratory, and ultimately build a large space station.

}

China could build a substantial number of these anti-satellite weapons and thus might soon be able to destroy substantial numbers of U.S. satellites in low earth orbit.

The Chinese space agency’s long-range plans include a permanent space station as well as a lunar On January 11, 2007, China launched a missile into mission. space, releasing a homing vehicle that destroyed an Read more: “China’s Space Program: An Overview,” old Chinese weather satellite. This test demonstrated Congressional Research Service. “China, Space Weapons, & U.S. Security,” that, if it so chose, China could build a substantial www.csis.org. number of these anti-satellite weapons (ASAT) and thus might soon be able to destroy substantial

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Chinaâ&#x20AC;&#x2122;s Government


“Be Wary of Mirror Images,” the section begins. “One kind of assumption an analyst should always recognize and question is mirror-imaging--filling gaps in the analyst’s own knowledge by assuming that the other side is likely to act in a certain way familiar to the analyst.” The book, Psychology of Intelligence Analysis, continues: “To say, “if I were a Russian intelligence officer ...” or “if I were running the Indian Government ...” is mirror-imaging. … mirror-imaging leads to dangerous assumptions, because people in other cultures do not think the way we do. The US perspective on what is in another country’s national interest is usually irrelevant in intelligence analysis. Judgment must be based on how the other country perceives its national interest.” It’s a basic tenant of intelligent analysis: be careful not to assume that others think like we do. And, yet, in many ways, the United States is guilty of mirrorimaging when it comes to China. What are the pitfalls the US faces when it mirror-images China? What opportunities will we miss and what threats will we not perceive when suffering from the Mirror Image Syndrome?

the mirror image syndrome


Photo Credit: Jakob Halun


CHINA’S GOVERNMENT Opaque and shrouded in secrecy, China’s political system and decision-making processes are mysteries to most outsiders. At one level, China is a one-party state that has been ruled by the Chinese Communist Party (CCP) since 1949. But rather than being rigidly hierarchical and authoritarian, which is often the assumption, political power in China has shifted to a dispersed, complex, and at times highly competitive system. Despite its grip on power, the Party and its senior leaders are not always able to dictate policy decisions as they once did. Instead, present-day China’s political process is infused with other political actors that influence and sometimes determine policy.

CHINESE COMMUNIST PARTY (CCP) The 76 million-member Chinese Communist Party (CCP), authoritarian in structure and ideology, continues to dominate government. Nevertheless, China’s population, geographical vastness, and social diversity frustrate attempts to rule by fiat from Beijing. Central leaders must increasingly build consensus for new policies among party members, local and regional leaders, influential non-party members, and the population at large.

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Theoretically, the party’s highest body is the Party Congress, which traditionally meets at least once every 5 years. The 17th Party Congress took place in fall 2007. The 18th Party Congress will take place in 2012. The primary organs of power in the Communist Party include: • The Politburo Standing Committee, which currently consists of nine members; • The Politburo, consisting of 25 full members, including the members of the Politburo Standing Committee; • The Secretariat, the principal administrative mechanism of the CCP, headed by Politburo Standing Committee member and executive secretary Xi Jinping; • The Central Military Commission; • The Discipline Inspection Commission, which is charged with rooting out corruption and malfeasance among party cadres.

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STATE STRUCTURE The Chinese Government has always been subordinate to the Chinese Communist Party (CCP); its role is to implement party policies. The primary organs of state power are the National People’s Congress (NPC), the President (the head of state), and the State Council.

The main political structure of the PRC is comprised of two vertically integrated, but interlocking institutions: the CCP, headed by the Party Politburo and its Standing Committee; and the state government apparatus, headed by the premier, who presides over the State Council, a de-facto cabinet.

Under the Chinese constitution, the NPC is the highest organ of state power. It meets annually for about two weeks to review and approve major new policy directions, laws, the budget, and major personnel changes. These initiatives are presented to the NPC for consideration by the State Council after previous endorsement by the Communist Party’s Central Committee.

In 2012, current CPC leaders will retire and a new generation – the so-called fifth generation – will take the helm. The transition will affect the CPC’s most powerful decision-making organs, determining the makeup of the 18th CPC Central Committee, the Political Bureau (Politburo) of the Central Committee, and most important, the nine-member Politburo Standing Committee that is the core of political power in China.

Members of the State Council include Premier Wen Jiabao (the head of government), a variable number of vice premiers (now four), five state councilors (protocol equivalents of vice premiers but with narrower portfolios), and 25 ministers, the central bank governor, and the auditor-general.

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Although the NPC generally approves State Council policy and personnel recommendations, various NPC committees hold active debate in closed sessions, and changes may be made to accommodate alternate views. When the NPC is not in session, its permanent organ, the Standing Committee, exercises state power.

CHINA’S CIVILIAN LEADERSHIP Since the victory of Mao Zedong’s communist forces in 1949, the Chinese mainland has been a communist state ruled by the Chinese Communist Party (CCP). Although other minor political parties exist, they are authorized by the CCP, operate under its leadership, and are effectively powerless. No independently organized and established political parties are tolerated, effectively making the PRC a one-party state.

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}

In 2012, current CCP leaders will retire and a new generation - the so-called fifth generation - will take the helm, affecting the CCP’s most powerful decision-making organs.

Xi Jinping and Li Keqiang have been tipped as frontrunners to be Hu Jintao’s successor as Party secretary. After Xi and Li, the most likely contenders for seats on the Politburo Standing Committee are Li Yuanchao, director of the CPC’s powerful organization department, Wang Yang, member of the CPC’s Politburo, Liu Yunshan, director of the CPC’s propaganda department, and Vice Premier Wang Qishan. The next most likely candidates include Vice Premier Zhang Dejiang, Chongqing Party Secretary Bo Xilai, Tianjin Party Secretary Zhang Gaoli and CPC General Office Director Ling Jihua (secretary to Hu Jintao). Appointments to the Politburo Standing Committee are the result of intense negotiation between the current committee members, with the retiring members (everyone except Xi Jinping and Li Keqiang) wielding the most influence. Read more: “Understanding China’s Political System,” Congressional Research Service. “Looking to 2012: China’s Next Generation Leaders www.stratfor.com.

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GOVERNMENT SIDE -BY- SIDE

Government type

Constitution-based federal republic; strong democratic tradition

Communist state

Administrative Divisions

50 states and 1 district

23 provinces*, 5 autonomous regions, and 4 municipalities

Legal System

federal court system based on English common law; each state has its own unique legal system of which all but one (Louisiana, which is still influenced by the Napoleonic Code) is based on English common law; judicial review of legislative acts; has not accepted compulsory ICJ jurisdiction

based on civil law system; derived from Soviet and continental civil code legal principles; legislature retains power to interpret statutes; constitution ambiguous on judicial review of legislation; party organs exercise authority over judiciary; has not accepted compulsory ICJ jurisdiction

Executive Branch

Chief of State: President Barack Obama Vice President: Joseph Biden Head of Government: President Barack Obama

Chief of State: President HU Jintao Vice President: XI Jinping Head of Government: Premier Wen Jiabao

cabinet: Cabinet appointed by the president with Senate approval

cabinet: State Council appointed by National People’s Congress

elections: president and vice president elected on the same ticket by a college of representatives who are elected directly from each state; president and vice president serve four-year terms

elections: president and vice president elected by National People’s Congress for a five-year term; premier nominated by president, confirmed by National People’s Congress

Legislative Branch

bicameral Congress consists of the Senate (100 seats, 2 members elected from each state by popular vote to serve six-year terms; one-third elected every two years) and the House of Representatives (435 seats; members directly elected by popular vote to serve two-year terms)

unicameral National People’s Congress or Quanguo Renmin Daibiao Dahui (2,987 seats; members elected by municipal, regional, and provincial people’s congresses, and People’s Liberation Army to serve 5-year terms)**

Judicial Branch

Supreme Court (nine justices; nominated by the president and confirmed with the advice and consent of the Senate; appointed to serve for life); United States Courts of Appeal; United States District Courts; State and County Courts

Supreme People’s Court (judges appointed by the National People’s Congress); Local People’s Courts (comprise higher, intermediate, and basic courts); Special People’s Courts (primarily military, maritime, railway transportation, and forestry courts)

Political parties

Democratic Party; Green Party; Libertarian Party; Republican Party

Chinese Communist Party or CCP; eight registered small parties controlled by CCP

*China considers Taiwan its 23rd province ** Only members of the CCP, its eight allied parties, and sympathetic independent candidates are elected


Photo Credit: Thomas Fanghaenel

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THE POLITICAL BUREAU (POLITURBO) At the top of the Chinese Communist Party’s political structure is its Political Bureau (Politburo), generally regarded as the most important formal political institution in China. The official head of the Politburo is the Party’s general secretary.

members, including five returning members and four new members.

Although officially the Politburo is the chief political decision-making body, its relatively unwieldy size and its lack of a known formalized meeting schedule have suggested that the full body is involved in decisionmaking only when the stakes are high–as when considering major policy shifts, dealing with matters of immediate urgency, or when a higher level of legitimization of a particular policy direction is necessary.

As part of a drive to gain political and cultural influence and to secure energy supplies and markets, also known as “soft power,” China has reached out to the developing world through high level official visits and exchanges; economic assistance, loans, and investment; participation in regional organizations; and Chinese language programs. Competition with Taiwan for diplomatic recognition has also spurred PRC engagement in Latin America, Africa, and the Southwest Pacific. According to some analysts, China has filled a diplomatic void left by the United States as Washington has been preoccupied with global terrorism, and many developing countries have perceived the U.S. government as having placed unreasonable conditions upon political support and economic assistance.

THE POLITURBO STANDING COMMITTEE Of more significance than the full Politburo is its Standing Committee, the smaller group of elite Party members that wields much of the political power in China. The Politburo Standing Committee (PSC) that emerged from the 17th Party Congress has nine

CHINA’S SOFT POWER IN THE DEVELOPING WORLD

Factionalism There are currently differences in opinion among the Party’s top leadership concerning the best path for future development in China. Experts hold that the two frontrunners for Party secretary – Xi Jinping and Li Keqiang – each sit at the pinnacle of what effectively is an equal PSC split between two distinct leadership camps: the “populist” group, represented by Li Ke-qiang, and the “elitist” group, represented by Xi Jin-ping, one of the so-called “princelings” – meaning a child of one of the early senior CCP officials and thus someone with elite personal connections. It is believed the “populist” group favors balance in economic development, focus on improving the lots of the poor and disenfranchised, and an emphasis on the principles of “harmonious society.” It is believed the “elitist” group favors continued rapid economic development, less emphasis on social issues, and seeks to nurture China’s growing capitalist and middle-class populations.

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U.S.- CHINA COUNTERPARTS SIDE -BY- SIDE

U.S. Official and Chinese Counterpart*

*The side-by-side reflects a close approximation of USG counterparts in China. Due to the different structures of our two systems of government, there is not always an obvious counterpart to a USG official (e.g. China has both a President and a Premier).

President Barack Obama

President HU Jintao; Premier WEN Jiabao

Vice President Joseph Biden

Vice President XI Jinping; Chairman of the National People’s Congress WU Bangguo

Speaker John Boehner

Chairman of the National People’s Congress WU Bangguo

House Majority Leader Cantor

No equivalent

House Minority Leader Pelosi

No equivalent

Senate Majority Leader Reid

No equivalent

Senate Minority Leader McConnell

No equivalent

Attorney General Eric Holder

Minister of Justice WU Aiying; Minister of Public Security MENG Jianzhu; Chinese Party Politburo Standing Committee Member ZHOU Yongkang (China’s Security Chief); Procurator-general of the Supreme People’s Procuratorate CAO Jianming

Secretary of State Hillary Clinton

State Councilor DAI Bingguo (S&ED Counterpart); Minister of Foreign Affairs YANG Jiechi

Secretary of Defense Robert Gates

Gen. GUO Boxiong, Vice Chairman of the Central Military Commission (CMC); Gen. XU Caihou, Vice Chairman of CMC; Gen. LIANG Guanglie, Minister of National Defense (All three are considered counterparts, in descending order of rank)


U.S.- CHINA COUNTERPARTS CONT...

U.S. Official and Chinese Counterpart

Secretary of the Treasury Geithner

Vice Premier WANG Qishan (S&ED Counterpart); Minister of Finance XIE Xuren

Secretary of Energy Chu

Vice Chairman of National Development and Reform Commission/Administrator of National Energy ZHANG Guobao; Minister of Science and Technology WAN Gang

Secretary of Commerce Locke

Minister of Commerce CHEN Deming

Secretary of Agriculture Vilsack

Minister of Agriculture HAN Changfu

Secretary of Labor Solis

Minister of Human Resources and Social Security YIN Weimin

Secretary of Education Duncan

Minister of Education YUAN Guiren

Secretary of Homeland Security Napolitano

Minister of Public Security MENG Jianzhu

HHS Secretary Sebelius

Minister of Health CHEN Zhu No equivalent; Depending on the issue, approximate counterparts are the Administrator of the State Forestry Administration JIA Zhibang, Vice Chairman of the National Development and Reform Commission/Administrator of National Energy ZHANG Guobao; Minister of Science and Technology WAN Gang; or Minister of Water Resources CHEN Lei

Secretary of the Interior Salazar

Minister of Housing and Urban-Rural Development JIANG Weixin


U.S.- CHINA COUNTERPARTS CONT...

U.S. Official and Chinese Counterpart

HUD Secretary Donovan

Minister of Housing & UrbanRural Development JIANG Weixin

Secretary of Transportation LaHood

Minister of Transport LI Shenglin

Federal Reserve Chairman Ben Bernanke

Governor of the Peopleâ&#x20AC;&#x2122;s Bank of China ZHOU Xiaochuan

U.S. Ambassador to China Jon Huntsman

Chinese Ambassador to the United States ZHANG Yesui

U.S. Ambassador to the UN Susan Rice

Permanent Representative of China to the United Nations LI Baodong

U.S. Trade Representative Ron Kirk

Minister of Commerce CHEN Deming

Chairman of the Joint Chiefs Mike Mullen

No equivalent; visits hosted by PLA Chief of the General Staff General CHEN Bingde

Army Sec. John McHugh

No equivalent; closest approximation is PLA Deputy Chief of General Staff General ZHANG Qinsheng

Navy Sec. Ray Mabus

No equivalent; closest approximation is PLA Navy Commander Admiral WU Shengli

Air Force Sec. Michael Donley

No equivalent; closest approximation is PLA Air Force Commander General XU Qiliang

OMB Director Jacob Lew

Minister of Finance XIE Xuren

EPA Administrator Lisa Jackson

Minister of Environmental Protection ZHOU Shengxian


Charts courtesy of STRATFOR, www.stratfor.com

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Just as China’s civilian leadership will change, China’s military will see a sweeping change in leadership in 2012. The military’s influence over China’s politics and policies has grown over the past decade, as the country has striven to professionalize and modernize its forces and expand its capabilities in response to deepening international involvement and challenges to its internal stability.


OTHER IMPORTANT POLITICAL ACTORS Government-Sponsored Research Institutions. Think tanks and other research institutions, usually sponsored by and often linked to various government entities, have proliferated greatly in China in recent years. There appear to be several forces driving this trend. Not the least of these is the need for officials to have access to greater professional expertise as they wrestle with policy decisions that have become increasingly complex and sophisticated. Although there are many think tanks and research institutions in China, the box below lists what PRC authorities in 2006 considered to be the most prominent. All are in Beijing, with one exception. They are all longstanding institutions, and all are sponsored by a state entity. Zhou Xiaochuan – Governor, People’s Bank. This August, Internet rumors that Chinese central bank governor Zhou Xiaochuan had defected and sent portfolio managers and currency traders the world over scrambling for cover. Although the rumors were later proved false, they revealed how important Zhou has become to global economic stability. Last year, Zhou notoriously roiled markets by proposing a new international reserve currency to replace the U.S. dollar. This year, batting away demands that China allow its currency to appreciate, Zhou described yuan revaluation as a Western-style fantasy cure, “pills that solve your problem overnight,” as opposed to what’s needed: a proper Chinese-style treatment of “10 herbs put together … that solve the problem not overnight, but maybe in one month or two months.” (Foreign Policy Magazine, Dec-10) Liu Xiaobo – Nobel Peace Prize Winner, Political Prisoner. When Liu Xiabo learned of his 2010 Nobel Peace Prize, he wept and told his wife – who was visiting him in remote Jinzhou prison, where the dissident writer has been serving an 11-year sentence – that he was dedicating the award to “the lost souls” of Tiananmen Square, whose protest back in 1989 turned the soft-spoken professor into a political activist. Mr. Liu is perhaps China’s best known dissident. On December 25, 2009, he was given an 11-year prison sentence on subversion charges. The Chinese Foreign Ministry reacted angrily to the news, calling it a “blasphemy” to the Peace Prize and saying it would harm Norwegian-Chinese relations. “Liu Xiaobo is a criminal who has been sentenced by Chinese judicial departments for violating Chinese law.” (NYTimes) China’s state media have characterized the Nobel only as a tool of Western propagandists, and live feeds of CNN and the BBC went black during the prize’s announcement. (Foreign Policy Magazine, Dec-10)

Top Ten Prominent PRC Think Tanks Chinese Academy of Social Sciences (CASS) Development Research Center of the State Council Chinese Academy of Sciences (CAS) Academy of Military Science China Institute of International Study China Institute of Contemporary International Relations (CICIR) China National Committee for Pacific Economic Cooperation China Association for Science and Technology China International Institute of Strategic Society Shanghai Institute for International Studies (SIIS) * In March 2009, the State Council approved the founding of a new think tank in Beijing, the China Center for International Economic Exchanges.


Han Han – Blogger and Novelist. At 28, Han Han may well be the world’s most popular living writer, perhaps the most-read blogger in a country of some 400 million Internet users. Also a novelist, he has become the inflammatory voice of the provocative, status-obsessed cohort called the “post-80’s generation” in China. Han Han has gleefully taken on state TV’s self-censorship, China’s flawed educational system, and particularly wayward officials. In May, following news of a schoolhouse stabbing, Han Han wrote on his blog: “Wretched children, it is you who are poisoned by milk powder, harmed by vaccines, crushed by earthquakes, and burned in fires… I hope that when you grow up, you will not only protect your own children but build a society that protects everyone’s children.” Zheng Bijian. One of the leading intellectuals of China’s Communist Party, Zheng was a key architect of the idea of China’s “peaceful rise,” which he introduced to the West in a 2005 Foreign Affairs article. The theory laid the groundwork for a global strategy that would allow the country to continue its transformation into an economic juggernaut, while also seeking to allay fears that Beijing would use its newfound power to overturn the existing international balance of power. Most of China’s top leaders quickly came out in support of the motto, but the debate over it was instructive: Some Chinese scholars worried that the word “rise” was too provocative for foreigners, while others didn’t like the word “peace,” arguing it wouldn’t allow for China to be aggressive if the need arose. (Foreign Policy Magazine, Dec-10).

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Important Reading


A Reading Guide to Key US-China Security Reports NAME OF REPORT

BY WHOM, FOR WHOM, AND WHEN

National Security Strategy Report

By the President annually to the Congress. Required to be transmitted on the date on which the President submits the annual budget to Congress (i.e., 1st Monday in February) and additionally within 150 days after the date on which a new President takes office.

“The President shall transmit to Congress each year a comprehensive report on the national security strategy of the United States…” From 1987 through 2000, reports were submitted every year except for 1989 and 1992, though on varying dates. The George W. Bush Administration released only two reports, the first in September 2002 and the second in March 2006. The Obama Administration released its first report on May 25, 2010.

By the Secretary of Defense to the House and Senate Armed Services Committees. Original report due by May 15, 1997. 2001 report due September 30, 2001. Subsequent reviews due every four years on the date on which the president submits the annual budget to Congress (i.e., 1st Monday in February). Also requires the Chairman of the Joint Chiefs to submit an independent assessment of the QDR, including an assessment of risks in carrying out the national defense strategy. The Chairman’s assessment has been appended to each of the QDR reports.

Preceded by the 1990-1991 Base Force analysis and the 1993 Bottom-Up Review, which were DOD initiatives not required by law. Reports have all been released by the date required. By law, the QDR is required “to delineate a national defense strategy consistent with the most recent National Security Strategy prescribed by the President” and to “conduct a comprehensive examination … of … national defense strategy, force structure, force modernization plans, infrastructure, budget plan, and other elements of the defense program and policies of the United States with a view toward determining and expressing the defense strategy of the United States and establishing a defense program for the next 20 years.”

Panel of 9 members appointed by Secretary of Defense in consultation with chairmen and ranking members of Senate Armed Services and House National Security (temporary renaming of HASC) Committees. By March 14, 1997 the Panel was required to provide a report to the Secretary of Defense assessing the conduct of the QDR to date. Final report to Congress due December 1, 1997.

Required to review and assess a full range of alternative force structures, including the recommended QDR force structure, and required to recommend the optimal force structure to meet anticipated threats. The Panel reported that it did not have the time or resources to perform such a full assessment. It recommended much more attention to asymmetric challenges, reductions in selected capabilities for traditional conflicts, and extensive experimental testing of alternative technologies and organization.

Quadrennial Defense Review

National Defense Panel

HISTORY/RELATION TO OTHER DOCUMENTS/COMMENTS


A Reading Guide to Key US-China Security Reports Cont... NAME OF REPORT

BY WHOM, FOR WHOM, AND WHEN

HISTORY/RELATION TO OTHER DOCUMENTS/COMMENTS

Quadrennial Defense Review Independent Panel

Under the original statute, the report is to be prepared by an independent panel appointed by the Secretary of Defense no later than six months before the QDR is due, with no guidance on the number of members or their qualifications. The FY2010 NDAA amendment adds eight members, two each appointed by Chairman and Ranking Member of the House and Senate Armed Services Committees. The DOD Report on the QDR is required to include an interim assessment by the Panel. A final report to the House and Senate Armed Services Committees is due on July 15, 2010, and a response by the Secretary of Defense is due by August 15, 2010.

Required to submit an assessment of the QDR, including the recommendations of the QDR, the assumptions in the QDR, and the vulnerabilities of the strategy and force structure underlying the QDR. The final Panel report was critical of the QDR for not planning a full 20 years ahead, as required by the QDR statute, and for not including clear force sizing criteria. It urged greater efforts in cyberspace, homeland defense, and responding to anti-access strategies (all areas of emphasis in the QDR). It endorsed the planned size and composition of most of the force, but urged an increase in the size of the Navy based on assessments in the 1993 Bottom-Up Review.

National Defense Strategy

Required to be prepared by the Secretary of Defense as part of the QDR. A discussion was included in QDRs in 1997 and 2001. The Defense Department later prepared separate documents in May 2005 and June 2008.

The permanent QDR statute requires that the national defense strategy be consistent with the President’s National Security Strategy. The 2008 National Defense Strategy report explains that the document “flows from” the President’s National Security Strategy and “informs the National Military Strategy.”

National Military Strategy

By the Chairman of the Joint Chiefs, to the House and Senate Armed Services Committees, due on February 15 of each even numbered year. A separate part of the statute requires an assessment of risks in executing the strategy, to be prepared by the Chairman “in conjunction with” the service chiefs and the commanders of the unified and specified commands, to be submitted to the Secretary of Defense. The Secretary’s assessment and comments are to be included in the report.

The report is required to delineate a national military strategy consistent with the most recent National Security Strategy and Quadrennial Defense Review, and to assess the adequacy of planned forces to successfully execute the strategy. If the Chairman identifies any “significant” risks in executing the strategy, the Secretary of Defense is required to include in the report submitted to the congressional committees the Secretary’s plan for mitigating the risks.


A Reading Guide to Key US-China Security Reports Cont... NAME OF REPORT

Roles and Missions Report

Unified Command Plan

Annual “Posture” Statements

BY WHOM, FOR WHOM, AND WHEN Initially required to be prepared by the Chairman of the Joint Chiefs and submitted to the Secretary of Defense. Required every three years or when requested by the Secretary of Defense or the President. As amended by the FY2008 NDAA, required to be prepared by the Secretary of Defense, with an initial report to the Secretary by the Chairman of the Joint Chiefs. First review to be conducted in 2008 and subsequent reviews to be conducted every four years beginning in 2011. A report on the review is to be submitted to the House and Senate Armed Services Committees in the year following the review no later than the date on which the President’s annual budget is submitted to Congress. An executive document signed by the President.

Annual statements by each of the service chiefs and by the Chairman of the Joint Chiefs on the posture of the armed forces – presented as testimony to the congressional defense committees.

HISTORY/RELATION TO OTHER DOCUMENTS/COMMENTS Initially required the Chairman of the JCS to make recommendations for such “changes in the assignment of functions (or roles and missions) to the armed forces as the Chairman considers necessary to achieve maximum effectiveness of the armed forces.” As amended, requires the Chairman to organize forces into core mission areas, avoid unnecessary duplication, identify core competencies associated with missions, identify gaps in capabilities, and report on plans for addressing gaps and reducing duplication.

The Unified Command Plan is a classified document, signed by the President. The Defense Department has established a regular, biennial review cycle for considering changes in the UCP.


A Reading Guide to Key US-China Security Reports Cont... NAME OF REPORT

BY WHOM, FOR WHOM, AND WHEN

DoD Annual Report on Military and Security Developments Involving the People’s Republic of China

Prepared Annually by the Department of Defense

US-China Economic and Security Review Commission Annual Report to Congress

Prepared Annually by the U.S.China Economic and Security Review Commission for Congress

HISTORY/RELATION TO OTHER DOCUMENTS/COMMENTS “The report shall address the current and probable future course of military- technological development of the People’s Liberation Army and the tenets and probable development of Chinese security strategy and military strategy, and of the military organizations and operational concepts, through the next 20 years. The report shall also address United StatesChina engagement and cooperation on security matters during the period covered by the report, including through United States-China military-to-military contacts, and the United States strategy for such engagement and cooperation in the future.”

The US-China Commission’s Annual Report to Congress sets forth the Commission’s analysis of the U.S.-China relationship in the topical areas designated by its Congressional mandate. These areas are China’s proliferation practices, the qualitative and quantitative nature of economic transfers of U.S. production activities to China, the effect of China’s development on world energy supplies, the access to and use of U.S. capital markets by China, China’s regional economic and security impacts, U.S.-China bilateral programs and agreements, China’s record of compliance with its World Trade Organization (WTO) commitments, and the implications of China’s restrictions on freedom of expression.


A Congressional Research Service Reading Guide on China CRS.gov is the official, authoritative, non-partisan source for up-to-date, current CRS reports on major policy issues. CRS reports are available to Members, committees and staff.

ECONOMIC ISSUES CRS Report RL33536, China-U.S. Trade Issues, by Wayne M. Morrison. CRS Report RS21625, China’s Currency: A Summary of the Economic Issues, by Wayne M. Morrison and Marc Labonte. CRS Report RL34314, China’s Holdings of U.S. Securities: Implications for the U.S. Economy, by Wayne M. Morrison and Marc Labonte. CRS Report RS22984, China and the Global Financial Crisis: Implications for the United States, by Wayne M. Morrison. CRS Report RS22713, Health and Safety Concerns Over U.S. Imports of Chinese Products: An Overview, by Wayne M. Morrison.

MILITARY AND SECURITY ISSUES CRS Report RL32496, U.S.-China Military Contacts: Issues for Congress, by Shirley A. Kan. CRS Report RL31555, China and Proliferation of Weapons of Mass Destruction and Missiles: Policy Issues, by Shirley A. Kan. CRS Report RL33153, China Naval Modernization: Implications for U.S. Navy Capabilities— Background and Issues for Congress, by Ronald O’Rourke. CRS Report RL33001, U.S.-China Counterterrorism Cooperation: Issues for U.S. Policy, by Shirley A. Kan. CRS Report RS22652, China’s Anti-Satellite Weapon Test, by Shirley A. Kan.

TAIWAN CRS Report R40493, Taiwan-U.S. Relations: Developments and Policy Implications, by Kerry Dumbaugh. CRS Report RL30957, Taiwan: Major U.S. Arms Sales Since 1990, by Shirley A. Kan. CRS Report RL30341, China/Taiwan: Evolution of the “One China” Policy—Key Statements from Washington, Beijing, and Taipei, by Shirley A. Kan. CRS Report RL34441, Security Implications of Taiwan’s Presidential Election of March 2008, by Shirley A. Kan.

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GLOBAL ENVIRONMENT AND ENERGY CRS Report R40493, Taiwan-U.S. Relations: Developments and Policy Implications, by Kerry Dumbaugh. CRS Report RL30957, Taiwan: Major U.S. Arms Sales Since 1990, by Shirley A. Kan. CRS Report RL30341, China/Taiwan: Evolution of the “One China” Policy—Key Statements from Washington, Beijing, and Taipei, by Shirley A. Kan. CRS Report RL34441, Security Implications of Taiwan’s Presidential Election of March 2008, by Shirley A. Kan.

CHINA’S POLITICAL SYSTEM AND HUMAN RIGHTS CRS Report R41007, Understanding China’s Political System , by Kerry Dumbaugh and Michael F. Martin. CRS Report RL34729, Human Rights in China: Trends and Policy Implications, by Thomas Lum and Hannah Fischer. CRS Report RL34445, Tibet: Problems, Prospects, and U.S. Policy, by Kerry Dumbaugh. CRS Report R40453, The Tibetan Policy Act of 2002: Background and Implementation, by Kerry Dumbaugh. CRS Report RS22663, U.S.-Funded Assistance Programs in China, by Thomas Lum.

FOREIGN POLICY CRS Report RL34588, China’s Foreign Policy: What Does It Mean for U.S. Global Interests?, by Kerry Dumbaugh. CRS Report RL34620, Comparing Global Influence: China’s and U.S. Diplomacy, Foreign Aid, Trade, and Investment in the Developing World, coordinated by Thomas Lum. CRS Report R40940, China’s Assistance and Government-Sponsored Investment Activities in Africa, Latin America, and Southeast Asia, by Thomas Lum.

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Congressman Randy Forbes 2438 Rayburn House Office Building Washington, DC 20515 202-225-6365

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A Publication of the Office of Congressman Randy Forbes

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