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Sam Brownback)Tj -1.964 -1 TD 0.052 Tw (\(chairman of the subcommittee\), presiding.)Tj 1 -1 TD 1.038 Tw (Present: Senators Brownback, Alexander, Hagel, Allen,)Tj -1 -1 TD 0.052 Tw (Voinovich, Kerry, Rockefeller, Feingold, and Corzine.)Tj 1 -1 TD 0.14 Tw (Senator B)Tj 8 0 0 7.6194 204.6993 418 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 254.6185 418 Tm 0.14 Tw (. Thank you all for joining us today. I want)Tj -10.7619 -1 TD (to thank everybody for participation in exploring an important set)Tj T* 0.282 Tw (of topics regarding China, economic emergence in Asia, and the)Tj T* 0.2 Tw (possible consequences this could have for the region and for U.S.)Tj T* 0 Tw (policy.)Tj 1 -1 TD 0.158 Tw (At the outset, I want to say that this is really just an overview)Tj -1 -1 TD 0.152 Tw (of an immense topic, one I feel it is important for us to explore. I)Tj T* 0.058 Tw (come from a heavily agricultural state. I know how important trade)Tj T* 0.122 Tw (is to our economy. And trade with China is an increasingly impor-)Tj T* 0.116 Tw (tant part of the overall economy for the United States. Total trade)Tj T* 0.162 Tw (between the United States and China reached $147 billion a year)Tj T* 0.152 Tw (in 2002 making China the fourth-largest trading partner with the)Tj T* 0.212 Tw (United States. I would note I met recently with an international)Tj T* 0.166 Tw (buyer for Wal-Mart, and they buy so many products out of China)Tj T* 0.43 Tw (that Wal-Mart itself is the tenth-largest trading partner with)Tj T* 0 Tw (China.)Tj 1 -1 TD 0.32 Tw (As with any important trade relationship, it is important for)Tj -1 -1 TD 0.058 Tw (American policymakers to ensure that U.S. interest is being served.)Tj T* 0.244 Tw (In the case of China, we are only starting out in the process of)Tj T* 0.24 Tw (WTO implementation. After 1 year, we are already encountering)Tj T* 0.094 Tw (some difficulties. China is in violation of its WTO commitments re-)Tj T* 0.14 Tw (garding tariff-rate quotas, export subsidies, and regulations on ge-)Tj T* 0.24 Tw (netically modified organisms, which negatively affect agricultural)Tj T* 0.268 Tw (producers in my state and across the country, especially consid-)Tj T* 0.076 Tw (ering that China is the fastest-growing export destination for goods)Tj T* 0.106 Tw (from Kansas. USTR must be vigilant in its efforts to ensure China)Tj T* 0.074 Tw (complies with its WTO commitments in these areas and in general.)Tj 1 -1 TD 0.11 Tw (China is also infamous for its failure to adequately protect intel-)Tj -1 -1 TD 0.3 Tw (lectual property rights. While we have seen improvement, more)Tj T* 0.08 Tw (clearly needs to be done. IP piracy losses in China amount to $1.85)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00005)-1076.9(Fmt 6633)-1076.9(Sfmt 6633)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 26 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R /F19 17 0 R /F20 27 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 29 0 obj << /Length 5500 >> stream BT /F18 1 Tf 10 0 0 10 303.22 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (2)Tj -15.622 -2 TD 0.098 Tw (billion in 2002, and piracy rates continue at over 90 percent across)Tj 0 -0.99 TD 0.052 Tw (all copyright industries.)Tj 1 -0.99 TD 0.122 Tw (When I was last in China in December, just outside of our hotel)Tj -1 -0.99 TD 0.086 Tw (they were selling the new James Bond movie on the street corners.)Tj T* 0.082 Tw (I had not yet seen it in theaters, and I do not know if it just comes)Tj T* 0.076 Tw (late to our state or it gets early to China and the vendors, but they)Tj T* 0.398 Tw (were selling some pretty good-looking cover copies of the new)Tj T* 0.052 Tw (James Bond movie at that time.)Tj 1 -0.99 TD 0.204 Tw (Trade is only part of the issue we will be exploring today. An-)Tj -1 -0.99 TD 0.232 Tw (other key concept to examine is the rapid rate of foreign invest-)Tj T* 0.066 Tw (ment, which China has steadily drawn in the past few years. There)Tj T* 0.108 Tw (has been a strong focus on investment reforms and incentives over)Tj T* 0.11 Tw (the past 10 years, which has led to a steady flow of foreign capital)Tj T* 0.148 Tw (into the country. We can see the impact of this growth by looking)Tj T* 0.22 Tw (at the levels of foreign direct investment [FDI]. In 1983, China)Tj /F14 1 Tf 31.1286 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (s)Tj -31.3326 -0.99 TD 0.058 Tw (FDI was $636 million, about two-thirds of a billion dollars. In 2002,)Tj T* 0 Tw (China)Tj /F14 1 Tf 2.815 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.252 Tw (s FDI was approximately $53 billion. 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Will the political leadership in China)Tj T* 0.27 Tw (use the profit from their country)Tj /F14 1 Tf 16.3298 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.27 Tw (s growth in ways that may be)Tj -16.5338 -1 TD 0.052 Tw (damaging for long-term U.S. security interests?)Tj 1 -1 TD 0.082 Tw (By no means am I suggesting that we should vary from our posi-)Tj -1 -1 TD 0.22 Tw (tion supporting free trade with China. I voted for PNTR and re-)Tj T* 0.212 Tw (main a supporter. But it is important for us to examine some of)Tj T* 0.304 Tw (the long-term consequences of the economic growth going on in)Tj T* 0.186 Tw (China so that we and our friends in the region can approach the)Tj T* 0.052 Tw (future from a more informed perspective.)Tj 1 -1 TD 0.17 Tw (That is the intent of this hearing. We will hear from a number)Tj -1 -1 TD 0.114 Tw (of expert witnesses. Our first panel, from the administration, I am)Tj T* 0.16 Tw (delighted to have present Mr. Randall Schriver. He is Deputy As-)Tj T* 0.184 Tw (sistant Secretary of State for East Asian and Pacific Affairs. And)Tj T* 0.39 Tw (then Mr. Charles Freeman, Deputy Assistant U.S. Trade Rep-)Tj T* 0 Tw (resentative)Tj /F14 1 Tf 5.2039 0 TD ()Tj /F18 1 Tf 1 0 TD 0.322 Tw (one of my alma mater institutions; I was there in)Tj -6.2039 -1 TD 0 Tw (1990)Tj /F14 1 Tf 2.224 0 TD ()Tj /F18 1 Tf 0.556 0 TD (91)Tj /F14 1 Tf 1.112 0 TD ()Tj /F18 1 Tf 1 0 TD 0.18 Tw (he is with the Office of U.S. Trade Representative, and)Tj -4.8919 -1 TD 0.052 Tw (works on issues regarding China.)Tj 1 -1 TD ([The opening statement of Senator Brownback follows:])Tj 8 0 0 8 209.34 152.9999 Tm 0 Tw (O)Tj 6.4 0 0 6.0958 215.5639 152.9999 Tm (PENING)Tj 8 0 0 8 245.1095 152.9999 Tm (S)Tj 6.4 0 0 6.0958 250.1494 152.9999 Tm [(TATEMENT)-412.5(OF)]TJ 8 0 0 8 302.6038 152.9999 Tm (S)Tj 6.4 0 0 6.0958 307.6437 152.9999 Tm (ENATOR)Tj 8 0 0 8 338.61 152.9999 Tm (S)Tj 6.4 0 0 6.0958 343.65 152.9999 Tm (AM)Tj 8 0 0 8 356.9524 152.9999 Tm (B)Tj 6.4 0 0 6.0958 362.7283 152.9999 Tm (ROWNBACK)Tj 8 0 0 8 155 139.9999 Tm 0.3025 Tw (Coming from a heavily agricultural state like Kansas, I know how important)Tj -1 -1 TD 0.2075 Tw (trade is to our economy. And trade with China is an increasingly important part)Tj T* 0.2325 Tw (of our economy. Total trade between the U.S. and China reached $147 billion in)Tj T* 0 Tw (2002)Tj /F14 1 Tf 2.224 0 TD ()Tj /F18 1 Tf 1 0 TD 0.0525 Tw (making China our 4th largest trading partner.)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00006)-1076.9(Fmt 6633)-1076.9(Sfmt 6621)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 30 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 32 0 obj << /Length 7543 >> stream BT /F18 1 Tf 10 0 0 10 303.22 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (3)Tj 8 0 0 8 155 648 Tm 0.2525 Tw (As with any important trade relationship, it is important for American policy-)Tj -1 -0.9875 TD 0.205 Tw (makers to ensure that U.S. interest is being served. In the case of China we are)Tj T* 0.1275 Tw (only starting out on the process of WTO implementation. After one year we are al-)Tj T* 0.2075 Tw (ready encountering difficulties. China is in violation of its WTO commitments re-)Tj T* 0.18 Tw (garding Tariff Rate Quotas, export subsidies, and regulations on genetically modi-)Tj T* 0.055 Tw (fied organisms, which negatively affect agricultural producers in my state, especially)Tj T* 0.165 Tw (considering that China is the fastest growing export destination for Kansas goods.)Tj T* (USTR must be vigilant in its efforts to ensure China complies with its WTO com-)Tj T* 0.0525 Tw (mitments in these areas, and in general.)Tj 1 -0.9875 TD 0.185 Tw (China is also infamous for its failure to adequately protect intellectual property)Tj -1 -0.9875 TD 0.21 Tw (rights. While we have seen some improvement, more needs to be done. IP piracy)Tj 0 -1 TD 0.085 Tw (losses in China amounted to $1.85 billion in 2002, and piracy rates continue at over)Tj T* 0.0525 Tw (90 percent across all copyright industries.)Tj 1 -1 TD 0.2575 Tw (Another key concept to examine is the rapid rate of foreign investment which)Tj -1 -1 TD 0.15 Tw (China has steadily drawn in the past few years. There has been a strong focus on)Tj T* 0.295 Tw (investment reforms and incentives over the past ten years)Tj /F14 1 Tf 29.2496 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.295 Tw (which has led to a)Tj -30.2496 -1 TD 0.08 Tw (steady flow of foreign capital into the country. We can see the impact of this growth)Tj T* 0.155 Tw (by looking at the levels of foreign direct investment, or FDI. In 1983, China)Tj /F14 1 Tf 36.7975 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.155 Tw (s FDI)Tj -37.0015 -1 TD 0.1325 Tw (was $636 million. In 2002, China)Tj /F14 1 Tf 15.9463 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1325 Tw (s FDI was at approximately $53 billion. In terms)Tj -16.1503 -1 TD 0.1425 Tw (of percentages, the U.N. reports that FDI into China grew by nearly 13 percent in)Tj T* 0.0525 Tw (2002 even while it )Tj /F19 1 Tf 8.9169 0 TD 0 Tw (fell )Tj /F18 1 Tf 1.7735 0 TD 0.0525 Tw (by 27 percent in all countries for the same time period.)Tj -9.6903 -1 TD 0.0875 Tw (We should explore the potential consequences that could come from an unchecked)Tj -1 -1 TD 0.24 Tw (economic powerhouse in China. Would the profit be used to remake the Chinese)Tj T* 0.17 Tw (military? Would this economic growth lead to more or less aggressive behavior to-)Tj T* 0.12 Tw (ward Taiwan? Will the political leadership in China use the profit from their coun-)Tj T* 0 Tw (try)Tj /F14 1 Tf 1.37 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.19 Tw (s growth in ways that may be damaging for long-term U.S. security interests?)Tj -0.574 -1 TD 0.165 Tw (By no means am I suggesting that we should vary from our position supporting)Tj -1 -1 TD 0.0575 Tw (free trade with China. I voted for PNTR and remain a supporter. But it is important)Tj T* 0.095 Tw (for us to examine some of the long term consequences of the economic growth going)Tj T* 0.07 Tw (on in China, so that we, and our friends in the region, can approach the future from)Tj T* 0.0525 Tw (an informed perspective.)Tj 10 0 0 10 157 393 Tm 0.052 Tw ([A statement submitted by Senator Lugar follows:])Tj 8 0 0 8 203.56 377 Tm 0 Tw (P)Tj 6.4 0 0 6.0958 208.8959 377 Tm (REPARED)Tj 8 0 0 8 243.8879 377 Tm (S)Tj 6.4 0 0 6.0958 248.9278 377 Tm [(TATEMENT)-412.5(OF)]TJ 8 0 0 8 301.3822 377 Tm (S)Tj 6.4 0 0 6.0958 306.4221 377 Tm (ENATOR)Tj 8 0 0 8 337.3885 377 Tm (R)Tj 6.4 0 0 6.0958 343.1644 377 Tm (ICHARD)Tj 8 0 0 8 372.582 377 Tm 0.0525 Tw (G. L)Tj 6.4 0 0 6.0958 389.0097 377 Tm 0 Tw (UGAR)Tj 8 0 0 8 155 364 Tm 0.2625 Tw (I would like to thank Senator Brownback for chairing this important hearing.)Tj -1 -1 TD 0.105 Tw (Those of us who have watched China)Tj /F14 1 Tf 17.7057 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.105 Tw (s remarkable growth during the past two dec-)Tj -17.9097 -1 TD 0.155 Tw (ades can only marvel over how much has changed since the dark days of the Cul-)Tj T* 0.1875 Tw (tural Revolution. Economists now tell us that at current growth rates, the size of)Tj T* 0 Tw (China)Tj /F14 1 Tf 2.815 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.0525 Tw (s economy will double every 10 years.)Tj -2.019 -1 TD 0 Tw (China)Tj /F14 1 Tf 2.815 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.1775 Tw (s economic growth has meant rising standards of living for millions of its)Tj -4.019 -1 TD 0.17 Tw (people, who can now buy apartments and own cars and other goods unimaginable)Tj T* 0.1 Tw (just a decade ago. Along with that has come an increase in personal freedom. Aver-)Tj T* 0.1675 Tw (age Chinese citizens can travel, start businesses, file suits in court and surf parts)Tj T* 0.19 Tw (of the Internet. China is now the world)Tj /F14 1 Tf 19.3307 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.19 Tw (s second-largest market for personal com-)Tj -19.5347 -1 TD 0 Tw (puters.)Tj 1 -1 TD 0.11 Tw (This increasing wealth and China)Tj /F14 1 Tf 16.1088 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.11 Tw (s recent membership in the World Trade Orga-)Tj -17.3128 -1 TD 0.1475 Tw (nization have created many opportunities for the sale of American-produced goods,)Tj T* 0.195 Tw (agricultural products and services. China is the largest foreign buyer of U.S. soy-)Tj T* 0.0525 Tw (beans, and overall the seventh biggest market for American exports.)Tj 1 -1 TD 0.12 Tw (We in the United States have encouraged China to spread the benefits of growth)Tj -1 -1 TD 0.095 Tw (more widely throughout the country and to crack down on corruption. We also have)Tj T* 0.3525 Tw (pushed China to embrace democracy, political freedom, and respect for human)Tj T* 0 Tw (rights.)Tj 1 -1 TD 0.1475 Tw (Clearly the emergence of a more prosperous and self-assured China is a positive)Tj -1 -1 TD 0.2725 Tw (development for East Asia and the world. No one has benefited more from this)Tj T* 0.2575 Tw (progress than China itself. But with those benefits come responsibilities, and as)Tj T* 0.1325 Tw (China becomes a more significant player on the global stage, it must take on more)Tj T* 0.0525 Tw (of the duties of global citizenship.)Tj 1 -1 TD 0.1675 Tw (In the area of trade, in particular, China must follow through with the commit-)Tj -1 -1 TD 0.125 Tw (ments it has made in the WTO by enforcing its laws against counterfeiting and pi-)Tj T* 0.2925 Tw (racy of intellectual property. The illegal copying of software, music, movies and)Tj T* 0.21 Tw (other copyrighted material in China cost American firms and individuals an esti-)Tj T* 0.0525 Tw (mated $1.85 billion in lost sales last year alone.)Tj 1 -1 TD 0.1775 Tw (Likewise in agricultural trade, the United States Trade Representative late last)Tj -1 -1 TD 0.1475 Tw (year raised serious concerns about China)Tj /F14 1 Tf 19.7562 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1475 Tw (s willingness to fully implement its WTO)Tj -19.9602 -1 TD 0.185 Tw (obligations. In January the Bush administration protested China)Tj /F14 1 Tf 31.4465 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.185 Tw (s moves to delay)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00007)-1076.9(Fmt 6633)-1076.9(Sfmt 6621)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 33 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R /F19 17 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 35 0 obj << /Length 5239 >> stream BT /F18 1 Tf 10 0 0 10 303.22 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (4)Tj 8 0 0 8 147 648 Tm 0.1375 Tw (approval of certain bio-engineered crops for import. Industries in the service sector)Tj 0 -1.025 TD 0.2325 Tw (and elsewhere have complained that China has either not passed regulations re-)Tj T* 0.1225 Tw (quired by the WTO or is not implementing them fairly. Beijing must live up to the)Tj T* 0.0525 Tw (promises it has made in the international trade arena.)Tj 1 -1.025 TD 0.2225 Tw (China must also acknowledge the responsibilities that go with its status as an)Tj -1 -1.025 TD 0.1225 Tw (economic force within the Asia-Pacific region. Other countries also need the foreign)Tj T* 0.285 Tw (investment that is flowing into China, and many of China)Tj /F14 1 Tf 29.2726 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.285 Tw (s exports compete in)Tj -29.4766 -1.025 TD 0.06 Tw (world markets against the exports of its neighbors. China must engage its neighbors)Tj T* 0.0525 Tw (so that its success benefits other developing countries in the region.)Tj 1 -1.025 TD 0.1325 Tw (I thank today)Tj /F14 1 Tf 6.5439 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1325 Tw (s witnesses for agreeing to appear before us, and I look forward to)Tj -7.7479 -1.025 TD 0.0525 Tw (their testimony.)Tj 10 0 0 10 157 547.7999 Tm 0.372 Tw (Senator B)Tj 8 0 0 7.6194 207.0193 547.7999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 256.9385 547.7999 Tm 0.372 Tw (. Gentlemen, welcome. I am delighted to)Tj -10.9939 -1.02 TD 0.194 Tw (have you here. And we will open the floor up. We will take your)Tj T* 0.168 Tw (full written statements into the record. If you want to give those,)Tj T* 0.072 Tw (you can. If you would like to summarize and make your key points,)Tj T* 0.052 Tw (that is up to you, as well. We are delighted to have you here.)Tj 1 -1.02 TD (Mr. Schriver.)Tj /F20 1 Tf 9 0 0 9 147 476.5999 Tm 0.2556 Tw (STATEMENT OF RANDALL G. SCHRIVER, DEPUTY ASSISTANT)Tj 1 -1.2 TD 0.3 Tw (SECRETARY OF STATE FOR EAST ASIAN AND PACIFIC AF-)Tj T* 0.0422 Tw (FAIRS, DEPARTMENT OF STATE, WASHINGTON, DC)Tj /F18 1 Tf 10 0 0 10 157 440.8 Tm 0.174 Tw (Mr. S)Tj 8 0 0 7.6194 184.4796 440.8 Tm 0 Tw (CHRIVER)Tj 10 0 0 10 223.279 440.8 Tm 0.174 Tw (. Thank you, Mr. Chairman. And I appreciate the)Tj -7.6279 -1.02 TD 0.154 Tw (opportunity to participate in this hearing today, particularly since)Tj T* 0.23 Tw (there are other international issues that are rightfully occupying)Tj T* 0.218 Tw (the headlines and occupying everyone)Tj /F14 1 Tf 18.3717 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.218 Tw (s attention. It is important)Tj -18.5757 -1.02 TD 0.14 Tw (not to lose sight of longer-term and, I would argue, strategic chal-)Tj T* 0.286 Tw (lenges that we are facing. And I cannot think of any challenge)Tj T* 0.122 Tw (more important than how to deal with the long-term consequences)Tj T* 0.052 Tw (of China)Tj /F14 1 Tf 3.9779 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.052 Tw (s emergence.)Tj -3.1819 -1.02 TD 0.152 Tw (I would like to submit my full statement to the record and give)Tj -1 -1.02 TD 0.052 Tw (a brief summary now.)Tj 1 -1.02 TD 0.182 Tw (The administration has worked very hard over the last 2 years)Tj -1 -1.02 TD 0.194 Tw (to improve our relationship with China, and I think the progress)Tj T* 0.294 Tw (has been quite remarkable given that the EP)Tj /F14 1 Tf 22.8587 0 TD 0 Tw ()Tj /F18 1 Tf 0.556 0 TD 0.294 Tw (3 incident was a)Tj -23.4147 -1.02 TD 0.14 Tw (mere 2 years ago, even less than that. We have tried to achieve a)Tj T* 0.102 Tw (point where we can have a more constructive and cooperative rela-)Tj T* 0.188 Tw (tionship with China, and I would in no way minimize the impor-)Tj T* 0.404 Tw (tant differences that we have, issues such as Taiwan, human)Tj 0 -1.01 TD 0.082 Tw (rights, and religious freedoms, and nonproliferation, but I think we)Tj T* 0.108 Tw (have achieved a state now where the U.S./China bilateral relation-)Tj T* 0.202 Tw (ship is one that carries great potential to be a more constructive)Tj T* 0.208 Tw (and cooperative relationship, certainly much more so than in the)Tj T* 0 Tw (past.)Tj 1 -1.01 TD 0.248 Tw (And if I could just briefly cite a few areas, China has been a)Tj -1 -1.01 TD 0.068 Tw (partner in the war on terrorism. China voted in favor of U.N. Secu-)Tj T* 0.072 Tw (rity Council Resolution 1373, they publicly supported our campaign)Tj T* 0.264 Tw (in Afghanistan, and they contributed to reconstruction efforts in)Tj T* 0.24 Tw (Afghanistan to the tune of about 150 million U.S. dollars. Quite)Tj T* 0.158 Tw (significant. They have engaged in bilateral discussions with us on)Tj T* 0.186 Tw (counter-terrorism, and we are developing, I think, a very positive)Tj T* 0.134 Tw (agenda. At the same time, we know that there are those in China)Tj T* 0.208 Tw (who are interested in using the issue of terrorism to crack down)Tj T* 0.192 Tw (on some who are merely expressing their views and their opposi-)Tj T* 0.136 Tw (tion to the government, and part of our dialog is, of course, to not)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00008)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 36 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R /F20 27 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 38 0 obj << /Length 5427 >> stream BT /F18 1 Tf 10 0 0 10 303.22 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (5)Tj -15.622 -2 TD 0.22 Tw (support those efforts in any way and, in fact, to make sure that)Tj 0 -1 TD 0 Tw (China)Tj /F14 1 Tf 2.815 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.052 Tw (s counter-terrorism efforts are consistent with our own.)Tj -2.019 -1 TD 0.118 Tw (On Iraq and North Korea, it is known that China voted in favor)Tj -1 -1 TD 0.14 Tw (of U.N. Security Council Resolution 1441, and they have criticized)Tj T* 0.282 Tw (Iraq for its failure to disarm and to comply with U.N. Security)Tj T* 0.052 Tw (Council resolutions.)Tj 1 -1 TD 0.218 Tw (With respect to North Korea, China has condemned North Ko-)Tj -1 -1 TD 0 Tw (rea)Tj /F14 1 Tf 1.5 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.206 Tw (s decision to withdraw from the NPT. They have voiced their)Tj -1.704 -1 TD 0.136 Tw (opposition to nuclear weapons being introduced on the Korean Pe-)Tj T* 0.194 Tw (ninsula, and they voted in favor of referring the issue of DPRK)Tj /F14 1 Tf 31.1166 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (s)Tj -31.3206 -1 TD 0.164 Tw (noncompliance in the IAEA Board of Governors to the U.N. Secu-)Tj T* 0.052 Tw (rity Council.)Tj 1 -1 TD 0.26 Tw (So although on these three issues I mentioned, we are not in)Tj -1 -1 TD 0.15 Tw (complete agreement with China, these are the major issues of the)Tj T* 0.174 Tw (day, and I think it is fair to say that our cooperation with China)Tj T* 0.074 Tw (has been more productive and constructive than in the past. Again,)Tj T* 0.116 Tw (were not in complete agreement, but there is a dialog and there is)Tj T* 0.052 Tw (some constructive cooperation.)Tj 1 -1 TD 0.226 Tw (Surely, this is not destined to be a static relationship, though.)Tj -1 -1 TD 0.248 Tw (China is growing and evolving. And as the topic of this hearing)Tj T* 0.122 Tw (suggests, we need to understand and account for the consequences)Tj T* 0.052 Tw (of China)Tj /F14 1 Tf 3.9779 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.052 Tw (s emergence.)Tj -3.1819 -1 TD 0.09 Tw (Primarily, when we talk about China)Tj /F14 1 Tf 17.6577 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.09 Tw (s emergence, we are speak-)Tj -18.8617 -1 TD 0.178 Tw (ing, as you suggested, Mr. Chairman, of China)Tj /F14 1 Tf 22.7477 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.178 Tw (s economic growth)Tj -22.9517 -1 TD 0.154 Tw (and economic emergence and how that translates into comprehen-)Tj T* 0.134 Tw (sive national power. So I would like to briefly discuss China)Tj /F14 1 Tf 28.9366 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.134 Tw (s eco-)Tj -29.1406 -1 TD 0.052 Tw (nomic growth and its modernization efforts.)Tj 1 -1 TD 0.296 Tw (I think it is inevitable that China is going to modernize and)Tj -1 -1 TD 0.172 Tw (grow, so it is incumbent upon us to have the kind of relationship)Tj T* 0.088 Tw (where we can channel that in productive ways. It is in our interest)Tj T* 0.302 Tw (to promote China)Tj /F14 1 Tf 8.6599 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.302 Tw (s economic reform as it modernizes. We want)Tj -8.8639 -1 TD 0.192 Tw (China to be a responsible member of the world community living)Tj T* 0.052 Tw (by global trade and financial rules.)Tj 1 -1 TD 0.106 Tw (They are in the midst of an economic transformation. It gives us)Tj -1 -1 TD 0.15 Tw (an opportunity not only to promote ties, economic and commercial)Tj T* 0.116 Tw (ties, between our two countries, but, through that, to contribute to)Tj T* 0 Tw (China)Tj /F14 1 Tf 2.815 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.1 Tw (s political evolution and to a more liberal society, albeit sub-)Tj -3.019 -1 TD 0.11 Tw (tly and albeit it with limited influence to do that from the outside,)Tj T* 0.15 Tw (but I think it is an important element of the commercial relation-)Tj T* 0 Tw (ship.)Tj 1 -1 TD 0.114 Tw (You mentioned foreign direct investment has contributed greatly)Tj -1 -1 TD 0.12 Tw (to China)Tj /F14 1 Tf 4.1019 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.12 Tw (s economic growth. We see this as also exposing China to)Tj -4.3059 -1 TD 0.146 Tw (modern business and labor practices, another, I would argue, sub-)Tj T* 0.184 Tw (tle benefit to these kinds of relationships that we are developing.)Tj 1 -1 TD 0.234 Tw (Mr. Chairman, you mentioned that China is our fourth-largest)Tj -1 -1 TD 0.298 Tw (trading partner, it)Tj /F14 1 Tf 9.0779 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.298 Tw (s our seventh-largest export market, and our)Tj -9.2819 -1 TD 0.176 Tw (fourth-largest source of imports. The total two-way trade between)Tj T* 0.194 Tw (the two countries has expanded greatly from about $33 billion in)Tj T* 0.052 Tw (1992 to almost $150 billion in 2002.)Tj 1 -1 TD 0 Tw (China)Tj /F14 1 Tf 2.815 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.124 Tw (s entry into WTO, I think, is the greatest signal that it is)Tj -4.019 -1 TD 0.296 Tw (committed to further opening and reforming its economy. Moni-)Tj T* 0.092 Tw (toring and enforcing China)Tj /F14 1 Tf 12.7568 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.092 Tw (s implementation of WTO commitments)Tj -12.9608 -1 TD 0.204 Tw (is, of course, the centerpiece of our economic relationship and, in)Tj T* 0.236 Tw (fact, our overall bilateral relationship. And I know Mr. Freeman)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00009)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 39 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 41 0 obj << /Length 5103 >> stream BT /F18 1 Tf 10 0 0 10 303.22 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (6)Tj -15.622 -2 TD 0.084 Tw (will discuss that in greater detail. But we do have serious concerns)Tj 0 -1 TD 0.09 Tw (about WTO compliance, especially in the areas of agriculture, serv-)Tj T* 0.052 Tw (ices, and intellectual property.)Tj 1 -1 TD 0.112 Tw (Largely, we view China)Tj /F14 1 Tf 11.2268 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.112 Tw (s integration into regional and global or-)Tj -12.4308 -1 TD 0.1 Tw (ganizations as a largely positive development. Not only does China)Tj T* 0.19 Tw (commit itself, by joining these organizations, to play by the rules)Tj T* 0.226 Tw (in a different fora, but it has an increasing stake in seeing that)Tj T* 0.07 Tw (others play by the rules. But we do need to be vigilant with respect)Tj T* 0.162 Tw (to second- and third-order effects related to this economic growth.)Tj T* 0.166 Tw (And Mr. Chairman, you mentioned one. As China grows economi-)Tj T* 0.182 Tw (cally, certainly the military will be a potential beneficiary of that)Tj T* 0.156 Tw (economic growth. That is why we feel it is important to sustain a)Tj T* 0.244 Tw (modest military-to-military relationship with the People)Tj /F14 1 Tf 27.2416 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.244 Tw (s Libera-)Tj -27.4456 -1 TD 0.142 Tw (tion Army consistent with the guidelines that Congress has given.)Tj T* 0.06 Tw (We think it is important that as the People)Tj /F14 1 Tf 20.3727 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.06 Tw (s Liberation Army mod-)Tj -20.5767 -1 TD 0.274 Tw (ernizes, that we have windows on that modernization effort, we)Tj T* 0.366 Tw (have some transparency, so we can better understand it as it)Tj T* 0.086 Tw (evolves. Also, through a relationship with the PLA we have the op-)Tj T* 0.136 Tw (portunity to avoid miscalculations and misjudgments. This can ac-)Tj T* 0.142 Tw (tually contribute to a deterrent effect so that they understand our)Tj T* 0.078 Tw (very important interests and what we are prepared to do to protect)Tj T* 0.052 Tw (those interests.)Tj 1 -1 TD 0.126 Tw (I think it is also important to understand that China)Tj /F14 1 Tf 25.5266 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.126 Tw (s economic)Tj -26.7306 -1 TD 0.17 Tw (growth and modernization does not translate directly, necessarily,)Tj T* 0.408 Tw (into an upward trajectory of increased comprehensive national)Tj T* 0.256 Tw (power. It is more complicated than that. As China is integrated)Tj T* 0.102 Tw (into the global economy, several challenges are, in fact, heightened)Tj T* 0.216 Tw (that China is dealing with. Stripping themselves of their bloated)Tj T* 0.14 Tw (state-owned enterprises, which are a drag on the economy, carries)Tj T* 0.164 Tw (the potential for great social unrest, which China is dealing with.)Tj T* 0.236 Tw (Corruption remains a serious problem. Chinese have tremendous)Tj T* 0.156 Tw (issues related to urban unemployment. There is a great disparity,)Tj T* 0.066 Tw (of course, between what can be earned in rural China versus urban)Tj T* 0.424 Tw (China. This has led to a floating population of either under-)Tj T* 0.084 Tw (employed or unemployed Chinese internal migrants. China is a net)Tj T* 0.052 Tw (energy importer, and its dependency on foreign oil is increasing sig-)Tj T* (nificantly year by year.)Tj 1 -1 TD 0.138 Tw (These challenges are coupled with other significant challenges)Tj /F14 1 Tf 29.8006 0 TD 0 Tw ()Tj /F18 1 Tf -30.8006 -1 TD 0.16 Tw (for instance, dealing with HIV/AIDS in China, which is a serious,)Tj T* 0.052 Tw (serious problem)Tj /F14 1 Tf 7.4039 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.052 Tw (as well as the rapid industrialization they are un-)Tj -8.4039 -1 TD 0.216 Tw (dergoing and the effects that that is having on the environment.)Tj T* 0.154 Tw (This, if not dealt with by the Chinese, will have serious repercus-)Tj T* 0.052 Tw (sions for their interest in sustaining economic growth.)Tj 1 -1 TD 0.138 Tw (Responsibility for these challenges will rest largely with China)Tj /F14 1 Tf 30.1256 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (s)Tj -31.3296 -1 TD 0.214 Tw (fourth generation of leaders. I think conventional wisdom is that)Tj T* 0.174 Tw (these leaders are younger, more technocratic, and seemingly open)Tj T* 0.21 Tw (to confronting these vast economic challenges. I think the reality)Tj T* 0.192 Tw (is they remain largely an unknown quantity. In the Chinese sys-)Tj T* 0.07 Tw (tem, you make your way to the top by not deviating from the script)Tj T* 0.276 Tw (and reading your talking points for 12 years. So now that they)Tj T* 0.094 Tw (have assumed the mantle of power, we will see actually what their)Tj T* 0.052 Tw (governance will look like.)Tj 1 -1 TD 0.232 Tw (I want to briefly also mention three important issues we have)Tj -1 -1 TD 0.084 Tw (with China. First, human rights and religious freedom, and I know)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00010)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 42 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 44 0 obj << /Length 6043 >> stream BT /F18 1 Tf 10 0 0 10 303.22 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (7)Tj -15.622 -2 TD 0.084 Tw (this is an issue very dear to you, Senator, as I know you addressed)Tj 0 -1.01 TD 0.11 Tw (the Commission on International Religious Freedom just last week)Tj T* 0.262 Tw (and made some remarks. We had some positive momentum last)Tj T* 0.138 Tw (year in the area of human rights, and we began a dialog with the)Tj T* 0.146 Tw (Chinese headed by our Assistant Secretary, Lorne Craner. I think)Tj T* 0.178 Tw (there were some positive feelings that came out of that initial ef-)Tj T* 0.214 Tw (fort. Unfortunately, the last 3 months there has been a series of)Tj T* 0.338 Tw (setbacks and some very negative experiences. Secretary Powell,)Tj T* 0.072 Tw (when he was in Beijing last month, mentioned this publicly as part)Tj T* 0.112 Tw (of his press conference, that we were greatly disappointed in these)Tj T* 0 Tw (setbacks.)Tj 1 -1 TD 0.172 Tw (The Chinese have also taken some positive steps in the area of)Tj -1 -1 TD 0.108 Tw (nonproliferation. They have promulgated some export control laws,)Tj T* 0.166 Tw (which, if implemented, carry the potential to vastly improve their)Tj T* 0.288 Tw (system. But implementation is certainly the key. We are aware)Tj T* 0.192 Tw (that there is only a small number of people, a handful of people,)Tj T* 0.15 Tw (at MOFTEC who work on export controls. They need to vastly in-)Tj T* 0.14 Tw (crease their resources and increase their attention to training and)Tj T* 0.178 Tw (understanding how you implement an effective export-control sys-)Tj T* 0.052 Tw (tem, and we are willing to work with them on that.)Tj 1 -1 TD 0.148 Tw (And finally, Taiwan, which, from the PRC perspective is always)Tj -1 -1 TD 0.144 Tw (the most sensitive issue in our relationship. We regard Taiwan as)Tj T* 0.172 Tw (a great success story in the United States. Taiwan has made tre-)Tj T* 0.296 Tw (mendous progress with respect to democratization and economic)Tj T* 0.31 Tw (modernization. Through our unofficial relationship with Taiwan,)Tj T* 0.074 Tw (the United States will continue to promote Taiwan)Tj /F14 1 Tf 23.9666 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.074 Tw (s story as a suc-)Tj -24.1706 -1 TD 0.132 Tw (cess and as a model for others. President Bush has emphasized to)Tj T* 0.11 Tw (China that our policy is consistent. We do have our one-China pol-)Tj T* 0.152 Tw (icy, which is defined not only by the three communiques, but also)Tj T* 0.186 Tw (by the Taiwan Relations Act. We have abiding interest, above all)Tj T* 0.198 Tw (else, in a peaceful resolution of cross-trade differences, and we)Tj /F14 1 Tf 30.5596 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (ve)Tj -30.7636 -1 TD 0.198 Tw (urged China to renounce the use of force and open a dialog with)Tj T* 0 Tw (Taiwan.)Tj 1 -1 TD 0.422 Tw (To conclude, the U.S./China relationship remains a work in)Tj -1 -1 TD 0.246 Tw (progress. Despite difficulties, we have reached a point where we)Tj T* 0.224 Tw (are today where we have a great deal of high-level interaction)Tj /F14 1 Tf 30.7986 0 TD 0 Tw ()Tj /F18 1 Tf -30.7986 -1 TD 0.17 Tw (three Presidential visits in a little over a year)Tj /F14 1 Tf 22.4377 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.17 Tw (and a recognition)Tj -23.4377 -1 TD 0.098 Tw (that China and the United States do share some common interests)Tj T* 0.144 Tw (on some of the most pressing matters of the day. We know that a)Tj T* 0.14 Tw (China that contributes to the common solution of global problems,)Tj T* 0.194 Tw (that increasingly shares our commitment to world peace and sta-)Tj T* 0.24 Tw (bility, open markets, and cooperation, as well as individual free-)Tj T* 0.098 Tw (dom, is clearly in our interest. Of course, the great trick is how we)Tj T* 0.094 Tw (get there, and that is what we are working on, and we will remain)Tj T* 0.052 Tw (vigilant in that effort.)Tj 1 -1 TD 0.106 Tw (Thank you, Mr. Chairman, and I look forward to your questions.)Tj T* 0.052 Tw ([The prepared statement of Mr. Schriver follows:])Tj 8 0 0 8 149.52 169.0001 Tm 0 Tw (P)Tj 6.4 0 0 6.0958 154.8559 169.0001 Tm (REPARED)Tj 8 0 0 8 189.8479 169.0001 Tm (S)Tj 6.4 0 0 6.0958 194.8878 169.0001 Tm [(TATEMENT)-412.5(OF)]TJ 8 0 0 8 247.3421 169.0001 Tm (R)Tj 6.4 0 0 6.0958 253.1181 169.0001 Tm (ANDALL)Tj 8 0 0 8 283.7325 169.0001 Tm 0.0525 Tw (G. S)Tj 6.4 0 0 6.0958 299.8642 169.0001 Tm 0 Tw (CHRIVER)Tj 8 0 0 8 330.9042 169.0001 Tm 0.0525 Tw (, D)Tj 6.4 0 0 6.0958 341.996 169.0001 Tm 0 Tw (EPUTY)Tj 8 0 0 8 367.516 169.0001 Tm (A)Tj 6.4 0 0 6.0958 373.2919 169.0001 Tm (SSISTANT)Tj 8 0 0 8 409.0071 169.0001 Tm (S)Tj 6.4 0 0 6.0958 414.047 169.0001 Tm [(ECRETARY)-412.5(OF)]TJ 8 0 0 8 176.94 161.0001 Tm (S)Tj 6.4 0 0 6.0958 181.9799 161.0001 Tm [(TATE)-412.5(FOR)]TJ 8 0 0 8 218.9079 161.0001 Tm (E)Tj 6.4 0 0 6.0958 224.6838 161.0001 Tm (AST)Tj 8 0 0 8 240.2454 161.0001 Tm (A)Tj 6.4 0 0 6.0958 246.0213 161.0001 Tm [(SIAN)-412.5(AND)]TJ 8 0 0 8 282.5909 161.0001 Tm (P)Tj 6.4 0 0 6.0958 287.9268 161.0001 Tm (ACIFIC)Tj 8 0 0 8 313.9076 161.0001 Tm (A)Tj 6.4 0 0 6.0958 319.6835 161.0001 Tm (FFAIRS)Tj 8 0 0 8 344.0995 161.0001 Tm 0.0525 Tw (, D)Tj 6.4 0 0 6.0958 355.1913 161.0001 Tm 0 Tw [(EPARTMENT)-412.5(OF)]TJ 8 0 0 8 412.2665 161.0001 Tm (S)Tj 6.4 0 0 6.0958 417.3064 161.0001 Tm (TATE)Tj 8 0 0 8 155 148.0001 Tm 0.125 Tw (Mr. Chairman, thank you. I appreciate the opportunity to testify before this sub-)Tj -1 -1 TD 0.0525 Tw (committee today.)Tj 1 -1 TD 0.0675 Tw (President Bush, Secretary Powell and all of us in the Administration have worked)Tj -1 -1 TD 0.1175 Tw (over the last two years to forge a candid, constructive, and cooperative relationship)Tj T* 0.065 Tw (with China. As China modernizes and grows, it is in our interest to promote China)Tj /F14 1 Tf 39.0794 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (s)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00011)-1076.9(Fmt 6633)-1076.9(Sfmt 6621)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 45 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 49 0 obj << /Length 8255 >> stream BT /F18 1 Tf 10 0 0 10 303.22 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (8)Tj 8 0 0 8 147 648 Tm 0.07 Tw (continued economic reform. We want China to be a responsible member of the world)Tj 0 -0.9875 TD 0.0675 Tw (community, living by global trade and financial rules. China)Tj /F14 1 Tf 28.4146 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0675 Tw (s ongoing focus on mar-)Tj -28.6186 -0.9875 TD 0.065 Tw (ket-oriented economic development holds promise that it will increasingly contribute)Tj T* 0.0525 Tw (positively to economic growth in the region.)Tj 1 -0.9875 TD 0.0575 Tw (While not minimizing the significant differences that remain between us in impor-)Tj -1 -0.9875 TD 0.0975 Tw (tant areas like human rights, nonproliferation and Taiwan, I can report to you that)Tj T* 0.21 Tw (the Administration)Tj /F14 1 Tf 9.0809 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.21 Tw (s approach to China has resulted in a U.S.-China relationship)Tj -9.2849 -0.9875 TD 0.11 Tw (that carries great potential to be more cooperative and productive than in the past.)Tj 1 -0.9875 TD 0.0775 Tw (Let me cite some examples where the United States and China are working close-)Tj -1 -0.9875 TD 0.1475 Tw (ly. China has been a strong partner in the war on terrorism. China voted in favor)Tj T* 0.0675 Tw (of UNSCR 1373, a rare vote under Chapter VII of the UN Charter which potentially)Tj T* 0.205 Tw (authorizes the use of force, publicly supported the coalition campaign in Afghani-)Tj T* 0.165 Tw (stan, and contributed $150 million of bilateral assistance to Afghan reconstruction)Tj T* 0.1525 Tw (following defeat of the Taliban. Shortly after 9-11, the U.S. and China commenced)Tj T* 0.1575 Tw (a counter-terrorism dialogue. The third round of that dialogue was held in Beijing)Tj T* 0.23 Tw (in February. While we recognize that China faces its own terrorist problems, we)Tj T* 0.125 Tw (have been steadfast and clear that China must not use the war on terror to justify)Tj T* 0.0675 Tw (any crackdown on those who call peacefully for greater autonomy, religious freedom,)Tj T* 0.0525 Tw (and political rights.)Tj 1 -0.9875 TD 0.1675 Tw (China voted in favor of UNSCR 1441 and has criticized Iraq)Tj /F14 1 Tf 29.3816 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1675 Tw (s failure to destroy)Tj -30.5856 -0.9875 TD 0.2 Tw (its weapons of mass destruction. China has stressed its opposition to the DPRK)Tj /F14 1 Tf 39.0894 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (s)Tj -39.2934 -0.9875 TD 0.1875 Tw (decision to withdraw from the Nuclear Non-Proliferation Treaty, its concerns over)Tj T* 0.21 Tw (North Korea)Tj /F14 1 Tf 6.0249 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.21 Tw (s nuclear capabilities and its desire for a non-nuclear Korean penin-)Tj -6.2289 -0.9875 TD 0.1725 Tw (sula. It voted to refer the DPRK)Tj /F14 1 Tf 15.7768 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1725 Tw (s noncompliance with its IAEA obligations to the)Tj -15.9808 -0.9875 TD 0.0525 Tw (UN Security Council in New York.)Tj 1 -0.9875 TD 0.12 Tw (Turning to economics, I want to highlight the importance to the United States of)Tj -1 -0.9875 TD 0 Tw (China)Tj /F14 1 Tf 2.815 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.09 Tw (s ongoing economic transformation. Not only has this transformation resulted)Tj -3.019 -0.9875 TD 0.0725 Tw (in economic growth and expanded commercial ties between our countries, but it also)Tj T* 0.18 Tw (has contributed to China)Tj /F14 1 Tf 12.0408 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.18 Tw (s political evolution to a more liberal society. Market re-)Tj -12.2448 -0.9875 TD 0.1225 Tw (forms and economic engagement have unleashed individual initiative and entrepre-)Tj T* 0.2025 Tw (neurship. Foreign direct investment has both contributed to economic growth and)Tj T* 0.145 Tw (exposed China to modern business and labor practices. China)Tj /F14 1 Tf 29.5696 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.145 Tw (s economic growth is)Tj -29.7736 -0.9875 TD 0.07 Tw (a bright spot in the global economy and today China accounts for about four percent)Tj T* 0.1775 Tw (of the world economy. Per capita income has increased at an annual average rate)Tj T* 0.105 Tw (of almost nine percent since 1980. China attracted $52.7 billion worth of foreign di-)Tj T* 0.145 Tw (rect investment, in 2002 becoming the world)Tj /F14 1 Tf 21.4097 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.145 Tw (s top destination for foreign direct in-)Tj -21.6137 -0.9875 TD 0 Tw (vestment.)Tj 1 -0.9875 TD 0.0725 Tw (China today ranks among the world)Tj /F14 1 Tf 16.9942 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0725 Tw (s half-dozen largest trading nations. It is now)Tj -18.1982 -0.9875 TD 0.0875 Tw (our fourth-largest trading partner, seventh-largest export market and fourth-largest)Tj T* 0.09 Tw (source of imports. Total two-way trade between the U.S. and China has grown from)Tj T* 0.175 Tw ($33 billion in 1992 to almost $150 billion in 2002. With growing imports, particu-)Tj 0 -1 TD 0.1975 Tw (larly from Southeast Asian nations, China has become one of the most important)Tj T* 0.0525 Tw (engines of growth for both the region and the world.)Tj 1 -1 TD 0 Tw (China)Tj /F14 1 Tf 2.815 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.1325 Tw (s entry into the WTO signaled its commitment to further open and reform)Tj -4.019 -1 TD 0.0575 Tw (its economy. WTO membership will accelerate China)Tj /F14 1 Tf 24.7916 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0575 Tw (s economic reforms and provide)Tj -24.9956 -1 TD 0.215 Tw (more export and investment opportunities for U.S. companies. This will translate)Tj T* 0.165 Tw (into more jobs for Americans. Monitoring and enforcing China)Tj /F14 1 Tf 30.0226 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.165 Tw (s implementation of)Tj -30.2266 -1 TD 0.1625 Tw (its WTO commitments is a centerpiece of our efforts. For the most part, we credit)Tj T* 0.1375 Tw (China for making significant progress in implementing its WTO commitments dur-)Tj T* 0.0525 Tw (ing its first year as a WTO member.)Tj 1 -1 TD (We do have some serious concerns with China)Tj /F14 1 Tf 21.6452 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0525 Tw (s WTO compliance, especially in the)Tj -22.8492 -1 TD 0.0725 Tw (areas of agriculture, services, intellectual property rights enforcement as well as the)Tj T* 0.1975 Tw (cross-cutting issue of transparency. We are working closely with USTR, the Com-)Tj T* 0.215 Tw (merce and Agricultural Departments and through our Embassy with the Chinese)Tj T* 0.205 Tw (government, to address these concerns. Although progress is not easy, we remain)Tj T* 0.1825 Tw (encouraged that China)Tj /F14 1 Tf 10.9578 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1825 Tw (s leaders have repeatedly confirmed their intentions to im-)Tj -11.1618 -1 TD 0.1375 Tw (plement China)Tj /F14 1 Tf 7.0084 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1375 Tw (s market access commitments. At the same time, when these inten-)Tj -7.2124 -1 TD 0.14 Tw (tions do not translate into positive results, we also stand ready to use multilateral)Tj T* 0.0525 Tw (means, including WTO dispute settlement, to enforce those commitments.)Tj 1 -1 TD 0 Tw (China)Tj /F14 1 Tf 2.815 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.06 Tw (s economic growth has made it an increasingly important regional and glob-)Tj -4.019 -1 TD 0.155 Tw (al player. The PRC is pursuing a Free Trade Agreement \(FTA\) with ASEAN. It is)Tj T* 0.115 Tw (pursuing the Closer Economic Partnership Agreement with Hong Kong and has ex-)Tj T* 0.1175 Tw (plored FTAs with Korea and Japan. China has been an active participant in APEC)Tj T* 0.1825 Tw (for years and served as a host in 2001. Having acceded to the WTO in December)Tj T* 0.1625 Tw (2001, it is now playing an increasingly visible role in that organization. In our ef-)Tj T* 0.35 Tw (forts to successfully conclude the WTO Doha Development Agenda, the United)Tj T* 0.1425 Tw (States has already begun consulting with China on areas of mutual interest)Tj /F14 1 Tf 36.628 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD (such)Tj -37.6279 -1 TD 0.0525 Tw (as reducing barriers to agricultural trade.)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00012)-1076.9(Fmt 6633)-1076.9(Sfmt 6621)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 50 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 52 0 obj << /Length 7839 >> stream BT /F18 1 Tf 10 0 0 10 303.22 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (9)Tj 8 0 0 8 155 648 Tm 0.16 Tw (We view China)Tj /F14 1 Tf 7.3019 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.16 Tw (s integration into regional and global organizations and arrange-)Tj -8.5059 -0.9875 TD 0.0975 Tw (ments as a positive development. Not only is China committing itself to play by the)Tj T* 0.115 Tw (rules of a different fora, but it has an increasing stake in seeing that others do the)Tj T* 0.2175 Tw (same. And as its economy and prosperity become linked more closely to relation-)Tj T* 0.2425 Tw (ships with trading partners, it has a greater stake in peace and stability in the)Tj T* 0.0525 Tw (Asia-Pacific region and the world.)Tj 1 -0.9875 TD 0.2075 Tw (We also need to be aware that the Chinese military is a beneficiary of China)Tj /F14 1 Tf 38.0955 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (s)Tj -39.2995 -0.9875 TD 0.1925 Tw (economic growth. Thus, as we proceed in our overall bilateral relationship, it will)Tj T* 0.2225 Tw (remain important that we sustain a modest military-to-military relationship with)Tj T* 0.2125 Tw (the People)Tj /F14 1 Tf 5.0464 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.2125 Tw (s Liberation Army within the guidelines established by Congress. This)Tj -5.2504 -0.9875 TD 0.195 Tw (will allow for better understanding of the PLA as it modernizes, and will give us)Tj T* 0.16 Tw (lines of communication to PLA leaders so as to reduce to possibility of miscalcula-)Tj T* 0 Tw (tion.)Tj 1 -0.9875 TD 0.1175 Tw (Of course, integration into the global economy and its institutions also highlights)Tj -1 -0.9875 TD 0.1125 Tw (challenges for the Chinese government. A high level of nonperforming loans weighs)Tj T* 0.1925 Tw (down its state-run banking system. Capital markets are immature. Bloated state-)Tj T* 0.1075 Tw (owned enterprises are a drag on growth. Corruption remains a serious problem. In-)Tj T* 0.1325 Tw (come disparities between coastal urban and inland rural areas are rapidly growing)Tj T* 0.215 Tw (and Chinese concerns about urban unemployment and surplus rural labor hinder)Tj T* 0.1925 Tw (the pace of economic reform. China is a net energy importer and increasingly de-)Tj T* 0.2 Tw (pendent on foreign oil. These economic challenges are coupled with other threats.)Tj T* 0.11 Tw (China is already experiencing a rapidly growing HIV/AIDS epidemic. It faces large-)Tj T* 0.0675 Tw (scale desertification and water shortages, while rapid industrialization has damaged)Tj T* 0.185 Tw (the environment. Successfully dealing with all of these problems will not be easy.)Tj 1 -0.9875 TD 0.1725 Tw (Responsibility for these challenges will rest largely with China)Tj /F14 1 Tf 30.4016 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (s )Tj /F14 1 Tf 0.9135 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.1725 Tw (fourth genera-)Tj -32.927 -0.9875 TD 0 Tw (tion)Tj /F14 1 Tf 1.815 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.105 Tw [( leadership. Over the past six months Beijing has begun setting this new lead-)]TJ -2.223 -0.9875 TD 0.27 Tw (ership in place, through a partial transfer of power. These leaders are younger,)Tj T* 0.075 Tw (more technocratic and are seemingly open to confronting vast economic and political)Tj T* 0.07 Tw (challenges. We look forward to working with China)Tj /F14 1 Tf 24.1586 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.07 Tw (s new leadership to promote bet-)Tj -24.3626 -0.9875 TD 0.0525 Tw (ter economic governance and encourage political reform in China.)Tj 1 -0.9875 TD 0.2575 Tw (Let me briefly comment on three other important issues we have with China.)Tj -1 -0.9875 TD 0.09 Tw (Human rights and religious freedom remain serious issues of concern. Despite some)Tj T* 0.2 Tw (positive momentum last year and greater signs that China was willing to engage)Tj T* 0.1525 Tw (with the U.S. and others on this topic, there has been some serious backsliding in)Tj T* 0.125 Tw (recent months. We were encouraged in 2002 by the release of a significant number)Tj T* 0.17 Tw (of political and religious prisoners, and by China)Tj /F14 1 Tf 23.6737 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.17 Tw (s agreement to interact with UN)Tj -23.8777 -0.9875 TD 0.2625 Tw (experts on torture, arbitrary detention and religion. However, we have seen vir-)Tj T* 0.0575 Tw (tually no movement on these promises. We recognize that China still has a long way)Tj T* 0.1775 Tw (to go in instituting the kind of fundamental systemic change that will protect the)Tj T* 0.3025 Tw (rights and liberties of all its citizens. Congressional support for our democracy,)Tj T* 0.28 Tw (human rights and rule of law programs is helping to promote just this kind of)Tj 0 -1 TD 0.1875 Tw (change. We have not relaxed our efforts to promote respect for human rights and)Tj T* 0.0525 Tw (religious freedom in China.)Tj 1 -1 TD 0.13 Tw (The Chinese also have taken some steps to curb the proliferation of missiles and)Tj -1 -1 TD 0.23 Tw (WMD. In August 2002, China promulgated missile-related export controls and in)Tj T* 0.065 Tw (October 2002 issued updated regulations on the export of dual-use chemical and bio-)Tj T* 0.08 Tw (logical agents, in addition to its 1997 nuclear export controls. Getting these commit-)Tj T* 0.155 Tw (ments is important, but the challenge is full implementation and effective enforce-)Tj T* 0.0525 Tw (ment. We look forward to working with China to that end.)Tj 1 -1 TD 0.0725 Tw (Taiwan remains one of the most sensitive issues in U.S.-China relations. Over the)Tj -1 -1 TD 0.1675 Tw (last two decades, Taiwan has made tremendous progress with respect to democra-)Tj T* 0.15 Tw (tization and economic modernization. Through our unofficial relationship with Tai-)Tj T* 0.2075 Tw (wan, the United States will continue to promote Taiwan)Tj /F14 1 Tf 27.6096 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.2075 Tw (s story as a success and)Tj -27.8136 -1 TD 0.2825 Tw (as a potential model for others. President Bush and others have emphasized to)Tj T* 0.175 Tw (China that our policy is consistent and unchanged. We are committed to our )Tj /F14 1 Tf 37.7395 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD (one)Tj -38.1475 -1 TD (China)Tj /F14 1 Tf 2.815 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.1675 Tw [( policy and the three communique)]TJ /F14 1 Tf 16.1068 0.076 TD 0 Tw ()Tj /F18 1 Tf 0.4165 -0.076 TD 0.1675 Tw (s, as well as to our obligations under the)Tj -19.7462 -1 TD 0.0925 Tw (Taiwan Relations Act to ensure Taiwan has an adequate self-defense capability. We)Tj T* 0.1775 Tw (do not support Taiwan independence. We have an abiding interest, above all else,)Tj T* 0.2225 Tw (in the peaceful resolution of cross-Strait differences. We have urged China to re-)Tj T* 0.0525 Tw (nounce the use of force and open a dialogue with Taiwan.)Tj 1 -1 TD 0.105 Tw (To conclude, the U.S.-China relationship remains a work in progress. Despite dif-)Tj -1 -1 TD 0.1925 Tw (ficulties, we have reached the point where we are today)Tj /F14 1 Tf 27.3641 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.1925 Tw (an unprecedented three)Tj -28.3641 -1 TD 0.1675 Tw (presidential visits in a little over a year, a recognition that China and the United)Tj T* 0.0875 Tw (States have common interests on some of the most pressing matters of the day, and)Tj T* 0.1575 Tw (a strong, growing economic relationship clearly in the interest of both nations and)Tj T* 0.0725 Tw (the global economy. A China that contributes to the common solution of global prob-)Tj T* 0.125 Tw (lems, that increasingly shares our commitment to world peace, stability, open mar-)Tj T* 0.0525 Tw (kets, cooperation, and individual freedom is clearly in our interest.)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00013)-1076.9(Fmt 6633)-1076.9(Sfmt 6621)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 53 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 55 0 obj << /Length 4761 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (10)Tj -14.344 -2 TD 0.052 Tw (Senator B)Tj 8 0 0 7.6194 203.8193 646 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 253.7385 646 Tm 0.052 Tw (. Thank you, Mr. Schriver.)Tj -9.6739 -1.01 TD (Mr. Freeman.)Tj /F20 1 Tf 9 0 0 9 147 615.7 Tm 0.1556 Tw (STATEMENT OF CHARLES FREEMAN, DEPUTY ASSISTANT U.S.)Tj 1 -1.2 TD 0.1511 Tw (TRADE REPRESENTATIVE, OFFICE OF THE U.S. TRADE REP-)Tj T* 0.0422 Tw (RESENTATIVE, WASHINGTON, DC)Tj /F18 1 Tf 10 0 0 10 157 580 Tm 0.276 Tw (Mr. F)Tj 8 0 0 7.6194 185.8696 580 Tm 0 Tw (REEMAN)Tj 10 0 0 10 223.045 580 Tm 0.276 Tw (. Thank you very much, Mr. Chairman. It is an)Tj -7.6045 -1.01 TD 0.172 Tw (honor for us to have the opportunity to appear here today and to)Tj T* 0.2 Tw (testify. At USTR, we tend to be somewhat obsessive in our focus)Tj T* 0.104 Tw (on economic relations, but we are aware of what is going on in the)Tj T* 0.17 Tw (greater world around us, so it is doubly important for us that we)Tj T* 0.064 Tw (are here today carrying on with our work, and so we appreciate the)Tj T* 0 Tw (opportunity.)Tj 1 -1.01 TD 0.144 Tw (I am going to speak almost exclusively on WTO implementation)Tj -1 -1.01 TD 0.182 Tw (issues with respect to China and leave the more weighty matters)Tj T* 0.052 Tw (to Mr. Schriver in his questions.)Tj 1 -1.01 TD 0.158 Tw (But just, as you are aware, Mr. Chairman, the USTR publishes)Tj -1 -1.01 TD 0.076 Tw (every year a report to Congress at the one-year anniversary of Chi-)Tj T* 0 Tw (na)Tj /F14 1 Tf 1.167 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.1 Tw (s accession to the WTO, which is December 11, a report on Chi-)Tj -1.371 -1.01 TD 0 Tw (na)Tj /F14 1 Tf 1.167 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.222 Tw (s implementation progress to date. We had our first report in)Tj -1.371 -1.01 TD 0.108 Tw (December of last year, and many of my remarks today derive from)Tj T* 0.188 Tw (that report, so I commend that to the Chair and to the members)Tj T* 0.162 Tw (and to the general public for a broader assessment of China)Tj /F14 1 Tf 29.1596 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.162 Tw (s im-)Tj -29.3636 -1.01 TD 0.052 Tw (plementation record to date.)Tj 1 -1.01 TD 0.092 Tw (But I will say, without giving a thumbs up or a thumbs down on)Tj -1 -1.01 TD 0 Tw (China)Tj /F14 1 Tf 2.815 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.074 Tw (s implementation progress, China certainly has made signifi-)Tj -3.019 -1.01 TD 0.352 Tw (cant progress in implementing its agreement, although, as Mr.)Tj T* 0.126 Tw (Schriver says, implementation is a work in progress similar to the)Tj T* 0.116 Tw (relationship with the United States. Progress was made on may of)Tj T* 0.174 Tw (the systemic changes that were required under the accession pro-)Tj T* 0.11 Tw (tocol, particularly in terms of implementing the framework of laws)Tj T* 0.234 Tw (and regulations required by the protocol. I think China, by mid-)Tj T* 0.17 Tw (2002, had changed or repealed some 2,500 trade-related laws and)Tj T* 0.216 Tw (regulations. And there are similar reviews that are ongoing with)Tj T* 0.122 Tw (respect to other laws and regulations throughout not only the cen-)Tj T* 0.052 Tw (tral, but the local governments.)Tj 1 -1.01 TD 0.094 Tw (China also had devoted a great deal of attention to restructuring)Tj -1 -1.01 TD 0.086 Tw (its government to meet the challenges of WTO. There are a variety)Tj T* 0.136 Tw (of ministries and agencies in China that have a role in overseeing)Tj T* 0.274 Tw (implementation and overseeing trade in goods and services, and)Tj T* 0.206 Tw (there were a variety of things that China did to react to the de-)Tj T* 0.052 Tw (mands of WTO.)Tj 1 -1.01 TD 0.21 Tw (Another major effort that China made over the first year after)Tj -1 -1.01 TD 0.26 Tw (accession was an effort to train and educate broadly throughout)Tj T* 0.122 Tw (China. It is not only the different agencies and the officials within)Tj T* 0.074 Tw (China, but also the general public, about what it means to be WTO)Tj T* 0.096 Tw (consistent. And those efforts have, without doubt, proved very ben-)Tj 0 -1 TD 0 Tw (eficial.)Tj 1 -1 TD 0.144 Tw (That said, you know, China did undertake to make tariff reduc-)Tj -1 -1 TD 0.124 Tw (tions; for the most part, they came on time. I think, without ques-)Tj T* 0.114 Tw (tion, the tariff climate for U.S. businesses attempting to gain mar-)Tj T* 0.136 Tw (ket access to China has improved significantly since accession. So,)Tj T* 0.154 Tw (for the most part, a lot of the mechanical steps on accession were)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00014)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 56 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R /F20 27 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 58 0 obj << /Length 4964 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (11)Tj -15.344 -2 TD 0.208 Tw (handled without incident. And so although those are not without)Tj 0 -1 TD 0.052 Tw (problems, that is something we can take some comfort in.)Tj 1 -1 TD 0.12 Tw (That said, there are a number of serious problems that you, Mr.)Tj -1 -1 TD 0.156 Tw (Chairman, mentioned, and I will talk a little bit about it in brief.)Tj T* 0.162 Tw (We grouped most of the problems that we saw over the first year)Tj T* 0.262 Tw (into four rough categories. The first one primarily was one that)Tj T* 0.28 Tw (was cross-cutting on transparency. China, by its WTO accession)Tj T* 0.228 Tw (commitments, was required to not only publish laws and regula-)Tj T* 0.072 Tw (tions, but have a more open and transparent process by which they)Tj T* 0.192 Tw (regulated and legislated. And that, I have to say, has been done,)Tj T* 0.054 Tw (in some cases, very well, but, for the most part, very unevenly, and,)Tj T* 0.19 Tw (in some cases, not very well at all. So that is something that we)Tj T* 0.09 Tw (are very concerned as USTR and throughout the administration on)Tj T* 0.162 Tw (this year two after accession and looking forward, is trying to en-)Tj T* 0.102 Tw (sure that China)Tj /F14 1 Tf 7.5379 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.102 Tw (s regulatory process is transparent, that U.S. com-)Tj -7.7419 -1 TD 0.12 Tw (panies and, indeed, all companies, whether they are United States)Tj T* 0.106 Tw (or Chinese, know what they are getting into when they embark on)Tj T* 0.052 Tw (doing business in China.)Tj 1 -1 TD 0.236 Tw (Apart from that systemic concern, there were three major sec-)Tj -1 -1 TD 0.15 Tw (toral issues or areas that we noted problems with. Agriculture, as)Tj T* 0.068 Tw (you noted, was perhaps the most problematic area in the first year.)Tj T* 0.22 Tw (We had a tremendous degree of problems with China)Tj /F14 1 Tf 26.2796 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.22 Tw (s efforts to)Tj -26.4836 -1 TD 0.184 Tw (regulate biotechnology products, which affected our soybean trade)Tj T* 0.106 Tw (to the tune of a billion dollars each year. That was something that)Tj T* 0.078 Tw (was a tremendous concern to us very early after accession and con-)Tj T* (tinues to be not completely resolved, but looks to be better resolved)Tj T* 0.08 Tw (thanks to a great deal of work by not only the USTR and the State)Tj T* 0.134 Tw (Department and Commerce and USDA, but also the White House.)Tj 1 -1 TD 0.286 Tw (Aside from biotechnology, in agriculture there are tremendous)Tj -1 -1 TD 0.21 Tw (problems with China)Tj /F14 1 Tf 10.1249 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.21 Tw (s administration of its tariff rate quota sys-)Tj -10.3288 -1 TD 0.304 Tw (tem. That has, I think, primarily affected the cotton trade this)Tj T* 0.42 Tw (year, but we can see, for other bulk agriculture commodities,)Tj T* 0.11 Tw (whether it is wheat, corn, or others, there are significant problems)Tj T* 0.122 Tw (going forward. It is one of the highest priorities of the administra-)Tj T* 0.052 Tw (tion in terms of our attempts to ensure implementation.)Tj 1 -1 TD 0.15 Tw (Aside from that, and as I said earlier, the tariff system has im-)Tj -1 -1 TD 0.182 Tw (proved dramatically, and tariffs have lowered; but, in their place,)Tj T* 0.198 Tw (non-tariff barriers have sprung up. We have seen, particularly in)Tj T* 0.9 Tw (agriculture, in the implementation of new sanitary and)Tj T* 0.216 Tw (phytosanitary measures and inspection requirements, which have)Tj T* 0.082 Tw (made it very difficult for some of our competitive agricultural prod-)Tj T* 0.098 Tw (ucts to enter into the marketplace. This is something we are work-)Tj T* 0.102 Tw (ing very hard, both in Geneva and with our counterparts at USDA)Tj T* 0.088 Tw (and in the Chinese Ministry of Agriculture and other ministries, to)Tj T* 0.258 Tw (try to improve, and we have had some success. There is, again,)Tj T* 0.052 Tw (much work to be done.)Tj 1 -1 TD 0.162 Tw (On intellectual property rights, it is hard to overstate the prob-)Tj -1 -1 TD 0.274 Tw (lem on IPR in China. It is rampant. It crosses everything from)Tj T* 0.126 Tw (DVDs, like the James Bond DVD, to car parts, to airplane brakes,)Tj T* 0.152 Tw (to practically anything that you could conceivably brand and send)Tj T* 0.282 Tw (out into the marketplace, it is being counterfeited or pirated in)Tj T* 0.19 Tw (China. The good news is that China)Tj /F14 1 Tf 17.6797 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.19 Tw (s central government is very)Tj -17.8837 -1 TD 0.078 Tw (aware of the issues with respect to IPR, very intent on doing some-)Tj T* 0.192 Tw (thing about it. The question is, what can they do and when, and)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00015)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 59 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 61 0 obj << /Length 5450 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (12)Tj -15.344 -2 TD 0.224 Tw (what kind of dent in the marketplace can you make? They have)Tj 0 -1 TD 0.13 Tw (what appears to be a better regulatory process in place and a bet-)Tj T* 0.208 Tw (ter framework of laws to deal with IPR, but, again, the question)Tj T* 0.052 Tw (is enforcement, and that remains the $64,000 question.)Tj 1 -1 TD 0.104 Tw (There is a lack of coordination between the judiciary branch, the)Tj -1 -1 TD 0.252 Tw (administrative branch, and the legislative branch on IPR issues,)Tj T* 0.216 Tw (which really requires a great deal of overhaul, and this is some-)Tj T* 0.244 Tw (thing that we have been pushing pretty hard)Tj /F14 1 Tf 22.4507 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.244 Tw (again, with some)Tj -23.4507 -1 TD 0.144 Tw (progress. It)Tj /F14 1 Tf 5.4209 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.144 Tw (s difficult when you hear from the central government)Tj -5.6249 -1 TD 0.15 Tw (leadership, when they say, )Tj /F14 1 Tf 13.2128 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.15 Tw (Yes, we recognize we have 99 percent)Tj -13.6208 -1 TD 0.224 Tw (piracy rates in some products. We recognize we need to do a lot)Tj T* 0.19 Tw (about this. We are working very hard on it. We need your help.)Tj /F14 1 Tf 31.3746 0 TD 0 Tw ()Tj /F18 1 Tf -31.3746 -1 TD 0.21 Tw (It is difficult when you are facing that kind of lack of pushback.)Tj T* 0.148 Tw (When we at the USTR typically deal with what we consider to be)Tj T* 0.058 Tw (a recalcitrant country on IPR issues, they tend to say, )Tj /F14 1 Tf 25.6926 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.058 Tw (Oh, our IPR)Tj -26.1006 -1 TD 0.082 Tw (is just fine.)Tj /F14 1 Tf 5.2939 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.082 Tw [( China does not say that. They say, )]TJ /F14 1 Tf 17.1597 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.082 Tw (We know we have)Tj -23.2697 -1 TD 0.052 Tw (got lots of problems. We are working hard on it.)Tj /F14 1 Tf 22.4517 0 TD 0 Tw ()Tj /F18 1 Tf -21.4517 -1 TD 0.14 Tw (So I guess the good news is the central government realizes the)Tj -1 -1 TD 0.198 Tw (role of IPR in a mature economy, and we need to make progress)Tj T* 0.196 Tw (at the local level and in terms of getting the deterrent-level pen-)Tj T* 0.052 Tw (alties necessary to prevent IPR violations.)Tj 1 -1 TD 0.204 Tw (On services, another area that Mr. Schriver raised and is, sort)Tj -1 -1 TD 0.11 Tw (of, the fourth major area that we have seen problems in, there are)Tj T* 0.272 Tw (a variety of issues, not least of which is the high capitalization)Tj T* 0.236 Tw (costs for not just financial services, insurance, and banking, and)Tj T* 0.268 Tw (non-bank financing for motor vehicles, et cetera, but throughout)Tj T* 0.062 Tw (China, and almost every sector has high cap rates, and that is real-)Tj T* 0.254 Tw (ly preventing a lot of market access of U.S. firms that may not)Tj T* 0.058 Tw (have the capital or want to invest the capital necessary to build the)Tj T* 0.104 Tw (book of business over time that is required to justify dumping that)Tj T* 0.052 Tw (level of capital into China at the outset.)Tj 1 -1 TD 0.17 Tw (The good news on that is, we are getting some recognition that)Tj -1 -1 TD 0.08 Tw (this is preventing China)Tj /F14 1 Tf 11.4628 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.08 Tw (s growth. We are talking about it in Gene-)Tj -11.6668 -1 TD 0.144 Tw (va, and that is having some effect, but we have a lot of work still)Tj T* 0.052 Tw (to do on that front.)Tj 1 -1 TD 0.058 Tw (Aside from that, there are a variety of other areas in which agen-)Tj -1 -1 TD 0.134 Tw (cies in China that have traditionally performed both a commercial)Tj T* 0.224 Tw (and a regulatory function have, as they have tried to split regu-)Tj T* 0.14 Tw (latory and commercial functions aside, they tend to bleed into one)Tj T* 0.152 Tw (another, and so the competitor of U.S. companies in China is also)Tj T* 0.108 Tw (their regulator. This is something that is particularly noticeable in)Tj T* 0.34 Tw (the express courier area. We have made progress there. China)Tj T* 0.116 Tw (Post, who is the regulator of express couriers, de facto and now de)Tj T* 0.226 Tw (jure, has agreed to, or has been instructed to, separate its regu-)Tj T* 0.318 Tw (latory and commercial functions and have a regulator that has)Tj T* 0.052 Tw (nothing to do with the business side of it.)Tj 1 -1 TD 0.158 Tw (But again, these are areas where we continue to work. We con-)Tj -1 -1 TD 0.124 Tw (tinue to work on every level in government, in the administration.)Tj T* 0.174 Tw (We continue to work with every agency in China. We continue to)Tj T* 0.15 Tw (work with every province and every municipality every chance we)Tj T* 0.052 Tw (get. We will focus on it extensively in Geneva at the WTO.)Tj 1 -1 TD 0.284 Tw (And the good news is, we are making progress. We rarely, if)Tj -1 -1 TD 0.168 Tw (ever, get from China a flat, )Tj /F14 1 Tf 13.7688 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.168 Tw (No, we are not going to do anything)Tj -14.1768 -1 TD 0.062 Tw (about it.)Tj /F14 1 Tf 3.9339 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.062 Tw [( And that is the good news. The bad news is, we still have)]TJ /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00016)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 62 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 64 0 obj << /Length 8179 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (13)Tj -15.344 -2 TD 0.074 Tw (not gotten as far as we need to go, especially in some of our critical)Tj 0 -0.99 TD 0.052 Tw (products that we need to get in for market access purposes.)Tj 1 -0.99 TD 0.314 Tw (Mr. Chairman and members of the committee, thank you for)Tj -1 -0.99 TD 0.052 Tw (your attention, and I look forward to your questions.)Tj 1 -0.99 TD ([The prepared statement of Mr. Freeman follows:])Tj 8 0 0 8 161.12 590.5 Tm 0 Tw (P)Tj 6.4 0 0 6.0958 166.4559 590.5 Tm (REPARED)Tj 8 0 0 8 201.4479 590.5 Tm (S)Tj 6.4 0 0 6.0958 206.4878 590.5 Tm [(TATEMENT)-412.5(OF)]TJ 8 0 0 8 258.9422 590.5 Tm (C)Tj 6.4 0 0 6.0958 264.7181 590.5 Tm (HARLES)Tj 8 0 0 8 294.8524 590.5 Tm (F)Tj 6.4 0 0 6.0958 300.1884 590.5 Tm (REEMAN)Tj 8 0 0 8 329.9292 590.5 Tm 0.0525 Tw (, D)Tj 6.4 0 0 6.0958 341.021 590.5 Tm 0 Tw (EPUTY)Tj 8 0 0 8 366.541 590.5 Tm (A)Tj 6.4 0 0 6.0958 372.3169 590.5 Tm (SSISTANT)Tj 8 0 0 8 408.0321 590.5 Tm 0.0525 Tw (U.S. T)Tj 6.4 0 0 6.0958 432.0197 590.5 Tm 0 Tw (RADE)Tj 8 0 0 8 153.6 582.6 Tm (R)Tj 6.4 0 0 6.0958 159.3759 582.6 Tm (EPRESENTATIVE)Tj 8 0 0 8 216.3806 582.6 Tm 0.0525 Tw (, O)Tj 6.4 0 0 6.0958 227.4725 582.6 Tm 0 Tw [(FFICE)-412.5(OF)-412.5(THE)]TJ 8 0 0 8 279.2452 582.6 Tm 0.0525 Tw (U.S. T)Tj 6.4 0 0 6.0958 303.2329 582.6 Tm 0 Tw (RADE)Tj 8 0 0 8 324.7145 582.6 Tm (R)Tj 6.4 0 0 6.0958 330.4904 582.6 Tm (EPRESENTATIVE)Tj 8 0 0 8 387.4951 582.6 Tm 0.0525 Tw (, W)Tj 6.4 0 0 6.0958 400.2109 582.6 Tm 0 Tw (ASHINGTON)Tj 8 0 0 8 441.4589 582.6 Tm 0.0525 Tw (, DC)Tj -35.8074 -1.6125 TD 0.13 Tw (Thank you for inviting me to appear before you today to discuss the Administra-)Tj -1 -0.9875 TD 0 Tw (tion)Tj /F14 1 Tf 1.815 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.0825 Tw (s perspectives on the United States)Tj /F14 1 Tf 16.7103 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0825 Tw [( trade relationship with the People)]TJ /F14 1 Tf 16.5073 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0825 Tw (s Repub-)Tj -35.6445 -0.9875 TD 0.0525 Tw (lic of China and, in particular, the topic of China)Tj /F14 1 Tf 22.9372 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0525 Tw (s WTO implementation.)Tj 6.4 0 0 6.0958 279.2 540 Tm 0 Tw (INTRODUCTION)Tj 8 0 0 8 155 527.1 Tm 0.0775 Tw (For much of the past two decades, China had been gradually transitioning toward)Tj -1 -0.9875 TD 0.1325 Tw (a market economy from what in the late 1970)Tj /F14 1 Tf 22.1017 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1325 Tw (s was a strict command economy. In)Tj -22.3057 -0.9875 TD 0.245 Tw (acceding to the WTO, China was required by the United States and other WTO)Tj T* 0.225 Tw (members to agree to accelerate this process of market reform in order to comply)Tj T* 0.0575 Tw (with WTO requirements. China)Tj /F14 1 Tf 14.8403 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0575 Tw (s WTO accession agreement embodies a set of exten-)Tj -15.0443 -0.9875 TD 0.09 Tw (sive and far-reaching commitments on the part of China to change its trade regime,)Tj T* 0.0525 Tw (at all levels of government.)Tj 1 -0.9875 TD 0.2475 Tw (Overall, during the first year of its WTO membership, China made significant)Tj -1 -0.9875 TD 0.365 Tw (progress in implementing its WTO commitments, although much is left to do.)Tj T* 0.16 Tw (Progress was made both in making many of the required systemic changes and in)Tj T* 0.25 Tw (implementing specific commitments. At the same time, serious concerns arose in)Tj T* 0.0525 Tw (some areas, where implementation had not yet occurred or was inadequate.)Tj 1 -0.9875 TD 0.135 Tw (In December 2002, USTR submitted a report to Congress detailing China)Tj /F14 1 Tf 35.2435 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.135 Tw (s WTO)Tj -36.4475 -0.9875 TD 0.2375 Tw (compliance efforts, along with the Administration)Tj /F14 1 Tf 24.1701 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.2375 Tw (s corresponding monitoring and)Tj -24.3741 -0.9875 TD 0.0525 Tw (enforcement efforts. Let me give you a brief summary of what we found.)Tj 6.4 0 0 6.0958 254.76 402.6 Tm 0 Tw [(IMPLEMENTATION)-412.5(PROGRESS)]TJ 8 0 0 8 155 389.7 Tm 0.1125 Tw (As expected, the principal focus of China)Tj /F14 1 Tf 19.4707 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1125 Tw (s first year of WTO membership was on)Tj -20.6747 -0.9875 TD 0.06 Tw (its framework of laws and regulations governing trade in goods and services, at both)Tj T* 0.17 Tw (the central and local levels. China)Tj /F14 1 Tf 16.5928 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.17 Tw (s trade ministry, the Ministry of Foreign Trade)Tj -16.7968 -0.9875 TD 0.13 Tw (and Economic Cooperation \(MOFTEC\), reports that the central government has re-)Tj T* 0.0725 Tw (viewed more than 2,500 trade-related laws and regulations for WTO consistency. By)Tj T* 0.0525 Tw (mid-2002, it had reportedly repealed 830 of these laws and regulations and amended)Tj T* 0.0775 Tw (325 more. It had also reportedly drafted and adopted 118 new laws and regulations.)Tj T* 0.1475 Tw (Similar reviews are taking place at the local level, although the local governments)Tj T* 0.0525 Tw (are generally not as far along in their review process.)Tj 1 -0.9875 TD 0.07 Tw (Beginning early in 2002, China also devoted considerable resources to the restruc-)Tj -1 -0.9875 TD 0.135 Tw (turing of the various government ministries and agencies with a role in overseeing)Tj T* 0.06 Tw (trade in goods and services. Some of these changes were mandated by China)Tj /F14 1 Tf 36.0195 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.06 Tw (s acces-)Tj -36.2235 -0.9875 TD 0.1225 Tw (sion agreement, while others were undertaken by China to facilitate its compliance)Tj T* 0.215 Tw (with WTO rules. With the recently concluded National People)Tj /F14 1 Tf 30.2956 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.215 Tw (s Congress, we are)Tj -30.4996 -1 TD 0.0525 Tw (seeing even further restructuring, which should promote WTO compliance.)Tj 1 -1 TD 0.1675 Tw (Another significant focus for China during the past year involved education and)Tj -1 -1 TD 0.1175 Tw (training. China embarked on an extensive campaign to teach central and local gov-)Tj T* 0.08 Tw (ernment officials and state-owned enterprise managers about both the requirements)Tj T* 0.2425 Tw (and the benefits of WTO membership, with the goal of facilitating China)Tj /F14 1 Tf 36.135 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.2425 Tw (s WTO)Tj -36.339 -1 TD 0.155 Tw (compliance. The United States and other WTO members, along with many private)Tj T* 0.105 Tw (sector groups, contributed substantial technical assistance and capacity building re-)Tj T* 0.0525 Tw (sources to this effort.)Tj 1 -1 TD 0.1425 Tw (As a general matter, China took positive steps to implement many of its specific)Tj -1 -1 TD 0.14 Tw (WTO commitments during the past year. It made required tariff reductions, to the)Tj T* 0.06 Tw (benefit of many U.S. industries. China also began the process of removing numerous)Tj T* 0.125 Tw (non-tariff trade barriers, and it continued to improve its standards regime. For the)Tj T* 0.1825 Tw (most part, these steps were managed without serious incident, and market access)Tj T* 0.0925 Tw (for U.S. products in the affected sectors has generally improved. Although not with-)Tj T* 0.1225 Tw (out problems, China also took the necessary legal steps to allow for increased mar-)Tj T* 0.0525 Tw (ket access for foreign service suppliers in a variety of sectors.)Tj 6.4 0 0 6.0958 253.88 145 Tm 0 Tw [(IMPLEMENTATION)-412.5(CONCERNS)]TJ 8 0 0 8 155 132 Tm 0.1575 Tw (While the efforts of China)Tj /F14 1 Tf 12.5738 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1575 Tw (s leadership to implement China)Tj /F14 1 Tf 15.7428 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1575 Tw (s WTO commitments)Tj -29.7246 -1 TD 0.12 Tw (should be recognized, the Administration also found a number of causes for serious)Tj T* 0.0525 Tw (concern during China)Tj /F14 1 Tf 10.1218 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0525 Tw (s first year of WTO membership.)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00017)-1076.9(Fmt 6633)-1076.9(Sfmt 6621)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 65 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 67 0 obj << /Length 7302 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (14)Tj 8 0 0 8 155 648 Tm 0.11 Tw (One area of cross-cutting concern involved transparency. In particular, China im-)Tj -1 -0.9875 TD 0.0975 Tw (plemented its commitment to greater transparency in the adoption and operation of)Tj T* (new laws and regulations unevenly at best. While some ministries and agencies did)Tj T* 0.19 Tw (take steps to improve opportunities for public comment on draft laws and regula-)Tj T* 0.2575 Tw (tions, and to provide appropriate WTO enquiry points, the Administration found)Tj T* 0 Tw (China)Tj /F14 1 Tf 2.815 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.0675 Tw (s overall effort to be plagued by uncertainty and a lack of uniformity. The Ad-)Tj -3.019 -0.9875 TD 0.165 Tw (ministration is committed to seeking improvements in China)Tj /F14 1 Tf 29.3246 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.165 Tw (s efforts in this area.)Tj -28.5286 -0.9875 TD 0.22 Tw (Apart from this systemic concern, three other areas generated significant prob-)Tj -1 -0.9875 TD 0.1325 Tw (lems and warrant continued U.S. scrutiny)Tj /F14 1 Tf 20.1082 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.1325 Tw (agriculture, intellectual property rights)Tj -21.1082 -0.9875 TD 0.0525 Tw (and services.)Tj 1 -0.9875 TD 0.2175 Tw (The area of agriculture proved to be especially contentious between the United)Tj -1 -0.9875 TD 0.14 Tw (States and China. While concerns over market access for U.S. agriculture products)Tj T* 0.17 Tw (are not unique to China, particularly serious problems were encountered on many)Tj T* 0.165 Tw (fronts, including China)Tj /F14 1 Tf 11.0518 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.165 Tw (s regulation of agricultural goods made with biotechnology,)Tj -11.2558 -0.9875 TD 0.2075 Tw (the administration of China)Tj /F14 1 Tf 13.5313 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.2075 Tw (s tariff-rate quota \(TRQ\) system for bulk agricultural)Tj -13.7353 -0.9875 TD 0.0825 Tw (commodities, the application of sanitary and phytosanitary measures and inspection)Tj T* 0.12 Tw (requirements. The United States and China were able to make progress toward re-)Tj T* 0.2675 Tw (solving some of these problems, particularly with regard to biotechnology. Other)Tj T* 0.1175 Tw (problems remain unresolved, however, with the most troublesome being China)Tj /F14 1 Tf 37.4309 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1175 Tw (s in-)Tj -37.6349 -0.9875 TD 0.0525 Tw (adequate implementation of its TRQ commitments.)Tj 1 -0.9875 TD 0.17 Tw (In the area of intellectual property rights \(IPR\), China did make significant im-)Tj -1 -0.9875 TD 0.105 Tw (provements to its framework of laws and regulations. However, the lack of effective)Tj T* 0.11 Tw (IPR enforcement remained a major challenge. If significant improvements are to be)Tj T* 0.0575 Tw (achieved on this front, China will have to devote considerable resources and political)Tj T* 0.1125 Tw (will to this problem, and there will continue to be a need for sustained efforts from)Tj T* 0.0525 Tw (the United States and other WTO members.)Tj 1 -0.9875 TD 0.305 Tw (Meanwhile, concerns arose in many services sectors, principally due to trans-)Tj -1 -0.9875 TD 0.1675 Tw (parency problems and China)Tj /F14 1 Tf 13.7993 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1675 Tw (s use of prudential requirements that exceeded inter-)Tj -14.0033 -0.9875 TD 0.2175 Tw (national norms. Progress was made in 2002 toward resolving these concerns, but)Tj T* 0.0525 Tw (much work remains to be done.)Tj 1 -0.9875 TD 0.2 Tw (In our experience, China)Tj /F14 1 Tf 12.0248 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.2 Tw (s compliance problems are occasionally generated by a)Tj -13.2288 -1 TD 0.11 Tw (lack of coordination among relevant ministries in the Chinese government. Another)Tj T* 0.2075 Tw (source of compliance problems has been a lack of effective or uniform application)Tj T* 0.1725 Tw (of China)Tj /F14 1 Tf 4.0984 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1725 Tw (s WTO commitments at local and provincial levels. China is taking steps)Tj -4.3024 -1 TD 0.195 Tw (to address both of these concerns, through more effective inter-ministerial mecha-)Tj T* 0.08 Tw (nisms at the national level, and through a more concerted effort to reinforce the im-)Tj T* 0.085 Tw (portance of WTO-consistency with sub-national authorities. In other cases, however,)Tj T* 0.28 Tw (compliance problems involve entrenched domestic Chinese interests that may be)Tj T* 0.0525 Tw (seeking to minimize their exposure to foreign competition.)Tj 1 -1 TD 0.1525 Tw (When confronted with compliance problems in 2002, the Administration used all)Tj -1 -1 TD 0.1375 Tw (available and appropriate means to obtain China)Tj /F14 1 Tf 23.5157 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1375 Tw (s full compliance, including inter-)Tj -23.7197 -1 TD 0.06 Tw (vention at the highest levels of government. The Administration worked closely with)Tj T* 0.13 Tw (the affected U.S. industries on compliance concerns, and utilized bilateral channels)Tj T* 0.08 Tw (through multiple agencies, at all levels, to press these concerns. The Administration)Tj T* 0.1875 Tw (also initiated a regular dialogue on compliance issues between USTR and China)Tj /F14 1 Tf 39.0869 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (s)Tj -39.2909 -1 TD 0.2125 Tw (lead trade agency, MOFTEC, with the goal of bringing all involved Chinese min-)Tj T* 0.1925 Tw (istries and agencies together when the resolution of particular problems warrants)Tj T* 0.14 Tw (it. Where possible, the Administration also multilateralized its enforcement efforts,)Tj T* 0.2725 Tw (by working with like-minded WTO members on an ad hoc basis, whenever par-)Tj T* 0.0525 Tw (ticular issues have had an adverse impact beyond the United States.)Tj 6.4 0 0 6.0958 283.12 244.9999 Tm 0 Tw (CONCLUSION)Tj 8 0 0 8 155 231.9999 Tm 0.24 Tw (Mr. Chairman and members of the Subcommittee, thank you for providing me)Tj -1 -1 TD 0.0525 Tw (with the opportunity to testify. I look forward to answering your questions.)Tj 10 0 0 10 157 205.9999 Tm 0.098 Tw (Senator B)Tj 8 0 0 7.6194 204.2793 205.9999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 254.1985 205.9999 Tm 0.098 Tw (. I rarely tell my mother-in-law a flat no, ei-)Tj -10.7199 -1 TD 0.104 Tw (ther; and yet there are a lot of things that she suggests that I just)Tj T* 0.052 Tw (somehow do not get done.)Tj 1 -1 TD 0.278 Tw (I am not suggesting China is my mother-in-law or yours, but)Tj -1 -1 TD 0.146 Tw (when you were talking about the IPR, and this has been an issue)Tj T* 0.144 Tw (around here for a long period of time)Tj /F14 1 Tf 17.9337 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.144 Tw (you know, I am in Beijing,)Tj -18.9337 -1 TD 0.126 Tw (step outside of the hotel, walk about two blocks away, and several)Tj T* 0.13 Tw (people are trying to hawk this latest James Bond movie to me. At)Tj T* 0.194 Tw (the same time, I go to a restaurant)Tj /F14 1 Tf 17.4348 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.194 Tw (they double concertina wire)Tj -18.4347 -1 TD 0.218 Tw (all the embassies, put extra troops around to make sure that no)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00018)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 68 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 70 0 obj << /Length 5318 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (15)Tj -15.344 -2 TD 0.116 Tw (North Korean refugees make it into the embassies to get out to be)Tj 0 -1 TD 0.172 Tw (able to go to South Korea or somewhere else. And where there is)Tj T* 0.236 Tw (a will, there is a way; and where there is not a will, no way is)Tj T* 0.11 Tw (found. And it seems like on the IPR issues, China has consistently)Tj T* 0.16 Tw (found no way to do this over an extended period of time, to great)Tj T* 0.238 Tw (harm to the United States and to businesses and, I think, long-)Tj T* 0.132 Tw (term harm to China, as well. But I would hope we could put a lot)Tj T* 0.052 Tw (of pressure on them about this.)Tj 1 -1 TD 0.258 Tw (Can I ask you, how would you grade, Mr. Freeman, this past)Tj -1 -1 TD 0 Tw (year)Tj /F14 1 Tf 2.037 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.186 Tw (s compliance with their WTO agreement, China? If you gave)Tj -2.241 -1 TD 0.07 Tw (them a letter grade, how would you grade their compliance overall?)Tj 1 -1 TD 0.182 Tw (Mr. F)Tj 8 0 0 7.6194 184.9296 535.9999 Tm 0 Tw (REEMAN)Tj 10 0 0 10 222.105 535.9999 Tm 0.182 Tw (. I cannot really give them a grade. It is, I would)Tj -7.5105 -1 TD 0.052 Tw (say, pass, if that is)Tj /F14 1 Tf 8.8589 0 TD 0 Tw ()Tj /F18 1 Tf -7.8589 -1 TD 0.052 Tw (Senator B)Tj 8 0 0 7.6194 203.8193 515.9999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 253.7385 515.9999 Tm 0.052 Tw (. You are passing, or they are passing?)Tj -9.6739 -1 TD 0.132 Tw (Mr. F)Tj 8 0 0 7.6194 184.4296 505.9999 Tm 0 Tw (REEMAN)Tj 10 0 0 10 221.605 505.9999 Tm 0.132 Tw (. I was hoping to get away with that one, but)Tj /F14 1 Tf 21.9547 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD (no,)Tj -30.4152 -1 TD 0.25 Tw (I think, in general, they have passed because of the work to be)Tj T* 0.264 Tw (done in terms of putting into play the framework of laws. That)Tj T* 0.17 Tw (really was not an insubstantial task. And in our view, they did a)Tj T* 0.246 Tw (tremendous amount over the first year. Really the rubber meets)Tj T* 0.066 Tw (the road in year two and three to see whether these laws and regu-)Tj T* 0.108 Tw (lations that they have put in effect are effective. And in our sense,)Tj T* 0.094 Tw (they are working on them, even on IPR, but, you know, we are not)Tj T* 0.052 Tw (there yet.)Tj 1 -1 TD (Senator B)Tj 8 0 0 7.6194 203.8193 415.9999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 253.7385 415.9999 Tm 0.052 Tw (. So passing, but no better than that?)Tj -9.6739 -1 TD 0.09 Tw (Mr. F)Tj 8 0 0 7.6194 184.0096 405.9999 Tm 0 Tw (REEMAN)Tj 10 0 0 10 221.185 405.9999 Tm 0.09 Tw (. I would hesitate to give them better than that. To)Tj -7.4185 -1 TD 0.224 Tw (be honest, it is tough to come out with one solid grade. I mean,)Tj T* 0.278 Tw (they have taken something like 400 courses, and in some cases)Tj T* 0.198 Tw (they have clearly failed, in some cases they have done very well.)Tj T* 0.114 Tw (I have not averaged it out yet, but I am going to saying it is pass-)Tj T* 0 Tw (ing.)Tj 1 -1 TD 0.052 Tw (Senator B)Tj 8 0 0 7.6194 203.8193 345.9999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 253.7385 345.9999 Tm 0.052 Tw (. How are they doing on agriculture?)Tj -9.6739 -1 TD 0.216 Tw (Mr. F)Tj 8 0 0 7.6194 185.2696 335.9999 Tm 0 Tw (REEMAN)Tj 10 0 0 10 222.445 335.9999 Tm 0.216 Tw (. On agriculture, I have to say in our view, their)Tj -7.5445 -1 TD 0.172 Tw (passing grade is in the balance, to be quite frank. Market access,)Tj T* 0.104 Tw (specifically under the TRQ system, has been a real problem. There)Tj T* 0.054 Tw (seems to be some genuine attempts by different agencies within the)Tj T* 0.158 Tw (Chinese Government to maintain the kind of non-market environ-)Tj T* 0.152 Tw (ment for agriculture that they have exercised in the past. So that)Tj T* 0.052 Tw (is an area that we are watching extremely closely.)Tj 1 -1 TD 0.194 Tw (Senator B)Tj 8 0 0 7.6194 205.2393 265.9999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 255.1585 265.9999 Tm 0.194 Tw (. Bertie, let us run the clock at 7 minutes.)Tj -10.8159 -1 TD 0.148 Tw (And we have got a vote that is coming up sometime, so I want to)Tj T* 0.138 Tw (make sure that Senator Allen has a chance to ask some questions)Tj T* 0.144 Tw (before we go over. And we will take a short recess and then come)Tj T* 0 Tw (back.)Tj 1 -1 TD 0.168 Tw (I am concerned that we may not push China quickly enough to)Tj -1 -1 TD 0.18 Tw (comply; that in our history we, I think, sometimes have let these)Tj T* 0.13 Tw (trade issues simmer for a long period of time before we finally de-)Tj T* 0.114 Tw (cide, OK, we are going to need to bring a WTO case against them.)Tj T* 0.124 Tw (And I would urge you not to do that in this case. This is too large)Tj T* 0.304 Tw (of a market; the trade between the two countries, $150 billion,)Tj T* 0.182 Tw (most of that coming this way. I do not know what the imbalance)Tj T* 0.126 Tw (is of the export/import, but I think $120 billion of that is probably)Tj T* 0.15 Tw (coming this way and $30 billion back the other way. You can cor-)Tj T* 0.124 Tw (rect me on the number. Do you know what it exactly is, Mr. Free-)Tj T* 0 Tw (man?)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00019)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 71 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 73 0 obj << /Length 4947 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (16)Tj -14.344 -2 TD 0.052 Tw (Mr. F)Tj 8 0 0 7.6194 183.6296 646 Tm 0 Tw (REEMAN)Tj 10 0 0 10 220.805 646 Tm 0.052 Tw (. That is about right.)Tj -6.3805 -1 TD 0.232 Tw (Senator B)Tj 8 0 0 7.6194 205.6193 636 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 255.5385 636 Tm 0.232 Tw (. We need to be able to get access to that)Tj -10.8539 -1 TD 0.082 Tw (market. And the more we push them, the earlier, I think, the more)Tj T* 0.088 Tw (likely they are going to be to comply across the board, because this)Tj T* 0.052 Tw (is a large trading relationship back and forth.)Tj 1 -1 TD 0.19 Tw (I would ask you, though, as well, I hope we do not subject our)Tj -1 -1 TD 0.128 Tw (other interests in Chinese diplomacy, Mr. Schriver, and subjugate,)Tj T* 0.08 Tw (then, our economic issues here, as well. You have noted that China)Tj T* 0.14 Tw (has been a partner on a number of issues, and concerning on oth-)Tj T* 0.066 Tw (ers, whether it is dealing with Iraq, North Korea, nuclear prolifera-)Tj T* 0.052 Tw (tion on the Korean Peninsula, we have got a litany of things.)Tj 1 -1 TD 0.218 Tw (I would ask you, has China been cooperating as much as they)Tj -1 -1 TD 0.184 Tw (can with the United States on the North Korean issue? They are)Tj T* 0.144 Tw (the closest partner with North Korea. They have a generally open)Tj T* 0.226 Tw (border with North Korea. They have been sending refugees back)Tj T* 0.25 Tw (into North Korea against the agreements that the Chinese have)Tj T* 0.326 Tw (signed. Have they truly been working with us on dealing with)Tj T* 0.052 Tw (North Korea?)Tj 1 -1 TD 0.194 Tw (Mr. S)Tj 8 0 0 7.6194 184.6796 465.9999 Tm 0 Tw (CHRIVER)Tj 10 0 0 10 223.479 465.9999 Tm 0.194 Tw (. Well, I think we have been very frustrated, pri-)Tj -7.6479 -1 TD 0.108 Tw (marily with the North Koreans and their provocative acts, and the)Tj T* 0.162 Tw (Chinese share some of our concerns related to that situation. You)Tj T* 0.184 Tw (fall perhaps short of saying they share common interests because)Tj T* 0.132 Tw (when we start to talk about what to do about it, there is some di-)Tj T* 0.216 Tw (vergence. And it is difficult to answer your question in a precise)Tj T* 0.166 Tw (way, because we do not always know what the Chinese are doing)Tj T* 0.052 Tw (diplomatically behind the scenes with the North Koreans.)Tj 1 -1 TD 0.204 Tw (I think they are sufficiently concerned about the situation that)Tj -1 -1 TD 0.21 Tw (they would like to move it in a positive direction, not as a favor)Tj T* 0.13 Tw (to us, or not because they see this situation just as we do, but be-)Tj T* 0.07 Tw (cause they recognize it is getting extremely serious. I think the air-)Tj T* 0.076 Tw (craft intercept really caught their attention. So it is difficult to say,)Tj T* 0.266 Tw (are they doing enough? Could they do more, because we do not)Tj T* 0.052 Tw (have a hundred-percent transparency on what they are doing.)Tj 1 -1 TD 0.204 Tw (The issue of refugees is a very serious issue to us. It is raised)Tj -1 -1 TD 0.17 Tw (in virtually every setting now when North Korea and the nuclear)Tj T* 0.104 Tw (issue is discussed. I just returned from Beijing. I raised it in every)Tj T* 0.126 Tw (meeting I had, and we note to them that it is important that they)Tj T* 0.16 Tw (meet their commitments. After all, they have signed international)Tj T* 0.066 Tw (protocols saying that they will cooperate with the U.N. Commission)Tj T* 0.18 Tw (on High Refugees to screen these people and find out which ones)Tj T* 0.356 Tw (have legitimate concerns about returning to North Korea, and,)Tj T* 0.2 Tw (frankly, that would probably be just about all of them, given the)Tj T* 0.124 Tw (conditions there. And we have told them that this is an issue that)Tj T* 0 Tw (they)Tj /F14 1 Tf 2.037 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.054 Tw (re not going to get a pass on. And frankly, Mr. Chairman, your)Tj -2.241 -1 TD 0.162 Tw (leadership and the leadership of others who have heightened sen-)Tj T* 0.212 Tw (sitivities to this issue is helpful to us in this regard. China does)Tj T* 0.124 Tw (care about their international reputation and how they are viewed)Tj T* 0.296 Tw (publicly, and they know that people who are committed to this)Tj T* 0.052 Tw (issue will not let it go.)Tj 1 -1 TD 0.152 Tw (So we need to focus on, No. 1, making sure that we can get as-)Tj -1 -1 TD 0.21 Tw (sistance to the people who do make it across the border. We are)Tj T* 0.108 Tw (working with NGOs in that area to provide assistance. We need to)Tj T* 0.094 Tw (make sure that China stops the forced repatriation, sending people)Tj T* 0.164 Tw (back to those horrible conditions. And we need to make sure that)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00020)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 74 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 76 0 obj << /Length 5158 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (17)Tj -15.344 -2 TD 0.19 Tw (China cooperates with the U.N. High Commission on Refugees to)Tj 0 -1 TD 0.052 Tw (have a process in place to screen these people and help them.)Tj 1 -1 TD 0.128 Tw (The way I have put it, and others in the leadership have put it,)Tj -1 -1 TD 0.066 Tw (out of all the things we are working on with China, some are really)Tj T* 0.082 Tw (in the hard basket. This one is not in the hard basket. If they real-)Tj T* 0.112 Tw (ly believe that these are economic migrants and people are coming)Tj T* 0.246 Tw (across the border for economic reasons or to settle, then greater)Tj T* 0.062 Tw (transparency through the High Commission on Refugees would cer-)Tj T* 0.214 Tw (tainly reveal that. And so the way we have put it is, this is not)Tj T* 0.052 Tw (a hard one to help yourselves on.)Tj 1 -1 TD 0.29 Tw (Senator B)Tj 8 0 0 7.6194 206.1993 545.9999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 256.1185 545.9999 Tm 0.29 Tw (. Senator Allen, thank you very much for)Tj -10.9119 -1 TD 0.052 Tw (joining us.)Tj 1 -1 TD 0.162 Tw (Senator A)Tj 8 0 0 7.6194 204.9193 525.9999 Tm 0 Tw (LLEN)Tj 10 0 0 10 227.8869 525.9999 Tm 0.162 Tw (. Thank you, Mr. Chairman. Thank you for hold-)Tj -8.0887 -1 TD 0.126 Tw (ing this hearing on this very important matter to trade opportuni-)Tj T* 0.158 Tw (ties for American businesses, consumers, as well hopeful improve-)Tj T* 0.206 Tw (ments in human rights for the people of the People)Tj /F14 1 Tf 25.2996 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.206 Tw (s Republic of)Tj -25.5036 -1 TD 0 Tw (China.)Tj 1 -1 TD 0.076 Tw (I was listening to your questions, and they are many of the same)Tj -1 -1 TD 0.078 Tw (concerns I have. Overall, I would say China, in listening to the tes-)Tj T* 0.132 Tw (timony here and reading the witnesses)Tj /F14 1 Tf 18.6057 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.132 Tw [( testimony, compared to 20)]TJ -18.8097 -1 TD 0.214 Tw (years ago, has improved. But if you give it a grading scale, it is)Tj T* 0.194 Tw (a pretty low grading curve. It might be called )Tj /F14 1 Tf 22.9147 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.194 Tw (social promotion.)Tj /F14 1 Tf 8.0649 0 TD 0 Tw ()Tj /F18 1 Tf -30.3876 -1 TD 0.124 Tw (And then there are some areas where they have passing grades,)Tj -1 -1 TD 0.092 Tw (and there are others that I think are clear failures, even if you are)Tj T* 0.052 Tw (a very lenient teacher.)Tj 1 -1 TD 0.116 Tw (The area of the North Korean refugees, that is an abject failure.)Tj -1 -1 TD 0.092 Tw (These people are leaving a tyrannical dictatorship, and if there are)Tj T* 0.096 Tw (countries, whether it is the United States or South Korea, that are)Tj T* 0.162 Tw (willing to take those refugees, allow them to do so. Sending them)Tj T* 0.178 Tw (back means they will be killed or they are going to be tormented)Tj T* 0.052 Tw (and imprisoned. And that is an abject failure.)Tj 1 -1 TD 0.166 Tw (I am glad to hear Mr. Freeman talk about intellectual property)Tj -1 -1 TD 0.084 Tw (rights. That is an abject failure. Ninety percent piracy rates, under)Tj T* 0.076 Tw (the most lenient of all grading curves, would be a failure, and I en-)Tj T* 0.152 Tw (courage you to keep working. And I know there will be other wit-)Tj T* 0.226 Tw (nesses coming forward in later panels who will be addressing it,)Tj T* 0.086 Tw (and it is important for you all to ride herd on that. It is important.)Tj T* 0.13 Tw (This is property rights. It is not just affecting businesses; it is the)Tj T* 0.16 Tw (artists, it affects creation, the research, the development, whether)Tj T* 0.056 Tw (that is in business software, whether that is in the recording indus-)Tj T* 0.052 Tw (try, regardless, those are property rights.)Tj 1 -1 TD 0.184 Tw (One other area where I see a failure, which was not addressed)Tj -1 -1 TD 0.114 Tw (by either of the two gentlemen here, which I wish to bring to your)Tj T* 0.172 Tw (attention, has to do with the WTO and semiconductor chips. As I)Tj T* (understand it, they put a 17-percent value-added tax on all semi-)Tj T* 0.092 Tw (conductor chips. In the event, though, that the chips are fabricated)Tj T* 0.058 Tw (within the People)Tj /F14 1 Tf 8.2469 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.058 Tw (s Republic of China, instead of paying 17 percent,)Tj -8.4509 -1 TD 0.164 Tw (I believe they get an 11 percent rebate, so they pay 6 percent. In)Tj T* 0.108 Tw (the event that they are also designed and fabricated within China,)Tj T* 0.124 Tw (they get a 14 percent rebate, or, in other words, 3 percent. To me,)Tj T* 0.052 Tw (this seems to be a clear violation of WTO agreements.)Tj 1 -1 TD 0.088 Tw (The point is, is that if you are going to have fair trade, and I am)Tj -1 -1 TD 0.122 Tw (one who, with a great deal of trepidation, worry, concern, so forth,)Tj T* 0.06 Tw (did vote for normal trading relations with China, figuring that with)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00021)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 77 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 80 0 obj << /Length 5190 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (18)Tj -15.344 -2 TD 0.16 Tw (technology more people in China will be able to disseminate their)Tj 0 -1.02 TD 0.06 Tw (ideas and have their own independent thought not dictated to them)Tj T* 0.184 Tw (by a government. Now, I understand they try to curtail that, but)Tj T* 0.256 Tw (ingenuity and free minds and human instincts of hating restric-)Tj T* 0.126 Tw (tions and limits, I figure the creative nature of technology will by-)Tj T* 0.27 Tw (pass the bureaucrats and the pack-mule mentality of those who)Tj T* 0.052 Tw (want to control thought and ideas.)Tj 1 -1.02 TD 0.122 Tw (So when they start doing this with semiconductors, what do you)Tj -1 -1.02 TD 0.148 Tw (all intend to do about what seems to me to be a clear violation of)Tj T* 0.364 Tw (WTO rules, insofar as treating semiconductor chips, no matter)Tj T* 0.214 Tw (where they are fabricated, whether they are fabricated in China,)Tj T* 0.254 Tw (the United States, Taiwan, Korea, what do you all intend to do)Tj T* 0.12 Tw (about this? And I will be writing, once again, Ambassador Zoellick)Tj T* (on this, and I know other Members on the House side, on a bipar-)Tj T* 0.124 Tw (tisan basis, have a great deal of concern of this discriminatory tax)Tj T* 0 Tw (treatment.)Tj 1 -1.02 TD 0.052 Tw (Mr. Freeman, I will let you, since you are the grader.)Tj T* 0.146 Tw (Mr. F)Tj 8 0 0 7.6194 184.5696 472.6 Tm 0 Tw (REEMAN)Tj 10 0 0 10 221.745 472.6 Tm 0.146 Tw (. I am not going to give them a grade on this one.)Tj -7.4745 -1.02 TD 0.114 Tw (We have started looking at this issue pretty directly recently. This)Tj T* 0.19 Tw (is still a new issue for us. I tend to agree with you that, at first)Tj T* 0.18 Tw (blush, there does not seem to be any rationale for it according to)Tj T* 0.246 Tw (WTO commitments. But we are looking at it. We have raised it)Tj T* 0.082 Tw (with the Chinese. We have not had a tremendous degree of success)Tj T* 0.17 Tw (in what we have)Tj /F14 1 Tf 8.0859 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.17 Tw (in terms of getting to acknowledge that there)Tj /F14 1 Tf 22.0437 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (s)Tj -31.3335 -1.02 TD 0.17 Tw (a problem yet, although they have said, )Tj /F14 1 Tf 19.7307 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.17 Tw (Oh, well, look at this in)Tj -20.1387 -1.02 TD 0.052 Tw (the WTO context.)Tj /F14 1 Tf 8.2339 0 TD 0 Tw ()Tj /F18 1 Tf -7.2339 -1.02 TD 0.202 Tw (You know, our sense is that there is a broad use of the value-)Tj -1 -1.02 TD 0.116 Tw (added tax system to try to encourage different industries to set up)Tj T* 0.15 Tw (shop in China. If they are going to use it in this manner, though,)Tj T* 0.27 Tw (obviously this raises WTO issues. We are looking at this exten-)Tj T* 0.158 Tw (sively, and I can get you more information as we, sort of, develop)Tj T* 0.052 Tw (a final position.)Tj 1 -1.02 TD 0.118 Tw (But I would strongly urge you, at the same time as you write to)Tj -1 -1.02 TD 0.114 Tw (Ambassador Zoellick, to copy our friends in China on this, because)Tj T* 0.052 Tw (they need to hear directly from the U.S. Congress that this is some-)Tj T* 0.162 Tw (thing that is of concern not just to the pencil-necks in USTR, but)Tj T* 0.052 Tw (to other folks in the)Tj /F14 1 Tf 9.2829 0 TD 0 Tw ()Tj /F18 1 Tf -8.2829 -1.02 TD 0.064 Tw (Senator B)Tj 8 0 0 7.6194 203.9393 268.6 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 253.8585 268.6 Tm 0.064 Tw (. Senator Allen, if I could, just really quick)Tj /F14 1 Tf 20.1067 0 TD 0 Tw ()Tj /F18 1 Tf -30.7926 -1.02 TD 0.214 Tw (we have been hit with a vote at 3:10. Why do you not go ahead)Tj T* 0.124 Tw (with your questions, and then we will go to Senator Corzine. I am)Tj T* 0.204 Tw (going to try to run over and vote. I can get back before it closes)Tj T* 0.158 Tw (down. If I am not able to, Senator Corzine will put us into recess)Tj T* 0.052 Tw (briefly and then I will be right back.)Tj 1 -1.02 TD 0.184 Tw (Senator A)Tj 8 0 0 7.6194 205.1393 207.4 Tm 0 Tw (LLEN)Tj 10 0 0 10 232.7269 207.4 Tm 0.184 Tw ([presiding]. I will just followup)Tj /F14 1 Tf 14.9398 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.184 Tw (thank you, Mr.)Tj -24.5125 -1.02 TD 0 Tw (Chairman)Tj /F14 1 Tf 4.7039 0 TD ()Tj /F18 1 Tf 1 0 TD 0.188 Tw (follow up, but yes I will copy them. You could under-)Tj -5.7039 -1.02 TD 0.078 Tw (stand why they are doing it. They want to favor those that are fab-)Tj T* 0.216 Tw (ricated and add a favoritism to those that are designed and fab-)Tj T* 0.066 Tw (ricated within China. However, that is not the way that WTO rules)Tj T* 0.194 Tw (operate. I guarantee you if we were doing something like that in)Tj 0 -1.01 TD 0.222 Tw (this country, they would be pretty hard on us maybe not China,)Tj T* 0.12 Tw (but other countries. So I think it is important that if we are going)Tj T* 0.212 Tw (to have faith in these organizations in these countries, that they)Tj T* 0.052 Tw (live up to their agreements.)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00022)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 81 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 83 0 obj << /Length 5239 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (19)Tj -14.344 -2 TD 0.08 Tw (They have made progress. I do not want to just focus on the neg-)Tj -1 -1 TD 0.174 Tw (ative. China has made progress. It is better than it was 10 years)Tj T* 0.176 Tw (ago, 20 years, and significantly better than it was 30 or 40 years)Tj T* 0.182 Tw (ago, and I do think engagement is a good idea. But nevertheless,)Tj T* 0.278 Tw (there is a great deal of improvement that needs to be made in)Tj T* 0.262 Tw (semiconductors and intellectual property, as well as a few other)Tj T* 0.052 Tw (areas of human rights.)Tj 1 -1 TD 0.084 Tw (I thank you. I am going to turn it over to my compatriot and col-)Tj -1 -1 TD 0.122 Tw (league and counterpart and everything, Senator Corzine, I have to)Tj T* 0.186 Tw (vote, on trying to get more jobs and energy independence, on the)Tj T* 0 Tw (floor.)Tj 1 -1 TD (Thanks.)Tj T* 0.23 Tw (Senator C)Tj 8 0 0 7.6194 205.5993 525.9999 Tm 0 Tw (ORZINE)Tj 10 0 0 10 243.1188 525.9999 Tm 0.23 Tw ([presiding]. Senator Allen, I am glad you are)Tj -9.6119 -1 TD 0.192 Tw (not grading my efforts in some of my outside activities in DSCC.)Tj 1 -1 TD 0.066 Tw (I think this is a truly important topic to be discussing, and some-)Tj -1 -1 TD 0.21 Tw (times with all the other elements that are challenging us on the)Tj T* 0.286 Tw (international front, we lose track of)Tj /F14 1 Tf 17.8018 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.286 Tw (probably America)Tj /F14 1 Tf 8.4719 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.286 Tw (s biggest)Tj -27.4776 -1 TD 0.132 Tw (challenge is its relationship with China if you look at it in a long-)Tj T* 0.162 Tw (term perspective)Tj /F14 1 Tf 7.9019 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.162 Tw (a great nation, a great culture that certainly is)Tj -8.9019 -1 TD 0.38 Tw (advancing and positively competes in many ways and some)Tj /F14 1 Tf 30.3956 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD (I)Tj -31.3956 -1 TD 0.052 Tw (worry about whether it is always positive.)Tj 1 -1 TD 0.198 Tw (I really have two questions. One has to do with a general geo-)Tj -1 -1 TD 0.284 Tw (political situation today. We saw the Duma in Russia decide to)Tj T* 0.134 Tw (withhold consideration of the Moscow Treaty, a treaty that passed)Tj T* 0.216 Tw (here 100 to 0. Are there political actions that have been an out-)Tj T* 0.146 Tw (growth of some of the debate with regard to the potential for con-)Tj T* 0.154 Tw (flict in Iraq, looks quite imminent, in our relationship with China)Tj T* 0.062 Tw (that have been brought forward? And I apologize if you have talked)Tj T* (about it in your opening statements, but I have not)Tj /F14 1 Tf 24.1356 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.062 Tw (I would be cu-)Tj -25.1356 -1 TD 0.052 Tw (rious if you could respond.)Tj 1 -1 TD 0.242 Tw (Mr. S)Tj 8 0 0 7.6194 185.1596 345.9999 Tm 0 Tw (CHRIVER)Tj 10 0 0 10 223.959 345.9999 Tm 0.242 Tw (. If you are asking about something that is very)Tj -7.6959 -1 TD 0.21 Tw (similar to that kind of move by Russia to withhold consideration)Tj T* 0.194 Tw (of the treaty, I am not aware of any moves by China that would)Tj T* 0.068 Tw (fall into that category. They voted in favor of U.N. Security Council)Tj T* 0.128 Tw (Resolution 1441. They have consistently said Iraq needs to comply)Tj T* 0.106 Tw (with that resolution, as well as all previous resolutions. They have)Tj T* 0.066 Tw (urged Iraq to disarm and to cooperate. However, they have publicly)Tj T* 0.052 Tw (said they are not in favor of the use of force.)Tj 1 -1 TD 0.12 Tw (So although they would fall into the camp of wanting more time)Tj -1 -1 TD 0.092 Tw (for the inspectors, they, in the end, do not have any great affection)Tj T* 0.146 Tw (for Saddam Hussein, are not particularly interested in seeing him)Tj T* 0.098 Tw (stay around on the scene. So they have indicated that they are not)Tj T* 0.196 Tw (to be an obstacle to us in this endeavor, and that is how they)Tj /F14 1 Tf 30.5536 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (ve)Tj -30.7576 -1 TD 0.052 Tw (approached it.)Tj 1 -1 TD 0.164 Tw (So I am not aware of any moves of retribution or anything like)Tj -1 -1 TD 0 Tw (that.)Tj 1 -1 TD 0.056 Tw (Senator C)Tj 8 0 0 7.6194 203.8593 185.9999 Tm 0 Tw (ORZINE)Tj 10 0 0 10 236.2988 185.9999 Tm 0.056 Tw (. And you feel there are no long-run implications)Tj -8.9299 -1 TD 0.052 Tw (to these current events to our relationship in the evolution.)Tj 1 -1 TD 0.254 Tw (Mr. S)Tj 8 0 0 7.6194 185.2796 165.9999 Tm 0 Tw (CHRIVER)Tj 10 0 0 10 224.079 165.9999 Tm 0.254 Tw (. Well, you know, I think there is actually some)Tj -7.7079 -1 TD 0.062 Tw (good news. The Chinese, as a member of the U.N. Security Council,)Tj T* 0.18 Tw (were grateful that we took this issue to the Security Council and)Tj T* 0.212 Tw (did not approach it entirely in a unilateral way, which was, sort)Tj T* 0.108 Tw (of, the public buzz, that we would do so. China has been consulted)Tj T* 0.204 Tw (very closely on these matters. Secretary Powell has met with his)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00023)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 84 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 86 0 obj << /Length 5515 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (20)Tj -15.344 -2 TD (counterpart)Tj /F14 1 Tf 5.4619 0 TD ()Tj /F18 1 Tf 1 0 TD 0.13 Tw (at least he was his counterpart until a day ago)Tj /F14 1 Tf 22.6557 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD (five)Tj -30.1176 -1.02 TD 0.066 Tw (times in about 6 weeks)Tj /F14 1 Tf 10.8598 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.066 Tw (met with him in New York and in Beijing.)Tj -11.8598 -1.02 TD 0.1 Tw (President Bush speaks frequently to former President Jiang Zemin)Tj T* (and has already had a conversation with President Hu Jin Tao. So)Tj T* 0.084 Tw (I think, through this process, although there is not complete agree-)Tj T* 0.176 Tw (ment on what may ultimately be military action, the Chinese are)Tj T* 0.08 Tw (grateful that they are being consulted closely, that we have treated)Tj T* 0.06 Tw (the U.N. seriously, arguably more seriously than many of the mem-)Tj T* 0.288 Tw (ber states, because they are willing to let it go the way of the)Tj T* 0.218 Tw (League of Nations, perhaps. And the Chinese are happy that we)Tj T* 0.12 Tw (have taken that approach and included them, as a great power, in)Tj T* 0.052 Tw (looking at these very challenging issues.)Tj 1 -1.02 TD 0.06 Tw (Senator C)Tj 8 0 0 7.6194 203.8993 523.6 Tm 0 Tw (ORZINE)Tj 10 0 0 10 236.3388 523.6 Tm 0.06 Tw (. And there have been no public statements with)Tj -8.9339 -1.02 TD 0.052 Tw (regard to preemptive strike policies?)Tj 1 -1.02 TD 0.056 Tw (Mr. S)Tj 8 0 0 7.6194 183.2996 503.2 Tm 0 Tw (CHRIVER)Tj 10 0 0 10 222.099 503.2 Tm 0.056 Tw (. I would have to check the record. They have clear-)Tj -7.5099 -1.02 TD 0.066 Tw (ly said they are not in favor)Tj /F14 1 Tf 13.1568 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.066 Tw (that they would like to see a peaceful)Tj -14.1568 -1.02 TD 0.112 Tw (resolution and a diplomatic resolution and are not in favor of mili-)Tj T* 0.23 Tw (tary action. That is been part of their public statement. I would)Tj T* 0.18 Tw (have to check the record and see if they mention )Tj /F14 1 Tf 24.3747 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD (preemptive)Tj /F14 1 Tf 5.2219 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.18 Tw [( in)]TJ -30.4126 -1.02 TD 0.052 Tw (a specific way.)Tj 1 -1.02 TD 0.164 Tw (Senator C)Tj 8 0 0 7.6194 204.9393 442 Tm 0 Tw (ORZINE)Tj 10 0 0 10 237.3788 442 Tm 0.164 Tw (. I would just comment that one of the worries)Tj -9.0379 -1.02 TD 0.178 Tw (that some have expressed and it is a concern of mine is that one)Tj T* 0.112 Tw (can use as a pattern, potentially, preemption in cases when people)Tj T* 0.184 Tw (feel that they are threatened, and that, therefore, might apply in)Tj T* 0.232 Tw (other situations that we would not necessarily want another nu-)Tj T* 0.25 Tw (clear power necessarily exercising that. There have been domino)Tj T* 0.052 Tw (theories talked about among some.)Tj 1 -1.02 TD 0.19 Tw (I want to go to another area, and that really is one that I feel)Tj -1 -1.02 TD 0.16 Tw (more comfortable on the ground on, and that is China)Tj /F14 1 Tf 26.2566 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.16 Tw (s trade im-)Tj -26.4606 -1.02 TD 0.094 Tw (balance, which is spectacular and is growing at rather phenomenal)Tj T* 0.088 Tw (rates, at least I would like to grow earnings of a company if I were)Tj T* 0.142 Tw (managing at these rates. We are over $100 billion trade deficit. It)Tj T* 0.184 Tw (has grown about 25 percent since the year 2000. How do you as-)Tj T* 0.208 Tw (sess, how do we look at our trade situation? Is there any reason)Tj T* 0.182 Tw (to believe that we are moving into a position of changing policies)Tj T* 0.114 Tw (in a way that would lead to a different outcome than an exploding)Tj T* 0.152 Tw (deficit that seems to be attracting, based on cost advantages, par-)Tj T* 0.228 Tw (ticularly with regard to labor, much of the manufacturing of the)Tj T* 0.12 Tw (globe, in many ways? If I understand it correctly, a lot of the auto)Tj T* 0.074 Tw (manufacturing that previously was in Mexico had gone and is mov-)Tj T* 0.062 Tw (ing into China. But have there been steps taken to address this im-)Tj T* 0.162 Tw (balance? Do we think there are steps that we need to be working)Tj T* 0.062 Tw (on to address something that)Tj /F14 1 Tf 13.6938 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.062 Tw (I can tell you I was given a question)Tj -14.6938 -1.02 TD 0.256 Tw (to ask you about wire hangers, which happens to be a business)Tj T* 0.198 Tw (that is in New Jersey that basically lost its reason to be, from a)Tj T* 0.124 Tw (cost standpoint. And I run into this on a regular basis across both)Tj T* 0.212 Tw (my own State and as I travel the country. I wonder what is the)Tj T* 0 Tw (administration)Tj /F14 1 Tf 6.9269 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.31 Tw (s response? Where do we think the outgrowth of)Tj -7.1309 -1.02 TD 0.052 Tw (this will be?)Tj 1 -1.01 TD 0.08 Tw (Mr. F)Tj 8 0 0 7.6194 183.9096 146.3 Tm 0 Tw (REEMAN)Tj 10 0 0 10 221.085 146.3 Tm 0.08 Tw (. Well, obviously, when you get up over $100 billion)Tj -7.4085 -1.01 TD 0.116 Tw (in a trade deficit, it is a striking number, and it is something that)Tj T* 0.114 Tw (we are obviously very focused on. But I think the way that we are)Tj T* 0.144 Tw (approaching this, the administration is approaching this, is not so)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00024)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 87 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 89 0 obj << /Length 5473 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (21)Tj -15.344 -2 TD 0.134 Tw (much to get worried about what the deficit is, but to look at what)Tj 0 -1 TD 0.052 Tw (the growth of the trade relationship is, generally.)Tj 1 -1 TD 0.266 Tw (What we are looking at is improving market access to China.)Tj -1 -1 TD 0.14 Tw (That is what our primary focus is. I think that if we)Tj /F14 1 Tf 25.4506 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.14 Tw (we are cer-)Tj -26.4506 -1 TD 0.112 Tw (tainly not about throwing up new barriers here to reduce the com-)Tj T* 0.146 Tw (petitiveness of our domestic industry. What we are trying to do is)Tj T* 0.354 Tw (encourage more growth in China and more purchasing of U.S.)Tj T* 0.146 Tw (goods and services in China. And we think that the U.S. business)Tj T* 0.19 Tw (person, the U.S. worker, and the U.S. consumer will take care of)Tj T* 0.052 Tw (the rest.)Tj 1 -1 TD 0.056 Tw (So, you know, our focus is)Tj /F14 1 Tf 12.1698 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.056 Tw (again, is not so much on reducing the)Tj -14.1698 -1 TD 0.132 Tw (deficit for the deficit)Tj /F14 1 Tf 9.7469 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.132 Tw (s sake, but to improve market access and im-)Tj -9.9509 -1 TD 0.052 Tw (prove the growth of Chinese purchases.)Tj 1 -1 TD 0.124 Tw (Senator C)Tj 8 0 0 7.6194 204.5393 515.9999 Tm 0 Tw (ORZINE)Tj 10 0 0 10 236.9788 515.9999 Tm 0.124 Tw (. Do we think that is happening in the banking)Tj -8.9979 -1 TD 0.122 Tw (sector, the capital market sector, the manufacturing sector? Do we)Tj T* 0.124 Tw (have specific points where we are)Tj /F14 1 Tf 16.0648 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.124 Tw (to use Senator Allen)Tj /F14 1 Tf 9.7619 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.124 Tw (s analogy,)Tj -27.0306 -1 TD 0.074 Tw (where we could give high marks for the opening up of these sectors)Tj T* 0.052 Tw (for export opportunities?)Tj 1 -1 TD 0.056 Tw (Mr. F)Tj 8 0 0 7.6194 183.6696 465.9999 Tm 0 Tw (REEMAN)Tj 10 0 0 10 220.845 465.9999 Tm 0.056 Tw (. Well, believe it or not, I mean, in some of our agri-)Tj -7.3845 -1 TD 0.11 Tw (culture sectors, we have the highest sales of U.S. agriculture prod-)Tj T* 0.194 Tw (ucts into China that we have ever seen. Citrus has been a huge,)Tj T* 0.128 Tw (a huge, success story in China, U.S. citrus into China. There have)Tj T* 0.256 Tw (been a variety of other products where we have seen increasing)Tj T* 0.306 Tw (competitiveness. And very frankly, in things like insurance and)Tj T* 0.076 Tw (other U.S. services, we have seen an increased access to there. And)Tj T* 0.212 Tw (one of the things that we are trying to do is reduce some of the)Tj T* 0.086 Tw (costs of doing business over there so that it become easier for more)Tj T* 0.152 Tw (U.S. insurers, more U.S. service companies, more U.S. businesses,)Tj T* 0 Tw (generally.)Tj 1 -1 TD 0.142 Tw (Senator C)Tj 8 0 0 7.6194 204.7193 355.9999 Tm 0 Tw (ORZINE)Tj 10 0 0 10 237.1588 355.9999 Tm 0.142 Tw (. You give them high marks for the opening up)Tj -9.0159 -1 TD 0.052 Tw (of the financial services industry?)Tj 1 -1 TD 0.154 Tw (Mr. F)Tj 8 0 0 7.6194 184.6496 335.9999 Tm 0 Tw (REEMAN)Tj 10 0 0 10 221.825 335.9999 Tm 0.154 Tw (. No, I am suggesting that)Tj /F14 1 Tf 12.7908 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.154 Tw (I did not mean to say)Tj -21.2733 -1 TD 0 Tw (that)Tj /F14 1 Tf 1.945 0 TD ()Tj /F18 1 Tf 1 0 TD 0.164 Tw (I am saying that they are getting better. I mean, I think it)Tj -2.945 -1 TD 0.136 Tw (is too early, in many cases, to give them final marks on anything.)Tj T* 0.196 Tw (This is a work in progress. And so, you know, we are continuing)Tj T* 0.052 Tw (to push very hard on all fronts.)Tj 1 -1 TD 0.118 Tw (And again, $100 billion trade deficit is striking. There is no way)Tj -1 -1 TD 0.052 Tw (to get around that.)Tj 1 -1 TD 0.262 Tw (Senator C)Tj 8 0 0 7.6194 205.9193 265.9999 Tm 0 Tw (ORZINE)Tj 10 0 0 10 238.3588 265.9999 Tm 0.262 Tw (. The rate of growth is even more striking, a)Tj -9.1359 -1 TD 0.052 Tw (compounded 25 percent growth rate.)Tj 1 -1 TD (Mr. F)Tj 8 0 0 7.6194 183.6296 245.9999 Tm 0 Tw (REEMAN)Tj 10 0 0 10 220.805 245.9999 Tm 0.052 Tw (. Correct.)Tj -6.3805 -1 TD (Senator C)Tj 8 0 0 7.6194 203.8193 235.9999 Tm 0 Tw (ORZINE)Tj 10 0 0 10 236.2588 235.9999 Tm 0.052 Tw (. A pretty astounding end result.)Tj -7.9259 -1 TD 0.088 Tw (I apologize, but the hour is late on the vote, so I am going to put)Tj -1 -1 TD 0.106 Tw (us into recess until Senator Brownback comes back. I apologize for)Tj T* 0.122 Tw (cutting short. This is a very important topic. Fixed exchange rates)Tj T* 0.13 Tw (and a lot of other issues, I think, need to be seriously examined if)Tj T* 0.112 Tw (this issue is not to become a serious irritant between our two soci-)Tj T* 0.134 Tw (eties as time goes on. And while other things are maybe priorities)Tj T* 0.152 Tw (for the moment, this may end up having some of the greatest im-)Tj T* 0.052 Tw (port for one of the most important countries in the world.)Tj 1 -1 TD (Thank you.)Tj T* 0 Tw ([Recess.])Tj T* 0.062 Tw (Senator B)Tj 8 0 0 7.6194 203.9193 125.9999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 257.2385 125.9999 Tm 0.062 Tw ([presiding]. We are sorry for the momentary)Tj -11.0239 -1 TD 0 Tw (delay.)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00025)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 90 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 92 0 obj << /Length 5777 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (22)Tj -14.344 -2 TD 0.244 Tw (Gentlemen, thank you for continuing. I have got just a couple)Tj -1 -1 TD 0.052 Tw (more followup questions and then we will go to our next panel.)Tj 1 -1 TD 0.354 Tw (Mr. Schriver, just a couple of questions. What has been the)Tj -1 -1 TD 0.336 Tw (growth of the budget for the Chinese military over the past 5)Tj T* 0.052 Tw (years? Do you know what that has been?)Tj 1 -1 TD 0.188 Tw (Mr. S)Tj 8 0 0 7.6194 184.6196 596 Tm 0 Tw (CHRIVER)Tj 10 0 0 10 223.419 596 Tm 0.188 Tw (. I would resist putting a number on it. The Chi-)Tj -7.6419 -1 TD 0.208 Tw (nese have official statistics, which are about anywhere from 7 or)Tj T* 0.258 Tw (8 or 9 percent growth a year. So, even by official statistics, the)Tj T* 0.144 Tw (growth has been very significant. I think most analysts do not re-)Tj T* 0.276 Tw (gard those number as accurate and would put them somewhere)Tj T* 0.052 Tw (higher. So it is difficult to pinpoint.)Tj 1 -1 TD 0.132 Tw (And I think the important point, and one that is not in dispute,)Tj -1 -1 TD 0.176 Tw (is the Chinese have been investing heavily in their military mod-)Tj T* 0.23 Tw (ernization, mostly directed at Taiwan, mostly in the area of bal-)Tj T* 0.168 Tw (listic and cruise missile development and deployment, and that is)Tj T* 0.052 Tw (of great concern.)Tj 1 -1 TD 0.4 Tw (Senator B)Tj 8 0 0 7.6194 207.2993 485.9999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 257.2185 485.9999 Tm 0.4 Tw (. Have they increased their spending on)Tj -11.0219 -1 TD 0.12 Tw (space programs, as well? Do you know of anything in that nature?)Tj 1 -1 TD 0.214 Tw (Mr. S)Tj 8 0 0 7.6194 184.8796 465.9999 Tm 0 Tw (CHRIVER)Tj 10 0 0 10 223.679 465.9999 Tm 0.214 Tw (. They have. Not only are they pursuing manned)Tj -7.6679 -1 TD 0.116 Tw (space launch, it is a goal of the Chinese)Tj /F14 1 Tf 19.1157 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.116 Tw (I think national prestige)Tj -20.1157 -1 TD 0.08 Tw (has something to do with that)Tj /F14 1 Tf 14.2358 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.08 Tw (but military space programs across)Tj -15.2358 -1 TD 0.082 Tw (the board, satellites for communications, trying to develop more so-)Tj T* 0 Tw (phisticated)Tj /F14 1 Tf 5.1299 0 TD ()Tj /F18 1 Tf 1 0 TD 0.388 Tw (what the military would call C4I capabilities, and)Tj -6.1299 -1 TD 0.052 Tw (some of that is in the area of space.)Tj 1 -1 TD 0.292 Tw (Senator B)Tj 8 0 0 7.6194 206.2193 405.9999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 256.1385 405.9999 Tm 0.292 Tw (. Has this raised any areas of concern or)Tj -10.9139 -1 TD 0.052 Tw (alarm at State Department or Defense Department?)Tj 1 -1 TD 0.294 Tw (Mr. S)Tj 8 0 0 7.6194 185.6796 386 Tm 0 Tw (CHRIVER)Tj 10 0 0 10 224.479 386 Tm 0.294 Tw (. The broader issue of military modernization is)Tj -7.7479 -1 TD 0.076 Tw (something we watch very carefully. In terms of space programs, we)Tj T* 0.072 Tw (have strict export controls, and we have a history there. In fact, we)Tj T* 0.128 Tw (just levied a penalty on a couple of U.S. companies involved in co-)Tj T* 0.108 Tw (operation that was outside the law. So we are concerned about the)Tj T* 0.208 Tw (developments, and we try to ensure that any kind of cooperation)Tj T* 0.306 Tw (with the Chinese does not go to People)Tj /F14 1 Tf 19.9217 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.306 Tw (s Liberation Army end-)Tj -20.1257 -1 TD 0.218 Tw (users, or if an item is in the area of dual-use, that any transfer)Tj T* 0.052 Tw (does not contribute to military modernization.)Tj 1 -1 TD 0.256 Tw (Senator B)Tj 8 0 0 7.6194 205.8593 295.9999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 255.7785 295.9999 Tm 0.256 Tw (. Is the Chinese leadership in the country)Tj -10.8779 -1 TD 0.182 Tw (moving toward democracy across the nation? Can we say that, or)Tj T* 0.052 Tw (is that not taking place?)Tj 1 -1 TD 0.154 Tw (Mr. S)Tj 8 0 0 7.6194 184.2796 265.9999 Tm 0 Tw (CHRIVER)Tj 10 0 0 10 223.079 265.9999 Tm 0.154 Tw (. I think it is a mixed bag. If you want to see the)Tj -7.6079 -1 TD 0.27 Tw (glass half full, you would say that there has been a trend over)Tj T* 0.29 Tw (many years of increasing village elections at the local level, in-)Tj T* 0.274 Tw (creasing abilities for people to participate in choosing their own)Tj T* 0.186 Tw (leaders at the local level. We just saw a transfer of power in the)Tj T* 0.106 Tw (National People)Tj /F14 1 Tf 7.4969 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.106 Tw (s Congress, which was hardly reflective of a demo-)Tj -7.7009 -1 TD 0.052 Tw (cratic process. So it is a mixed bag.)Tj 1 -1 TD 0.102 Tw (Senator B)Tj 8 0 0 7.6194 204.3193 195.9999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 254.2385 195.9999 Tm 0.102 Tw (. My indications are that)Tj /F14 1 Tf 11.8168 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.102 Tw (what I have been)Tj -23.5407 -1 TD 0.09 Tw (reading is that they are moving toward some sort of democratic re-)Tj T* 0.136 Tw (forms at the local level, the closest local level, and that may be to)Tj T* 0.31 Tw (deal with corruption as much as anything. But at the national)Tj T* 0.154 Tw (level, there is no intent, nor movement, toward democracy. Would)Tj T* 0.118 Tw (that be a correct bifurcation of the situation in China on its move-)Tj T* 0.052 Tw (ment toward democracy?)Tj 1 -1 TD 0.128 Tw (Mr. S)Tj 8 0 0 7.6194 184.0196 125.9999 Tm 0 Tw (CHRIVER)Tj 10 0 0 10 222.819 125.9999 Tm 0.128 Tw (. I think that is accurate. Again, if you want to be)Tj -7.5819 -1 TD 0.14 Tw (an optimist, you would say that the movements at the local levels)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00026)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 93 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 95 0 obj << /Length 5723 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (23)Tj -15.344 -2 TD 0.174 Tw (are a precursor for other things. But, again, what we just saw at)Tj 0 -1 TD 0.226 Tw (the National People)Tj /F14 1 Tf 9.6209 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.226 Tw (s Congress was hardly the result of a demo-)Tj -9.8249 -1 TD 0.052 Tw (cratic participatory kind of system.)Tj 1 -1 TD (Senator B)Tj 8 0 0 7.6194 203.8193 616 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 253.7385 616 Tm 0.052 Tw (. Does any of the Chinese leadership ever ex-)Tj -10.6739 -1 TD 0.212 Tw (press to you a willingness to move at the national toward demo-)Tj T* 0.052 Tw (cratic governance?)Tj 1 -1 TD 0.286 Tw (Mr. S)Tj 8 0 0 7.6194 185.5996 586 Tm 0 Tw (CHRIVER)Tj 10 0 0 10 224.399 586 Tm 0.286 Tw (. The Chinese leadership is mostly interested in)Tj -7.7399 -1 TD 0.052 Tw (stability, as they define it, and that does not include moving in that)Tj T* (direction, as far as I am aware.)Tj 1 -1 TD 0.116 Tw (Senator B)Tj 8 0 0 7.6194 204.4593 555.9999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 254.3785 555.9999 Tm 0.116 Tw (. Mr. Freeman, it seems to me that much of)Tj -10.7379 -1 TD 0.212 Tw (the market access U.S. firms get in China is contingent on their)Tj T* 0.154 Tw (willingness to take a minority stake in a Chinese partner. This is)Tj T* 0.096 Tw (part of China)Tj /F14 1 Tf 6.3589 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.096 Tw (s WTO agreement. And why? Should we not have re-)Tj -6.5629 -1 TD 0.1 Tw (quired that the same to China has here, that we have access there)Tj T* 0.052 Tw (into their market or into their groups or companies?)Tj 1 -1 TD 0.092 Tw (Mr. F)Tj 8 0 0 7.6194 184.0296 495.9999 Tm 0 Tw (REEMAN)Tj 10 0 0 10 221.205 495.9999 Tm 0.092 Tw (. Well, one of the things about the accession is that)Tj -7.4205 -1 TD 0.378 Tw (it provided for a phase-in, including phase-in of the ability of)Tj T* 0.102 Tw (United States and other foreign companies to have a greater share)Tj T* 0.108 Tw (of a Chinese company. In fact, it is increasingly popular, if not the)Tj T* 0.122 Tw (only preferred way to do business is to get a wholly owned foreign)Tj T* 0.15 Tw (entity in China. So, increasingly, most of the firms that are doing)Tj T* 0.298 Tw (business in China, foreign firms, are wholly owned and moving)Tj T* 0.2 Tw (away from a strict JV, joint venture, structure. So we are seeing)Tj T* 0.052 Tw (movement there.)Tj 1 -1 TD 0.248 Tw (Senator B)Tj 8 0 0 7.6194 205.7793 405.9999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 255.6985 405.9999 Tm 0.248 Tw (. Good. What about pressing them on this)Tj -10.8699 -1 TD 0.334 Tw (genetically modified organism case? When would you anticipate)Tj T* 0.078 Tw (bringing that or getting some sort of final resolution instead of this)Tj T* 0.162 Tw (year-by-year issue? I am concerned that we are continuing to sow)Tj T* (difficulties in our agricultural markets. You mentioned it is about)Tj T* 0.234 Tw (a billion dollars a year in soybeans that is being impacted here.)Tj T* 0.118 Tw (When are we going to be able to press them to finally resolve that)Tj T* 0 Tw (issue?)Tj 1 -1 TD 0.264 Tw (Mr. F)Tj 8 0 0 7.6194 185.7496 325.9999 Tm 0 Tw (REEMAN)Tj 10 0 0 10 222.925 325.9999 Tm 0.264 Tw (. Well, it has always been our view that the at-)Tj -7.5925 -1 TD 0.114 Tw (tempts to regulate soybeans, in particular, were uncalled for. Most)Tj T* 0.19 Tw (of the soybeans that they have tried to do tests on to see if they)Tj T* 0.076 Tw (are food safe or they are environmentally safe have been going into)Tj T* 0.082 Tw (China for something like 7 years. So it)Tj /F14 1 Tf 18.3177 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.082 Tw (s always been our view that)Tj -18.5217 -1 TD 0 Tw (it)Tj /F14 1 Tf 0.704 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.082 Tw (s a bit of a smokescreen to test these products, because any envi-)Tj -0.908 -1 TD 0.134 Tw (ronmental event that would have happened, or that could happen,)Tj T* 0.222 Tw (would have happened already. These are safe products. We have)Tj T* 0.138 Tw (tested them extensively. They have been tested in much more rig-)Tj T* 0.3 Tw (orous markets than the United States before)Tj /F14 1 Tf 22.4507 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.3 Tw (excuse me)Tj /F14 1 Tf 5.0219 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD (more)Tj -29.4726 -1 TD 0.138 Tw (rigorous markets than China before, and they have always proved)Tj T* 0.186 Tw (safe. So we don)Tj /F14 1 Tf 7.6149 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.186 Tw (t think that there)Tj /F14 1 Tf 8.6889 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.186 Tw (s a need to test these products)Tj -16.7118 -1 TD 0.052 Tw (to the extent the Chinese are doing.)Tj 1 -1 TD 0.14 Tw (That said, what China has done is they have agreed the testing)Tj -1 -1 TD 0.12 Tw (of soybeans, in particular, or other genetically modified organisms,)Tj T* 0.272 Tw (will not impact trade. So what they)Tj /F14 1 Tf 17.9318 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.272 Tw (ve done is they)Tj /F14 1 Tf 7.6869 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.272 Tw (ve extended)Tj -26.0266 -1 TD 0.142 Tw (now the period for testing, the interim arrangements under which)Tj T* 0.186 Tw (soybeans are coming in, and other GMO products, until April 20,)Tj T* 0.226 Tw (2004, which should allow the testing to finish and they can offi-)Tj T* 0.052 Tw (cially seal these as safe.)Tj 1 -1 TD 0.188 Tw (So, at the end of the day, we do not think we are going to see)Tj -1 -1 TD 0.114 Tw (an impact, again, on soybean and other GMO trade into China. So)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00027)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 96 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 98 0 obj << /Length 5029 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (24)Tj -15.344 -2 TD 0.088 Tw (that is the good news. We really feel this is one of the relative suc-)Tj 0 -1 TD 0.16 Tw (cess stories of U.S./China engagement on agriculture and econom-)Tj T* 0.198 Tw (ics in particular. But it has not been easy, and it has been a lot)Tj T* 0.052 Tw (more adversarial than we would have appreciated.)Tj 1 -1 TD 0.184 Tw (Senator B)Tj 8 0 0 7.6194 205.1393 606 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 255.0585 606 Tm 0.184 Tw (. I just want to go back to an earlier point)Tj -10.8059 -1 TD 0.16 Tw (and just mention it one more time, is that I think we really need)Tj T* 0.11 Tw (to press them early in their WTO process of getting in compliance,)Tj T* 0.152 Tw (and early with cases, too, that I think if we do that early, we are)Tj T* 0.2 Tw (going to have more success over the longer term than if we wait)Tj T* 0.146 Tw (a couple of years and say, well, OK, we are going to kind of let it)Tj T* 0.148 Tw (slide a little bit. If you let it slide at the front, it is going to slide)Tj T* 0.154 Tw (further at the back side of it. And it is just such a large economy)Tj T* 0.108 Tw (and a large market force. I really hope you will push them aggres-)Tj T* 0.052 Tw (sively at an early stage.)Tj 1 -1 TD 0.292 Tw (I presume that discussion is going on internally now. And at)Tj -1 -1 TD 0.42 Tw (what point do you start really pulling the trigger with cases)Tj T* 0.052 Tw (against them to get in compliance?)Tj 1 -1 TD 0.198 Tw (Mr. F)Tj 8 0 0 7.6194 185.0896 475.9999 Tm 0 Tw (REEMAN)Tj 10 0 0 10 222.265 475.9999 Tm 0.198 Tw (. Well, again, our sense is that when you bring a)Tj -7.5265 -1 TD 0.164 Tw (case, because of the time that it takes not only to go through the)Tj T* 0.202 Tw (WTO process, but the time to implement the WTO solution, it is)Tj T* 0.056 Tw (far better to solve your problems bilaterally so that you do not have)Tj T* 0.052 Tw (to go to the WTO and dispute the resolution.)Tj 1 -1 TD 0.18 Tw (Again, you know, there are a couple of issues)Tj /F14 1 Tf 22.1827 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.18 Tw (you have raised)Tj -24.1827 -1 TD 0.098 Tw (a couple here)Tj /F14 1 Tf 6.3069 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.098 Tw (where we are farther along in the process of throw-)Tj -7.3069 -1 TD 0.162 Tw (ing up our hands and saying it is time to take a case, but this is)Tj T* 0.224 Tw (something that the administration will have to decide upon as a)Tj T* 0.052 Tw (whole and not something that USTR on its own would do.)Tj 1 -1 TD 0.216 Tw (Senator B)Tj 8 0 0 7.6194 205.4593 375.9999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 255.3785 375.9999 Tm 0.216 Tw (. And toward the general administration, I)Tj -10.8379 -1 TD 0.164 Tw (hope we do not subjugate trade to the broader issues that are in-)Tj T* 0.272 Tw (volved here. I think we should deal with trade issues on trade,)Tj T* 0.106 Tw (trade agenda and the broader issues in their field, as well, but not)Tj T* 0.052 Tw (tie those two in together.)Tj 1 -1 TD 0.25 Tw (Gentlemen, I have two questions that Senator Biden wants to)Tj -1 -1 TD 0.202 Tw (submit for the record. And, if you could, I would appreciate your)Tj T* 0.184 Tw (responding to them as soon as possible and we will include them)Tj T* 0.052 Tw (in the record. Thank you very much for joining us today.)Tj 1 -1 TD 0.218 Tw (Our second panel will be Dr. Robert A. Kapp, president of the)Tj -1 -1 TD 0.134 Tw (US-China Business Council here in Washington, DC, and Ms. Hil-)Tj T* 0.054 Tw (lary B. Rosen, chairman and chief executive officer of the Recording)Tj T* 0.052 Tw (Industry Association of America.)Tj 1 -1 TD 0.162 Tw (Dr. Kapp, Ms. Rosen, delighted to have you here. Dr. Kapp, we)Tj -1 -1 TD 0.152 Tw (will go with your testimony first. You are free to submit your full)Tj T* 0.076 Tw (full statement, into the record and summarize, if you would like to,)Tj T* 0.052 Tw (or read your statement, whichever you would prefer.)Tj /F20 1 Tf 9 0 0 9 150.4 199.7999 Tm 0.0422 Tw (STATEMENT OF ROBERT A. KAPP, PH.D., PRESIDENT, THE US-)Tj 4.3867 -1.0889 TD (CHINA BUSINESS COUNCIL, WASHINGTON, DC)Tj /F18 1 Tf 10 0 0 10 157 175.9999 Tm 0.19 Tw (Dr. K)Tj 8 0 0 7.6194 184.4596 175.9999 Tm 0 Tw (APP)Tj 10 0 0 10 200.9073 175.9999 Tm 0.19 Tw (. Thank you very much, Senator Brownback. I am de-)Tj -5.3907 -1 TD 0.212 Tw (lighted to be here. I want to thank you in particular for proving)Tj T* 0.084 Tw (just how nonpartisan the US-China Business Council is. I have ap-)Tj T* 0.142 Tw (peared before this subcommittee or the full committee at the invi-)Tj T* 0.092 Tw (tation of members of the Democratic contingent on a number of oc-)Tj T* 0.208 Tw (casions, but this is the first time to be here invited by a Repub-)Tj T* 0.052 Tw (lican, and I am delighted to be here.)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00028)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 99 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R /F20 27 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 101 0 obj << /Length 5646 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (25)Tj -14.344 -2 TD 0.052 Tw (Senator B)Tj 8 0 0 7.6194 203.8193 646 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 253.7385 646 Tm 0.052 Tw (. Good.)Tj -9.6739 -1 TD 0.136 Tw (Dr. K)Tj 8 0 0 7.6194 183.9196 636 Tm 0 Tw (APP)Tj 10 0 0 10 200.3674 636 Tm 0.136 Tw (. I did present written testimony. It, unfortunately, did)Tj -5.3367 -1 TD 0.162 Tw (not get up here until just a few minutes ago. It is, I believe, now)Tj T* 0.152 Tw (on the back table, and I would ask that it be in the record; I will)Tj T* 0.052 Tw (speak only briefly to some of the points I made.)Tj 1 -1 TD (Senator B)Tj 8 0 0 7.6194 203.8193 596 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 253.7385 596 Tm 0.052 Tw (. Without objection.)Tj -9.6739 -1 TD 0.202 Tw (Dr. K)Tj 8 0 0 7.6194 184.5796 586 Tm 0 Tw (APP)Tj 10 0 0 10 201.0273 586 Tm 0.202 Tw (. You know, we meet at an interesting moment. None)Tj -5.4027 -1 TD 0.088 Tw (of us needs to be reminded of that. I spent the hours before I came)Tj T* 0.37 Tw (over here reading the Federal Emergency Management Agency)Tj T* 0 Tw (pamphlet )Tj /F14 1 Tf 4.7619 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.076 Tw (Are You Ready?)Tj /F14 1 Tf 7.5219 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.076 Tw [( in order to get ready for my own meet-)]TJ -13.0998 -1 TD 0.096 Tw (ing of our small staff to discuss who was going to bring the bottled)Tj T* 0.102 Tw (water and who was going to bring the blankets and so forth to our)Tj T* 0.132 Tw (office. It is a very strange moment, in which Washington is aware)Tj T* 0.052 Tw (of the dangers that the world presents.)Tj 1 -1 TD 0.056 Tw (We had an article in the Washington Post yesterday called )Tj /F14 1 Tf 27.9146 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD (Pearl)Tj -29.3226 -1 TD 0.134 Tw (Harbor 2003?)Tj /F14 1 Tf 6.4129 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.134 Tw [( which suggested that the American military is now)]TJ -6.8209 -1 TD 0.08 Tw (very, very thinly stretched and could be even more thinly stretched)Tj T* 0.052 Tw (in the near future, with critical implications for our security.)Tj 1 -1 TD 0.208 Tw (So as we meet today about China, I guess, on the one hand, I)Tj -1 -1 TD 0.162 Tw (feel very grateful to you, Mr. Chairman, and to the subcommittee)Tj T* 0.212 Tw (and the full committee, for convening on this topic at a when so)Tj T* 0.052 Tw (much else is going on. I think that is critically important.)Tj 1 -1 TD 0.128 Tw (At the same time, I think the world that we look out upon from)Tj -1 -1 TD 0.064 Tw (the windows is one which ought to make us take a deep breath and)Tj T* 0.07 Tw (think as broadly as we can about the U.S.-China relationship, past,)Tj T* 0.084 Tw (present, and certainly future, as is implied in the title of this hear-)Tj T* 0.052 Tw (ing, implications of China)Tj /F14 1 Tf 12.0648 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.052 Tw (s emergence.)Tj -11.2688 -1 TD 0.156 Tw (In that regard, I sent to members of the committee and staff of)Tj -1 -1 TD 0.352 Tw (the committee)Tj /F14 1 Tf 6.9449 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.352 Tw (I was unable to make it available fully to the)Tj -7.9449 -1 TD 0 Tw (press)Tj /F14 1 Tf 2.444 0 TD ()Tj /F18 1 Tf 1 0 TD 0.136 Tw (copies of the brand new issue of our magazine, )Tj /F14 1 Tf 22.9477 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.136 Tw (The China)Tj -26.7996 -1 TD 0.152 Tw (Business Review,)Tj /F14 1 Tf 8.2079 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.152 Tw [( because it is about the 30th anniversary of our)]TJ -8.6159 -1 TD 0.106 Tw (group and is filled with articles by scholars and members and gov-)Tj T* 0.352 Tw (ernment figures on U.S.-China relationship at 30; what China,)Tj T* 0.166 Tw (itself, will look like 20 and 30 years into the future. Former Rep-)Tj T* 0.17 Tw (resentative Lee Hamilton has a very serious and thoughtful piece)Tj T* 0.178 Tw (in here. President George Herbert Walker Bush was kind enough)Tj T* 0.118 Tw (to sign his name to a greeting at the front. But, taken as a whole,)Tj T* 0.22 Tw (I hope the people on the committee will be able to read some of)Tj T* 0.1 Tw (these essays, by Chinese as well as American writers, about where)Tj T* 0.316 Tw (China is going and where the United States-China relationship)Tj T* 0.052 Tw (might proceed in the future.)Tj 1 -1 TD 0.102 Tw (I am here as the representative of the US-China Business Coun-)Tj -1 -1 TD 0.522 Tw (cil, a private, nonprofit corporate-supported organization cele-)Tj T* 0.096 Tw (brating, as I mentioned, its 30th anniversary. And the simple mes-)Tj T* 0.182 Tw (sage of the business sections of this testimony is that business is)Tj T* 0.164 Tw (growing rapidly. The volume of trade expanded very substantially)Tj T* 0.072 Tw (last year, both imports and exports rising by more than 20 percent.)Tj T* 0.302 Tw (The trade deficit, as you know, has risen significantly, as well.)Tj T* 0.126 Tw (American companies, by and large, view China today with a sense)Tj T* (of expanded opportunities, and that applies not only to big compa-)Tj T* 0.1 Tw (nies. We find that smaller companies, who, until now, have viewed)Tj T* 0.106 Tw (China as so mysterious and so obscure as to be off limits to people)Tj T* 0.166 Tw (with shallower pockets, are now beginning to call us with greater)Tj T* 0.076 Tw (frequency to say, )Tj /F14 1 Tf 8.3209 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.076 Tw (We would really like to see how we can economi-)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00029)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 102 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 104 0 obj << /Length 5356 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (26)Tj -15.344 -2 TD 0.506 Tw (cally, but effectively, maximize our opportunities over there.)Tj /F14 1 Tf 31.3946 0 TD 0 Tw ()Tj /F18 1 Tf -31.3946 -1 TD 0.112 Tw (American businesses are seeing a China in which a large domestic)Tj T* 0.156 Tw (market is clearly in evidence in many, many fields. Autos are the)Tj T* 0.206 Tw (classic case that we read about in the newspapers now, with car)Tj T* 0.302 Tw (sales going very, very dynamically. But the same is true about)Tj T* 0.082 Tw (other familiar subjects. China, the largest cellular phone market in)Tj T* 0.108 Tw (the world, with American brands prevalent, or at least very highly)Tj T* 0.15 Tw (present. And increasingly, not only in Beijing, Shanghai and Can-)Tj T* 0.092 Tw (ton on the coast, but in the major cities of other provinces, as well.)Tj 1 -1 TD 0.408 Tw (Broadly speaking, American business views China as still a)Tj -1 -1 TD 0.22 Tw (tough place to do business. It has always been that. But anyone)Tj T* 0.098 Tw (who has been there for more than a year views it as a better place)Tj T* 0.06 Tw (to do business today than in the past. And anyone who)Tj /F14 1 Tf 25.8446 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.06 Tw (s been there)Tj -26.0486 -1 TD 0.184 Tw (for 5 or 10 or 15 or 20 years, or who goes back to 1977, as I do,)Tj T* 0.12 Tw (recognizes that a great deal has moved in positive directions, from)Tj T* 0.052 Tw (the standpoint of business.)Tj 1 -1 TD 0.198 Tw (We are very supportive of the interest that the Congress takes)Tj -1 -1 TD 0.146 Tw (in our trade and economic relations with China, including China)Tj /F14 1 Tf 31.1305 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (s)Tj -31.3345 -1 TD 0.124 Tw (WTO implementation process. It is not, I think, excessively associ-)Tj T* 0.078 Tw (ating with the Chinese view of the world to recognize and acknowl-)Tj T* 0.102 Tw (edge that what China signed in the WTO agreements that it made)Tj T* 0.156 Tw (first with us in November 1999 and then in Geneva, with the en-)Tj T* 0.116 Tw (tire WTO, at the end of 2001, demands of China a degree of social)Tj T* 0.18 Tw (and economic and even political change)Tj /F14 1 Tf 19.1047 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.18 Tw (certainly, administrative)Tj -20.1047 -1 TD 0 Tw (change)Tj /F14 1 Tf 3.2589 0 TD ()Tj /F18 1 Tf 1 0 TD 0.19 Tw (which is very difficult for us even to imagine doing, and)Tj -4.2589 -1 TD 0.374 Tw (certainly bigger, I think, than anything that any international)Tj T* 0.084 Tw (agreement has imposed on the United States at any time. We have)Tj T* 0.154 Tw (tended to be the power that has pretty much drawn up the rules.)Tj T* 0.054 Tw (And in this case with China, the PRC has accepted a set of commit-)Tj T* 0.056 Tw (ments that are enormously far-reaching and very difficult to accom-)Tj T* 0 Tw (plish.)Tj 1 -1 TD 0.256 Tw (So we support very strongly both the Congress)Tj /F14 1 Tf 23.3107 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.256 Tw [( and the Com-)]TJ -24.5147 -1 TD 0.074 Tw (merce Department)Tj /F14 1 Tf 8.7589 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.074 Tw (s and the USTR)Tj /F14 1 Tf 7.5939 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.074 Tw (s very strong and systematic ef-)Tj -16.7607 -1 TD 0.082 Tw (forts to monitor and watch the process by which China seeks to ac-)Tj T* 0.052 Tw (complish these huge changes.)Tj 1 -1 TD 0.182 Tw (I do have a message for China today. You know, whenever one)Tj -1 -1 TD 0.1 Tw (speaks in a meeting like this from a position like mine, one under-)Tj T* 0.092 Tw (stands that the audiences are multiple. And my message for China)Tj T* 0.052 Tw (today is an expression of congratulations on the seamless transition)Tj T* 0.34 Tw (to a new leadership. It is, by far, the most peaceful and non-)Tj T* 0.232 Tw (destructive, noninvasive political transition of leadership that we)Tj T* 0.162 Tw (have seen in the history of the People)Tj /F14 1 Tf 18.4317 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.162 Tw (s Republic. The people who)Tj -18.6357 -1 TD 0.09 Tw (have taken office are experienced and talented. And as I say in my)Tj T* 0.122 Tw (written testimony, the rule of the great man is a thing of the past)Tj T* 0.248 Tw (in China. These are well-turned-out, experience, administratively)Tj T* 0.15 Tw (savvy, sometimes internationally adept, professional political lead-)Tj T* 0.176 Tw (ers, and we congratulate them on their accession to their new of-)Tj T* 0 Tw (fices.)Tj 1 -1 TD 0.12 Tw (At the same time, as they settle into their new offices, it is very)Tj -1 -1 TD 0.202 Tw (important that the WTO implementation process on which China)Tj T* 0.144 Tw (embarked so boldly at the end of 2001, not be allowed to slip into)Tj T* 0.15 Tw (a side office or)Tj /F14 1 Tf 7.0609 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.15 Tw (no matter how pressing the domestic priorities of)Tj -8.0609 -1 TD 0.21 Tw (a new regime are)Tj /F14 1 Tf 8.5939 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.21 Tw (be relegated to a secondary position. And the)Tj -9.5939 -1 TD 0.208 Tw (reason for that, of course, is essentially you, Senator Brownback,)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00030)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 105 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 107 0 obj << /Length 4961 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (27)Tj -15.344 -2 TD 0.208 Tw (and the U.S. Congress, in particular, but also the administration)Tj 0 -1 TD 0.15 Tw (and also the American business community. The rest of the world)Tj T* 0.128 Tw (cannot wait for China always to reach the right moment when ev-)Tj T* 0.164 Tw (erything domestically is lined up in perfect order in order to turn)Tj T* 0.154 Tw (to the implementation and realization of its international commit-)Tj T* 0.092 Tw (ments. We think the Chinese understand that, and we believe that)Tj T* 0.054 Tw (the Chinese leaders who brought China into the WTO against enor-)Tj T* 0.238 Tw (mous resistance)Tj /F14 1 Tf 7.6639 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.238 Tw (even after they were in, enormous resistance)Tj /F14 1 Tf 22.1317 0 TD 0 Tw ()Tj /F18 1 Tf -30.7956 -1 TD 0.246 Tw (understood and that their successors understand that the imple-)Tj T* 0.076 Tw (mentation of China)Tj /F14 1 Tf 9.1159 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.076 Tw (s obligations, or realization of those obligations,)Tj -9.3199 -1 TD 0.052 Tw (is, in fact, very good for China in the medium to long run.)Tj 1 -1 TD 0.218 Tw (We also know that they know that they are looking at tens of)Tj -1 -1 TD 0.102 Tw (millions of people already laid off from the creaky state-owned sec-)Tj T* 0.174 Tw (tor, which may go into further decline under the pressures of the)Tj T* 0.072 Tw (international community through the WTO. We know that they are)Tj T* 0.18 Tw (very, very concerned about the future of the hundreds of millions)Tj T* 0.23 Tw (of people on the farms whose products and crops are simply not)Tj T* 0.4 Tw (price-competitive and quality-competitive with international im-)Tj T* 0.052 Tw (ports moving into China.)Tj 1 -1 TD 0.126 Tw (But our message is, please do not let this drop or let this fall to)Tj -1 -1 TD 0.17 Tw (the side. You are only in the second year. There is a long way to)Tj T* 0.052 Tw (go. The world and the United States are watching.)Tj 1 -1 TD 0.178 Tw (Now, having said that, I have attached to my testimony a very)Tj -1 -1 TD 0.152 Tw (short essay which summarizes the testimony that the council pro-)Tj T* 0.246 Tw (vided to the Trade Policy Staff Committee coordinated by USTR)Tj T* 0.084 Tw (last fall, and there is a very short essay summing up our positions,)Tj T* 0.108 Tw (particularly about the salience and critical importance of year two,)Tj T* 0.194 Tw (which began last December 11, in this WTO phase in process, in)Tj T* 0.052 Tw (the written testimony.)Tj 1 -1 TD 0.158 Tw (Beyond that, however, the testimony goes a little further, and I)Tj -1 -1 TD 0.08 Tw (want to take just a moment, because of the circumstances in which)Tj T* 0.054 Tw (we meet, to make a somewhat broader and a more wide-ranging ar-)Tj T* 0 Tw (gument.)Tj 1 -1 TD 0.224 Tw (We have got a new leadership in Beijing. We are not in crisis)Tj -1 -1 TD 0.164 Tw (with China. In fact, it is better than that. Mr. Schriver in his re-)Tj T* 0.054 Tw (marks today made clear how much has progressed forward between)Tj T* 0.21 Tw (the United States and China since the calming down of the EP)Tj /F14 1 Tf 31.2396 0 TD 0 Tw ()Tj /F18 1 Tf -31.2396 -1 TD 0.144 Tw (3 affair. Those of us who have been in Washington since the mid-)Tj T* 0.082 Tw (1990s can list, as I do in my testimony, the hammer blows through)Tj T* 0.28 Tw (which the United States-China relationship went in 1995, 1996,)Tj T* 0.238 Tw (1997, 1998, 1999, even up to the EP)Tj /F14 1 Tf 18.2287 0 TD 0 Tw ()Tj /F18 1 Tf 0.556 0 TD 0.238 Tw (3, itself. That, for the mo-)Tj -18.7847 -1 TD 0.174 Tw (ment, and hopefully for more than a moment, is in abeyance. My)Tj T* 0.062 Tw (hope is that the Senate Foreign Relations Committee, and this sub-)Tj T* 0.106 Tw (committee, in particular, will act in a sustained, thorough, and en-)Tj T* 0.094 Tw (gaged way to grapple with the fundamental questions of where the)Tj T* 0.118 Tw (U.S.-China relationship is going to go, before the next crisis comes)Tj T* 0.122 Tw (along. We tend to drift from moments of acute interest and excite-)Tj T* 0.136 Tw (ment about China in the American political system to moments of)Tj T* 0.174 Tw (almost complete disinterest. I think it is very important that this)Tj T* 0.056 Tw (subcommittee and its parent committee use the opportunity to real-)Tj T* 0.206 Tw (ly ask some very fundamental questions about the United States)Tj T* 0.148 Tw (and China and how we can evaluate our own and the other side)Tj /F14 1 Tf 31.1316 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (s)Tj -31.3355 -1 TD 0.3 Tw (mutual areas of interests and mutual areas of concern and see)Tj T* 0.052 Tw (about managing those for the long-term.)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00031)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 108 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 111 0 obj << /Length 5442 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (28)Tj -14.344 -2 TD 0.158 Tw (There is an inter-parliamentary exchange now, which Congress-)Tj -1 -1 TD 0.204 Tw (man Manzullo has taken the lead in impelling forward. We hope)Tj T* 0.166 Tw (that more members of the Senate and more Members of the Con-)Tj T* 0.052 Tw (gress, as a whole, will become involved in that.)Tj 1 -1 TD 0.184 Tw (What I am trying to say is that we in the business community)Tj -1 -1 TD 0.13 Tw (understand that the core of the positive advance in U.S.-China re-)Tj T* 0.168 Tw (lations in the last 15 to 20 years has been an economic one. Just)Tj T* 0.208 Tw (look at the magnitude of this economic engagement now. We are)Tj T* 0.346 Tw (their number-two trade partner; they are our number-four. We)Tj T* 0.232 Tw (know the investment numbers, and so forth. But we also under-)Tj T* 0.206 Tw (stand that if the other dimensions of the U.S.-China relationship)Tj T* 0.232 Tw (are not managed carefully and with a mutual view toward long-)Tj T* 0.112 Tw (term progress, ultimately the trade and economic relationship can-)Tj T* 0.17 Tw (not carry the freight all by itself, just as, in the old MFN annual)Tj T* 0.14 Tw (renewal days, we used to feel that if trade were cutoff, the rest of)Tj T* 0.106 Tw (the relationship could not be held on an even keel, either. The two)Tj T* 0.086 Tw (are intertwined. I sympathize, Senator Brownback, with your point)Tj T* 0.138 Tw (about not conflating everything and dealing with trade matters as)Tj T* 0.152 Tw (trade matters and not hauling in the kitchen sink and mixing ev-)Tj T* 0.16 Tw (erything together. But realistically, if the U.S.-China relationship,)Tj T* 0.122 Tw (at the level of who we think we are, who they think they are, and)Tj T* 0.164 Tw (where we think we are going, is not consciously and energetically)Tj T* 0.266 Tw (addressed by both sides, including this committee, then I think,)Tj T* 0.198 Tw (over the long-haul, the prospects for all of our engagements with)Tj T* 0.08 Tw (China, even including this huge economic one, will not be as bright)Tj T* 0.25 Tw (as they could if we put the effort into defining this relationship)Tj T* 0 Tw (now.)Tj 1 -1 TD 0.18 Tw (Without that kind of effort at conscious definition, anybody can)Tj -1 -1 TD 0.11 Tw (read the numbers and come up with any conclusion he wants. You)Tj T* 0.054 Tw (can read the trade numbers, you can read the armaments numbers,)Tj T* 0.072 Tw (everybody can say, you see? I told you so. This just proved they are)Tj T* 0.142 Tw (this, they are that. And the Chinese do it to us at the same time.)Tj 1 -1 TD (So what is needed, and hopefully in this committee we will find)Tj -1 -1 TD 0.076 Tw (the source of that energy, would be an effort to really work, domes-)Tj T* 0.206 Tw (tically and also across the Pacific, on coming up with some clear)Tj T* (understandings between the two countries about where we really)Tj T* 0.146 Tw (think we are going. Because if we do not do that, it can drift into)Tj T* 0.086 Tw (very, very serious, very serious conflicts, of a magnitude that make)Tj T* 0.13 Tw (the North Korea problem or the Iraq problem, at least potentially,)Tj T* 0.052 Tw (look small, indeed.)Tj 1 -1 TD (Thank you very much.)Tj T* ([The prepared statement of Dr. Kapp follows:])Tj 8 0 0 8 163.34 219.9999 Tm 0 Tw (P)Tj 6.4 0 0 6.0958 168.6759 219.9999 Tm (REPARED)Tj 8 0 0 8 203.6678 219.9999 Tm (S)Tj 6.4 0 0 6.0958 208.7078 219.9999 Tm [(TATEMENT)-412.5(OF)]TJ 8 0 0 8 261.1622 219.9999 Tm (R)Tj 6.4 0 0 6.0958 266.9381 219.9999 Tm (OBERT)Tj 8 0 0 8 292.6884 219.9999 Tm 0.0525 Tw (A. K)Tj 6.4 0 0 6.0958 309.5562 219.9999 Tm 0 Tw (APP)Tj 8 0 0 8 322.7146 219.9999 Tm 0.0525 Tw (, P)Tj 6.4 0 0 6.0958 332.9184 219.9999 Tm 0 Tw (RESIDENT)Tj 8 0 0 8 367.8816 219.9999 Tm 0.0525 Tw (, US-C)Tj 6.4 0 0 6.0958 392.7492 219.9999 Tm 0 Tw (HINA)Tj 8 0 0 8 413.162 219.9999 Tm (B)Tj 6.4 0 0 6.0958 418.9379 219.9999 Tm (USINESS)Tj 8 0 0 8 254.24 211.9999 Tm (C)Tj 6.4 0 0 6.0958 260.0159 211.9999 Tm (OUNCIL)Tj 8 0 0 8 286.9215 211.9999 Tm 0.0525 Tw (, W)Tj 6.4 0 0 6.0958 299.6373 211.9999 Tm 0 Tw (ASHINGTON)Tj 8 0 0 8 340.8853 211.9999 Tm 0.0525 Tw (, DC)Tj -23.2357 -1.625 TD (Mr. Chairman, members of the Subcommittee:)Tj 0 -1 TD (Thank you for inviting me to appear before you today.)Tj 6.4 0 0 6.0958 275.48 177 Tm 0 Tw (I)Tj 8 0 0 8 278.0848 177 Tm (. )Tj 6.4 0 0 6.0958 282.9527 177 Tm (INTRODUCTION)Tj 8 0 0 8 155 163.9999 Tm 0.3125 Tw (I am Robert Kapp, president of the US-China Business Council. The Council)Tj -1 -1 TD 0 Tw (\()Tj /F19 1 Tf 0.333 0 TD (www.uschina.org)Tj /F18 1 Tf 7.9989 0 TD 0.28 Tw (\) was established in 1973. The Council, a tax-exempt nonprofit)Tj -8.3319 -1 TD 0.0575 Tw (business association under Section 501/c/6 of the Internal Revenue Code, is the prin-)Tj T* 0.255 Tw (cipal organization of American companies engaged in trade and investment with)Tj T* 0.25 Tw (China, serving approximately 225 leading corporations and firms from its Wash-)Tj T* 0.09 Tw (ington headquarters and field offices in Beijing and Shanghai. The Council provides)Tj T* 0.16 Tw (a combination of business advisory services, written information and analysis \(pri-)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00032)-1076.9(Fmt 6633)-1076.9(Sfmt 6621)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 112 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F18 16 0 R /F19 17 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 114 0 obj << /Length 8296 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (29)Tj 8 0 0 8 147 648 Tm 0.2125 Tw (marily online\), meetings and programs of all kinds, and advocacy work on public)Tj 0 -1.0125 TD 0.1875 Tw (policy issues of concern to its broad business constituency, both in the US and in)Tj T* 0.185 Tw (China. The Council has long enjoyed productive and close engagement with many)Tj T* 0.325 Tw (Members of the Senate and House, many Committees and Subcommittees, and)Tj T* 0.1325 Tw (many members of Congressional Staff. We welcome such contacts, and believe that)Tj T* 0.115 Tw (the Council can provide dispassionate and accurate information and perspectives to)Tj T* 0.14 Tw (our counterparts on Capitol Hill, as we do to many in the executive branch and to)Tj T* 0.0525 Tw (our business constituents.)Tj 1 -1.0125 TD 0.1125 Tw (The Council publishes the leading magazine on US-China trade and economic re-)Tj -1 -1.0125 TD 0 Tw (lations, )Tj /F14 1 Tf 3.9724 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.2675 Tw (The China Business Review)Tj /F14 1 Tf 13.7293 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.2675 Tc ( \()Tj /F19 1 Tf 0.8785 0 TD 0 Tc (www.chinabusinessreview.com)Tj /F18 1 Tf 14.1448 0 TD 0.2675 Tw (\). As it hap-)Tj -33.541 -1.0125 TD 0.0575 Tw (pens, the new issue of our magazine, celebrating the Council)Tj /F14 1 Tf 28.4821 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0575 Tw (s 30th anniversary, has)Tj -28.6861 -1 TD 0.1525 Tw (appeared only this week. Most of the article content of this issue, by authoritative)Tj T* 0.225 Tw (American and Chinese analysts, deals with the very subject of today)Tj /F14 1 Tf 33.8085 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.225 Tw (s hearing. I)Tj -34.0125 -1 TD 0.1925 Tw (have taken the liberty of making copies of this issue available to members of the)Tj T* 0.075 Tw (Subcommittee, in the hope that they or their staff will find them useful in exploring)Tj T* 0.0525 Tw (the themes of today)Tj /F14 1 Tf 9.2324 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0525 Tw (s hearing.)Tj -8.4364 -1 TD 0.1575 Tw (I congratulate this Subcommittee for getting an early start in the new Congress)Tj -1 -1 TD 0.1525 Tw (on the broad subject of US-China relations. China has a way of bursting upon the)Tj T* 0.065 Tw (Congressional agenda in times of acute crisis, and then disappearing almost without)Tj T* 0.2625 Tw (trace from Members)Tj /F14 1 Tf 9.8759 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.2625 Tw [( priorities when things settle down. This relationship is too)]TJ -10.0799 -1 TD 0.1875 Tw (huge, and its implications not only for America)Tj /F14 1 Tf 22.9992 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1875 Tw (s interests but for the interests of)Tj -23.2032 -1 TD 0.1425 Tw (world peace and prosperity too significant, for it to be treated in this manner. The)Tj T* 0.22 Tw (Senate Foreign Relations Committee and this Subcommittee can do the Congress)Tj T* 0.1625 Tw (and the nation a major service by staying the course on our relations with China,)Tj T* 0.14 Tw (year in and year out, hearing the good and the bad, the positive and the negative,)Tj T* 0.1225 Tw (and placing the US-China relationship into the broadest context of American inter-)Tj T* 0.0525 Tw (ests and policies worldwide.)Tj 6.4 0 0 6.0958 197.74 425 Tm 0 Tw (II)Tj 8 0 0 8 202.9496 425 Tm (. )Tj 6.4 0 0 6.0958 207.8175 425 Tm (US)Tj 8 0 0 8 217.0655 425 Tm (-)Tj 6.4 0 0 6.0958 219.7295 425 Tm [(CHINA)-412.5(TRADE)-412.5(AND)-412.5(ECONOMIC)-412.5(RELATIONS)]TJ 8 0 0 8 367.5246 425 Tm (: )Tj /F14 1 Tf 0.6085 0 TD ()Tj /F18 1 Tf 6.4 0 0 6.0958 375.6564 425 Tm [(THE)-412.5(DATA)]TJ /F14 1 Tf 8 0 0 8 411.0068 425 Tm ()Tj /F18 1 Tf -32.0009 -1.625 TD 0.1025 Tw (It is no secret that our country and China now participate in a vast economic en-)Tj -1 -1 TD 0.2225 Tw (gagement that places the US second on China)Tj /F14 1 Tf 22.7822 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.2225 Tw (s list of trade partners and China)Tj -22.9862 -1 TD 0.0625 Tw (fourth on our own. In a year of economic sluggishness, US-China trade in 2002 grew)Tj T* 0.06 Tw (rapidly. US figures show US exports to China up more than 15% over 2001 the larg-)Tj T* 0.175 Tw (est and most rapid export growth booked with any of our trade partners. Chinese)Tj T* 0.185 Tw (exports to the US continued to expand very rapidly as well, and the merchandise)Tj T* 0.0525 Tw (trade deficit reached unprecedented levels.)Tj 1 -1 TD 0 Tw (China)Tj /F14 1 Tf 2.815 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.2125 Tw (s economy continued to move ahead strongly, driven by a combination of)Tj -4.019 -1 TD 0.2 Tw (domestic market growth, government deficit spending to deter deflationary trends)Tj T* 0.1175 Tw (and mitigate reform-driven unemployment, stronger than predicted export perform-)Tj T* 0.1825 Tw (ance, and strong incoming FDI levels. The bulk of China)Tj /F14 1 Tf 27.7011 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1825 Tw (s very large FDI inflows)Tj -27.9051 -1 TD 0.215 Tw (continues to come from Asian points of origin, most notably Hong Kong, Taiwan,)Tj T* 0.0525 Tw (and Japan, with more Asian investment booked under British Virgin Islands.)Tj 1 -1 TD 0.14 Tw (Chinese figures show the top six import suppliers to the PRC as Japan, Taiwan,)Tj -1 -1 TD 0.0875 Tw (South Korea, the US, Germany and Hong Kong, with Taiwan)Tj /F14 1 Tf 29.1261 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0875 Tw (s exports to the main-)Tj -29.3301 -1 TD 0.255 Tw (land rising 39% in 2002. China)Tj /F14 1 Tf 15.5938 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.255 Tw (s top export destinations continue to be the US,)Tj -15.7978 -1 TD 0.0525 Tw (Hong Kong, and Japan, with South Korea and Germany running far behind.)Tj 1 -1 TD 0 Tw (China)Tj /F14 1 Tf 2.815 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.06 Tw (s total foreign trade grew by nearly 22 percent in 2002; exports and imports)Tj -4.019 -1 TD 0.1775 Tw (both rose by more than 20%. China)Tj /F14 1 Tf 17.3268 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1775 Tw (s overall positive trade balance of around $30)Tj -17.5307 -1 TD 0.19 Tw (billion was higher than that of 2001, about the same as that for 1999, and lower)Tj T* 0.145 Tw (than that for 1997 and 1998. China)Tj /F14 1 Tf 17.2087 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.145 Tw (s trade with the Asia-Pacific region grew most)Tj -17.4127 -1 TD 0.195 Tw (rapidly. Overall, China)Tj /F14 1 Tf 11.0768 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.195 Tw (s top 6 trade partners in 2002 were \(in order\): Japan, the)Tj -11.2808 -1 TD 0.065 Tw (U.S., Hong Kong, Taiwan, South Korea and Germany. Taiwan replaced South Korea)Tj T* 0.0525 Tw (in the #4 slot, its trade with the PRC rising by 38.1 percent.)Tj 1 -1 TD 0.0625 Tw (Exports from non-state-controlled firms rose more than 27%, a sign of the growing)Tj -1 -1 TD 0.2125 Tw (international activity of non-governmental enterprises as China, under WTO, fur-)Tj T* 0.2025 Tw (ther opens the door to international business by domestic firms. Economists have)Tj T* 0.08 Tw (long noted that the non-governmental sector of the Chinese economy is far more dy-)Tj T* 0.18 Tw (namic and far more effective at generating employment than the state sector, but)Tj T* 0.1925 Tw (that the state sector continues to enjoy far greater access to capital than do non-)Tj T* 0.0525 Tw (state firms.)Tj 1 -1 TD 0.1525 Tw (In the first nine months of 2002, 60% of all incoming investment came from the)Tj -1 -1 TD 0.2125 Tw (Asian region, with the U.S. accounting for 10.5%. Exports from FIBs)Tj /F14 1 Tf 33.7565 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.2125 Tw (foreign in-)Tj -34.7565 -1 TD 0.1625 Tw (vested enterprises)Tj /F14 1 Tf 8.6064 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.1625 Tw (accounted for 52% of all Chinese exports in 2002, according to)Tj -9.6064 -1 TD 0.0525 Tw (Chinese numbers.)Tj 1 -1 TD 0.17 Tw (Among the key features of the Chinese economy in 2002 were the accumulating)Tj -1 -1 TD 0.09 Tw (evidence of a large domestic market for consumer durables and consumer goods, ex-)Tj T* 0.075 Tw (emplified by the rapid growth of auto sales, and the concurrent deepening of income)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00033)-1076.9(Fmt 6633)-1076.9(Sfmt 6621)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 115 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R /F19 17 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 117 0 obj << /Length 8555 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (30)Tj 8 0 0 8 147 648 Tm 0.1875 Tw (and wealth disparities within Chinese society, both on the rural-urban continuum)Tj 0 -1.0375 TD 0.205 Tw (and between the heavily advantaged coastal region and the more poorly endowed)Tj T* 0.1125 Tw (interior and )Tj /F14 1 Tf 6.0399 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.1125 Tw (rust belt)Tj /F14 1 Tf 4.0574 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.1125 Tw [( regions. One informed observer has argued that widespread)]TJ -10.9133 -1.0375 TD 0.2225 Tw (privatization of housing ownership has had a very powerful stimulating effect on)Tj T* 0 Tw (China)Tj /F14 1 Tf 2.815 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.0525 Tw (s domestic markets.)Tj -2.019 -1.0375 TD 0.0725 Tw (The central government has continued to pour resources into infrastructure devel-)Tj -1 -1.0375 TD 0 Tw (opment)Tj /F14 1 Tf 3.4629 0 TD ()Tj /F18 1 Tf 1 0 TD 0.195 Tw (dams, pipelines, modern highway networks, telecommunications systems,)Tj -4.4629 -1.0375 TD 0.165 Tw (and so forth)Tj /F14 1 Tf 5.8669 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.165 Tw (whose economic returns may not be immediate. The government \(as)Tj -6.8669 -1.0375 TD 0.0525 Tw (of today, the new team that has just taken high office\) faces huge challenges in deal-)Tj T* 0.15 Tw (ing with persistent budget deficits, widespread industrial unemployment and rural)Tj T* 0.235 Tw (economic distress, and the twin burdens of adhering to WTO market-opening re-)Tj T* 0.1875 Tw (quirements while simultaneously ameliorating the economic dislocations that such)Tj T* 0.1225 Tw (adherence is widely expected to entail. Meanwhile, the vast enterprise of shrinking)Tj T* 0.0975 Tw (the role of the public authority in the economic and social life of the populace while)Tj T* 0.1775 Tw (maintaining and even increasing the effectiveness of national authority across the)Tj T* 0.2025 Tw (length and breadth of China)Tj /F14 1 Tf 13.9038 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.2025 Tw (s huge land mass grinds ahead, bounded on the one)Tj -14.1078 -1.0375 TD 0.215 Tw (side by the looming danger of excessive audacity and on the other by the impos-)Tj T* 0.0525 Tw (sibility of holding back the tide of continuing economic reform.)Tj 1 -1.0375 TD 0.205 Tw (Faced with the broad range of economic and social challenges merely hinted at)Tj -1 -1.0375 TD 0.3 Tw (here, the regime has given strong signals in the past year that a stable inter-)Tj T* 0.115 Tw (national situation, including a stable relationship with the United States, is an im-)Tj T* 0.3475 Tw (portant prerequisite for the domestic economic progress on which it must con-)Tj T* 0.0575 Tw (centrate. For one expression of that viewpoint, I commend to your attention the arti-)Tj T* 0.14 Tw (cle by Prof. Huang Renwei in the issue of )Tj /F14 1 Tf 20.5207 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.14 Tw (The China Business Review)Tj /F14 1 Tf 13.3468 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.14 Tw [( that I am)]TJ -34.6835 -1.0375 TD 0.07 Tw (presenting to members of the Committee. We expect the heavy focus on pressing do-)Tj T* 0.0525 Tw (mestic demands to continue under China)Tj /F14 1 Tf 19.2442 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0525 Tw (s new leadership.)Tj 6.4 0 0 6.0958 181.8 426.2001 Tm 0 Tw (III)Tj 8 0 0 8 189.6144 426.2001 Tm (. )Tj 6.4 0 0 6.0958 194.4823 426.2001 Tm [(CHINA)-412.5(IN)-412.5(THE)-412.5(WTO)]TJ 8 0 0 8 262.3639 426.2001 Tm (: )Tj 6.4 0 0 6.0958 267.2318 426.2001 Tm (THE)Tj /F14 1 Tf 8 0 0 8 284.0926 426.2001 Tm ()Tj /F18 1 Tf 6.4 0 0 6.0958 287.3565 426.2001 Tm (DATA)Tj /F14 1 Tf 8 0 0 8 305.8461 426.2001 Tm ()Tj /F18 1 Tf 0.408 0 TD ( )Tj 6.4 0 0 6.0958 311.7541 426.2001 Tm [(OF)-412.5(A)-412.5(WORK)-412.5(IN)-412.5(ITS)-412.5(EARLY)-412.5(STAGES)]TJ 8 0 0 8 155 412.9001 Tm 0.1375 Tw (Evaluation of China)Tj /F14 1 Tf 9.5909 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (s )Tj /F14 1 Tf 0.8785 0 TD ()Tj /F18 1 Tf 0.408 0 TD (performance)Tj /F14 1 Tf 5.7949 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.1375 Tw [( in adjusting its institutions, laws, and prac-)]TJ -18.2842 -1.0375 TD 0.1675 Tw (tices to the requirements detailed in its WTO accession papers began almost from)Tj T* 0.1725 Tw (the day China joined the WTO in December, 2001. American businesses, who had)Tj T* 0.1175 Tw (played such a significant advisory role in helping the government to define the far-)Tj T* 0.2025 Tw (reaching obligations that the United States insisted China accept if it were to be)Tj T* 0.095 Tw (admitted to the WTO, viewed China)Tj /F14 1 Tf 17.1627 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.095 Tw (s entrance into the WTO with optimism, in the)Tj -17.3667 -1.0375 TD 0.2925 Tw (belief that a China committed to conducting its now-massive international com-)Tj T* 0.1575 Tw (merce under rules and dispute mechanisms established by the global trading com-)Tj T* 0.28 Tw (munity would prove a more congenial and dependable trade counterpart than a)Tj T* 0.135 Tw (China left to its own devices outside the framework which governed the conduct of)Tj T* 0.0525 Tw (the rest of the world)Tj /F14 1 Tf 9.5619 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0525 Tw (s trading nations. That remains their view.)Tj -8.7659 -1.0375 TD 0.1425 Tw (Partly because China)Tj /F14 1 Tf 10.1938 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1425 Tw (s WTO accession was unprecedented in the complexity and)Tj -11.3978 -1.0375 TD 0.2275 Tw (detail of its commitments, and partly because of the intense political controversy)Tj T* (surrounding the PNTR debate in the United States, this country has established)Tj T* 0.2225 Tw (multiple governmental mechanisms for examining China)Tj /F14 1 Tf 27.5031 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.2225 Tw (s continuing progress to-)Tj -27.7071 -1.0375 TD 0.11 Tw (ward full implementation of its commitments, not only at the outset of its member-)Tj T* 0.0575 Tw (ship in the WTO, but each year for the long period of its phasing in of required mar-)Tj T* 0.1325 Tw (ket openings. The WTO itself has subjected China to annual review of its perform-)Tj 0 -1.025 TD 0.0525 Tw (ance as well.)Tj 1 -1.025 TD 0.055 Tw (Thus, the US-China Business Council offered to the Trade Policy Staff Committee,)Tj -1 -1.025 TD 0.1575 Tw (coordinated by the Office of the U.S. Trade Representative, its preliminary assess-)Tj T* 0.145 Tw (ment of China)Tj /F14 1 Tf 6.8829 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.145 Tw (s earliest progress as a WTO member, in testimony last September.)Tj -6.0869 -1.025 TD 0.0825 Tw (I attach an article I wrote at that time, )Tj /F14 1 Tf 19.0052 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.0825 Tw (WTO: Toward Year Two,)Tj /F14 1 Tf 11.7313 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.0825 Tw [( which summa-)]TJ -32.5525 -1.025 TD 0.0975 Tw (rized very briefly the much more detailed analysis the Council produced \(the longer)Tj T* 0.1225 Tw (document is available at the Council web site, )Tj /F19 1 Tf 22.4477 0 TD 0 Tw (www.uschina.org, )Tj /F18 1 Tf 8.6774 0 TD (at )Tj /F14 1 Tf 1.3455 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.1225 Tw (China and the)Tj -32.8785 -1.025 TD 0 Tw (WTO/Public.)Tj /F14 1 Tf 5.8899 0 TD ()Tj /F18 1 Tf 0.408 0 TD (\))Tj -5.2979 -1.025 TD 0.175 Tw (We concluded, in essence, that after only ten months of Chinese membership in)Tj -1 -1.025 TD 0.15 Tw (the WTO, it was premature to form sweeping conclusions about the extent, the ef-)Tj T* 0.11 Tw (fectiveness, or the forthcomingness of China)Tj /F14 1 Tf 20.9747 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.11 Tw (s WTO conformity efforts. We observed)Tj -21.1787 -1.025 TD 0.1875 Tw (that, near the end of the first year, the WTO glass was half full, not half empty,)Tj T* 0.2125 Tw (primarily because China had reduced tariffs on time and in full keeping with its)Tj T* 0.165 Tw (first year obligations, had made very extensive efforts to amend existing laws and)Tj T* 0.055 Tw (regulations or put new WTO-compatible laws on the books; and that the government)Tj T* 0.0875 Tw (was clearly involved in a wide-ranging effort to introduce the notions and the meth-)Tj T* 0.095 Tw (ods of a WTO-consistent economy to tens of thousands of administrators and cadres)Tj T* 0.1375 Tw (who were essentially confronting an entire new conceptual and administrative uni-)Tj T* 0.0525 Tw (verse for the first time.)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00034)-1076.9(Fmt 6633)-1076.9(Sfmt 6621)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 118 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R /F19 17 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 120 0 obj << /Length 8291 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (31)Tj 8 0 0 8 155 648 Tm 0.145 Tw (We noted, as well, however, that the first year had begun to reveal a number of)Tj -1 -1.0125 TD (emergent problems which demanded resolution in the second year of China)Tj /F14 1 Tf 36.2285 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.145 Tw (s WTO)Tj -36.4325 -1.0125 TD 0 Tw (membership.)Tj 1 -1.0125 TD 0.2 Tw (These included inadequacies in the establishment of the )Tj /F14 1 Tf 27.8256 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.2 Tw (tariff rate quota)Tj /F14 1 Tf 7.8269 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.2 Tw [( sys-)]TJ -37.4685 -1.0125 TD 0.1425 Tw (tems, for both agricultural and non-agricultural products; delays in instituting sta-)Tj T* 0.2575 Tw (ble import policies on GMO commodities; the absence of timely establishment of)Tj T* 0.3075 Tw (WTO-required auto-financing systems; continuing lacunae in the critical area of)Tj T* 0.055 Tw (legal and regulatory transparency, despite some examples of noticeable progress; the)Tj T* 0.0675 Tw (nascent practice of posting excessively high capital requirements on new service-sec-)Tj T* 0.075 Tw (tor businesses in a manner that militated against international companies)Tj /F14 1 Tf 35.1255 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.075 Tw [( full real-)]TJ -35.3295 -1.0125 TD 0.2575 Tw (ization of new WTO-mandated market opportunities; manipulation of certain tax)Tj 0 -1 TD 0.0675 Tw (practices, notably relating to the )Tj /F14 1 Tf 15.6543 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD (VAT)Tj /F14 1 Tf 2.111 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.0675 Tw [( or Value Added Tax, in ways that suggested)]TJ -18.5812 -1 TD 0.245 Tw (inappropriate favoritism toward domestic products; opacity in the critical area of)Tj T* 0.2025 Tw (trading and distribution rights for foreign invested enterprises; and the perennial)Tj T* 0.0525 Tw (problem of intellectual property rights protection and enforcement.)Tj 1 -1 TD 0.1725 Tw (We noted, further, that with )Tj /F14 1 Tf 14.2333 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.1725 Tw (Year Two,)Tj /F14 1 Tf 4.8774 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.1725 Tw [( the process of phasing in key Chinese)]TJ -20.9267 -1 TD 0.1375 Tw (market opening commitments would begin in earnest, and expressed the hope that)Tj T* 0.0525 Tw (such phase-ins would proceed as smoothly and definitively as possible.)Tj 1 -1 TD 0.16 Tw (Now, in March 2003, we are moving into the middle portion of )Tj /F14 1 Tf 30.8686 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.16 Tw (Year Two.)Tj /F14 1 Tf 4.8649 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.16 Tw [( The)]TJ -37.5495 -1 TD 0.075 Tw (United States Government has engaged directly with Chinese authorities on a num-)Tj T* 0.1325 Tw (ber of the most significant issues mentioned in our list of concerns above. China is)Tj T* 0.0625 Tw (just finishing a period of political transition that began with the Party Congress last)Tj T* 0.135 Tw (November and concluded with the end of the National People)Tj /F14 1 Tf 29.4956 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.135 Tw (s Congress on March)Tj -29.6996 -1 TD 0.115 Tw (18. Some of the key Chinese agencies responsible for policies and actions central to)Tj T* 0.0875 Tw (fulfillment of China)Tj /F14 1 Tf 9.3049 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0875 Tw (s WTO obligations are being reorganized, merged, or redirected.)Tj -9.5089 -1 TD 0.1975 Tw (A period of uncertainty as to who reports to whom and who has the power to do)Tj T* 0.155 Tw (what in the WTO implementation realm may be before us; we hope that any such)Tj T* 0.0525 Tw (hiatus will be short.)Tj 1 -1 TD 0.0825 Tw (While the US-China Business Council recognizes that )Tj /F14 1 Tf 25.7441 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.0825 Tw (Year Two)Tj /F14 1 Tf 4.5094 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.0825 Tw [( has a long time)]TJ -32.0695 -1 TD 0.21 Tw (to run, we are of the view that the months since submission of our TPSC report)Tj T* 0.1725 Tw (last fall have shown few significant advances in China)Tj /F14 1 Tf 26.4946 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1725 Tw (s WTO acclimatization and)Tj -26.6986 -1 TD 0.2 Tw (implementation. As we have noted to our Chinese interlocutors many times, time)Tj T* 0.0525 Tw (is passing.)Tj 1 -1 TD 0.095 Tw (The list of our concerns has changed little since the fall of 2002: the TRQ regime,)Tj -1 -1 TD 0.155 Tw (opaque or discriminatory use of technical standards whose effect is to block access)Tj T* 0.0925 Tw (of foreign products to China)Tj /F14 1 Tf 13.2578 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0925 Tw (s markets, continuing excessive capital requirements in)Tj -13.4618 -1 TD 0.16 Tw (most service sectors, telecommunications sector licensing requirements, inadequate)Tj T* 0.115 Tw (progress on the establishment of trading and distribution rights for certain foreign-)Tj T* 0.2275 Tw (invested firms, inappropriate use of VAT rebates in a manner that discriminates)Tj T* 0.065 Tw (against imported products, the drawn-out GMO controversy, the unresolved problem)Tj T* 0.08 Tw (of rampant intellectual property abuse)Tj /F14 1 Tf 18.1917 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.08 Tw (all remain of concern to the Council and its)Tj -19.1917 -1 TD 0 Tw (members.)Tj 1 -1 TD 0.195 Tw (At the same time, we are well aware that United States agencies are receiving)Tj -1 -1 TD 0.1275 Tw (rising numbers of requests for protection against Chinese imports, both from tradi-)Tj T* 0.18 Tw (tional heavily protected sectors of the US economy and from individual makers of)Tj T* 0.1525 Tw (products now facing Chinese competition in US markets. Further, China itself has)Tj T* 0.2275 Tw (developed and is now using its own anti-dumping rules and institutions with in-)Tj T* 0.0525 Tw (creasing frequency and thoroughness.)Tj 6.4 0 0 6.0958 186.52 257.0001 Tm 0 Tw (IV)Tj 8 0 0 8 193.7456 257.0001 Tm (. )Tj 6.4 0 0 6.0958 198.6135 257.0001 Tm [(ECONOMIC)-412.5(AND)-412.5(COMMERCIAL)-412.5(RELATIONS)]TJ 8 0 0 8 345.3046 257.0001 Tm (: )Tj 6.4 0 0 6.0958 350.1725 257.0001 Tm [(A)-412.5(QUICK)-412.5(SUMMATION)]TJ 8 0 0 8 155 244.0001 Tm 0.195 Tw (Taken as a whole, the immense process of economic and social change rolls on.)Tj -1 -1 TD 0.1075 Tw (China continues to move in the directions that, presumably, Americans want to see)Tj T* 0.1325 Tw (it go. The economy is very heavily marketized now. The profit motive has trumped)Tj T* 0.2025 Tw (the planned economy to a degree unimaginable a few years ago. The heavy hand)Tj T* 0.065 Tw (of the state has been removed from many aspects of Chinese citizens)Tj /F14 1 Tf 32.3645 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.065 Tw [( lives. The Chi-)]TJ -32.5685 -1 TD 0.4075 Tw (nese government continues to move away from the remnants of the Stalinist)Tj T* 0.1475 Tw (planned economy, often against entrenched bureaucratic vested interests and often)Tj T* 0.3425 Tw (at the cost of cutting once-dependent constituencies adrift. An important trend)Tj T* 0.1625 Tw (gradually moving ahead now is the reduction of the stultifying and corruption-rid-)Tj T* 0.185 Tw (den but all-pervasive system of bureaucratic approvals and licensing in favor of a)Tj T* 0.0775 Tw (more equitable and routinized system that places fewer obstacles in the path of pro-)Tj T* 0.0525 Tw (ductive economic activity)Tj /F14 1 Tf 11.7158 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.0525 Tw (for Chinese and non-Chinese alike.)Tj -11.7158 -1 TD 0 Tw (China)Tj /F14 1 Tf 2.815 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.215 Tw (s domestic market is an established fact of real significance to many US)Tj -4.019 -1 TD 0.125 Tw (firms. Chinese companies and entrepreneurs increasingly have assimilated the lan-)Tj T* 0.2125 Tw (guage and the methods of global commerce. Contrary to the familiar portrayal of)Tj T* 0.0975 Tw (deluded and befuddled business people throwing their money down the drain in the)Tj T* 0.1575 Tw (vain pursuit of the mythical China market, many of our Council)Tj /F14 1 Tf 31.1326 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1575 Tw (s member compa-)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00035)-1076.9(Fmt 6633)-1076.9(Sfmt 6621)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 121 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 123 0 obj << /Length 8994 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (32)Tj 8 0 0 8 147 648 Tm 0.145 Tw (nies are doing well there, and view China either as a short-term bright spot in an)Tj 0 -1.025 TD (otherwise bleak business landscape or as a compelling mid- to long-term venue for)Tj T* 0.2 Tw (business development. Smaller US companies are unquestionably stirring as well,)Tj T* 0.09 Tw (beginning to see China for the first time as a place where they, too, might seriously)Tj T* 0.0525 Tw (explore profitable opportunities.)Tj 1 -1.025 TD 0.505 Tw (The economic development of China, including the improved economic cir-)Tj -1 -1.025 TD 0.245 Tw (cumstances of hundreds of millions of Chinese citizens and the expansion of the)Tj T* 0.2675 Tw (modern Chinese industrial economy)Tj /F14 1 Tf 17.4502 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.2675 Tw (are widely seen by American companies as)Tj -18.4502 -1.025 TD 0.3325 Tw (highly positive developments)Tj /F14 1 Tf 14.0918 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.3325 Tw (especially since U.S. products are best suited for)Tj -15.0918 -1.025 TD 0.0525 Tw (more advanced economies and for consumers with money to spend.)Tj 1 -1.025 TD 0.1575 Tw (China has proven, as well, capable of manufacturing a vast array of products to)Tj -1 -1.025 TD 0.0725 Tw (world specifications at highly competitive prices, and has established itself as a sup-)Tj T* 0.14 Tw (plier of many manufactured goods to foreign markets, including the United States.)Tj T* 0.1425 Tw (Clearly, China has become an integral component in many firms)Tj /F14 1 Tf 31.1 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1425 Tw [( global marketing)]TJ -31.304 -1.025 TD 0.0525 Tw (and sourcing strategies. This trend is likely to continue.)Tj 1 -1.025 TD 0 Tw (This )Tj /F14 1 Tf 2.454 0 TD ()Tj /F18 1 Tf 0.408 0 TD (emergence,)Tj /F14 1 Tf 5.2029 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.12 Tw [( as the Subcommittee has called it, of China in the world econ-)]TJ -9.4729 -1.025 TD 0.09 Tw (omy is important news for China)Tj /F14 1 Tf 15.6548 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.09 Tw (s trade partners, including the United States. And)Tj -15.8588 -1.025 TD 0.15 Tw (it is this complex mixture of good and bad news that leads me to the final section)Tj T* 0.0525 Tw (of this testimony.)Tj 6.4 0 0 6.0958 227.02 486.2 Tm 0 Tw (IV)Tj 8 0 0 8 234.2456 486.2 Tm (. )Tj 6.4 0 0 6.0958 239.1135 486.2 Tm [(THE)-412.5(MEANING)-412.5(OF)]TJ /F14 1 Tf 8 0 0 8 303.8015 486.2 Tm ()Tj /F18 1 Tf 6.4 0 0 6.0958 307.0654 486.2 Tm (CHINA)Tj /F14 1 Tf 8 0 0 8 329.459 486.2 Tm ()Tj /F18 1 Tf 6.4 0 0 6.0958 331.091 486.2 Tm [(S)-412.5(EMERGENCE)]TJ /F14 1 Tf 8 0 0 8 381.7245 486.2 Tm ()Tj /F18 1 Tf -28.3406 -1.65 TD 0.22 Tw (Mr. Chairman, barring internal systemic crisis such as might arise from a col-)Tj -1 -1.025 TD 0.0825 Tw (lapsing banking system or a catastrophic worsening of China)Tj /F14 1 Tf 28.8666 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0825 Tw (s already serious rural)Tj -29.0706 -1.025 TD 0.1625 Tw (and urban social dislocations or from a decisive degradation of China)Tj /F14 1 Tf 33.4795 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1625 Tw (s corruption-)Tj -33.6835 -1.025 TD 0.17 Tw (ridden administrative structures, the China whose remarkable trajectory has been)Tj T* 0.2425 Tw (the object of world wonder and admiration over the past decade is here to stay.)Tj T* 0.13 Tw (While specialists vary in their assessments of the fragility of China)Tj /F14 1 Tf 32.3395 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.13 Tw (s economic and)Tj -32.5435 -1.025 TD 0.18 Tw (social stability, most view China)Tj /F14 1 Tf 15.7238 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.18 Tw (s track record over the past twenty years, for all)Tj -15.9278 -1.0125 TD 0.1875 Tw (its potholes, as very impressive, and conclude that China is far from the brink of)Tj T* 0.125 Tw (systemic failure. It would be a very risky bet to assume that China is headed back)Tj T* 0.1375 Tw (into the weakness and global insignificance that the older among us)Tj /F14 1 Tf 32.7685 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.1375 Tw (and the par-)Tj -33.7685 -1.0125 TD 0.0525 Tw (ents of the younger among us)Tj /F14 1 Tf 13.8553 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.0525 Tw (used to take for granted.)Tj -13.8553 -1.0125 TD 0 Tw (China)Tj /F14 1 Tf 2.815 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.2 Tw (s high-level politics, however opaque they might be to Western eyes, still)Tj -4.019 -1.0125 TD 0.2625 Tw (appear demonstrate continuity and )Tj /F14 1 Tf 17.6437 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD (normalcy.)Tj /F14 1 Tf 4.5739 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.2625 Tw [( The transition to new Party and)]TJ -23.0337 -1.0125 TD 0.09 Tw (government leadership has been navigated to conclusion only in the past few hours.)Tj T* 0.1025 Tw (The regime has now passed a longer period free of wrenching internal political con-)Tj T* 0.13 Tw (flict than at any time since its founding. The deep-seated assumption, arising from)Tj T* 0 Tw (Mao)Tj /F14 1 Tf 2 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.1375 Tw (s time, that any leader of China must be a charismatic )Tj /F14 1 Tf 26.9801 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD (mobilizational)Tj /F14 1 Tf 6.6129 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.1375 Tw [( figure)]TJ -36.613 -1.0125 TD 0.2875 Tw (is outmoded; China)Tj /F14 1 Tf 9.5389 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.2875 Tw (s leaders are educated, administratively experienced, techno-)Tj -9.7429 -1.0125 TD 0.095 Tw (logically literate, and for the most part unspectacular. The era of )Tj /F14 1 Tf 31.2515 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.095 Tw (Great Man Rule)Tj /F14 1 Tf 7.6719 0 TD 0 Tw ()Tj /F18 1 Tf -39.3314 -1.0125 TD 0.0525 Tw (is over.)Tj 1 -1.0125 TD 0.065 Tw (The regime)Tj /F14 1 Tf 5.3059 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.065 Tw (s stalwarts, like our own still come to their posts from overwhelmingly)Tj -6.5099 -1.0125 TD 0.305 Tw (domestic backgrounds. But China possesses a large pool of internationally com-)Tj T* 0.06 Tw (petent talent, in government and increasingly in business. The contrast with the sit-)Tj T* 0.0525 Tw (uation twenty years ago could not be more stark.)Tj 1 -1.0125 TD 0 Tw (China)Tj /F14 1 Tf 2.815 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.16 Tw (s international relations are generally stable, especially on its borders. Its)Tj -4.019 -1.0125 TD 0.1125 Tw (position in the Asia-Pacific regional economy is increasingly prominent and has not)Tj T* 0.1875 Tw (caused the economic disaster in the region that some observers had predicted; in-)Tj T* 0.1575 Tw (deed, China)Tj /F14 1 Tf 5.6764 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1575 Tw (s Asian neighbors are increasingly interested in building bilateral and)Tj -5.8804 -1.0125 TD 0.115 Tw (regional cooperative links with China that might help to assure their place in a re-)Tj T* 0.1375 Tw (gional economy heavily influenced by China)Tj /F14 1 Tf 20.9852 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1375 Tw (s trade behavior. China is an engaged,)Tj -21.1892 -1.0125 TD 0.0525 Tw (generally responsible player in most major world bodies.)Tj 1 -1.0125 TD 0.2275 Tw (The US-China dialogue of the past eighteen months, characterized by repeated)Tj -1 -1.0125 TD 0.1425 Tw (meetings of the heads of government and near-routine consultations at the cabinet)Tj T* 0 Tw (level)Tj /F14 1 Tf 2.167 0 TD ()Tj /F18 1 Tf 1 0 TD 0.1125 Tw (and, I)Tj /F14 1 Tf 2.8165 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1125 Tw (m happy to say, by expanded Congressional engagement with China)Tj /F14 1 Tf 32.572 0 TD 0 Tw ()Tj /F18 1 Tf -38.7594 -1.0125 TD 0.195 Tw (appears to be on a civil and respectful course, even when the two nations cannot)Tj T* 0.1925 Tw (fully agree. Human rights and labor issues continue to rankle, and should not be)Tj T* 0.12 Tw (lightly dismissed, but the past year has seen a few hopeful moments, including the)Tj T* 0.065 Tw (visit of representatives of the Dalai Lama to China and the release of Mr. Xu Wenli.)Tj T* 0.2325 Tw (Somewhat amazingly, after the tumult of the period from the Lee Teng-hui visit)Tj T* 0.1475 Tw (through the Taiwan Strait missile crisis, the missile technology brouhaha, and the)Tj T* 0.1925 Tw (successive controversies over campaign finance, the Cox Commission, Los Alamos,)Tj T* 0.11 Tw (the Belgrade Embassy bombing, the Long Beach and Panama Canal questions, and)Tj T* 0.185 Tw (the EP-3 Hainan Island incident, US-China relations are said by both sides to be)Tj /F14 1 Tf T* 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.0525 Tw (better than ever before.)Tj /F14 1 Tf 11.0283 0 TD 0 Tw ()Tj /F18 1 Tf -10.4363 -1.0125 TD 0.0525 Tw (China has, as the title of this hearing suggests, )Tj /F14 1 Tf 22.5502 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD (emerged.)Tj /F14 1 Tf 4.2219 0 TD ()Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00036)-1076.9(Fmt 6633)-1076.9(Sfmt 6621)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 124 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 126 0 obj << /Length 9133 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (33)Tj 8 0 0 8 155 648 Tm 0.0625 Tw (Yet the full implications of China)Tj /F14 1 Tf 15.7033 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0625 Tw (s arrival among the ranks of the very significant)Tj -16.9073 -0.9875 TD 0.1725 Tw (nations of the world are still, somehow, unexplored. I hope the Subcommittee will)Tj T* 0.09 Tw (excuse me for going beyond the narrow professional focus of the US-China Business)Tj T* 0.0525 Tw (Council for a moment to comment on this broader problem.)Tj 1 -0.9875 TD 0.215 Tw (The recitation of our business and economic relations with the PRC above is a)Tj -1 -0.9875 TD 0.0525 Tw (small facet of this larger picture. And there are a number of disquieting signs.)Tj 1 -0.9875 TD 0.1325 Tw (It is common to observe that with the collapse of the Soviet Union the )Tj /F14 1 Tf 34.3035 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD (strategic)Tj -35.7115 -0.9875 TD (rationale)Tj /F14 1 Tf 4.1859 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.1475 Tw [( for US-China relations evaporated, and that in its absence a plethora of)]TJ -4.5939 -0.9875 TD 0.0525 Tw (individual issues has tossed US-China relations one way and then another.)Tj 1 -0.9875 TD 0.185 Tw (Perhaps the )Tj /F14 1 Tf 6.2409 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.185 Tw (war on terror)Tj /F14 1 Tf 6.5359 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.185 Tw [( has re-established that overarching commonality of)]TJ -14.5928 -0.9875 TD 0.0525 Tw (interests needed to advance the bilateral relationship. Perhaps not.)Tj 1 -0.9875 TD 0.0925 Tw (An arms race is underway in the Taiwan Strait, identified by all observers as the)Tj -1 -0.9875 TD 0.185 Tw (point of greatest military volatility in US-Chinese relations. No matter where one)Tj T* 0.0525 Tw (chooses to identify first causes, the fact of that military race is undeniable.)Tj 1 -0.9875 TD 0.095 Tw (To the alarm of American observers, some Chinese strategic analysts paint a por-)Tj -1 -0.9875 TD 0.0725 Tw (trait of a United States bent on )Tj /F14 1 Tf 15.2333 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD (blocking)Tj /F14 1 Tf 3.8709 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.0725 Tw [( China)]TJ /F14 1 Tf 3.1655 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0725 Tw (s rise, constricting its economic op-)Tj -23.2897 -0.9875 TD 0.0975 Tw (portunities, emasculating its strategic and regional military strength, compromising)Tj T* 0.2725 Tw (its sovereignty, and undermining its political system. The writings of such com-)Tj T* 0.2775 Tw (mentators often claim more attention in the United States than the writings of)Tj T* 0.1775 Tw (those who posit a more cordial US-China relationship as one of the core elements)Tj T* 0.0525 Tw (of Chinese foreign policy.)Tj 1 -0.9875 TD 0.1925 Tw (From time to time, American observers find in China a state determined to re-)Tj -1 -0.9875 TD 0.12 Tw (assert ancient imperial pretensions to world power, a regime that takes the United)Tj T* 0.1625 Tw (States as China)Tj /F14 1 Tf 7.6419 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (s )Tj /F14 1 Tf 0.9035 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.1625 Tw (principal enemy)Tj /F14 1 Tf 7.6254 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.1625 Tw [( and bends its efforts to ensuring its ability to)]TJ -17.1907 -0.9875 TD 0.0525 Tw (confound American economic and military power.)Tj 1 -0.9875 TD 0.1675 Tw (Some analysts in China view the United States with alarmed uncertainty. They)Tj -1 -0.9875 TD 0.0975 Tw (find it difficult to conclude, for example, from the recently published National Secu-)Tj T* 0.1425 Tw (rity Strategy, whether China is the real intended target of the American pledge to)Tj T* 0.255 Tw (prevent the emergence of any military challenges to U.S. power, or whether the)Tj T* 0.0925 Tw (China that the United States pledges to work with in a consortium of major powers)Tj T* 0.335 Tw (dedicated to eradicating the threat of global terrorism is the Americans)Tj /F14 1 Tf 36.2965 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD ( )Tj /F14 1 Tf 0.613 0 TD ()Tj /F18 1 Tf 0.408 0 TD (real)Tj /F14 1 Tf 1.815 0 TD ()Tj /F18 1 Tf -39.3365 -0.9875 TD (China.)Tj 1 -0.9875 TD 0.145 Tw (Significant bodies of opinion in both countries see conflict between the American)Tj /F14 1 Tf -1 -0.9875 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.08 Tw (status quo power)Tj /F14 1 Tf 8.0499 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.08 Tw [( and the Chinese )]TJ /F14 1 Tf 8.3949 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.08 Tw (rising power)Tj /F14 1 Tf 5.8389 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.08 Tw [( as likely, if not unavoidable. The)]TJ -23.9156 -0.9875 TD 0.0525 Tw (costs of such conflict are not addressed.)Tj 1 -0.9875 TD 0.19 Tw (Some powerful voices within the United States see China)Tj /F14 1 Tf 28.0046 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.19 Tw (s increasing ability to)Tj -29.2086 -0.9875 TD 0.085 Tw (compete with the developed industrial nations, including the US, as a mortal threat)Tj T* 0.0525 Tw (to the US economy and thus to U.S. national security.)Tj 1 -0.9875 TD 0.2 Tw (In spite of the resumption of cordial US-China engagement in the aftermath of)Tj -1 -0.9875 TD 0.0875 Tw (September 11, with cooperation in the campaign against global terrorism as its cen-)Tj T* 0.0575 Tw (terpiece and rapidly growing economic engagement as its most visible manifestation,)Tj 0 -1 TD 0.09 Tw (the two nations have yet to achieve)Tj /F14 1 Tf 16.8018 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.09 Tw (or perhaps event to seek)Tj /F14 1 Tf 11.6198 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.09 Tw (a durable set of un-)Tj -30.4215 -1 TD 0.0575 Tw (derstandings as to their intentions and their understandings of each others)Tj /F14 1 Tf 35.3725 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0575 Tw [( national)]TJ -35.5765 -1 TD 0 Tw (interests.)Tj 1 -1 TD 0.1675 Tw (There is no sign of effective dialogue between the two countries as to what con-)Tj -1 -1 TD 0.225 Tw (stitute the legitimate needs and aspirations of both, when the two bump against)Tj T* 0.0825 Tw (each other. Each side has its list of )Tj /F14 1 Tf 17.0138 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD (non-negotiables,)Tj /F14 1 Tf 7.5749 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.0825 Tw [( but there seems little results-)]TJ -25.4046 -1 TD 0.0875 Tw (oriented communication)Tj /F14 1 Tf 11.2723 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.0875 Tw (official or otherwise)Tj /F14 1 Tf 9.2859 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.0875 Tw (as to where and how to reach mutu-)Tj -22.5582 -1 TD 0.0525 Tw (ally satisfactory understandings in areas of latent conflict.)Tj 1 -1 TD 0.2425 Tw (In the absence of such a consensus over basic goals and mutual interests, the)Tj /F14 1 Tf -1 -1 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD (data)Tj /F14 1 Tf 2.075 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.0725 Tw [( of this relationship)]TJ /F14 1 Tf 9.2554 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.0725 Tw (whether trade numbers or facts and figures about weap-)Tj -13.1463 -1 TD 0.31 Tw (ons deployments)Tj /F14 1 Tf 8.0139 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.31 Tw (are left to be interpreted by believers according to their pre-)Tj -9.0139 -1 TD 0.2725 Tw (conceptions. The fascinating and disturbing thing about the entire strategic dia-)Tj T* 0.0925 Tw (logue, to which our trade and economic engagement is from time to time a footnote,)Tj T* 0.0825 Tw (is that in the absence of US-China communication about the nature of this relation-)Tj T* 0.1 Tw (ship, those who )Tj /F14 1 Tf 7.7269 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD (know)Tj /F14 1 Tf 2.482 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.1 Tw [( out of conviction what the relationship is now and must be-)]TJ -11.0248 -1 TD 0.0575 Tw (come can all point to the facts and figures to prove their points of view. There seems)Tj T* 0.2275 Tw (to be little concern, moreover, for questions of how the United States and China)Tj T* 0.0675 Tw (might act purposefully to establish consensus, defuse frictions, and reduce the possi-)Tj T* 0.0525 Tw (bilities of major conflict.)Tj 1 -1 TD 0.2475 Tw (Ironically, the conundrums that China poses for the United States today arise)Tj -1 -1 TD 0.1125 Tw (from China)Tj /F14 1 Tf 5.3714 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1125 Tw (s growing ability to function in the world as a )Tj /F14 1 Tf 22.3877 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD (normal)Tj /F14 1 Tf 3.3149 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.1125 Tw [( nation, and not)]TJ -32.094 -1 TD 0.2425 Tw (as the grotesque and demonic state that Americans saw with such alarm in the)Tj T* 0.07 Tw (1950s and 1960s. Surely, with the emergence of a country this large, this significant)Tj T* 0.1 Tw (to the future of the global commons, this invigorated by a sense of finally achieving)Tj T* 0.1875 Tw (the elusive breakthrough to prosperity and security, the United States and China)Tj T* 0.0675 Tw (should be trying with maximum energy to answer the riddle of their future relation-)Tj T* 0 Tw (ship.)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00037)-1076.9(Fmt 6633)-1076.9(Sfmt 6621)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 127 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 129 0 obj << /Length 6868 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (34)Tj 8 0 0 8 155 648 Tm (China)Tj /F14 1 Tf 2.815 0 TD ()Tj /F18 1 Tf 0.204 0 TD (s )Tj /F14 1 Tf 1.016 0 TD ()Tj /F18 1 Tf 0.408 0 TD (emergence)Tj /F14 1 Tf 4.9249 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.275 Tw [( is a fact. The world is a different place as a result. The)]TJ -10.7759 -1.05 TD 0.13 Tw (United States Senate and all Americans should be asking: how are the interests of)Tj T* 0.0625 Tw (the United States best secured in this new and different world? Should we take Chi-)Tj T* 0 Tw (na)Tj /F14 1 Tf 1.167 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.255 Tw (s emergence solely as an existential danger toward whose undoing we should)Tj -1.371 -1.05 TD 0.06 Tw (bend every ounce of American strength? Would that be feasible? What would it cost?)Tj T* 0.0525 Tw (Would the world be with us? What would it mean to )Tj /F14 1 Tf 24.8581 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD (prevail)Tj /F14 1 Tf 3.241 0 TD ()Tj /F18 1 Tf 0.408 0 TD (?)Tj -27.9151 -1.05 TD 0.195 Tw (Does China)Tj /F14 1 Tf 5.5289 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.195 Tw (s emergence require that the United States examine its own defini-)Tj -6.7329 -1.05 TD 0.1975 Tw (tions? Can the US and China do more to harmonize their interests and their en-)Tj T* 0.15 Tw (gagements? Are the current fault lines in US-China relations fixed for all time? Is)Tj T* 0.065 Tw (it even worth exploring these questions anew, and more effectively, with China than)Tj T* 0.15 Tw (we have managed to do thus far? What might be the dangers in doing so? Is such)Tj T* 0.2175 Tw (an effort simply beyond the abilities of leaders in two such disparate societies to)Tj T* 0 Tw (manage?)Tj 1 -1.05 TD 0.1425 Tw (I hope that the Senate Foreign Relations Committee and this Subcommittee will)Tj -1 -1.05 TD 0.1925 Tw (not avert their eyes from big-picture questions like these, Mr. Chairman, for it is)Tj T* 0.0925 Tw (in the answers to these questions that the meaning of the economic and trade data,)Tj T* 0.215 Tw (the micro-level experiences of Americans in business and other walks of life, will)Tj T* 0.095 Tw (emerge to inform the thinking of our legislators and policy makers. The work needs)Tj T* 0.1275 Tw (to go forward in the absence of US-China crisis. I thank the Subcommittee for get-)Tj T* 0.0525 Tw (ting started.)Tj 6.4 0 0 6.0958 176.7 474 Tm 0 Tw (V)Tj 8 0 0 8 181.3208 474 Tm (. )Tj 6.4 0 0 6.0958 186.1887 474 Tm [(A)-412.5(CONCRETE)-412.5(CONCERN)]TJ 8 0 0 8 267.5518 474 Tm (: )Tj 6.4 0 0 6.0958 272.4198 474 Tm [(THE)-412.5(ONGOING)-412.5(PROBLEM)-412.5(OF)-412.5(VISA)-412.5(PROCESSING)]TJ 8 0 0 8 155 460.6 Tm 0.2475 Tw (Mr. Chairman, before concluding my testimony, I would like to raise one very)Tj -1 -1.05 TD 0.12 Tw (practical and immediate issue, with which I believe the Subcommittee and perhaps)Tj T* 0.0775 Tw (the full Foreign Relations Committee ought to be concerned. The American business)Tj T* 0.085 Tw (community engaged with China has, since the summer of 2002, encountered serious)Tj T* 0.2025 Tw (difficulties in regard to the travel to the United States of Chinese citizens in the)Tj T* 0.1925 Tw (employ of US firms, or at the invitation of US firms, for legitimate business pur-)Tj T* 0.15 Tw (poses. Many visa applications for business travel have been delayed for four to six)Tj T* 0.47 Tw (months, without explanation. Some visa applications have been denied, after)Tj T* 0.0525 Tw (lengthy delays, again without explanation.)Tj 1 -1.05 TD 0.1175 Tw (The press has already reported on a series of cases in which US firms have been)Tj -1 -1.05 TD 0.065 Tw (unable to bring to the United States Chinese citizens whose travel to the US is inte-)Tj T* 0.1425 Tw (gral to the US companies)Tj /F14 1 Tf 12.2198 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1425 Tw [( achievement of valuable sales, implementation of signed)]TJ -12.4238 -1.05 TD 0.125 Tw (sales agreements with Chinese customers, training of Chinese personnel in the use)Tj T* 0.06 Tw (of legitimately purchased US equipment, or planning of US company business devel-)Tj T* 0.0525 Tw (opment strategies in China.)Tj 1 -1.05 TD 0.09 Tw (The disruption of visa processing appears to be the result of two separate US pol-)Tj -1 -1.05 TD 0.095 Tw (icy thrusts. One aims at strenghtening US border security by denying entry to dan-)Tj T* 0.195 Tw (gerous individuals. The other is to tighten access to US-origin technology by aug-)Tj T* 0.0825 Tw (menting existing export controls. The US business community strongly supports im-)Tj T* 0.08 Tw (provements in border security and understands the need for appropriate export con-)Tj T* 0 Tw (trols.)Tj 1 -1.05 TD 0.1975 Tw (At the same time, it is clear that any truly effective new visa procedures must)Tj -1 -1.05 TD 0.065 Tw (eliminate, or minimize as fully as possible, the unnecessary )Tj /F14 1 Tf 28.3666 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.065 Tw (collateral damage)Tj /F14 1 Tf 8.2889 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.065 Tw [( that)]TJ -37.4714 -1.05 TD 0.1875 Tw (the current procedures are causing to American companies attempting to function)Tj T* 0.0525 Tw (in today)Tj /F14 1 Tf 3.8124 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0525 Tw (s global economy.)Tj -3.0164 -1.05 TD 0.315 Tw (Whether the problem lies in the inadequacy of manpower and equipment re-)Tj -1 -1.05 TD 0.085 Tw (sources for the prompt and predictable processing of visa applications, or in the pol-)Tj T* 0.0675 Tw (icy definitions and administrative guidelines \(not transparent to those outside of the)Tj T* 0.2475 Tw (relevant government agencies\) that have occasioned these very counterproductive)Tj T* 0.09 Tw (results, we sincerely hope that Members of this Subcommittee will turn their atten-)Tj T* 0.1625 Tw (tion to the task of remedying these problems and restoring the maximum possible)Tj T* 0.0525 Tw (level of effectiveness in the visa evaluation process.)Tj 1 -1.05 TD 0.1625 Tw (We have worked, as part of a larger coalition of concerned business associations)Tj -1 -1.05 TD 0.23 Tw (and companies, for many months on this issue, with representatives of executive)Tj T* 0.2 Tw (branch agencies and with members of Congressional staff in both Houses of Con-)Tj T* (gress. The matter appears now to reside principally in the newly created Depart-)Tj T* 0.2275 Tw (ment of Homeland Security, with which we hope to establish productive working)Tj T* 0.08 Tw (contact. We appreciate, in advance, your willingness to take an interest in this mat-)Tj T* 0.0525 Tw (ter, and hope we can remain in close contact with you about it.)Tj 1 -1.05 TD (Thank you very much.)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00038)-1076.9(Fmt 6633)-1076.9(Sfmt 6621)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 130 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 132 0 obj << /Length 8493 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (35)Tj 6 0 0 6 203.88 650 Tm 0.0533 Tw ([Reprinted from The China Business Review, November-December 2002])Tj 8 0 0 8 239.22 634.1 Tm 0 Tw (T)Tj 6.4 0 0 6.0958 244.5559 634.1 Tm (HE)Tj 8 0 0 8 257.1479 634.1 Tm (US-C)Tj 6.4 0 0 6.0958 277.1476 634.1 Tm (HINA)Tj 8 0 0 8 297.5604 634.1 Tm (B)Tj 6.4 0 0 6.0958 303.3363 634.1 Tm (USINESS)Tj 8 0 0 8 335.7299 634.1 Tm (C)Tj 6.4 0 0 6.0958 341.5058 634.1 Tm (OUNCIL)Tj /F19 1 Tf 8 0 0 8 259.54 618.2 Tm 0.0525 Tw (Letter from the President)Tj /F18 1 Tf -9.5725 -1.4875 TD 0 Tw (\(R)Tj 6.4 0 0 6.0958 191.3998 606.3 Tm (OBERT)Tj 8 0 0 8 217.1502 606.3 Tm 0.0525 Tw (A. K)Tj 6.4 0 0 6.0958 234.018 606.3 Tm 0 Tw (APP)Tj 8 0 0 8 247.1764 606.3 Tm 0.0525 Tw (, P)Tj 6.4 0 0 6.0958 257.3802 606.3 Tm 0 Tw (RESIDENT)Tj 8 0 0 8 292.3434 606.3 Tm 0.0525 Tw (, T)Tj 6.4 0 0 6.0958 302.5472 606.3 Tm 0 Tw (HE)Tj 8 0 0 8 315.1392 606.3 Tm (US-C)Tj 6.4 0 0 6.0958 335.1389 606.3 Tm (HINA)Tj 8 0 0 8 355.5517 606.3 Tm (B)Tj 6.4 0 0 6.0958 361.3276 606.3 Tm (USINESS)Tj 8 0 0 8 393.7212 606.3 Tm (C)Tj 6.4 0 0 6.0958 399.4971 606.3 Tm (OUNCIL)Tj 8 0 0 8 426.4027 606.3 Tm (\))Tj 6.4 0 0 6.0958 258.08 592.4 Tm (WTO)Tj 8 0 0 8 273.6064 592.4 Tm (: )Tj 6.4 0 0 6.0958 278.4743 592.4 Tm (TOWARD)Tj /F14 1 Tf 8 0 0 8 310.8615 592.4 Tm ()Tj /F18 1 Tf 6.4 0 0 6.0958 314.1254 592.4 Tm [(YEAR)-412.5(TWO)]TJ /F14 1 Tf 8 0 0 8 350.6598 592.4 Tm ()Tj /F18 1 Tf -24.4575 -1.6125 TD 0.085 Tw (The US-China Business Council recently joined other trade organizations in offer-)Tj -1 -0.9875 TD 0.075 Tw (ing a detailed analysis to the US government of China)Tj /F14 1 Tf 25.7346 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.075 Tw (s progress in adjusting to the)Tj -25.9386 -0.9875 TD 0.2475 Tw (demands of its World Trade Organization \(WTO\) membership since it joined the)Tj T* 0.15 Tw (world trading body last December. The Council)Tj /F14 1 Tf 22.6797 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.15 Tw (s presentation was part of a multi-)Tj -22.8837 -0.9875 TD 0.0725 Tw (agency US government process of information-gathering and evaluation that will re-)Tj T* 0.2075 Tw (sult in an official administration report to the US Congress by December 11, the)Tj 0 -1 TD 0.115 Tw (first anniversary of China)Tj /F14 1 Tf 12.3448 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.115 Tw (s accession. \(The Council)Tj /F14 1 Tf 11.8448 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.115 Tw (s full presentation can be found)Tj -24.5976 -1 TD 0.0525 Tw (on the Council)Tj /F14 1 Tf 6.7899 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0525 Tw (s website, www.uschina.org.\))Tj -5.9939 -1 TD 0.26 Tw (In a brief oral presentation accompanying the written submission, the Council)Tj -1 -1 TD 0.0525 Tw (summed up its overall estimation of China)Tj /F14 1 Tf 20.0027 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0525 Tw (s WTO progress as follows:)Tj /F19 1 Tf -19.2067 -1 TD 0.1925 Tw (In the starkest of glass half full/glass half empty terms, the Council considers)Tj -1 -1 TD 0.165 Tw (the glass more than half full as the end of the first year approaches, thanks to the)Tj T* 0.2375 Tw (extensive and highly visible efforts China has made in many areas of WTO-man-)Tj T* 0.0525 Tw (dated reform.)Tj /F18 1 Tf 1 -1 TD (These efforts included)Tj /F9 1 Tf 0 -1.5 TD 0 Tw ()Tj /F18 1 Tf 1.015 0 TD 0.0625 Tw (Elimination of laws and regulations incompatible with WTO terms and issuance)Tj -0.015 -1 TD 0.0725 Tw (of new legislation and regulations designed to comport with WTO requirements;)Tj /F9 1 Tf -1 -1 TD 0 Tw ()Tj /F18 1 Tf 1.015 0 TD 0.1575 Tw (Reduction of China)Tj /F14 1 Tf 9.1849 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1575 Tw (s tariffs to levels pledged in the terms of China)Tj /F14 1 Tf 23.0672 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1575 Tw (s WTO ac-)Tj -32.675 -1 TD 0 Tw (cession;)Tj /F9 1 Tf -1 -1 TD ()Tj /F18 1 Tf 1.015 0 TD 0.29 Tw (Widespread commitment to )Tj /F14 1 Tf 13.8888 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD (capacity-building,)Tj /F14 1 Tf 8.2599 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.29 Tw [( or the development of WTO-)]TJ -22.9797 -1 TD 0.1975 Tw (trained personnel in central and sub-central government agencies, and efforts)Tj T* 0.1325 Tw (at public education on the WTO and its implications for Chinese economic and)Tj T* 0.0525 Tw (commercial life.)Tj -1 -1.5 TD 0.0575 Tw (These developments, we felt, were appropriate )Tj /F14 1 Tf 22.1247 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD (infrastructure)Tj /F14 1 Tf 6.5539 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.0575 Tw [( measures as China)]TJ -30.4946 -1 TD 0.2125 Tw (turned to building a new economic and commercial environment under the terms)Tj T* 0.0525 Tw (of its WTO membership. But we went on to offer a cautionary comment:)Tj /F19 1 Tf 1 -1 TD 0.1575 Tw (We perceive, however, a tone of impatience and uneasiness among some respected)Tj -1 -1 TD 0.2425 Tw (and experienced business observers within China over the PRCs accomplishments)Tj T* 0.2375 Tw (and intentions in some of the areas which have proven most problematic in Year)Tj T* 0.175 Tw (One. Because we are still in early days, American companies have not seen fit to)Tj T* 0.1525 Tw (issue, through the US-China Business Council, stark characterizations at this time,)Tj T* 0.1675 Tw (but the concerns registered in our written submission require close observation and)Tj T* 0.0525 Tw (may require additional action.)Tj /F18 1 Tf 1 -1 TD 0.23 Tw (The full content of the Council)Tj /F14 1 Tf 15.1868 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.23 Tw (s written analysis, produced by Council staff in)Tj -16.3908 -1 TD 0.115 Tw (Washington, Beijing, and Shanghai, mentions several examples of worrisome devel-)Tj T* 0 Tw (opments)Tj /F14 1 Tf 3.9259 0 TD ()Tj /F18 1 Tf 1 0 TD 0.29 Tw (or non-developments)Tj /F14 1 Tf 9.9189 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.29 Tw (in the post-accession PRC trade and investment)Tj -15.8448 -1 TD 0.34 Tw (environment. Widely acknowledged problems with agricultural tariff-rate quotas)Tj T* 0.15 Tw (\(TRQs\) and other traded goods under quota; the appearance of new procedural ob-)Tj T* 0.065 Tw (stacles, such as opaque registration processes or onerous standards or prudential re-)Tj T* 0.1675 Tw (quirements; and the persistence of massive intellectual property abuse were a few)Tj T* 0.1925 Tw (of the concerns mentioned in the Council)Tj /F14 1 Tf 20.0057 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1925 Tw (s presentation. The Council also pointed)Tj -20.2097 -1 TD 0.1775 Tw (to signs of an apparent inability or unwillingness of some government agencies to)Tj T* 0.0525 Tw (overcome other bodies)Tj /F14 1 Tf 10.3268 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0525 Tw [( entrenched resistance to thorough WTO implementation.)]TJ -9.5308 -1 TD 0.2675 Tw (In the question-and-answer session that followed, we were asked whether any)Tj -1 -1 TD 0.1425 Tw (particular year, in the nearly decade-long process of China)Tj /F14 1 Tf 28.1956 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1425 Tw (s WTO implementation,)Tj -28.3996 -1 TD 0.0525 Tw (was of special concern. We replied that Year Two was crucial.)Tj 1 -1 TD 0.215 Tw (We suggested that China had appropriately offered unique Year One responses)Tj -1 -1 TD 0.115 Tw (to the challenges of the inaugural WTO year: updating its legal framework, cutting)Tj T* 0.375 Tw (tariffs, moving toward the kind of consultative transparency that the Internet)Tj T* 0.0525 Tw (makes so technically feasible, and training WTO-competent administrators.)Tj 1 -1 TD 0.2 Tw (But as the United States and other WTO members track Chinese WTO adjust-)Tj -1 -1 TD 0.125 Tw (ment in Year Two, they will increasingly raise questions appropriate to an ongoing)Tj T* 0.0525 Tw (implementation process:)Tj /F9 1 Tf 1 -1 TD 0 Tw ()Tj /F18 1 Tf 1.015 0 TD 0.135 Tw (Will China remedy the acknowledged inefficiencies and confusions encountered)Tj -2.015 -1 TD 0.2975 Tw (in Year One? China itself has acknowledged that agricultural TRQs were inad-)Tj T* 0.1375 Tw (equately determined and allocated in the first year. There are other significant ex-)Tj T* 0.1675 Tw (amples. A second year of disappointment on TRQs and these other issues will not)Tj T* 0.0525 Tw (be attributable to start-up difficulties.)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00039)-1076.9(Fmt 6633)-1076.9(Sfmt 6621)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 133 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F9 134 0 R /F14 5 0 R /F18 16 0 R /F19 17 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 136 0 obj << /Length 7725 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (36)Tj /F9 1 Tf 8 0 0 8 155 648 Tm ()Tj /F18 1 Tf 1.015 0 TD 0.2025 Tw (Will measures that were to have been completed in Year One, but that were)Tj -2.015 -1.0125 TD 0.13 Tw (not, appear decisively in Year Two, and closer to the beginning of the year than to)Tj T* 0.0525 Tw (the end?)Tj /F9 1 Tf 1 -1.0125 TD 0 Tw ()Tj /F18 1 Tf 1.015 0 TD 0.1825 Tw (Will Year Two phase-ins take place on time? Delays in effecting these crucial)Tj -2.015 -1.0125 TD 0.15 Tw (market-opening reforms will pile up in ensuing years; prompt delivery on phase-in)Tj T* 0.0525 Tw (commitments is essential.)Tj /F9 1 Tf 1 -1.0125 TD 0 Tw ()Tj /F18 1 Tf 1.015 0 TD 0.1375 Tw (Will China find the necessary powers of persuasion to compel full WTO imple-)Tj -2.015 -1.0125 TD 0.0525 Tw (mentation by recalcitrant central and sub-central agencies?)Tj 1 -1.0125 TD 0.24 Tw (The process of evaluating China)Tj /F14 1 Tf 15.8128 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.24 Tw (s progress in adjusting to the requirements of)Tj -17.0168 -1.0125 TD 0.18 Tw (WTO membership takes place, like everything else in international relations, in a)Tj T* 0.1225 Tw (broader context. Here are just some of the background factors that directly or indi-)Tj 0 -1 TD 0.0525 Tw (rectly relate to the WTO implementation process:)Tj /F9 1 Tf 1 -1 TD 0 Tw ()Tj /F18 1 Tf 1.015 0 TD 0.2125 Tw (US-China trade continues to expand vigorously, in spite of sluggish economic)Tj -2.015 -1 TD 0.2175 Tw (conditions in the United States, Europe, and many of the Asia-Pacific economies.)Tj T* (First-half 2002 US exports to China were up more than 10 percent year-on-year,)Tj T* 0.1775 Tw (while Chinese exports to the United States in the same period were up nearly 15)Tj T* 0.08 Tw (percent. China is a critically important export market for many US firms struggling)Tj T* 0.0525 Tw (with deep declines in other markets.)Tj /F9 1 Tf 1 -1 TD 0 Tw ()Tj /F18 1 Tf 1.015 0 TD 0.0675 Tw (Foreign investment, perhaps buoyed by the terms of China)Tj /F14 1 Tf 27.7456 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0675 Tw (s WTO entry is mov-)Tj -29.9646 -1 TD 0.0525 Tw (ing into China at a very high rate.)Tj /F9 1 Tf 1 -1 TD 0 Tw ()Tj /F18 1 Tf 1.015 0 TD 0.1525 Tw (China and the United States appear, superficially at least, to be getting along)Tj -2.015 -1 TD 0.09 Tw (somewhat more civilly of late, thanks to the )Tj /F14 1 Tf 21.2237 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.09 Tw (War on Terror)Tj /F14 1 Tf 6.8269 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.09 Tw [( and signs that the top)]TJ -28.8666 -1 TD 0.095 Tw (leadership in both countries sees the value of cooperation. Signs of progress on Chi-)Tj T* 0.14 Tw (nese control of missile and missile-technology exports, a series of releases of politi-)Tj T* 0.195 Tw (cally sensitive prisoners, and the recent visit to China by senior associates of the)Tj T* 0.07 Tw (Dalai Lama are recent indications that progress can be made between the two coun-)Tj T* 0.1875 Tw (tries. Diplomatic contacts are again in high gear, and the network of consultative)Tj T* 0.295 Tw (arrangements between the two governments appears to be widening. The presi-)Tj T* 0.0975 Tw (dential meeting in Crawford, Texas, suggests a commitment at the top to continued)Tj T* 0.0525 Tw (US-China engagement.)Tj /F9 1 Tf 1 -1 TD 0 Tw ()Tj /F18 1 Tf 1.015 0 TD 0.0525 Tw (The United States is preoccupied with the possibility of major war in the Middle)Tj -2.015 -1 TD 0.0775 Tw (East; on top of the response to September 11, 2001, this preoccupation has deflected)Tj T* 0.2775 Tw (the energies of those earlier concerned with the likelihood of confrontation with)Tj T* 0.12 Tw (China and has become the primary index by which the United States gauges every)Tj T* 0 Tw (country)Tj /F14 1 Tf 3.5359 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.19 Tw (s positive or negative relationship to the United States. Though many ob-)Tj -3.7399 -1 TD 0.125 Tw (servers note that the underlying factors auguring for an ultimate clash of interests)Tj T* (between the United States and China are basically unchanged, it would be hard to)Tj T* 0.17 Tw (conclude today that the authoritative short-term American assessment of China is)Tj T* 0.0525 Tw (as gloomy as it seemed to be in 2001.)Tj /F9 1 Tf 1 -1 TD 0 Tw ()Tj /F18 1 Tf 1.015 0 TD 0.3075 Tw (And last but emphatically not least, China is on the brink of long-awaited)Tj -2.015 -1 TD 0.0825 Tw (changes in its political leadership, Within the Communist Party this fall and within)Tj T* 0.16 Tw (the government next spring. While no one expects this leadership transition to re-)Tj T* 0.23 Tw (sult in wholesale and radical changes, hope appears much more widespread that)Tj T* 0.0775 Tw (new principal office-holders will at least permit forward motion to resume and gath-)Tj T* 0.185 Tw (er speed on many policy issues currently perceived to be in suspended animation.)Tj 1 -1 TD 0.11 Tw (Energetic implementation of China)Tj /F14 1 Tf 16.6268 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.11 Tw (s WTO commitments must be one of the vehi-)Tj -17.8307 -1 TD 0.08 Tw (cles moving forward at full speed after the transition in China)Tj /F14 1 Tf 29.5056 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.08 Tw (s political leadership.)Tj -29.7096 -1 TD 0.32 Tw (That China)Tj /F14 1 Tf 5.6359 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.32 Tw (s new leaders will face daunting domestic economic challenges is a)Tj -5.8399 -1 TD 0.21 Tw (given: rural-urban disparities of income and wealth, East-West disparities, unem-)Tj T* 0.135 Tw (ployment associated with economic transition, looming troubles in the banking and)Tj T* 0.155 Tw (securities sectors)Tj /F14 1 Tf 8.0799 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.155 Tw (each of the major economic challenges facing the regime can be)Tj -9.0799 -1 TD 0.18 Tw (portrayed as dangerously susceptible to the disrupting effects of WTO compliance.)Tj T* 0.14 Tw (It will take concentrated attention by China)Tj /F14 1 Tf 21.1947 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.14 Tw (s new leadership team, and reaffirma-)Tj -21.3987 -1 TD 0.1575 Tw (tion that WTO compliance is in China)Tj /F14 1 Tf 18.4657 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1575 Tw (s dear interests, for Year Two to yield deci-)Tj -18.6697 -1 TD 0.0525 Tw (sive progress in uncertain areas.)Tj 1 -1 TD 0.2675 Tw (Immediately after publishing the Council)Tj /F14 1 Tf 20.2007 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.2675 Tw (s written USTR presentation in mid-)Tj -21.4047 -1 TD 0.075 Tw (September, I heard from a number of knowledgeable friends in the Council business)Tj T* 0.0525 Tw (community in China. I close with portions of one such message.)Tj 3 -1.375 TD 0.14 Tw (If one asks what positive difference WTO membership has meant to for-)Tj -1 -1 TD 0.21 Tw (eign business, it would be difficult to point to anything that the Chinese)Tj T* 0.0925 Tw (would not have done on their own, except maybe for some tariff reductions;)Tj T* 0.06 Tw (companies that were doing reasonably well prior to WTO accession continue)Tj T* 0.1525 Tw (to advance, while companies that faced daunting barriers continue to beat)Tj T* 0.0525 Tw (their heads against the wall.)Tj 1 -1 TD 0.0675 Tw (. . . [China has] feverishly written new regulations and trained thousands)Tj -1 -1 TD 0.1525 Tw (of people, and hailed all that as progress toward transparency and rule of)Tj T* 0.165 Tw (law. But in reality there has been little, if any, evidence of the structural)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00040)-1076.9(Fmt 6633)-1076.9(Sfmt 6621)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 137 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F9 134 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 139 0 obj << /Length 9640 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (37)Tj 8 0 0 8 163 648 Tm 0.2025 Tw (change that WTO was meant to trigger. Indeed, I would argue that thus)Tj 0 -1 TD 0.1175 Tw (far the Chinese have been busily hijacking WTO rulemaking to further ob-)Tj T* 0.18 Tw (struct foreign participation in key sectors, while maximizing the access of)Tj T* 0.31 Tw (their own companies to more liberal foreign markets . . . [such as the)Tj T* 0.085 Tw (United States]. I still think the top leadership embraces not only the letter,)Tj T* 0.175 Tw (but the intent of WTO membership. But too many parts of the regime do)Tj T* 0.08 Tw (not, and the leadership has not demonstrated a firm grip. Yes, there)Tj /F14 1 Tf 32.4015 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.08 Tw (s a big)Tj -32.6055 -1 TD 0.0925 Tw (transition taking place . . . [, but there are also] many entrenched interests)Tj T* 0.0875 Tw (that we knew opposed WTO. But they can)Tj /F14 1 Tf 20.0222 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0875 Tw (t make excuses)Tj /F14 1 Tf 7.1759 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.0875 Tw (or be excused)Tj /F14 1 Tf 6.3599 0 TD 0 Tw ()Tj /F18 1 Tf -34.762 -1 TD (indefinitely.)Tj 1 -1 TD 0.095 Tw ([Though] I assume your )Tj /F14 1 Tf 11.6758 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.095 Tw (glass half full)Tj /F14 1 Tf 6.4689 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.095 Tw [( characterization was intended to)]TJ -19.9607 -1 TD 0.0525 Tw (encourage the good guys, I don)Tj /F14 1 Tf 14.4843 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0525 Tw (t think it is accurate.)Tj -15.6883 -1.375 TD 0.195 Tw (It will be up to China, in Year Two, to show this writer and many others that)Tj -1 -1 TD 0.1125 Tw (my friend)Tj /F14 1 Tf 4.5934 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1125 Tw (s concerns were off the mark American business)Tj /F14 1 Tf 23.0462 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.1125 Tw (and many in American)Tj -28.8436 -1 TD 0 Tw (government)Tj /F14 1 Tf 5.5179 0 TD ()Tj /F18 1 Tf 1 0 TD 0.105 Tw (want to be constructive partners with China in WTO progress. But in)Tj -6.5179 -1 TD 0.235 Tw (the end, the laws, the regulations, the judicial rulings, and the changes in work)Tj T* 0.0525 Tw (style that the world is rooting for lie in the hands of the Chinese themselves.)Tj ET 0 G 0 J 0 j 0.4 w 10 M []0 d 1 i 291 506.2 m 321 506.2 l S BT 6 0 0 6 207.38 487.0001 Tm 0.0533 Tw ([Reprinted from The China Business Review, January-February 2003])Tj 8 0 0 8 239.22 471.0002 Tm 0 Tw (T)Tj 6.4 0 0 6.0958 244.5559 471.0002 Tm (HE)Tj 8 0 0 8 257.1479 471.0002 Tm (US-C)Tj 6.4 0 0 6.0958 277.1476 471.0002 Tm (HINA)Tj 8 0 0 8 297.5604 471.0002 Tm (B)Tj 6.4 0 0 6.0958 303.3363 471.0002 Tm (USINESS)Tj 8 0 0 8 335.7299 471.0002 Tm (C)Tj 6.4 0 0 6.0958 341.5058 471.0002 Tm (OUNCIL)Tj /F21 1 Tf 8 0 0 8 259.54 455.0002 Tm 0.0525 Tw (Letter from the President)Tj /F18 1 Tf -9.5725 -1.5 TD 0 Tw (\(R)Tj 6.4 0 0 6.0958 191.3998 443.0002 Tm (OBERT)Tj 8 0 0 8 217.1502 443.0002 Tm 0.0525 Tw (A. K)Tj 6.4 0 0 6.0958 234.018 443.0002 Tm 0 Tw (APP)Tj 8 0 0 8 247.1764 443.0002 Tm 0.0525 Tw (, P)Tj 6.4 0 0 6.0958 257.3802 443.0002 Tm 0 Tw (RESIDENT)Tj 8 0 0 8 292.3434 443.0002 Tm 0.0525 Tw (, T)Tj 6.4 0 0 6.0958 302.5472 443.0002 Tm 0 Tw (HE)Tj 8 0 0 8 315.1392 443.0002 Tm (US-C)Tj 6.4 0 0 6.0958 335.1389 443.0002 Tm (HINA)Tj 8 0 0 8 355.5517 443.0002 Tm (B)Tj 6.4 0 0 6.0958 361.3276 443.0002 Tm (USINESS)Tj 8 0 0 8 393.7212 443.0002 Tm (C)Tj 6.4 0 0 6.0958 399.4971 443.0002 Tm (OUNCIL)Tj 8 0 0 8 426.4027 443.0002 Tm (\))Tj 6.4 0 0 6.0958 175.78 429.0002 Tm [(MISSION)-412.5(IMPOSSIBLE)]TJ 8 0 0 8 250.0039 429.0002 Tm (: )Tj 6.4 0 0 6.0958 254.8719 429.0002 Tm (FINDING)Tj /F14 1 Tf 8 0 0 8 287.3806 429.0002 Tm ()Tj /F18 1 Tf 6.4 0 0 6.0958 290.6446 429.0002 Tm [(THE)-412.5(BUSINESSPERSON)]TJ /F14 1 Tf 8 0 0 8 369.6173 429.0002 Tm ()Tj /F18 1 Tf 6.4 0 0 6.0958 371.2493 429.0002 Tm [(S)-412.5(VIEW)-412.5(OF)-412.5(CHINA)]TJ /F14 1 Tf 8 0 0 8 432.9677 429.0002 Tm ()Tj /F18 1 Tf -34.746 -1.625 TD 0.1825 Tw (I was asked to speak at a conference on the topic of )Tj /F14 1 Tf 26.0446 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.1825 Tw (the businessperson)Tj /F14 1 Tf 9.0344 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1825 Tw (s view)Tj -36.691 -1 TD 0.0875 Tw (of China.)Tj /F14 1 Tf 4.2914 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.0875 Tw (I will be the only person on the program to address this topic. Others will)Tj -4.6994 -1 TD 0.1075 Tw (deal with issues of morality, national security, media coverage, ideology)Tj /F14 1 Tf 34.12 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.1075 Tw (the famil-)Tj -35.12 -1 TD 0.0975 Tw (iar panoply of concerns with which Americans frame the US dialogue on China. My)Tj T* 0.0525 Tw (job is to )Tj /F14 1 Tf 4.0104 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.0525 Tw (speak for business.)Tj /F14 1 Tf 8.8839 0 TD 0 Tw ()Tj /F18 1 Tf -12.3023 -1 TD 0.07 Tw (Put yourself in my place. What would you do to get your hands around that topic?)Tj /F21 1 Tf -1 -1.5 TD 0.0525 Tw (1. It)Tj /F19 1 Tf 1.9235 0 TD 0 Tw ()Tj /F21 1 Tf 0.204 0 TD 0.0525 Tw (s always safe to start by defining terms)Tj /F18 1 Tf -1.1275 -1.25 TD 0.0575 Tw (Who genuinely embodies )Tj /F14 1 Tf 11.9323 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.0575 Tw (the businessperson)Tj /F14 1 Tf 8.9094 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0575 Tw (s view of China)Tj /F14 1 Tf 7.2474 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.0575 Tw (? The CEO of a mul-)Tj -30.1091 -1 TD 0.1 Tw (tinational corporation, for whom China)Tj /F14 1 Tf 18.4937 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.1 Tw (no matter how important to the company)Tj /F14 1 Tf 19.6017 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (s)Tj -39.2994 -1 TD (business)Tj /F14 1 Tf 3.9819 0 TD ()Tj /F18 1 Tf 1 0 TD 0.06 Tw (is but one of a million daily concerns? How about a Taiwan- or Singapore-)Tj -4.9819 -1 TD 0.065 Tw (born manager of a US wholly owned plant in some East China economic zone, work-)Tj T* 0.055 Tw (ing to keep a complex production operation running smoothly? Or the American gen-)Tj T* 0.2775 Tw (eral manager of a joint venture, sitting as a minority member on the venture)Tj /F14 1 Tf 39.074 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (s)Tj -39.278 -1 TD 0.1375 Tw (board of directors? Or perhaps a government affairs director in Beijing, working to)Tj T* 0.38 Tw (improve the company)Tj /F14 1 Tf 10.6858 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.38 Tw (s communications with Chinese government agencies? Or)Tj -10.8898 -1 TD 0.095 Tw (maybe a lawyer with a good American firm and years on the ground in China help-)Tj T* 0.17 Tw (ing clients to do their homework before they sign their contracts? What about the)Tj T* 0.14 Tw (head of a security firm responsible for digging up reliable, confidential information)Tj T* 0.1125 Tw (about the Chinese companies and individuals with whom the firm)Tj /F14 1 Tf 31.479 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1125 Tw (s clients are con-)Tj -31.683 -1 TD 0.14 Tw (templating business relations? Or maybe a logistics person, struggling to get goods)Tj T* 0.1075 Tw (into China, out of customs, and on to their distributors and end-users countrywide?)Tj T* 0.1275 Tw (And what about the owner of a small US company pondering whether this, finally,)Tj T* 0.21 Tw (is the moment when China looks promising enough for him to look for profitable)Tj T* 0.1625 Tw (opportunities in the PRC? Is there an archetypal )Tj /F14 1 Tf 24.0967 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD (businessperson)Tj /F14 1 Tf 7.0739 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.1625 Tw (s view of China)Tj /F14 1 Tf 7.5624 0 TD 0 Tw ()Tj /F18 1 Tf -39.3449 -1 TD 0.0525 Tw (to be found here?)Tj /F21 1 Tf 0 -1.5 TD 0.08 Tw (2. Next, we might read the latest books in English on China)Tj /F19 1 Tf 28.1366 0 TD 0 Tw ()Tj /F21 1 Tf 0.204 0 TD 0.08 Tw (s economic and commer-)Tj -26.3406 -1 TD 0.0525 Tw (cial prospects)Tj /F18 1 Tf -1 -1.25 TD 0.055 Tw (These books)Tj /F14 1 Tf 5.6859 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.055 Tw [( message is brisk: China is China, either as it has been since imperial)]TJ -6.8899 -1 TD 0.2425 Tw (times or else as it has been since Mao took it over in the late 1940s. American)Tj T* 0.1325 Tw (businesspeople are )Tj /F14 1 Tf 9.2659 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.1325 Tw (innocents abroad,)Tj /F14 1 Tf 8.3184 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.1325 Tw [( self-deluding dreamers at best, and cavalier)]TJ -18.4002 -1 TD 0.0975 Tw (fools at worst, suspending their normal tough-mindedness as they guzzle the seduc-)Tj T* 0.0625 Tw (tive elixir of the limitless China market just as their predecessors did in nineteenth-)Tj T* 0.19 Tw (century England and early twentieth-century America. Drunk on the )Tj /F14 1 Tf 33.9135 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.19 Tw (sheer num-)Tj -34.3215 -1 TD 0 Tw (bers)Tj /F14 1 Tf 1.963 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.1575 Tw [( of people in China, these merchants failed to notice the difficulties)]TJ /F14 1 Tf 32.623 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD (poverty,)Tj -35.994 -1 TD 0.1425 Tw (barriers of language and culture, and logistics)Tj /F14 1 Tf 22.1157 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.1425 Tw (that ultimately sent many of them)Tj -23.1157 -1 TD 0.145 Tw (home disappointed. Today, these books suggest, US businesspeople still fabricate a)Tj T* 0.0625 Tw (mythical cornucopia of commercial triumphs just over the horizon, willfully deaf and)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00041)-1076.9(Fmt 6633)-1076.9(Sfmt 6621)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 140 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R /F19 17 0 R /F21 141 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 144 0 obj << /Length 9159 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (38)Tj 8 0 0 8 147 648 Tm 0.1475 Tw (blind to the evidence that China was, is, and will always be impenetrable and im-)Tj 0 -0.9875 TD 0.0525 Tw (mune to their misdirected efforts.)Tj 1 -0.9875 TD 0.1325 Tw (Focused on China, the writers of these books maintain)Tj /F14 1 Tf 26.2296 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.1325 Tw (if only by failing to look)Tj -28.2296 -0.9875 TD 0 Tw (elsewhere)Tj /F14 1 Tf 4.6109 0 TD ()Tj /F18 1 Tf 1 0 TD 0.1775 Tw (that China is unique as a graveyard for dashed business expectations.)Tj -4.6109 -0.9875 TD 0.085 Tw (They do not ask how overall returns on investment in other developing economies)Tj -1 -0.9875 TD 0.0525 Tw (compare with those in China.)Tj 1 -0.9875 TD 0.285 Tw (Focused on business aspirations, they forget about other Americans)Tj /F14 1 Tf 33.5595 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.285 Tw [( dreams)]TJ /F14 1 Tf 3.9889 0 TD 0 Tw ()Tj /F18 1 Tf -38.7525 -0.9875 TD 0.1475 Tw (some still very much alive today)Tj /F14 1 Tf 15.6283 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.1475 Tw (of a China with new social, political or religious)Tj -16.6283 -0.9875 TD 0.0525 Tw (norms based on US or other foreign models.)Tj 1 -0.9875 TD 0.1175 Tw (Focused on business disappointments in China, they do not mention such domes-)Tj -1 -0.9875 TD 0.1575 Tw (tic fiascos as the collapse of the American savings and loan sector or the more re-)Tj T* 0.0525 Tw (cent bursting of the dotcom bubble.)Tj 1 -0.9875 TD 0.1275 Tw (And they certainly do not spend their time on stories of business success or wise)Tj -1 -0.9875 TD 0.0525 Tw (business planning by American firms.)Tj 1 -0.9875 TD 0.375 Tw (We still haven)Tj /F14 1 Tf 7.3989 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.375 Tw (t found the key to )Tj /F14 1 Tf 10.3019 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.375 Tw (the businessperson)Tj /F14 1 Tf 9.2269 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.375 Tw (s view of China.)Tj /F14 1 Tf 8.4779 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.375 Tw [( We)]TJ -37.6295 -0.9875 TD 0 Tw (can)Tj /F14 1 Tf 1.611 0 TD ()Tj /F21 1 Tf -1.611 -1.4875 TD 0.0525 Tw (3. Look at the numbers)Tj /F18 1 Tf 1 -1.2375 TD 0.275 Tw (China is awash in numbers and statistics. Maybe the numbers will speak for)Tj -1 -0.9875 TD 0.5925 Tw (themselves, and a thorough search will lead to an inescapably convincing)Tj /F14 1 Tf T* 0 Tw ()Tj /F18 1 Tf 0.408 0 TD (businessperson)Tj /F14 1 Tf 7.0739 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.0525 Tw (s view of China?)Tj /F14 1 Tf 7.6764 0 TD 0 Tw ()Tj /F18 1 Tf -14.3623 -0.9875 TD 0.205 Tw (But which numbers? China)Tj /F14 1 Tf 13.2628 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.205 Tw (s economic growth since the late 1970s, as reported)Tj -14.4668 -0.9875 TD 0.0525 Tw (by the National Bureau of Statistics or as measured by skeptical foreign economists?)Tj T* 0.1525 Tw (The ballooning foreign direct investment numbers since 1992 and especially in the)Tj T* 0.135 Tw (past year? The figures showing China)Tj /F14 1 Tf 18.1387 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.135 Tw (s foreign trade growth from practically noth-)Tj -18.3427 -0.9875 TD 0.1025 Tw (ing 25 years ago to hundreds of billions of dollars today? The statistics on the soar-)Tj T* 0.15 Tw (ing number of mobile-phone and Internet users? The information on disposable in-)Tj T* 0.125 Tw (come levels for China)Tj /F14 1 Tf 10.2638 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.125 Tw (s emergent middle class? The data on exploding private own-)Tj -10.4678 -0.9875 TD 0.0525 Tw (ership of dwellings and autos? There are plenty of numbers to suggest that this time)Tj T* 0.105 Tw (around, China has achieved an economic takeoff that global business would be fool-)Tj T* 0.0525 Tw (ish not to notice and derelict )Tj /F21 1 Tf 13.7418 0 TD 0 Tw (not )Tj /F18 1 Tf 1.7935 0 TD 0.0525 Tw (to factor into its own projections.)Tj -14.5353 -0.9875 TD 0 Tw (Others)Tj /F14 1 Tf 3.185 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.095 Tw [( quantifiers are less encouraging. No one outside of China, and few inside,)]TJ -4.3889 -0.9875 TD 0.175 Tw (who have looked at the financial system have written a persuasively rosy picture;)Tj T* 0.1825 Tw (many have seen darker visions. Though hundreds of millions of Chinese have left)Tj T* 0.1175 Tw (poverty behind in the last 20 years, millions more remain impoverished. The quan-)Tj T* 0.105 Tw (titative evidence of inequality in wealth and income between cities and rural areas,)Tj T* 0.1325 Tw (and coastal and interior regions, suggests the intractability of China)Tj /F14 1 Tf 32.807 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1325 Tw (s immense so-)Tj -33.011 -0.9875 TD 0.085 Tw (cial, economic, and political challenges. Indices of environmental degradation can be)Tj T* 0.175 Tw (daunting. The HIV/AIDS numbers are only now beginning to see the light of day.)Tj T* 0.0525 Tw (And doubts keep arising about the reliability of statistics in China.)Tj 1 -0.9875 TD 0.1275 Tw (So far we)Tj /F14 1 Tf 4.5519 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1275 Tw (ve looked at defining our terms, we)Tj /F14 1 Tf 16.9888 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1275 Tw (ve read the latest books, and we)Tj /F14 1 Tf 15.5648 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (ve)Tj -38.7175 -0.9875 TD 0.6225 Tw (pondered some of the quantitative signs that could help our hypothetical)Tj T* 0.1225 Tw (businessperson form )Tj /F14 1 Tf 10.0408 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.1225 Tw (the businessperson)Tj /F14 1 Tf 8.9744 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1225 Tw (s view of China.)Tj /F14 1 Tf 7.7204 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.1225 Tw [( Still, we)]TJ /F14 1 Tf 4.3209 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1225 Tw (re not there. Of)Tj -32.2805 -0.9875 TD 0.0525 Tw (course, we can also)Tj /F14 1 Tf 8.9544 0 TD 0 Tw ()Tj /F21 1 Tf -8.9544 -1.4875 TD 0.0525 Tw (4. Take a look around)Tj /F18 1 Tf 1 -1.2375 TD 0 Tw (It)Tj /F14 1 Tf 0.796 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.065 Tw (s hard to come away from a visit to many areas of China without the sense that)Tj -2 -0.9875 TD 0.0525 Tw (the past 25 years amount to much more than a mirage.)Tj 1 -0.9875 TD 0.0625 Tw (Even as one sighs at the perpetual flow of media stories detailing investment bub-)Tj -1 -0.9875 TD 0 Tw (bles, )Tj /F21 1 Tf 2.9675 0 TD (guanxi)Tj /F18 1 Tf 3.166 0 TD 0.5775 Tw (-driven real estate scams, or huge, white-elephant office blocks)Tj -6.1334 -0.9875 TD 0.0725 Tw (unrented, the movement and the economic energy in many Chinese cities and towns)Tj T* 0.0675 Tw (bombards the senses. And by the way: What is that huge billboard for life insurance)Tj T* 0.11 Tw (doing above the main thoroughfare in remote Kashgar, at the western-most edge of)Tj T* 0.1625 Tw (China in Central Asia? And how did that sign reading )Tj /F14 1 Tf 26.8496 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.1625 Tw (Love and Protect the Pre-)Tj -27.2576 -0.9875 TD 0.08 Tw (cious Fiber Optic Cable)Tj /F14 1 Tf 11.0378 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.08 Tw [( wind up alongside the ribbon of asphalt running across the)]TJ -11.4458 -0.9875 TD 0.0525 Tw (endless desert of western Gansu?)Tj 1 -0.9875 TD 0.1775 Tw (On the other hand, who are those people in tattered clothes camping out under)Tj -1 -0.9875 TD 0.1725 Tw (bridges on the outskirts of this or that great city and scavenging through rubbish)Tj T* 0.0975 Tw (piles? Somehow, )Tj /F14 1 Tf 8.0479 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.0975 Tw (the businessperson)Tj /F14 1 Tf 8.9494 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0975 Tw (s view of China)Tj /F14 1 Tf 7.3674 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.0975 Tw [( needs to encompass the vital-)]TJ -25.3846 -0.9875 TD 0.0525 Tw (ity and the suffering that are part of the China he or she is seeking to )Tj /F14 1 Tf 33.2875 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD (view.)Tj /F14 1 Tf 2.408 0 TD ()Tj /F18 1 Tf -35.1035 -0.9875 TD 0.1175 Tw (Still on the trail of )Tj /F14 1 Tf 9.4044 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.1175 Tw (the businessperson)Tj /F14 1 Tf 8.9694 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1175 Tw (s view of China,)Tj /F14 1 Tf 7.7054 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.1175 Tw [( we certainly should)]TJ /F14 1 Tf 9.6494 0 TD 0 Tw ()Tj /F21 1 Tf -37.7485 -1.4875 TD 0.2225 Tw (5. Listen to China businesspeople who have lived and worked in other developing)Tj 2 -0.9875 TD 0 Tw (countries)Tj /F18 1 Tf -1 -1.25 TD 0.2575 Tw (Businesspeople with time on the ground elsewhere in Asia, Africa, the Middle)Tj -1 -1 TD 0.2075 Tw (East, or Latin America usually have interesting, and often balanced, perspectives)Tj T* 0.1875 Tw (on China as a business site. Employee productivity, human resources, localization)Tj T* 0.3925 Tw (issues, systems integration capacity, physical security, bureaucratic procedures,)Tj T* 0.1225 Tw (transportation challenges, intellectual property security, corruption, functionality of)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00042)-1076.9(Fmt 6633)-1076.9(Sfmt 6621)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 145 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R /F21 141 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 147 0 obj << /Length 9124 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (39)Tj 8 0 0 8 147 648 Tm (telecommunications)Tj /F14 1 Tf 9.2409 0 TD ()Tj /F18 1 Tf 1 0 TD 0.2175 Tw (take your pick. 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We)Tj /F14 1 Tf 17.5547 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.185 Tw (ll hear bounding hope that China)Tj /F14 1 Tf 16.3158 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.185 Tw (s continued)Tj -34.2785 -1 TD 0.09 Tw (opening to international business will bring growth and jobs, exposing the dark and)Tj T* 0.19 Tw (protected corners of the old society and economy \(and even the old politics\). We)Tj /F14 1 Tf 38.9134 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (ll)Tj -39.1174 -1 TD 0.2225 Tw (hear grim conviction that foreigners)Tj /F14 1 Tf 17.5557 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.2225 Tw [( high-tech productivity will throw millions of)]TJ -17.7597 -1 TD 0.1525 Tw (simple Chinese working people out on the street. We)Tj /F14 1 Tf 25.5176 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1525 Tw (ll hear familiar sounds about)Tj -25.7216 -1 TD 0.14 Tw (our investment dollars making money in China. We)Tj /F14 1 Tf 24.8896 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.14 Tw (ll hear pride in how much has)Tj -25.0936 -1 TD 0.1625 Tw (been achieved in such a short time; we)Tj /F14 1 Tf 18.9542 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1625 Tw (ll hear sober assessments of how much re-)Tj -19.1582 -1 TD 0.0525 Tw (mains to be done.)Tj 1 -1 TD 0.295 Tw (All right: we)Tj /F14 1 Tf 6.3499 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.295 Tw (ve done our due diligence. 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K)Tj 6.4 0 0 6.0958 234.018 367.0001 Tm 0 Tw (APP)Tj 8 0 0 8 247.1764 367.0001 Tm 0.0525 Tw (, P)Tj 6.4 0 0 6.0958 257.3802 367.0001 Tm 0 Tw (RESIDENT)Tj 8 0 0 8 292.3434 367.0001 Tm 0.0525 Tw (, T)Tj 6.4 0 0 6.0958 302.5472 367.0001 Tm 0 Tw (HE)Tj 8 0 0 8 315.1392 367.0001 Tm (US-C)Tj 6.4 0 0 6.0958 335.1389 367.0001 Tm (HINA)Tj 8 0 0 8 355.5517 367.0001 Tm (B)Tj 6.4 0 0 6.0958 361.3276 367.0001 Tm (USINESS)Tj 8 0 0 8 393.7212 367.0001 Tm (C)Tj 6.4 0 0 6.0958 399.4971 367.0001 Tm (OUNCIL)Tj 8 0 0 8 426.4027 367.0001 Tm (\))Tj 6.4 0 0 6.0958 282.08 353.0001 Tm [(IN)-412.5(THE)-412.5(HILLS)]TJ 8 0 0 8 155 340.0001 Tm 0.2325 Tw (American businesspeople, journalists, and politicians accustomed to running up)Tj -1 -1 TD 0.255 Tw (and down the East China coast, from glistening boardroom to humming twenty-)Tj T* 0.075 Tw (first-century factory floor to the front end of the airplane, should take a deep breath)Tj T* 0.065 Tw (now and then and go west, or inland)Tj /F14 1 Tf 17.2537 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.065 Tw (or even just get out of town. It is a refreshing)Tj -18.2537 -1 TD 0.0525 Tw (experience, in many ways invigorating, and in some ways very sobering.)Tj 1 -1 TD 0.2075 Tw (I was lucky to have had that chance recently. From a speaking engagement in)Tj -1 -1 TD 0.44 Tw (Tianjin, whose famous Tianjin Economic and Technological Development Area)Tj T* 0.3 Tw (houses advanced production facilities for some of the world)Tj /F14 1 Tf 29.6036 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.3 Tw (s most sophisticated)Tj -29.8076 -1 TD 0.1375 Tw (companies, I headed to Sichuan, China)Tj /F14 1 Tf 18.6892 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1375 Tw (s most populous province, home to 130 mil-)Tj -18.8932 -1 TD 0.0525 Tw (lion people.)Tj 1 -1 TD 0.1975 Tw (In the provincial capital of Chengdu, I passed through a new airport that com-)Tj -1 -1 TD 0.065 Tw (pared splendidly with the new airports of the coastal cities. I marveled at the extent)Tj T* 0.1925 Tw (of the urban development that has swept over this inland provincial capital since)Tj T* 0.3225 Tw (the days, 15 or 20 years ago, when Sichuan was a regular stop on my China)Tj T* 0.21 Tw (itineraries. I visited a proud business owner whose brilliantly lit five-story empo-)Tj T* 0.22 Tw (rium sold only high-end furniture and accessories made in Spain. Then I hit the)Tj T* 0.0525 Tw (road to see things I really hadn)Tj /F14 1 Tf 14.7608 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0525 Tw (t seen before.)Tj -13.9648 -1 TD 0.2 Tw (And what a road. Heading north from Chengdu to Mianyang, )Tj /F14 1 Tf 30.5756 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.2 Tw (the road)Tj /F14 1 Tf 4.0519 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.2 Tw [( was a)]TJ -36.4435 -1 TD 0.1725 Tw (gleaming, four-to-six-lane superhighway, perfectly graded and paved. 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Mianyang itself; with broad boulevards, beautifully)Tj T* 0.15 Tw (tended public spaces, the massive Changhong Electric Co. television production fa-)Tj T* 0.165 Tw (cility rolling block after block through town, and a booming downtown commercial)Tj T* 0.0525 Tw (core, has been firmly )Tj /F14 1 Tf 10.1178 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD (launched,)Tj /F14 1 Tf 4.4999 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.0525 Tw [( no matter how far from the coast it lies.)]TJ -14.4338 -1 TD 0.135 Tw (On the other side of Mianyang, the superhighway ended, and we exited onto an-)Tj -1 -1 TD 0.0575 Tw (other road)Tj /F14 1 Tf 4.8534 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.0575 Tw (National Highway 108, to be exact)Tj /F14 1 Tf 16.2183 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.0575 Tw (which connects the great southwest)Tj -23.0717 -1 TD 0.075 Tw (\(as far as Yunnan\) to the northwest and ultimately to Beijing itself. Kilometer posts)Tj T* 0.0825 Tw (showed numbers in the 2,000+ range, the distance to the national capital. Occasion-)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00043)-1076.9(Fmt 6633)-1076.9(Sfmt 6621)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 148 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R /F21 141 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 150 0 obj << /Length 8534 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (40)Tj 8 0 0 8 147 648 Tm 0.21 Tw (ally the road could be called two-lane; most of the time it was )Tj /F14 1 Tf 31.2726 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD (suck-in-your-gut)Tj /F14 1 Tf 7.6649 0 TD ()Tj /F18 1 Tf -39.3454 -0.9875 TD (width.)Tj 1 -0.9875 TD 0.205 Tw (Now the land heaved up; we entered the foothills of the Qinling, the great hill)Tj -1 -0.9875 TD 0.0525 Tw (barrier that traditionally isolated the densely settled Sichuan Basin from the old im-)Tj T* 0.14 Tw (perial capital of Chang)Tj /F14 1 Tf 10.9768 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.14 Tw (an to the north \(now the northwestern metropolis of Xi)Tj /F14 1 Tf 26.5756 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (an\),)Tj -37.9604 -0.9875 TD 0.21 Tw (and, indeed, from all of North China. We seemed to step back in time. The road)Tj T* 0.135 Tw (was pitted and slow, overwhelmed with heavy trucks moving cargoes in and out of)Tj T* 0.09 Tw (Sichuan on the only cargo route through the mountains. Country buses lurched and)Tj T* 0.12 Tw (swayed, carrying peasants and traders from town to town, from county seat to out-)Tj T* 0.0975 Tw (lying market villages, in this inaccessible region. Road maintenance was under way)Tj T* 0.17 Tw (mile after mile)Tj /F14 1 Tf 7.1559 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.17 Tw (by hand. Sunburned men and women shoveled piles of river rock)Tj -8.1559 -0.9875 TD 0.1 Tw (out onto the highway, sprinkled shovelsful of asphalt over them, and waited for the)Tj T* 0.1075 Tw (passing traffic to pack the highway surface. When overloaded trucks ruptured their)Tj T* 0.1825 Tw (springs, dozens of vehicles waited)Tj /F14 1 Tf 16.2858 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.1825 Tw (with a good-natured patience utterly unknown)Tj -17.2857 -0.9875 TD 0.215 Tw (in Washington, DC, I might add)Tj /F14 1 Tf 15.8728 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.215 Tw (to inch by the impasse. I was reminded of the)Tj -16.8728 -0.9875 TD 0.385 Tw (first thing that used to be said about Sichuan in the last century: )Tj /F19 1 Tf 35.3245 0 TD 0 Tw ()Tj /F21 1 Tf 0.408 0 TD (Jiaotong)Tj -35.7325 -0.9875 TD (bubian)Tj /F19 1 Tf 3.2409 0 TD ()Tj /F14 1 Tf 0.408 0 TD ()Tj /F18 1 Tf 1.408 0 TD 0.0525 Tw (Transportation is difficult.)Tj /F14 1 Tf 12.3648 0 TD 0 Tw ()Tj /F18 1 Tf -16.4217 -0.9875 TD 0.0825 Tw (The countryside was utterly gorgeous. Tiny fields of golden wheat alternated with)Tj -1 -0.9875 TD 0.16 Tw (rape or small plots of fruit trees. There were no large fields at all, no expanses of)Tj T* 0.055 Tw (paddy, no plains of wheat, soybeans, or sorghum. The steeper mountainsides showed)Tj T* 0.3575 Tw (wild evergreen and deciduous growth. In market towns we passed warehouses)Tj T* 0.135 Tw (where huge sacks of Chinese medicinal herbs from the mountainsides are collected)Tj T* 0.0525 Tw (and traded.)Tj 1 -0.9875 TD 0.1575 Tw (Roadside signs revealed that we had entered a region of poverty and announced)Tj -1 -0.9875 TD 0.0925 Tw (programs for local government assistance to the impoverished. Aside from our high-)Tj T* 0.21 Tw (way, roads were scarce; the hills, bigger than the Appalachians but smaller than)Tj T* 0.1175 Tw (the Rockies, stretched out in layers to the horizon. People living in them walked to)Tj T* 0.09 Tw (town. Yet children heading home from school were vividly clothed, their school bags)Tj T* 0.1875 Tw (ornamented with cartoon animals in bright colors. I wondered if there were other)Tj T* 0.0525 Tw (children for whom bright clothes)Tj /F14 1 Tf 15.2648 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.0525 Tw (or school itself)Tj /F14 1 Tf 6.7529 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.0525 Tw (were impossible.)Tj -23.0176 -0.9875 TD 0.14 Tw (We passed through the great Jianmenguan, a breathtaking narrow pass through)Tj -1 -0.9875 TD 0.3325 Tw (towering vertical rock faces. We were on )Tj /F14 1 Tf 21.2162 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.3325 Tw (The Road to Shu,)Tj /F14 1 Tf 8.9804 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.3325 Tw [( \(as Sichuan was)]TJ -31.0126 -0.9875 TD 0.0575 Tw (anciently called\), formerly a stone track no wider than a single person, immortalized)Tj T* 0.2025 Tw (in Tang poetry as )Tj /F14 1 Tf 9.1819 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.2025 Tw (more difficult than ascending to Heaven itself.)Tj /F14 1 Tf 22.6417 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.2025 Tw [( Steam poured)]TJ -32.6395 -0.9875 TD 0.3025 Tw (from the engines of overheated trucks on their way up to the pass and out of)Tj T* 0.105 Tw (Sichuan. Then we headed down, a racing river just below the side of the road. Now)Tj T* 0.1075 Tw (steam jetted from the hissing brakes of the heavily laden trucks struggling to navi-)Tj T* 0.0525 Tw (gate the twists and potholes on the steep descent.)Tj 1 -0.9875 TD 0.1225 Tw (By the end of the day, we had reached our destination: Guangyuan County Seat,)Tj -1 -0.9875 TD 0.095 Tw (essentially the last stop in Sichuan. The borders of Shaanxi Province, and of Gansu)Tj T* 0.0525 Tw (Province, gateway to Central Asia, lay a few miles further up the road.)Tj 1 -1 TD (In bustling Guangyuan, I learned from the mayor and his colleagues:)Tj /F9 1 Tf T* 0 Tw ()Tj /F18 1 Tf 1.015 0 TD 0.0625 Tw (Urban construction had recently blossomed, much of it funded by investors from)Tj -2.015 -1 TD 0.4425 Tw (the uniquely entrepreneurial city of Wenzhou in the East China province of)Tj T* 0 Tw (Zhejiang.)Tj /F9 1 Tf 1 -1 TD ()Tj /F18 1 Tf 1.015 0 TD 0.1675 Tw (The military plants uprooted from East and Central China and flung into the)Tj -2.015 -1 TD 0.2125 Tw (inaccessible interior by Mao Zedong in anticipation of war with the Soviet Union)Tj T* 0.16 Tw (35 years ago had picked up and moved out, either back east or to more accessible)Tj T* 0 Tw (locations.)Tj /F9 1 Tf 1 -1 TD ()Tj /F18 1 Tf 1.015 0 TD 0.0525 Tw (I was the second American visitor to Guangyuan in memory.)Tj /F9 1 Tf -1.015 -1 TD 0 Tw ()Tj /F18 1 Tf 1.015 0 TD 0.1325 Tw (There was now a new airport, with daily flights to key Chinese cities and con-)Tj -2.015 -1 TD 0.0525 Tw (nections through Xi)Tj /F14 1 Tf 9.2159 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0525 Tw (an and Chengdu to just about everywhere.)Tj /F9 1 Tf -8.4199 -1 TD 0 Tw ()Tj /F18 1 Tf 1.015 0 TD 0.1 Tw (Everyone was excited about China)Tj /F14 1 Tf 16.3458 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1 Tw (s World Trade Organization \(WTO\) member-)Tj -18.5647 -1 TD 0.0725 Tw (ship and hoped that it would bring opportunity to smaller and more distant commu-)Tj T* 0.0525 Tw (nities like Guangyuan.)Tj /F9 1 Tf 1 -1 TD 0 Tw ()Tj /F18 1 Tf 1.015 0 TD 0.16 Tw (Wahaha bottled water \(the traveler)Tj /F14 1 Tf 17.0308 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.16 Tw (s friend in the scorching Chinese summer\))Tj -19.2497 -1 TD 0.1525 Tw (had set up a bottling plant in none other than Guangyuan itself)Tj /F14 1 Tf 31.108 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.1525 Tw (living proof of a)Tj -32.108 -1 TD 0.0525 Tw (bright future!)Tj 1 -1 TD 0.115 Tw (But, most staggeringly, I learned that the superhighway that had taken me from)Tj -1 -1 TD 0.235 Tw (Chengdu to Mianyang in an hour and a half would be completed all the way to)Tj T* 0.32 Tw (Guangyuan by year)Tj /F14 1 Tf 9.7339 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.32 Tw (s end: by 2003, Chengdu would be three hours)Tj /F14 1 Tf 23.8777 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.32 Tw [( drive from)]TJ -34.0195 -1 TD 0.0975 Tw (Guangyuan County Seat. And the mountain communities through which we had la-)Tj T* 0.0525 Tw (bored would face a different future.)Tj 1 -1 TD 0.155 Tw (On the way back to the United States, I read intently about China)Tj /F14 1 Tf 32.4775 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.155 Tw (s rural econ-)Tj -33.6815 -1 TD 0.135 Tw (omy and the problems it faces: declining crop prices; rising taxes and fees imposed)Tj T* 0.0725 Tw (on farmers by parasitic local-level government bodies filled with cousins and in-laws)Tj /F14 1 Tf T* 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.1225 Tw (eating imperial grain)Tj /F14 1 Tf 10.0799 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.1225 Tw [( \(as they say about those paid with taxes and fees extracted)]TJ -10.8958 -1 TD 0.0525 Tw (from the peasants\); rampant usurious lending to these peasants by bottom-rung cad-)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00044)-1076.9(Fmt 6633)-1076.9(Sfmt 6621)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 151 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F9 134 0 R /F14 5 0 R /F18 16 0 R /F19 17 0 R /F21 141 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 153 0 obj << /Length 6062 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (41)Tj 8 0 0 8 147 648 Tm 0.17 Tw (res struggling to secure the money that must be sent up the administrative chain)Tj 0 -0.9875 TD 0.0575 Tw (to meet tax and fee obligations; out-migration of millions of rural inhabitants unable)Tj T* 0.1675 Tw (to survive on the land and hoping for better times in the neon-lit cities and hum-)Tj T* 0.215 Tw (ming factories of the coastal enclaves; the difficulty of implementing centrally di-)Tj T* 0.055 Tw (rected economic, political, and social reform in the face of entrenched holders of local)Tj T* 0.15 Tw (privilege; and the potential power of modern expose)Tj /F14 1 Tf 24.5051 0.076 TD 0 Tw ()Tj /F18 1 Tf 0.844 -0.076 TD 0.15 Tw (journalism. It was a reminder)Tj -25.3491 -0.9875 TD 0.1225 Tw (that much remains unsolved in this gigantic, fascinating, and sometimes incredibly)Tj T* 0.0525 Tw (lovely land.)Tj 1 -0.9875 TD 0.2 Tw (For me, living in the world of favorite seats on 747s, busy business people, US)Tj -1 -0.9875 TD 0.255 Tw (and Chinese diplomats and government leaders, journalists and polemicists, con-)Tj T* 0.2925 Tw (gressional investigators, Washington trade diplomats, nongovernmental organiza-)Tj T* 0.185 Tw (tions, human rights campaigners, WTO trainers, and US and PRC think tanks, a)Tj T* 0.19 Tw (couple of days on the road were more than a pleasant diversion. They were a re-)Tj T* 0.1575 Tw (minder that all of us who engage with China are part of a human drama that we)Tj T* 0.0675 Tw (can only perceive in fragments, and that what we do in business and diplomacy con-)Tj T* 0.185 Tw (nects to a big chunk of China)Tj /F14 1 Tf 14.5558 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.185 Tw (s life in ways that we)Tj /F14 1 Tf 10.7239 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.185 Tw (ll probably never fully grasp.)Tj -25.6876 -0.9875 TD 0.0675 Tw (Even so, I have a hunch we all ought to be thinking about what)Tj /F14 1 Tf 30.1421 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0675 Tw (s happening outside)Tj -30.3461 -0.9875 TD 0.0525 Tw (of town.)Tj 10 0 0 10 157 495.7999 Tm 0.106 Tw (Senator B)Tj 8 0 0 7.6194 204.3593 495.7999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 254.2785 495.7999 Tm 0.106 Tw (. I hope, Dr. Kapp, you and your association)Tj -10.7279 -1 TD 0.052 Tw (can help us press the Chinese to move toward democracy.)Tj 1 -1 TD 0.08 Tw (That would be a thing to help us in establishing and moving this)Tj -1 -1 TD 0.214 Tw (forward over a longer period of time. While they had a seamless)Tj T* 0.108 Tw (transition in leadership, it was certainly not a democratic one that)Tj T* 0.11 Tw (they went through. So, your help in that)Tj /F14 1 Tf 19.3827 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.11 Tw (you have got great rela-)Tj -20.3827 -1 TD 0.068 Tw (tions there in the country. And I think for the relationship between)Tj T* 0.082 Tw (the two countries to really maximize over a period of time, it needs)Tj T* 0.052 Tw (to be one democracy to another.)Tj 1 -1 TD 0.056 Tw (Dr. K)Tj 8 0 0 7.6194 183.1196 405.7999 Tm 0 Tw (APP)Tj 10 0 0 10 199.5674 405.7999 Tm 0.056 Tw (. Sir, I know that we need to turn to our second witness.)Tj -5.2567 -1 TD 0.278 Tw (Just let me say that if we could have a private conversation, I)Tj T* 0.09 Tw (would be happy to discuss some of the ways in which I, personally,)Tj T* 0.052 Tw (have attempted to act in that manner.)Tj 1 -1 TD (Senator B)Tj 8 0 0 7.6194 203.8193 365.8 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 253.7385 365.8 Tm 0.052 Tw (. Good, thank you.)Tj -9.6739 -1 TD 0.228 Tw (Ms. Rosen, thank you very much for appearing in front of the)Tj -1 -1 TD 0.272 Tw (subcommittee. I have not seen you in a while. Good to see you)Tj T* 0 Tw (again.)Tj /F20 1 Tf 9 0 0 9 147 319.5999 Tm 0.1178 Tw (STATEMENT OF HILARY B. ROSEN, CHAIRMAN AND CHIEF EX-)Tj 1 -1.0889 TD 0.0778 Tw (ECUTIVE OFFICER, RECORDING INDUSTRY ASSOCIATION OF)Tj T* 0.0422 Tw (AMERICA, WASHINGTON, DC)Tj /F18 1 Tf 10 0 0 10 157 285.9999 Tm 0.108 Tw (Ms. R)Tj 8 0 0 7.6194 184.9296 285.9999 Tm 0 Tw (OSEN)Tj 10 0 0 10 208.4892 285.9999 Tm 0.108 Tw (. I like being before you in this committee very much.)Tj -5.1489 -1 TD 0.052 Tw (Senator B)Tj 8 0 0 7.6194 203.8193 275.9999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 253.7385 275.9999 Tm 0.052 Tw (. It is a better setting, is it not?)Tj -9.6739 -1 TD (Ms. R)Tj 8 0 0 7.6194 184.3696 265.9999 Tm 0 Tw (OSEN)Tj 10 0 0 10 207.9292 265.9999 Tm 0.052 Tw (. Much better setting.)Tj -5.0929 -1 TD 0.184 Tw (And now I feel like the skunk at the picnic. I want to start by)Tj -1 -1 TD 0.178 Tw (saying how humble it feels to be here testifying on an issue with)Tj T* 0.21 Tw (such obvious self-interest when we are going through what we)Tj /F14 1 Tf 30.6506 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (re)Tj -30.8546 -1 TD 0.102 Tw (going through in this country. So I am incredibly)Tj /F14 1 Tf 23.3537 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.102 Tw (I was moved by)Tj -24.3536 -1 TD 0.116 Tw (what you said about the relationship to the larger picture, and ob-)Tj T* 0.178 Tw (viously grateful for your recognition, in particular, of the intellec-)Tj T* 0.052 Tw (tual property issues as they relate to the larger picture.)Tj 1 -1 TD 0.138 Tw (My testimony will go on the record. I will just make a couple of)Tj -1 -1 TD 0.146 Tw (points, because you have, for so long, demonstrated such good un-)Tj T* 0.052 Tw (derstanding of some of the issues that we are facing.)Tj 1 -1 TD 0.246 Tw (Obviously, I have been involved in issues related to China for)Tj -1 -1 TD 0.266 Tw (some time, and during that time there have been good develop-)Tj T* 0.052 Tw (ments and bad developments. And I will start with the positive.)Tj 1 -1 TD 0.336 Tw (In the early 1990s, China was the largest pirate exporter of)Tj -1 -1 TD 0.152 Tw (music in the world. There were over 25 domestic CD plants when)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00045)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 154 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R /F20 27 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 156 0 obj << /Length 4873 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (42)Tj -15.344 -2 TD 0.206 Tw (the legitimate market would have been served just fine with one)Tj 0 -1 TD 0.142 Tw (plant. It was the will of the U.S. Government and the response of)Tj T* 0.118 Tw (the Chinese Government that changed that situation dramatically.)Tj T* 0.148 Tw (The Chinese Government instituted regulations and enforced laws)Tj T* 0.258 Tw (to change the working nature of those plants. In some respects,)Tj T* 0.092 Tw (they shut down more than half of them; and, in others, they forced)Tj T* 0.154 Tw (them to go legitimate. That progress continues to this day. We do)Tj T* 0.096 Tw (not see a pirate export market out of China. It has drifted to other)Tj T* 0.126 Tw (parts in the region, like Taiwan, which we will talk about another)Tj T* 0 Tw (day.)Tj 1 -1 TD 0.186 Tw (But the problem that we face in China now is a great problem)Tj -1 -1 TD 0.142 Tw (and one that was left unresolved, I think, by the Chinese Govern-)Tj T* 0 Tw (ment)Tj /F14 1 Tf 2.389 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.066 Tw (s will those years, and that is really the domestic piracy prob-)Tj -2.593 -1 TD 0.208 Tw (lem. What we have is, as you said Mr. Chairman, virtually a 90)Tj T* 0.058 Tw (percent pirate market for all intellectual property goods. That is for)Tj T* 0 Tw (us)Tj /F14 1 Tf 1.074 0 TD ()Tj /F18 1 Tf 1 0 TD 0.128 Tw (Mr. Freeman called it the $64,000 question)Tj /F14 1 Tf 20.7357 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.128 Tw (I think we see it)Tj -23.8096 -1 TD 0.09 Tw (more like a $2- or $3-billion question, and that will not be resolved)Tj T* 0.094 Tw (until the Chinese officials take more steps to meet their TRIPS ob-)Tj T* 0.052 Tw (ligations under the WTO.)Tj 1 -1 TD 0.28 Tw (Specifically, I will give you some of the things we think they)Tj -1 -1 TD 0.222 Tw (have to do. They have to change the threshold laws for criminal)Tj T* 0.188 Tw (prosecution. There are procedural hurdles in their laws that they)Tj T* 0.154 Tw (need to change. And then once they change those laws, they need)Tj T* 0.286 Tw (to appoint some high-ranking)Tj /F14 1 Tf 14.5258 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.286 Tw (perhaps a Vice Premier to be in)Tj -15.5258 -1 TD 0.362 Tw (charge of the anti-piracy long-term enforcement. They need an)Tj T* 0.278 Tw (anti-piracy task force within the enforcement authorities that is)Tj T* 0.112 Tw (given the resources to do the job they need to do. As you said, Mr.)Tj T* 0.174 Tw (Chairman, they seem to find police officers to energize the things)Tj T* 0.158 Tw (that they decide are important, and we think that they should do)Tj T* 0.168 Tw (it here. Finally, looking forward, we think that they should ratify)Tj T* 0.262 Tw (the WIPO treaties for the Internet, which would mean adopting)Tj T* 0.176 Tw (laws domestically that would implement the WPPT and the WCT)Tj T* 0 Tw (treaties.)Tj 1 -1 TD 0.114 Tw (So there is a lot that they can do. We think that it is something)Tj -1 -1 TD 0.214 Tw (that they certainly could do if there was a significant will there.)Tj 1 -1 TD 0.194 Tw (There is one other issue that I think is worth mentioning here)Tj -1 -1 TD 0.166 Tw (which really does affect the domestic piracy situation, and that is)Tj T* 0.238 Tw (the market access issues. For our industry, there are very strict)Tj T* 0.104 Tw (rules of how foreign record companies can access the Chinese mar-)Tj T* 0.17 Tw (ket. They have to be done in minority stakes with the controlling)Tj T* 0.22 Tw (elements of investment and production and distribution, even in-)Tj T* 0.126 Tw (vestment and talent, being done by Chinese companies. That obvi-)Tj T* 0.15 Tw (ously limits our abilities in several areas. It limits our abilities to)Tj T* 0.292 Tw (work effectively with law enforcement on anti-piracy, and it re-)Tj T* 0.098 Tw (stricts our capacity to grow businesses and return moneys for a fa-)Tj T* 0.128 Tw (vorable balance of trade, which we think could be somewhere over)Tj T* 0.052 Tw (a half-a-billion dollars just for the U.S. record industry.)Tj 1 -1 TD 0.064 Tw (But there is a problem here, which is that the market access pro-)Tj -1 -1 TD 0.182 Tw (visions directly are not a violation of their WTO obligations. It is)Tj T* 0.052 Tw (simply the effect of them for some odd reasons.)Tj 1 -1 TD 0.102 Tw (Presumably, the market acts as provisions exist in China for the)Tj -1 -1 TD 0.248 Tw (record industry because they want to maintain control over con-)Tj T* 0.326 Tw (tent. The Chinese Government has very strict rules for foreign)Tj T* 0.274 Tw (sound recordings, and they are subject to significant censorship.)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00046)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 157 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 159 0 obj << /Length 5616 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (43)Tj -15.344 -2 TD 0.212 Tw (Any music that is regarded as unsuitable for public consumption)Tj 0 -0.99 TD 0.238 Tw (is rejected. And the Chinese have very tough laws punishing of-)Tj T* 0.052 Tw (fenders for releasing uncensored materials.)Tj 1 -0.99 TD 0.136 Tw (Obviously, this system of censorship would exist if we were per-)Tj -1 -0.99 TD 0.052 Tw (mitted access to the market. I see the irony in your face, Mr. Chair-)Tj T* (man, as I am having this conversation.)Tj 1 -0.99 TD 0.28 Tw (Senator B)Tj 8 0 0 7.6194 206.0993 586.6 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 256.0185 586.6 Tm 0.28 Tw (. You are tempting me. You are tempting)Tj -10.9019 -0.99 TD 0 Tw (me.)Tj 1 -0.99 TD 0.182 Tw (Ms. R)Tj 8 0 0 7.6194 185.6696 566.8 Tm 0 Tw (OSEN)Tj 10 0 0 10 209.2292 566.8 Tm 0.182 Tw (. But the problem here is that in China these provi-)Tj -6.2229 -0.99 TD 0.106 Tw (sions only affect a legitimate market, not the pirate market, which)Tj T* 0.21 Tw (is such a dominant source of access for consumers that it makes)Tj 0 -1 TD 0.052 Tw (no sense.)Tj 1 -1 TD 0.23 Tw (The Rolling Stones are about to go to China. It has been well)Tj -1 -1 TD 0.166 Tw (publicized. They are touring in several major cities the first week)Tj T* 0.094 Tw (of April. And they have been told not to play certain songs in their)Tj T* 0.214 Tw (concert, and the Stones have agreed not to play certain songs in)Tj T* 0.052 Tw (their concert.)Tj 1 -1 TD 0.306 Tw (The irony is that the pirate versions of all of those censored)Tj -1 -1 TD 0.172 Tw (songs are available everywhere on the streets and will be sold by)Tj T* 0.054 Tw (the thousands and thousands, maybe even millions, the week of the)Tj T* 0.074 Tw (Stones concert. But the legitimate CDs, which have those songs de-)Tj T* 0.162 Tw (leted, are obviously not going to sell. And so they have effectively)Tj T* 0.252 Tw (created the forbidden-fruit aspect of the pirate marketplace in a)Tj T* 0.124 Tw (way that hurts U.S. economic interests dramatically and obviously)Tj T* 0.052 Tw (puts complete holes in their decisions on market access.)Tj 1 -1 TD 0.208 Tw (So we are grateful for this committee)Tj /F14 1 Tf 18.3787 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.208 Tw (s interest in these issues)Tj -19.5827 -1 TD 0.066 Tw (and hope that, as you convey your concerns about intellectual prop-)Tj T* 0.058 Tw (erty to the Chinese Government, that market access restrictions, as)Tj T* 0.184 Tw (you see them, will also be a part of that discussion. Again, while)Tj T* 0.064 Tw (it is not a violation of their WTO obligations directly, we think that)Tj T* 0.114 Tw (it significantly creates incentives in the pirate market that do pre-)Tj T* 0.188 Tw (vent their ability to be in compliance on their enforcement prom-)Tj T* 0 Tw (ises.)Tj 1 -1 TD 0.136 Tw (Next month, China is going to host the World Intellectual Prop-)Tj -1 -1 TD 0.094 Tw (erty Summit celebrating the importance of intellectual property for)Tj T* 0.072 Tw (improvement of the condition of society and the betterment of man.)Tj T* 0.102 Tw (We are supportive of this conference and grateful that China is in-)Tj T* 0.152 Tw (terested in hosting it and welcoming so many foreign visitors. Let)Tj T* 0.19 Tw (us hope that the recognition of these issues, though, are followed)Tj T* 0.052 Tw (through in Chinese action.)Tj 1 -1 TD 0.246 Tw (And this committee, I think, knows better than most that the)Tj -1 -1 TD 0.064 Tw (greatest breakthroughs that we have had in China have been when)Tj T* 0.208 Tw (the U.S. Government has been most aggressive, most active, and)Tj T* 0.166 Tw (the U.S. Congress as its partner with the administration in those)Tj T* 0.082 Tw (times. We have seen it occur successfully in the late 1990s. We can)Tj T* 0.052 Tw (see that again.)Tj 1 -1 TD (Thank you.)Tj T* ([The prepared statement of Ms. Rosen follows:])Tj 8 0 0 8 160.08 160.9999 Tm 0 Tw (P)Tj 6.4 0 0 6.0958 165.4159 160.9999 Tm (REPARED)Tj 8 0 0 8 200.4079 160.9999 Tm (S)Tj 6.4 0 0 6.0958 205.4478 160.9999 Tm [(TATEMENT)-412.5(OF)]TJ 8 0 0 8 257.9022 160.9999 Tm (H)Tj 6.4 0 0 6.0958 264.566 160.9999 Tm (ILARY)Tj 8 0 0 8 287.8268 160.9999 Tm 0.0525 Tw (B. R)Tj 6.4 0 0 6.0958 304.2466 160.9999 Tm 0 Tw (OSEN)Tj 8 0 0 8 323.0946 160.9999 Tm 0.0525 Tw (, C)Tj 6.4 0 0 6.0958 333.7384 160.9999 Tm 0 Tw [(HAIRMAN)-412.5(AND)]TJ 8 0 0 8 386.8904 160.9999 Tm 0.0525 Tw (CEO, R)Tj 6.4 0 0 6.0958 415.31 160.9999 Tm 0 Tw (ECORDING)Tj 8 0 0 8 203.64 152.9999 Tm (I)Tj 6.4 0 0 6.0958 206.8959 152.9999 Tm (NDUSTRY)Tj 8 0 0 8 242.3743 152.9999 Tm (A)Tj 6.4 0 0 6.0958 248.1502 152.9999 Tm [(SSOCIATION)-412.5(OF)]TJ 8 0 0 8 304.6366 152.9999 Tm (A)Tj 6.4 0 0 6.0958 310.4125 152.9999 Tm (MERICA)Tj 8 0 0 8 337.5421 152.9999 Tm 0.0525 Tw (, W)Tj 6.4 0 0 6.0958 350.2579 152.9999 Tm 0 Tw (ASHINGTON)Tj 8 0 0 8 391.5059 152.9999 Tm 0.0525 Tw (, DC)Tj -29.5632 -1.625 TD 0.0575 Tw (Thank you for holding this important oversight hearing. China)Tj /F14 1 Tf 29.5176 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0575 Tw (s impact on the US)Tj -30.7216 -1 TD 0.165 Tw (economy is significant, and it is important that Congress stay involved along with)Tj T* 0.1625 Tw (the Administration to ensure that Chinese law and practices continue to evolve in)Tj T* 0.0525 Tw (ways that reflect its place in the international community, and its international obli-)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00047)-1076.9(Fmt 6633)-1076.9(Sfmt 6621)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 160 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 162 0 obj << /Length 7556 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (44)Tj 8 0 0 8 147 648 Tm 0.1625 Tw (gations. I have been personally involved in working on issues related to China for)Tj 0 -0.9875 TD 0.1075 Tw (nearly two decades, and can state that there have been both good and bad develop-)Tj T* 0.24 Tw (ments over that time. I can also advise this Committee that the greatest break-)Tj T* 0.17 Tw (throughs in China have come during the times of the greatest engagement by the)Tj T* 0.1075 Tw (US Government. I therefore urge the Subcommittee to remain engaged, and to con-)Tj T* 0.315 Tw (vey along with the Administration to the Government of China that it expects)Tj T* 0.23 Tw (progress in areas where Chinese practices have lagged. We ought to be straight-)Tj T* 0.065 Tw (forward with our praise, and with our criticism, because only with transparency will)Tj T* 0.0525 Tw (we be able to effectively deal with the problems of today and tomorrow.)Tj 1 -0.9875 TD 0.145 Tw (With that as my guide, let me offer my views on the successes and failures that)Tj -1 -0.9875 TD 0.195 Tw (we have witnessed in China over recent years. Let me start with the positive. In)Tj T* 0.3025 Tw (the early 1990)Tj /F14 1 Tf 7.2369 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.3025 Tw (s, China became home to the largest concentration of pirate CD)Tj -7.4409 -0.9875 TD 0.3 Tw (plants the world had known. Largely financed and operated by Taiwanese syn-)Tj T* 0.1275 Tw (dicates, China amassed over 26 CD plants at a time when 1 plant would have had)Tj T* 0.085 Tw (sufficient capacity to meet all of China)Tj /F14 1 Tf 18.3077 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.085 Tw (s legitimate needs. These 26 plants produced)Tj -18.5117 -0.9875 TD 0.2125 Tw (pirate CD)Tj /F14 1 Tf 4.7684 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.2125 Tw (s around the clock, almost entirely for export. During these dark days,)Tj -4.9724 -0.9875 TD 0.215 Tw (Chinese pirate exports decimated surrounding markets, and we witnessed signifi-)Tj T* 0.2225 Tw (cant declines in markets throughout Asia. In 1996, this came to a grinding halt.)Tj T* 0.1725 Tw (Faced with the imposition of US sanctions to the tune of approximately $1 billion)Tj T* 0.145 Tw (a year, the Chinese authorities took swift action, shutting down half of the plants,)Tj T* 0.1075 Tw (impounding the equipment, and introducing a new licensing regime for the remain-)Tj T* 0.165 Tw (ing plants to create more of a deterrence for future piracy. This plan worked, and)Tj T* 0.0625 Tw (continues to work. To this day, we have not seen the resurrection of an export based)Tj T* 0.34 Tw (pirate industry in China. Unfortunately, other countries have picked up where)Tj T* 0.0525 Tw (China left off, but we leave that story for another day.)Tj 1 -0.9875 TD 0.1025 Tw (This triumph is not to be underestimated)Tj /F14 1 Tf 19.7097 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.1025 Tw (either with respect to the US commit-)Tj -21.7097 -0.9875 TD 0.1475 Tw (ment to address it, or with respect to the Chinese determination to resolve it. The)Tj T* 0.115 Tw (fact that this success has lasted is a testament to the manifest will of both parties.)Tj T* 0.23 Tw (It is now time, however, to turn our attention to the issues that were left unre-)Tj T* 0.0525 Tw (solved, and which continue to be unresolved to this day.)Tj 1 -0.9875 TD 0.175 Tw (Simply, and transparently, put, piracy in China for all categories of copyrighted)Tj -1 -0.9875 TD 0.225 Tw (materials exceeds 90%. In the music sector, piracy hovers at approximately 95%.)Tj T* 0.19 Tw (This is, quite plainly, unacceptable. The Chinese Government has itself expressed)Tj T* 0.2075 Tw (dismay at these levels of piracy)Tj /F14 1 Tf 15.5023 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.2075 Tw (levels that it does not challenge, but it has not)Tj -16.5023 -0.9875 TD 0.0725 Tw (organized itself, either from a legal or practical standpoint, to do anything meaning-)Tj T* 0.1075 Tw (ful about it. Many Chinese officials have undertaken sincere efforts to address this,)Tj T* 0.11 Tw (particularly within the Ministry of Culture and within Customs, but they lack both)Tj T* 0.1375 Tw (the necessary manpower, and legal support, to get the job done. As a consequence,)Tj T* 0.0875 Tw (Chinese officials can, and have seized over two hundred million pirate CDs over the)Tj T* 0.14 Tw (past two years)Tj /F14 1 Tf 6.9849 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.14 Tw (a truly staggering sum, but have not had any impact on piracy in)Tj -7.9849 -0.9875 TD 0.075 Tw (China due to the fact that there are no criminal prosecutions. This failure is exacer-)Tj 0 -1 TD 0.11 Tw (bated by some legal impediments to bringing criminal copyright cases, but it is pri-)Tj T* 0.1575 Tw (marily the consequence of the lack of will on the part of relevant Chinese officials)Tj T* 0.1125 Tw (to pursue these cases criminally. USTR and other parts of the Administration have)Tj T* 0.215 Tw (been discussing this lack of criminal prosecutions with China for some time, and)Tj T* 0.3375 Tw (continue to do so, but have yet to see any resolution or even any meaningful)Tj T* 0.16 Tw (progress. This is unacceptable, and demands an immediate solution. If China does)Tj T* 0.145 Tw (not quickly get a handle on the CD piracy issues, then all will be lost as we move)Tj T* 0.15 Tw (to try to address internet issues, issues which are already beginning to heat up in)Tj T* 0.1575 Tw (China notwithstanding the Chinese control over other kinds of content on the net.)Tj 1 -1 TD 0.0625 Tw (Rampant piracy led to an estimated loss of $600 million for the recording industry)Tj -1 -1 TD 0.195 Tw (alone last year, with losses for US repertoire amounting to about $48 million per)Tj T* 0.1575 Tw (annum. The problem, of course, is that the profits are so high, and the deterrence)Tj T* 0.225 Tw (is so low. Given the lack of criminal prosecutions, and the fact that enforcement)Tj T* 0.1825 Tw (manpower and resources devoted to combat piracy are clearly inadequate, the au-)Tj T* 0.0575 Tw (thorities are in reality, fighting a losing battle. Until China modifies its legal system)Tj T* 0.085 Tw (to facilitate criminal copyright enforcement, and directs all parts of the enforcement)Tj T* 0.15 Tw (structure to deal with copyright matters as a priority matter, China will not be in)Tj T* (a position to meet its TRIPS obligations to provide effective enforcement. Criminal)Tj T* 0.0675 Tw (penalties in particular are required by TRIPS as an essential element of an effective)Tj T* 0.165 Tw (enforcement regime, and these, as a practical matter, are simply lacking in China)Tj T* 0.0525 Tw (at the moment.)Tj 1 -1 TD 0.215 Tw (Aside from the resource and legal issues impeding China)Tj /F14 1 Tf 27.9986 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.215 Tw (s anti-piracy perform-)Tj -29.2026 -1 TD 0.0975 Tw (ance, there are also the complications arising from the fact that foreign record com-)Tj T* 0.125 Tw (panies are only permitted very limited access to the Chinese market. This not only)Tj T* 0.1375 Tw (limits our ability to partner with law enforcement in the battle against piracy, but)Tj T* 0.085 Tw (also restricts our capacity to improve the infrastructure for the development of local)Tj T* 0.0975 Tw (talent, and for the manufacturing, distribution, promotion and sale of legitimate re-)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00048)-1076.9(Fmt 6633)-1076.9(Sfmt 6621)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 163 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 165 0 obj << /Length 7272 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (45)Tj 8 0 0 8 147 648 Tm 0.095 Tw (cordings. China has determined, consistent with its WTO obligations I hasten, how-)Tj 0 -0.9875 TD 0.1075 Tw (ever sadly, to add, that it will only allow very limited forms of foreign participation)Tj T* 0.0525 Tw (in the development of the cultural industries.)Tj 1 -0.9875 TD 0.0675 Tw (This is a grave error that we hope the Government of China will reverse. Presum-)Tj -1 -0.9875 TD 0.2475 Tw (ably, the idea behind limiting our access to the Chinese market is the desire to)Tj T* 0.19 Tw (maintain control over the content that reaches the Chinese public. While we may)Tj T* 0.0825 Tw (or may not agree with this goal, the fact remains that it can be upheld while simul-)Tj T* 0.2575 Tw (taneously permitting us much broader access to the Chinese market. All foreign)Tj T* 0.2175 Tw (sound recordings, whether licensed for local production or imported by a Chinese)Tj T* 0.11 Tw (state firm for the Chinese mainland market, are subjected to strict censorship. Any)Tj T* 0.21 Tw (sound recordings regarded as unsuitable for public consumption are rejected. The)Tj T* 0.1925 Tw (Chinese have very tough laws punishing offenders for releasing uncensored mate-)Tj T* 0.21 Tw (rials. This system of censorship offers more than sufficient safeguards concerning)Tj T* 0.0775 Tw (the content of cultural materials. Limiting our ability to do business in China is un-)Tj T* 0.0525 Tw (necessary, and destructive.)Tj 1 -0.9875 TD 0.1325 Tw (It is also highly instructive to note that if these market access provisions are in-)Tj -1 -0.9875 TD 0.215 Tw (deed intended to guard against unwanted content, that such an objective is com-)Tj T* 0.0525 Tw (pletely undermined by the total lack of control over piracy. The controls over content)Tj T* 0.1725 Tw (affect only US owners and their legitimate Chinese partners, but have no bearing)Tj T* 0.2175 Tw (on the pirates)Tj /F14 1 Tf 6.8429 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.2175 Tw [( activity whatsoever. Indeed, the inability to release materials EX-)]TJ -7.0469 -0.9875 TD 0.2125 Tw (CEPT in pirate form creates yet an additional competitive advantage for the bad)Tj 0 -1 TD 0.235 Tw (guys. There is simply an enormous disconnect in China between the indifference)Tj T* 0.1275 Tw (and permissiveness shown towards the distribution of supposedly )Tj /F14 1 Tf 31.6145 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.1275 Tw (undesirable con-)Tj -32.0225 -1 TD 0 Tw (tent)Tj /F14 1 Tf 1.889 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.15 Tw [( on illegal carriers, and the great abundance of impediments placed in selling)]TJ -2.297 -1 TD 0.1325 Tw (legitimate materials. This gap or double standard fuels the vast demand for piracy)Tj T* 0.12 Tw (while ensuring that legitimate industry cannot compete. Present Chinese policy op-)Tj T* 0.1925 Tw (erates to effectively grant illegal enterprises far greater access to consumers than)Tj T* (legitimate companies. This must be reversed through the significant liberalization)Tj T* 0.095 Tw (of China)Tj /F14 1 Tf 4.0209 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.095 Tw (s restrictive regime so that at a minimum, legitimate ventures can operate)Tj -4.2249 -1 TD 0.0525 Tw (with at least with the same level of access to consumers as pirates.)Tj 1 -1 TD 0.2225 Tw (At present, almost every aspect of operating a recording company is restricted.)Tj -1 -1 TD 0.1425 Tw (The basic business of a recording company is to release or publish recorded music,)Tj T* 0.1175 Tw (whether in physical format such as CDs or cassettes, or via transmissions. Chinese)Tj T* 0.0675 Tw (investment laws prohibit any foreign investment in this scope of business. Therefore)Tj T* 0.1325 Tw (our companies have to find a Chinese state owned publishing house or company to)Tj T* 0.085 Tw (release or publish their recorded music in China, regardless of whether there is any)Tj T* 0.0525 Tw (company suitable as a partner.)Tj 1 -1 TD 0.195 Tw (Record companies need to sign artists, select suitable compositions, produce the)Tj -1 -1 TD 0.0725 Tw (recordings in a studio, manufacture physical products, and distribute these products)Tj T* 0.13 Tw (to the public. Here we can see trade barriers erected at every stage in the process.)Tj T* 0.16 Tw (Chinese law prohibits us from investing in a company to promote our own artists.)Tj T* 0.0925 Tw (Chinese authorities only issue permits to production houses wholly owned by locals,)Tj T* 0.1675 Tw (and allow only a minority stake in joint ventures or cooperative joint ventures for)Tj T* 0.0525 Tw (manufacture or distribution.)Tj 1 -1 TD 0.1425 Tw (These trade barriers restrict us from doing business effectively or successfully in)Tj -1 -1 TD 0.1775 Tw (China, and contribute to the Chinese Government)Tj /F14 1 Tf 24.1956 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1775 Tw (s inability to effectively address)Tj -24.3996 -1 TD 0.115 Tw (piracy. We hope that members of this Committee can convey to your Chinese coun-)Tj T* 0.1375 Tw (terparts your interest in extending the market access of US record companies, and)Tj T* 0.175 Tw (in seeing China address its serious shortcomings in connection the enforcement of)Tj T* 0.1875 Tw (its copyright law through criminal measures. There have been encouraging recent)Tj T* 0.1025 Tw (statements from Chinese leaders about the need to address the overwhelming copy-)Tj T* 0.16 Tw (right piracy problem that affects US and Chinese creators alike, but these expres-)Tj T* 0.1875 Tw (sions of understanding alone will not solve the problem. To meet its WTO obliga-)Tj T* 0.145 Tw (tions, it is essential that China immediately commit to a course of action that will)Tj T* 0.18 Tw (materially decrease the level of piracy in the Chinese market. In order to achieve)Tj T* 0.0975 Tw (this, China should closely consider expanding the market access it grants to foreign)Tj T* 0.1675 Tw (firms so that it will have powerful new allies in expanding the capacity to deliver)Tj T* 0.095 Tw (legitimate materials to the Chinese public, and in confronting the scourge of piracy.)Tj 1 -1 TD 0.1 Tw (In just over one month, China will host the World IP Summit celebrating the im-)Tj -1 -1 TD 0.0925 Tw (portance of intellectual property for the improvement of the condition of society and)Tj T* 0.15 Tw (the betterment of man. Let)Tj /F14 1 Tf 13.1018 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.15 Tw (s hope, no, let)Tj /F14 1 Tf 6.8029 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.15 Tw (s WORK, to translate this recognition of)Tj -20.3127 -1 TD 0.1325 Tw (the value of copyright protection into meaningful action on the part of the Chinese)Tj T* 0.0525 Tw (Government to finally address this devastating problem.)Tj 10 0 0 10 157 136 Tm 0.102 Tw (Senator B)Tj 8 0 0 7.6194 204.3193 136 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 254.2385 136 Tm 0.102 Tw (. Thank you. You know, it just seems to me,)Tj -10.7239 -1 TD 0.2 Tw (that you just really have to press the Chinese on these issues to)Tj T* 0.052 Tw (get anything going.)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00049)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 166 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 168 0 obj << /Length 6212 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (46)Tj -14.344 -2 TD 0.074 Tw (On the domestic cases, you positively noted the export piracy has)Tj -1 -1 TD 0 Tw (been)Tj /F14 1 Tf 2.167 0 TD ()Tj /F18 1 Tf 1 0 TD 0.062 Tw (much of that has been shut down, but the domestic situation)Tj -3.167 -1 TD 0.146 Tw (is not. Do you know of any, or how many, cases the Chinese Gov-)Tj T* 0.052 Tw (ernment has brought domestically against domestic piracy?)Tj 1 -1 TD 0.074 Tw (Ms. R)Tj 8 0 0 7.6194 184.5896 606 Tm 0 Tw (OSEN)Tj 10 0 0 10 208.1492 606 Tm 0.074 Tw (. Well, the problem is they have done a lot of seizures.)Tj -6.1149 -1 TD 0.162 Tw (Over the last couple of years, we think they have probably seized)Tj T* 0.214 Tw (2 million disks from the pirates, but they do not prosecute them)Tj T* 0.086 Tw (because the will of the prosecutors is lacking. Also, their laws have)Tj T* 0.212 Tw (very strange thresholds and strange provisions that simply guar-)Tj T* 0.106 Tw (antee that the prosecutors are not going to have the ability to give)Tj T* 0.272 Tw (criminal jail time, which is really, as we know with piracy, the)Tj T* 0.052 Tw (largest deterrent.)Tj 1 -1 TD 0.194 Tw (Senator B)Tj 8 0 0 7.6194 205.2393 525.9999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 255.1585 525.9999 Tm 0.194 Tw (. So you do not know of any cases brought)Tj -10.8159 -1 TD 0.198 Tw (against domestic piracy or domestic selling of these pirated prod-)Tj T* 0.052 Tw (ucts in China?)Tj 1 -1 TD 0.094 Tw (Ms. R)Tj 8 0 0 7.6194 184.7896 495.9999 Tm 0 Tw (OSEN)Tj 10 0 0 10 208.3492 495.9999 Tm 0.094 Tw (. We do not know of a single case where there is)Tj /F14 1 Tf 23.0547 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD (one)Tj -30.1896 -1 TD 0.16 Tw (case, perhaps, where there was some conviction, but it was short-)Tj T* 0 Tw (term.)Tj 1 -1 TD 0.136 Tw (Senator B)Tj 8 0 0 7.6194 204.6593 465.9999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 254.5785 465.9999 Tm 0.136 Tw (. Out of 2 million disks that have been con-)Tj -10.7579 -1 TD 0.052 Tw (fiscated, one case?)Tj 1 -1 TD (Ms. R)Tj 8 0 0 7.6194 184.3696 445.9999 Tm 0 Tw (OSEN)Tj 10 0 0 10 207.9292 445.9999 Tm 0.052 Tw (. Yes.)Tj -5.0929 -1 TD 0.22 Tw (Senator B)Tj 8 0 0 7.6194 205.4993 435.9999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 255.4185 435.9999 Tm 0.22 Tw (. Have you brought this issue up either to)Tj -10.8419 -1 TD 0.216 Tw (the Chinese Government or the U.S. Government for a response,)Tj T* 0.192 Tw (why have there not been more domestic cases, why have you not)Tj T* 0.052 Tw (changed the law so you can prosecute these cases?)Tj 1 -1 TD (Ms. R)Tj 8 0 0 7.6194 184.3696 396 Tm 0 Tw (OSEN)Tj 10 0 0 10 207.9292 396 Tm 0.052 Tw (. Yes, weekly.)Tj -5.0929 -1 TD (Senator B)Tj 8 0 0 7.6194 203.8193 386 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 253.7385 386 Tm 0.052 Tw (. And their response?)Tj -9.6739 -1 TD 0.126 Tw (Ms. R)Tj 8 0 0 7.6194 185.1096 375.9999 Tm 0 Tw (OSEN)Tj 10 0 0 10 208.6692 375.9999 Tm 0.126 Tw (. Well, as I think you know, the Chinese Government)Tj -6.1669 -1 TD 0.138 Tw (is only so responsive to business. Maybe Dr. Kapp has some ideas)Tj T* 0.194 Tw (there. But the domestic Chinese music industry obviously has an)Tj T* 0.11 Tw (incentive, as we do, to see more prosecutions, and there is just not)Tj T* 0.052 Tw (a response.)Tj 1 -1 TD 0.224 Tw (I think USTR has been terrific in pressing these issues, and I)Tj -1 -1 TD 0.18 Tw (think they are as frustrated as we are with the lack of action on)Tj T* 0.052 Tw (the Chinese Government)Tj /F14 1 Tf 11.6408 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.052 Tw (s part.)Tj -10.8448 -1 TD 0.102 Tw (Senator B)Tj 8 0 0 7.6194 204.3193 295.9999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 254.2385 295.9999 Tm 0.102 Tw (. So, you bring it up, but there is just no re-)Tj -10.7239 -1 TD 0.052 Tw (sponse. Does the Chinese Government)Tj /F14 1 Tf 17.9307 0 TD 0 Tw ()Tj /F18 1 Tf -16.9307 -1 TD 0.132 Tw (Ms. R)Tj 8 0 0 7.6194 185.1696 275.9999 Tm 0 Tw (OSEN)Tj 10 0 0 10 208.7292 275.9999 Tm 0.132 Tw (. It is the mother-in-law test. That is my new)Tj /F14 1 Tf 21.9507 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.132 Tw (I love)Tj -29.1236 -1 TD 0.052 Tw (that analogy.)Tj 1 -1 TD 0.086 Tw (Senator B)Tj 8 0 0 7.6194 204.1593 255.9999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 254.0785 255.9999 Tm 0.086 Tw (. Well, do not tell my mother-in-law. I am in)Tj -10.7079 -1 TD 0.052 Tw (trouble, then.)Tj 1 -1 TD (Ms. R)Tj 8 0 0 7.6194 184.3696 235.9999 Tm 0 Tw (OSEN)Tj 10 0 0 10 207.9292 235.9999 Tm 0.052 Tw (. Good thing this is not on C)Tj /F14 1 Tf 13.2918 0 TD 0 Tw ()Tj /F18 1 Tf 0.556 0 TD (SPAN.)Tj -18.9407 -1 TD 0.126 Tw (Senator B)Tj 8 0 0 7.6194 204.5593 225.9999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 254.4785 225.9999 Tm 0.126 Tw (. What is the Chinese Government response)Tj -10.7479 -1 TD 0.052 Tw (to you when you raise this with them?)Tj 1 -1 TD 0.202 Tw (Ms. R)Tj 8 0 0 7.6194 185.8696 205.9999 Tm 0 Tw (OSEN)Tj 10 0 0 10 209.4292 205.9999 Tm 0.202 Tw (. Well, the good news is that they acknowledge that)Tj -6.2429 -1 TD 0.168 Tw (there is a problem. The bad news is that they are not doing any-)Tj T* 0.158 Tw (thing about it. So I think that we feel like we are being )Tj /F14 1 Tf 27.6716 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD (yessed,)Tj /F14 1 Tf 3.315 0 TD ()Tj /F18 1 Tf -31.3946 -1 TD 0.052 Tw (but we are not being responded to.)Tj 1 -1 TD 0.152 Tw (Senator B)Tj 8 0 0 7.6194 204.8193 165.9999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 254.7385 165.9999 Tm 0.152 Tw (. My guess is, too, that when you represent)Tj -10.7739 -1 TD 0.186 Tw (the entire intellectual property industry here at this hearing, but)Tj T* 0.146 Tw (software, movies are as bad, if not worse than what the recording)Tj T* 0 Tw (industry)Tj /F14 1 Tf 3.9439 0 TD ()Tj /F18 1 Tf -2.9439 -1 TD 0.204 Tw (Ms. R)Tj 8 0 0 7.6194 185.8896 125.9999 Tm 0 Tw (OSEN)Tj 10 0 0 10 209.4492 125.9999 Tm 0.204 Tw (. Absolutely. And in fact I think, for the U.S. music)Tj -6.2449 -1 TD 0.142 Tw (industry, we may be the smallest victim on a daily basis in terms)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00050)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 169 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 171 0 obj << /Length 5474 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (47)Tj -15.344 -2 TD 0.192 Tw (of overall dollars. Software, video games, films are extremely sig-)Tj 0 -1.02 TD 0.142 Tw (nificant. You know, software, I think, is a billion dollars of the $2)Tj T* 0.052 Tw (billion total that we think we are all losing.)Tj 1 -1.02 TD 0.266 Tw (Senator B)Tj 8 0 0 7.6194 205.9593 615.4 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 255.8785 615.4 Tm 0.266 Tw (. Mr. Kapp, do you have any thoughts on)Tj -10.8879 -1.02 TD 0.136 Tw (this? I mean, this has been a well-known problem for some period)Tj T* 0.052 Tw (of time)Tj /F14 1 Tf 3.2559 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.052 Tw (of how we should address this?)Tj -3.2559 -1.02 TD 0.144 Tw (Dr. K)Tj 8 0 0 7.6194 183.9996 584.8 Tm 0 Tw (APP)Tj 10 0 0 10 200.4474 584.8 Tm 0.144 Tw (. Senator, it has. As I start to answer, I should say, in)Tj -5.3447 -1.02 TD 0.228 Tw (case I did not make it clear earlier, that since Charles Freeman)Tj T* 0.154 Tw (enunciated the series of serious issues, that by the end of China)Tj /F14 1 Tf 31.1405 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (s)Tj -31.3445 -1.02 TD 0.064 Tw (first year in the WTO, had emerged as requiring improvement)Tj /F14 1 Tf 29.3736 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD (ag-)Tj -30.3735 -1.02 TD 0.408 Tw (ricultural TRQs, intellectual property, transparency, capital re-)Tj T* 0.19 Tw (quirements and so forth)Tj /F14 1 Tf 11.6628 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.19 Tw (one of the reasons that I did not recite)Tj -12.6628 -1.02 TD 0.21 Tw (those myself was that Charles had already done them, and, in a)Tj T* 0.176 Tw (sense, had laid out the major list of blocks of concern that USTR)Tj T* 0.18 Tw (and the business sector feel very strongly about. So any omission)Tj T* 0.108 Tw (of that list from earlier remarks was not intended to de-emphasize)Tj T* 0.052 Tw (those, but rather simply not to repeat them.)Tj 1 -1.02 TD 0.142 Tw (You know, the problem in China is that the place is evolving in)Tj -1 -1.02 TD 0.06 Tw (the direction of adherence to universally applied laws, but the proc-)Tj T* 0.258 Tw (ess is sometimes very slow. We have just done a compilation of)Tj T* 0.118 Tw (basic information on all the provinces and cities. Even it)Tj /F14 1 Tf 27.0646 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.118 Tw (s with all)Tj -27.2686 -1.02 TD 0.158 Tw (the little different colored blocks, is sort of a symbolic representa-)Tj T* 0.15 Tw (tion of the fact that the PRC today has left Stalinism behind to a)Tj T* 0.202 Tw (very significant degree; is really not totalitarian by most people)Tj /F14 1 Tf 31.1366 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (s)Tj -31.3405 -1.02 TD 0.1 Tw (definitions anymore; and has given a wider range of latitude of be-)Tj T* 0.096 Tw (havior to people in their lives in their ordinary communities, much)Tj T* 0.152 Tw (wider than was the case 10 years ago, but, at the same time, has)Tj T* 0.154 Tw (a problem making its writ stick. It has trouble collecting taxes. It)Tj T* 0.098 Tw (has trouble, even when it wishes to, in pushing down on local soci-)Tj T* 0.052 Tw (ety to do what Beijing says.)Tj 1 -1.02 TD 0.076 Tw (So people like our friends at USTR and people in the association,)Tj -1 -1.02 TD 0.058 Tw (they know. Beijing generally gets it. The people in Beijing, the ones)Tj T* (who signed the WTO deals, they understand the terms, they under-)Tj T* 0.16 Tw (stand the concepts, they understand the benefits. The minute you)Tj T* 0.094 Tw (get, metaphorically speaking, a hundred miles out of town, you are)Tj T* 0.17 Tw (into a world where local interests play a much, much bigger role.)Tj T* 0.238 Tw (I think Hilary Rosen knows this well. If a local party secretary,)Tj T* 0.15 Tw (who has to report on whether or not he is keeping unemployment)Tj T* 0.088 Tw (under control ultimately to the boss up in Beijing somewhere, if he)Tj T* 0.13 Tw (has got a factory turning out pirated materials that keep 250 peo-)Tj T* 0.094 Tw (ple on the job, he has got a conflict. The law says eliminate piracy,)Tj T* 0.092 Tw (and he says, )Tj /F14 1 Tf 6.2589 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.092 Tw (I have got to show my boss that I am keeping unem-)Tj -6.6669 -1.02 TD 0.052 Tw (ployment low.)Tj /F14 1 Tf 6.5159 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.052 Tw [( I am not apologizing for)]TJ /F14 1 Tf 11.5198 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.052 Tw (it needs to be ended.)Tj -18.4437 -1.02 TD 0.198 Tw (The pressure does need to begin with the central authorities, I)Tj -1 -1.02 TD 0.186 Tw (believe, and to be expressed both legally and educationally down-)Tj T* 0.16 Tw (ward throughout the society. We all have a role to play in that. I)Tj T* 0.082 Tw (think many American trade associations now are contributing posi-)Tj T* 0.108 Tw (tively to a fuller understanding of key concepts and of the value of)Tj T* 0.162 Tw (adherence to those concepts at the local level than used to be the)Tj 0 -1.01 TD 0.134 Tw (case. But it is not fast enough for any of us, and I do not disasso-)Tj T* 0.08 Tw (ciate myself from anything that Ms. Rosen said on behalf of the re-)Tj T* 0.1 Tw (cording industry, or the software and the other creative industries.)Tj T* 0.052 Tw (It is a large structural problem.)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00051)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 172 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 175 0 obj << /Length 5421 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (48)Tj -14.344 -2 TD 0.074 Tw (Now, years ago, when I was still out in Seattle working in a very)Tj -1 -1 TD 0.122 Tw (small organization, one of my friends at a software firm in Seattle)Tj T* 0.164 Tw (told me that in those days, and that was before China became as)Tj T* 0.136 Tw (big as it was today, the biggest single intellectual property abuser)Tj T* 0.256 Tw (that they faced, by value, was Germany. And the reason it was)Tj T* 0.16 Tw (Germany was that even though the incidence of abuse was lower,)Tj T* 0.168 Tw (the pervasiveness of the computer and of the use of software was)Tj T* 0.252 Tw (so great that, in dollar terms, Germany looked even worse than)Tj T* 0.27 Tw (China. That was, however, before China really took off into the)Tj T* 0.052 Tw (massive electronification and digitalization of the economy.)Tj 1 -1 TD (Senator B)Tj 8 0 0 7.6194 203.8193 545.9999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 253.7385 545.9999 Tm 0.052 Tw (. Ms. Rosen.)Tj -9.6739 -1 TD 0.096 Tw (Ms. R)Tj 8 0 0 7.6194 184.8096 535.9999 Tm 0 Tw (OSEN)Tj 10 0 0 10 208.3692 535.9999 Tm 0.096 Tw (. I think that that answer, with all due respect to Mr.)Tj -6.1369 -1 TD 0.052 Tw (Kapp, was extremely kind, but really too indulgent.)Tj 1 -1 TD (Dr. K)Tj 8 0 0 7.6194 183.0796 515.9999 Tm 0 Tw (APP)Tj 10 0 0 10 199.5273 515.9999 Tm 0.052 Tw (. The whole answer, or just the German part?)Tj -4.2527 -1 TD 0.218 Tw (Ms. R)Tj 8 0 0 7.6194 186.0296 505.9999 Tm 0 Tw (OSEN)Tj 10 0 0 10 209.5892 505.9999 Tm 0.218 Tw (. The German part is history, I think. Germany en-)Tj -6.2589 -1 TD 0.052 Tw (forces extremely well, as far as I can tell.)Tj 1 -1 TD 0.062 Tw (Too indulgent for a couple of reasons, because this is not a capac-)Tj -1 -1 TD 0.118 Tw (ity-to-succeed issue in China. We see, before every important state)Tj T* 0.168 Tw (visit, that the streets are cleaned up. We see that, in 1997, when)Tj T* 0.144 Tw (the Chinese Government thought that the future of their bilateral)Tj T* 0.268 Tw (relationship with the United States in other issues was at risk,)Tj T* 0.228 Tw (they cleaned it up. They have the ability to do this. I fully sub-)Tj T* 0.1 Tw (scribe to what you said earlier, Mr. Chairman, that if we left some)Tj T* 0.136 Tw (of these issues to the resolution of the global geopolitical future of)Tj T* 0.176 Tw (China, though democracy is an important and laudable goal, that)Tj T* 0.184 Tw (there would always be an excuse not to do the thing right before)Tj T* 0.074 Tw (them, the problem right before them. Unless all of the issues of the)Tj T* 0.192 Tw (relationship were addressed, then why should we bother address-)Tj T* 0.218 Tw (ing this one? Our experience in this country has shown, particu-)Tj T* 0.326 Tw (larly on issues like trade within bilateral agreements, that the)Tj T* 0.176 Tw (more specific we are, the more insistent we are on action on spe-)Tj T* 0.052 Tw (cific issues, the better our results are.)Tj 1 -1 TD 0.096 Tw (Senator B)Tj 8 0 0 7.6194 204.2593 325.9999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 254.1785 325.9999 Tm 0.096 Tw (. Thank you, and I want to thank the panel.)Tj -10.7179 -1 TD 0.174 Tw (And I just would mention, Dr. Kapp, as you leave, I work with a)Tj T* 0.232 Tw (number of companies that are working in China. Now, that is a)Tj T* 0.282 Tw (good thing. And I have seen enormous progress taking place in)Tj T* 0.068 Tw (China since the first time I went there in 1984-85. Beautiful. Great)Tj T* 0.246 Tw (for the individual life that is there. I am very concerned that if)Tj T* 0.126 Tw (they do not continue to)Tj /F14 1 Tf 11.0968 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.126 Tw (if they do not move forward positively on)Tj -12.0968 -1 TD 0.108 Tw (a broad-based agenda, that a number of businesses from the West,)Tj T* 0.148 Tw (from the United States, that invest there are going to be in a dif-)Tj T* 0.078 Tw (ficult situation if we get in a confrontational situation. EP)Tj /F14 1 Tf 27.4836 0 TD 0 Tw ()Tj /F18 1 Tf 0.556 0 TD 0.078 Tw (3, I was)Tj -28.0396 -1 TD 0.146 Tw (glad it got resolved. It also sowed a worrying note to a number of)Tj T* 0.2 Tw (people that this is not the alliance or partnership that some had)Tj T* 0.186 Tw (hoped for. This is still an adversarial relationship, and a number)Tj T* 0.23 Tw (did not think that it was. And that)Tj /F14 1 Tf 17.6138 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.23 Tw (s very troubling, because we)Tj -17.8178 -1 TD 0.25 Tw (have a number of businesses in the United States, a number of)Tj T* 0.142 Tw (businesses in China, that have heavy investment there, they have)Tj T* 0.168 Tw (heavy economic relations back and forth, and if the progress does)Tj T* 0.324 Tw (not continue to be made on democracy, human rights, and the)Tj T* 0.204 Tw (basic, opening up the society, on a free press, on military issues,)Tj T* 0.236 Tw (we could really be)Tj /F14 1 Tf 8.9869 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.236 Tw (we would be doing two things that could be)Tj -9.9869 -1 TD 0.168 Tw (very bad. One, we could have a lot of investment that is going to)Tj T* 0.084 Tw (be in difficult circumstances down the road. Two, we could actually)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00052)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 176 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 178 0 obj << /Length 5319 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (49)Tj -15.344 -2 TD 0.112 Tw (be paying for the modernization of a potential adversary in the fu-)Tj 0 -1 TD 0.25 Tw (ture. And I just really hope that with all the relations that our)Tj T* 0.182 Tw (business community has, which are very positive, and that is the)Tj T* 0.19 Tw (strength of the relationship now to the United States and China,)Tj T* (is the business and the economic relationship, that it helps move)Tj T* 0.086 Tw (it forward on these other fronts that are lagging, that are not mov-)Tj T* 0.162 Tw (ing as aggressively as they need to, and they sow very worrisome)Tj T* 0.052 Tw (notes for a lot of people.)Tj 1 -1 TD 0.136 Tw (Dr. K)Tj 8 0 0 7.6194 183.9196 565.9999 Tm 0 Tw (APP)Tj 10 0 0 10 200.3674 565.9999 Tm 0.136 Tw (. Senator, when you have a minute to look at the writ-)Tj -5.3367 -1 TD 0.192 Tw (ten testimony, I think you will discover that, in a way, you have)Tj T* 0.22 Tw (said better and certainly more briefly what I tried to say myself)Tj T* 0.052 Tw (and what I opened with today.)Tj 1 -1 TD 0.186 Tw (I do think the business and commercial relationship has grown)Tj -1 -1 TD 0.094 Tw (beautifully for many people. It has got a lot of problems. There are)Tj T* 0.088 Tw (some businesses who are very unhappy. But, by and large, it is be-)Tj T* 0.15 Tw (come a very, very big enterprise for both sides. But it cannot sur-)Tj T* 0.218 Tw (vive in a vacuum, and I think that is what you)Tj /F14 1 Tf 23.6287 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.218 Tw (re saying. If the)Tj -23.8327 -1 TD 0.178 Tw (other dimensions of this large relationship are not carefully man-)Tj T* 0.098 Tw (aged with a view toward a long-term, you might even say strategic)Tj T* 0.058 Tw (emerging and improving of both sides)Tj /F14 1 Tf 17.6797 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.058 Tw [( interest, it will be to the det-)]TJ -17.8837 -1 TD 0.286 Tw (riment of our economic engagement with China, no matter how)Tj T* 0.196 Tw (large today)Tj /F14 1 Tf 5.3819 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.196 Tw (s trade volume. You are saying, if these other dimen-)Tj -5.5859 -1 TD 0.108 Tw (sions are not properly)Tj /F14 1 Tf 10.3978 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.108 Tw (I hate to use that old word, but it requires)Tj /F14 1 Tf -11.3978 -1 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD (engagement.)Tj /F14 1 Tf 5.9079 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.25 Tw [( And I think, again, that you, yourself, from what)]TJ -6.7239 -1 TD 0.176 Tw (you have said today on this subcommittee by having this hearing)Tj T* 0.306 Tw (at the beginning of a new Congress in a period of great inter-)Tj T* 0.344 Tw (national tension, are laying the groundwork for the effort that)Tj T* 0.078 Tw (needs to be made within our country and bilaterally. I hope we can)Tj T* 0.052 Tw (proceed with it.)Tj 1 -1 TD (Senator B)Tj 8 0 0 7.6194 203.8193 355.9999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 253.7385 355.9999 Tm 0.052 Tw (. Thank you very much for joining us.)Tj -9.6739 -1 TD (Dr. K)Tj 8 0 0 7.6194 183.0796 345.9999 Tm 0 Tw (APP)Tj 10 0 0 10 199.5273 345.9999 Tm 0.052 Tw (. Thanks.)Tj -4.2527 -1 TD (Senator B)Tj 8 0 0 7.6194 203.8193 335.9999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 253.7385 335.9999 Tm 0.052 Tw (. The third panel will be Dr. Larry Wortzel)Tj /F14 1 Tf 20.1217 0 TD 0 Tw ()Tj /F18 1 Tf -30.7956 -1 TD 0.178 Tw (he is with The Heritage Foundation in Washington, DC)Tj /F14 1 Tf 27.0936 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.178 Tw (and Dr.)Tj -28.0936 -1 TD 0.09 Tw (David M. Lampton, director, Chinese Studies at The Nixon Center,)Tj T* 0.052 Tw (Washington, DC.)Tj 1 -1 TD 0.13 Tw (Dr. Wortzel, delighted to have you joining us. We will take your)Tj -1 -1 TD 0.196 Tw (written statement into the record, and you can summarize if you)Tj T* 0.052 Tw (would like.)Tj 1 -1 TD 0.106 Tw (I will set the clock at 7 minutes to give you some warning about)Tj -1 -1 TD 0.052 Tw (what is going on.)Tj /F20 1 Tf 9 0 0 9 147 239.7999 Tm 0.1933 Tw (STATEMENT OF LARRY M. WORTZEL, PH.D., VICE PRESIDENT)Tj 1 -1.1 TD 0.0667 Tw (AND DIRECTOR, THE KATHRYN AND SHELBY CULLOM DAVIS)Tj T* 0.2778 Tw (INSTITUTE FOR INTERNATIONAL STUDIES, THE HERITAGE)Tj 0 -1.1111 TD 0.0422 Tw (FOUNDATION, WASHINGTON, DC)Tj /F18 1 Tf 10 0 0 10 157 195.9999 Tm 0.056 Tw (Dr. W)Tj 8 0 0 7.6194 185.1496 195.9999 Tm 0 Tw (ORTZEL)Tj 10 0 0 10 218.4851 195.9999 Tm 0.056 Tw (. Mr. Chairman, I appreciate the opportunity to sub-)Tj -7.1485 -1 TD 0.196 Tw (mit a statement for the written record. I also want to thank you)Tj T* 0.052 Tw (for inviting me.)Tj 1 -1 TD 0.27 Tw (China is rising as both an economic and a strategic power in)Tj -1 -1 TD 0.132 Tw (Asia, and it has great influence over what happens on the Korean)Tj T* 0.052 Tw (Peninsula, so it is an important country that cannot be ignored.)Tj 1 -1 TD 0.162 Tw (It is also important that you hold this hearing, because a lot of)Tj -1 -1 TD 0.086 Tw (Americans have been critical that the United States is incapable of)Tj T* 0.134 Tw (conducting a war on terrorism around the world; of managing dis-)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00053)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 179 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R /F20 27 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 181 0 obj << /Length 5351 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (50)Tj -15.344 -2 TD 0.138 Tw (arming Iraq, if necessary, and I think it will be necessary; of sup-)Tj 0 -1 TD 0.224 Tw (porting the democracy on Taiwan; and addressing the North Ko-)Tj T* 0.114 Tw (rean nuclear program. The fact that this committee is holding this)Tj T* 0.052 Tw (hearing demonstrates the really powerful capacity of our democracy)Tj T* (to manage a lot of strategic challenges in a decisive way.)Tj 1 -1 TD 0.204 Tw (China is involved in all these things in one way or another. It)Tj -1 -1 TD 0.386 Tw (is a permanent member of the U.N. Security Council. It sup-)Tj T* 0 Tw (ported)Tj /F14 1 Tf 2.981 0 TD ()Tj /F18 1 Tf 1 0 TD 0.294 Tw (I would say it half-heartedly supported)Tj /F14 1 Tf 19.5077 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.294 Tw (the war on al-)Tj -24.4886 -1 TD 0.15 Tw (Qaeda. It did it for its own interests because it wanted to be able)Tj T* 0.254 Tw (to face, I think, a credible internal terrorist threat. Beijing sup-)Tj T* 0.18 Tw (ported U.N. Resolution 1441. Since then, they have made it clear)Tj T* 0.196 Tw (that they did not support the use of force in Iraq. But thanks to)Tj T* 0.058 Tw (French intransigence on the Security Council, Beijing did not really)Tj T* 0.052 Tw (have to take a position there. They kind of got away with it.)Tj 1 -1 TD 0.116 Tw (I think we have very serious disagreements with China over the)Tj -1 -1 TD 0.288 Tw (question of Taiwan, the island republic)Tj /F14 1 Tf 19.4617 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.288 Tw (s sovereignty, and about)Tj -19.6657 -1 TD 0.132 Tw (American arms sales under the Taiwan Relations Act. But I think)Tj T* 0.334 Tw (that there is a common agreement that neither China nor the)Tj T* 0.29 Tw (United States right now wants to see that problem resolved by)Tj T* 0.134 Tw (force. And I do not think either China or the United States wants)Tj T* 0.13 Tw (to see a war on the Korean Peninsula. I think China wants to see)Tj T* 0.318 Tw (a divided Korean Peninsula. It does not want to see it unified)Tj T* 0 Tw (democratically.)Tj 1 -1 TD 0.108 Tw (With respect to Korea, senior generals in the People)Tj /F14 1 Tf 24.8836 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.108 Tw (s Liberation)Tj -26.0876 -1 TD 0.124 Tw (Army made it clear to me when I was a military attache in China)Tj T* 0.174 Tw (that Beijing will not permit the collapse of North Korea, and any)Tj T* 0.142 Tw (American attempt to act in North Korea in a military way that is)Tj T* 0.056 Tw (not coordinated with China, they say, could well result in the situa-)Tj T* (tion that we saw in 1950, with the involvement of the Chinese mili-)Tj T* 0 Tw (tary.)Tj 1 -1 TD 0.114 Tw (China provides 70 to 88 percent of North Korea)Tj /F14 1 Tf 22.8027 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.114 Tw (s fuel needs and)Tj -24.0067 -1 TD 0.054 Tw (roughly 40 percent of North Korea)Tj /F14 1 Tf 16.1588 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.054 Tw (s food needs. There is no country)Tj -16.3628 -1 TD 0.274 Tw (in the world that is more capable of putting pressure on North)Tj T* 0.206 Tw (Korea than the People)Tj /F14 1 Tf 10.9528 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.206 Tw (s Republic of China. The result of that is,)Tj -11.1568 -1 TD 0.13 Tw (I think that Beijing finds itself in a diplomatic position that it en-)Tj T* 0.064 Tw (joys because it has got diplomats and legislators from Tokyo, Seoul,)Tj T* 0.212 Tw (Washington rushing over to Beijing to seek their assistance with)Tj T* 0.176 Tw (the North Korean nuclear program. That parade of visitors really)Tj T* 0.124 Tw (puts China at the center of a regional issue, and I think the polit-)Tj T* 0.142 Tw (buro welcomes that. At the same time, China)Tj /F14 1 Tf 21.8677 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.142 Tw (s worst fear is prob-)Tj -22.0717 -1 TD 0.052 Tw (ably a re-militarized and nuclear-armed Japan.)Tj 1 -1 TD 0.222 Tw (So this is not as simple a matter as China ignoring their pro-)Tj -1 -1 TD 0.188 Tw (liferation agreements and giving nuclear weapons and missiles to)Tj T* 0.212 Tw (Pakistan. They have got a higher stake here. I can tell you that)Tj T* 0.076 Tw (there is a debate going on in Beijing about what to do, but the peo-)Tj T* 0.242 Tw (ple that are calling Americans hegemonists are winning this de-)Tj T* 0.052 Tw (bate. Beijing is not moving decisively on what they could do.)Tj 1 -1 TD 0.206 Tw (I think that we must continue to attempt to resolve the North)Tj -1 -1 TD 0.132 Tw (Korean problem in a multilateral forum. Beijing is essentially car-)Tj T* 0.134 Tw (rying Pyongyang)Tj /F14 1 Tf 7.9489 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.134 Tw (s water, trying to encourage the United States to)Tj -8.1529 -1 TD 0.24 Tw (negotiate bilaterally with North Korea. I think to do that would)Tj T* 0.052 Tw (isolate South Korea and would be a serious mistake.)Tj 1 -1 TD 0.106 Tw (Now, let me talk for a minute)Tj /F14 1 Tf 14.2688 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.106 Tw (Mr. Chairman, you have covered)Tj -16.2688 -1 TD 0.204 Tw (the broad trade statistics. They are in my paper. I am not going)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00054)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 182 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 184 0 obj << /Length 4684 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (51)Tj -15.344 -2 TD 0.204 Tw (to cover those again. But I think it is fair to say that free trade)Tj 0 -1.04 TD 0.082 Tw (builds wealth and prosperity for the United States and all involved)Tj T* 0.152 Tw (in the fair exchange of goods, and China has benefited from turn-)Tj T* 0.168 Tw (ing away from a Stalinist system to a market economy. Economic)Tj T* 0.122 Tw (freedom in China has created a body of entrepreneurs and of ordi-)Tj T* 0.188 Tw (nary citizens who have a variety of choice about where they live,)Tj T* 0.248 Tw (where they invest, and what they buy. At least in the economic)Tj T* 0.166 Tw (sphere, that gives the Chinese Communist Party less control over)Tj T* 0.052 Tw (individual lives.)Tj 1 -1.04 TD 0.104 Tw (It is a dictatorship. It is a Leninist dictatorship. I think that the)Tj -1 -1.04 TD 0.124 Tw (Chinese people are quite capable today of realizing that if you can)Tj T* 0.068 Tw (pick where you live, if you can pick the car you buy, if you can pick)Tj T* 0.2 Tw (where you invest and make wise choices in the marketplace, you)Tj T* 0.148 Tw (can figure out who is going to be the best elected leader. It is the)Tj T* 0 Tw (People)Tj /F14 1 Tf 3.056 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.118 Tw (s Liberation Army and the security forces that prevent that)Tj -3.2599 -1.04 TD 0.052 Tw (from happening. I hope someday we see that change.)Tj 1 -1.04 TD 0.196 Tw (World foreign direct investment flows into China between 1995)Tj -1 -1.04 TD 0.062 Tw (and 2000 were $245 billion, but China did not attract the most FDI)Tj T* 0.268 Tw (out of the United States. It went to Hong Kong and Singapore.)Tj T* 0.116 Tw (What that tells us is that the rule of law, abiding by international)Tj T* 0.106 Tw (rules, are what affects the investor community, and I think that is)Tj T* 0.052 Tw (what China realizes.)Tj 1 -1.04 TD 0.238 Tw (I want to emphasize that I support free trade and I think we)Tj -1 -1.04 TD 0.09 Tw (need prudent national security controls on exports. There are some)Tj T* 0.204 Tw (areas where the United States maintains a significant advantage)Tj T* 0.262 Tw (in technology that has direct military application. We should do)Tj T* 0.158 Tw (nothing to make the People)Tj /F14 1 Tf 13.3008 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.158 Tw (s Liberation Army a greater threat or)Tj -13.5048 -1.04 TD 0.052 Tw (to make it more effective at suppressing the Chinese people.)Tj 1 -1.04 TD 0.178 Tw (I think that the biggest area where we could come into conflict)Tj -1 -1.04 TD (in China is not Taiwan and is not North Korea, but it is China)Tj /F14 1 Tf 31.1166 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (s)Tj -31.3206 -1.04 TD 0.162 Tw (excessive territorial claims and its unwillingness to allow the free)Tj T* 0.23 Tw (passage in international airspace and waters. The EP)Tj /F14 1 Tf 26.4106 0 TD 0 Tw ()Tj /F18 1 Tf 0.556 0 TD 0.23 Tw (3 incident)Tj -26.9666 -1.04 TD 0.258 Tw (was an example of that. I find that very dangerous. I think we)Tj T* 0.052 Tw (need to work on it.)Tj 1 -1.04 TD 0.084 Tw (I will close with a comment on capital markets. I think that Chi-)Tj -1 -1.04 TD 0.216 Tw (nese participation in our capital markets is a positive thing. Mr.)Tj T* 0.146 Tw (Chairman, anybody that gives you a straight-line prediction about)Tj T* 0.066 Tw (where China will be in 20 years is making it up. The United States)Tj T* 0.12 Tw (policy is about right. We ought to encourage reform, and we ought)Tj T* 0.142 Tw (to anticipate a China that has an educated populace, a productive)Tj T* 0.13 Tw (work force, and a nation that operates in a world of rules. But we)Tj T* 0.09 Tw (have got to handicap the potential outcomes, and I would give that)Tj T* 0.278 Tw (outcome about a two or three in five. We could see a collapsed)Tj T* 0.198 Tw (China with a floating labor population tearing the country apart,)Tj T* 0.06 Tw (or we could see an emerged Chinese state that will have a powerful)Tj T* 0.446 Tw (coercive military that threatens its neighbors and the United)Tj T* 0.094 Tw (States. 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It is privately supported and receives no)Tj T* 0.225 Tw (funds from any government at any level, nor does it perform any government or)Tj T* 0.0525 Tw (other contract work.)Tj 1 -0.9875 TD 0.11 Tw (The Heritage Foundation is the most broadly supported think tank in the United)Tj -1 -0.9875 TD 0.07 Tw (States. During 2002, it had more than 200,000 individual, foundation, and corporate)Tj T* 0.0525 Tw (supporters representing every state in the U.S. Its 2002 contributions came from the)Tj T* (following sources:)Tj 0 -1.4875 TD 0 Tw (Individuals)Tj /F14 1 Tf 5.2779 0 TD ()Tj /F18 1 Tf 1 0 TD (61.21%)Tj -6.2779 -0.9875 TD (Foundations)Tj /F14 1 Tf 5.7969 0 TD ()Tj /F18 1 Tf 1 0 TD (27.49%)Tj -6.7969 -0.9875 TD (Corporations)Tj /F14 1 Tf 6.0179 0 TD ()Tj /F18 1 Tf 1 0 TD (6.76%)Tj -7.0179 -0.9875 TD 0.0525 Tw (Investment Income)Tj /F14 1 Tf 8.9774 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD (1.08%)Tj -9.9773 -0.9875 TD 0.0525 Tw (Publication Sales and Other)Tj /F14 1 Tf 13.1973 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD (3.47%)Tj -13.1973 -1.4875 TD 0.22 Tw (The top five corporate givers provided The Heritage Foundation with less than)Tj -1 -0.9875 TD 0.145 Tw (3.5% of its 2002 income. The Heritage Foundation)Tj /F14 1 Tf 24.1306 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.145 Tw (s books are audited annually by)Tj -24.3346 -0.9875 TD 0.055 Tw (the national accounting firm of Deloitte & Touche. A list of major donors is available)Tj T* 0.0525 Tw (from The Heritage Foundation upon request.)Tj 1 -0.9875 TD 0.14 Tw (Members of The Heritage Foundation staff testify as individuals discussing their)Tj -1 -0.9875 TD 0.0975 Tw (own independent research. The views expressed are their own and do not reflect an)Tj T* 0.0525 Tw (institutional position for The Heritage Foundation or its board of trustees.)Tj 1 -0.9875 TD 0.1075 Tw (Mr. Chairman and distinguished members of the Committee, thank you for invit-)Tj -1 -0.9875 TD 0.19 Tw (ing me to address the regional factors related to China)Tj /F14 1 Tf 26.9156 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.19 Tw (s rise as an economic and)Tj -27.1196 -0.9875 TD 0.1525 Tw (strategic power in East Asia. With respect to the security problems on the Korean)Tj T* 0.11 Tw (Peninsula, China is a prime actor. More broadly, China)Tj /F14 1 Tf 26.4756 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.11 Tw (s economic growth, its mili-)Tj -26.6796 -0.9875 TD 0.2575 Tw (tary capacity, its industrial strength, and its entry into world economic markets)Tj T* 0.0525 Tw (challenge its regional neighbors and the United States.)Tj 1 -0.9875 TD 0 Tw (Today)Tj /F14 1 Tf 2.834 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.08 Tw (s hearing comes at a critical time for the American people as well as Amer-)Tj -4.038 -0.9875 TD 0 Tw (ica)Tj /F14 1 Tf 1.315 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.1075 Tw (s friends and allies. Some Americans have opined that the United States cannot)Tj -1.519 -0.9875 TD 0.2125 Tw (keep its focus while it conducts a war on terrorist organizations, stands ready to)Tj T* 0.3 Tw (disarm Iraq, continues to support the democracy on Taiwan, and addresses the)Tj T* 0.16 Tw (problem of the North Korean nuclear program. The very fact that the Senate For-)Tj T* 0.12 Tw (eign Relations Committee is holding this hearing demonstrates the powerful capac-)Tj T* 0.1425 Tw (ity of this democracy to manage multiple complex strategic challenges in a mature)Tj T* 0.0525 Tw (and deliberative, yet timely and decisive way.)Tj 1 -0.9875 TD 0.1875 Tw (China is involved in all of these issues in one way or another. As a permanent)Tj -1 -0.9875 TD 0.165 Tw (member of the United Nations Security Council, Beijing gave half-hearted support)Tj T* 0.13 Tw (to the war against al-Qaeda and the Taliban in Afghanistan. Beijing also professes)Tj T* 0.14 Tw (support for the long-term war on terrorism, believing that it faces its own internal)Tj 0 -1 TD 0.27 Tw (Islamic separatist terrorist threat. With respect to Iraq, while Beijing supported)Tj T* 0.205 Tw (United Nations Resolution 1441, the Chinese leadership made it clear that it did)Tj T* 0.1475 Tw (not support the use of force in Iraq, but French intransigence permitted Beijing to)Tj T* 0.0725 Tw (avoid taking a position in any subsequent vote. Over Taiwan, the United States and)Tj T* 0.2 Tw (China disagree about the question of that island republic)Tj /F14 1 Tf 27.9556 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.2 Tw (s sovereignty and about)Tj -28.1596 -1 TD 0.1125 Tw (American arms sales under the Taiwan Relations Act; but it is fair to say that nei-)Tj T* 0.165 Tw (ther Beijing nor Washington wants to see the question of Taiwan)Tj /F14 1 Tf 31.7085 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.165 Tw (s relationship to)Tj -31.9125 -1 TD 0.2075 Tw (the communist government of China resolved by force. Neither the United States)Tj T* 0.11 Tw (nor China wants to see a war on the Korean Peninsula. I believe that China would)Tj T* 0.0875 Tw (prefer to see the Peninsula divided and loathes the idea of a unified and democratic)Tj T* 0 Tw (Korea.)Tj 1 -1 TD 0.095 Tw (Let me address Korea first and then turn to economic and other regional security)Tj -1 -1 TD 0 Tw (factors.)Tj 6.4 0 0 6.0958 261.68 201 Tm [(THE)-412.5(KOREAN)-412.5(PENINSULA)]TJ 8 0 0 8 155 188 Tm 0.0775 Tw (Developments on the Korean Peninsula have worked to increase Beijing)Tj /F14 1 Tf 34.015 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0775 Tw (s political)Tj -35.219 -1 TD 0.15 Tw (influence in the region. During the years I worked as a military attache)Tj /F14 1 Tf 34.442 0.076 TD 0 Tw ()Tj /F18 1 Tf 0.844 -0.076 TD 0.15 Tw (in China,)Tj -35.286 -1 TD 0.105 Tw (the senior generals of the People)Tj /F14 1 Tf 15.5628 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.105 Tw (s Liberation Army made it clear that China would)Tj -15.7668 -1 TD 0.1925 Tw (not let North Korea collapse. I was consistently told that in the event of a major)Tj T* 0.215 Tw (crisis, war, or collapse in North Korea, China must be consulted on any military)Tj T* 0.1625 Tw (action to be taken. Three senior generals who fought against the United States in)Tj T* 0.1425 Tw (the Korean War stated that if U.S. forces had to stabilize a collapsed North Korea)Tj T* 0.075 Tw (or move into North Korea to fight there again, and those forces approached the Chi-)Tj T* 0.17 Tw (nese border without consulting with Beijing, it could force the Chinese military to)Tj T* 0.0525 Tw (enter into Korea as the PLA did in 1950.)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00056)-1076.9(Fmt 6633)-1076.9(Sfmt 6621)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 188 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 190 0 obj << /Length 7843 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (53)Tj 8 0 0 8 155 648 Tm 0.185 Tw (China provides somewhere between 70 percent and 88 percent of North Korea)Tj /F14 1 Tf 38.0924 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (s)Tj -39.2964 -1.0125 TD 0.0875 Tw (fuel needs and between 30 percent and 40 percent of North Korea)Tj /F14 1 Tf 31.261 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0875 Tw (s food needs. Sec-)Tj -31.465 -1.0125 TD 0.2075 Tw (retary of State Powell has given a range of figures for China)Tj /F14 1 Tf 30.0441 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.2075 Tw (s support for North)Tj -30.2481 -1.0125 TD 0.1775 Tw (Korea, as have other U.S. officials. The figures I cite are from the former defense)Tj T* 0.21 Tw (minister of South Korea. It is clear that the statements of Chinese generals that)Tj T* 0.0525 Tw (Beijing will not permit North Korea to collapse are correct. Moreover, the magnitude)Tj T* 0.1425 Tw (of this aid means that the People)Tj /F14 1 Tf 16.0988 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1425 Tw (s Republic of China is probably the country with)Tj -16.3028 -1.0125 TD 0.29 Tw (the most influence over North Korea. Unfortunately, Beijing seems unwilling to)Tj T* 0.0525 Tw (pressure North Korea to end its nuclear program.)Tj 1 -1.0125 TD 0.095 Tw (I believe that the leadership of China finds itself in a position that it enjoys. Dip-)Tj -1 -1.0125 TD 0.1025 Tw (lomats and legislators from Tokyo, Seoul, and Washington are rushing to Beijing to)Tj 0 -1 TD 0.055 Tw (seek assistance in ending the North Korean nuclear program. This parade of visitors)Tj T* 0.1275 Tw (puts Beijing into a central position on regional issues that the Chinese Communist)Tj T* 0.1875 Tw (Political Bureau must relish. Moreover, the fact that China)Tj /F14 1 Tf 28.8906 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1875 Tw (s nuclear proliferation)Tj -29.0946 -1 TD 0.075 Tw (to Pakistan has been more or less accepted by the United States means that Beijing)Tj T* 0.135 Tw (has managed to undermine a major pillar of American foreign policy)Tj /F14 1 Tf 32.9255 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.135 Tw (the non-pro-)Tj -33.9255 -1 TD 0.2825 Tw (liferation regime. The situation with North Korea is more delicate than that in)Tj T* 0.1925 Tw (Pakistan, however, because Beijing fears that a nuclear-armed North Korea could)Tj T* 0.205 Tw (drive Japan to abandon its peace constitution and even to consider expanding its)Tj T* 0.135 Tw (military capabilities to include nuclear weapons and delivery systems. Centuries of)Tj T* 0.1125 Tw (animosity and war between Japan and China have left deep clefts between the two)Tj T* 0.285 Tw (countries. The last thing Beijing wants to see is a re-militarized Japan. United)Tj T* 0.1 Tw (States diplomacy must emphasize to Beijing the potential consequences of failing to)Tj T* 0.0525 Tw (stop North Korea)Tj /F14 1 Tf 8.1239 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0525 Tw (s nuclear program, and of China)Tj /F14 1 Tf 15.2073 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0525 Tw (s proliferation behavior.)Tj -22.7391 -1 TD 0.085 Tw (The senior leaders of the Chinese Communist Party continue to support the nego-)Tj -1 -1 TD 0.0975 Tw (tiating position of North Korea in dealings with the United States. Both Pyongyang)Tj T* (and Beijing insist that the only way to resolve the diplomatic and security dilemma)Tj T* 0.0525 Tw (is direct negotiations between the United States and North Korea. Seoul also prefers)Tj T* 0.1575 Tw (to see direct U.S.-North Korean talks. I believe such an approach would be a mis-)Tj T* 0.07 Tw (take. Any solution to the nuclear program in North Korea must be multilateral. The)Tj T* 0.0525 Tw (same is true for North Korea)Tj /F14 1 Tf 13.5963 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0525 Tw (s economic problems.)Tj -12.8003 -1 TD 0.0675 Tw (The 37,000 U.S. troops in Korea are part of a United Nations Command. The U.S.)Tj -1 -1 TD 0.155 Tw (fought in the Korean War and negotiated the armistice ending the fighting on the)Tj T* 0.12 Tw (Peninsula on behalf of the United Nations. The International Atomic Energy Agen-)Tj T* 0.3275 Tw (cy, the body charged with monitoring the North Korean nuclear program, is a)Tj T* 0.1425 Tw (United Nations agency. Russia, Japan, South Korea, China, and the United States)Tj T* 0.0525 Tw (all have a stake in any outcome in Northeast Asia. The Korean Energy Development)Tj T* 0.1575 Tw (Organization, or KEDO, which provided heavy crude oil to North Korea under the)Tj T* 0.26 Tw (1994 Agreed Framework, is a multilateral organization. Finally, bilateral United)Tj T* 0.1825 Tw (States talks with North Korea only serve to isolate South Korea and freeze Seoul)Tj T* 0.0525 Tw (out of the settlement of the security threat it faces.)Tj 1 -1 TD 0.13 Tw (An interesting facet of the 1953 Armistice ending the fighting on the Korean Pe-)Tj -1 -1 TD 0.11 Tw (ninsula is that South Korea refused to sign and has not signed to this day. Instead)Tj T* 0.325 Tw (of arguing for the United States to negotiate bilaterally with the North, Seoul)Tj T* 0.0925 Tw (should begin its own talks to finalize that armistice. Ending the state of war on the)Tj T* 0.14 Tw (Peninsula would open the way for a wider round of regional talks about trade and)Tj T* 0.0525 Tw (economic development for North Korea if it verifiably ends its nuclear program.)Tj 1 -1 TD 0.1625 Tw (All of the nations involved on the Korean Peninsula recognize that North Korea)Tj -1 -1 TD 0.0575 Tw (must resolve its food and energy needs, as well as its economic problems. Pyongyang)Tj T* 0.2 Tw (must do this by reforming its Stalinist, command economy; changing its military-)Tj T* 0.0825 Tw (first policies; and ending the use of blackmail to gain concessions from its neighbors)Tj T* 0.1275 Tw (and the world. There should be no help for North Korea, however, until Kim Jong-)Tj T* 0.0525 Tw (il meets the obligations he has to South Korea and end the nuclear program.)Tj 6.4 0 0 6.0958 237.54 217.0001 Tm 0 Tw [(FREE)-412.5(TRADE)-412.5(AND)-412.5(NATIONAL)-412.5(SECURITY)]TJ 8 0 0 8 155 204.0001 Tm 0.1125 Tw (Free trade builds wealth and prosperity for the United States and all involved in)Tj -1 -1 TD 0.1325 Tw (the fair exchange of goods. China has benefited from turning from a Stalinist, cen-)Tj T* 0.165 Tw (trally planned system toward a market economy, as have the Chinese people. The)Tj T* 0.115 Tw (increase in economic freedom in China has created a body of entrepreneurs and or-)Tj T* 0.185 Tw (dinary citizens who have a variety of choices of where they live, how they invest,)Tj T* 0.1275 Tw (and what they buy. This means that the state and the Communist Party have less)Tj T* 0.0525 Tw (control over major aspects of the lives of China)Tj /F14 1 Tf 22.0127 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0525 Tw (s citizens.)Tj -21.2167 -1 TD 0 Tw (China)Tj /F14 1 Tf 2.815 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.19 Tw (s turn to a market economy has produced consistent economic growth for)Tj -4.019 -1 TD (the country. Its economic standing in Asia has given Beijing political influence in)Tj T* 0.085 Tw (the region, and China)Tj /F14 1 Tf 10.3298 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.085 Tw (s trade with its neighbors has grown rapidly. According to re-)Tj -10.5338 -1 TD 0.28 Tw (cent estimates, China)Tj /F14 1 Tf 10.6168 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.28 Tw (s gross domestic product today is $1.1 trillion. The future)Tj -10.8208 -1 TD 0.125 Tw (growth rate for China)Tj /F14 1 Tf 10.4488 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.125 Tw (s gross domestic product is expected to be between 7 percent)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00057)-1076.9(Fmt 6633)-1076.9(Sfmt 6621)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 191 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 193 0 obj << /Length 7985 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (54)Tj 8 0 0 8 147 648 Tm 0.1775 Tw (and 9 percent, according to the )Tj /F21 1 Tf 15.5838 0 TD (Economist Intelligence Unit. )Tj /F18 1 Tf 13.8433 0 TD (Regionally, only Viet-)Tj -29.4271 -1.0125 TD 0.0575 Tw (nam is expected to have that potential with a future growth rate of 7 percent. Japan)Tj T* 0.065 Tw (is projected to have a future GDP growth rate of only 0.7 percent. The Taiwan Insti-)Tj T* 0.0925 Tw (tute of Economic Research \(TIER\), a major private think tank on the island, on No-)Tj T* 0.0675 Tw (vember 7, 2002, revised its 2002 economic growth forecast for Taiwan slightly down-)Tj T* 0.12 Tw (ward to 3.05 percent from 3.09 percent. Singapore)Tj /F14 1 Tf 23.9536 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.12 Tw (s economic growth is expected to)Tj -24.1576 -1.0125 TD 0.21 Tw (reach 3.1 percent in 2003 and accelerate to 5.1 percent in 2004, according to the)Tj T* 0.0525 Tw (February 10, 2003, issue of )Tj /F21 1 Tf 13.0443 0 TD (The Economist.)Tj /F18 1 Tf -12.0443 -1.0125 TD 0 Tw (China)Tj /F14 1 Tf 2.815 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.2125 Tw (s merchandise exports grew 301 percent between 1990 and 2000, greater)Tj -4.019 -1.0125 TD 0.19 Tw (than the rest of Asia except the Philippines, where exports grew at a rate of 391)Tj T* 0.12 Tw (percent for the same period. China is attracting needed capital and export markets)Tj 0 -1 TD 0.0825 Tw (away from its neighbors. World foreign direct investment \(FDI\) flows into China be-)Tj T* 0.2175 Tw (tween 1995 and 2000 were about $245.1 billion. For Hong Kong and China com-)Tj T* 0.2075 Tw (bined, investment flows reached $377 billion. By comparison, for the same period)Tj T* 0.0725 Tw (South Korea only attracted $33.1 billion in FDI, Singapore $52.1 billion, and Malay-)Tj T* 0.1775 Tw (sia $31.3 billion, according to the July 2002 )Tj /F21 1 Tf 21.7417 0 TD (Report to Congress by the U.S.-China)Tj -21.7417 -1 TD 0.1025 Tw (Security Review Commission. )Tj /F18 1 Tf 14.1383 0 TD (However, China did not attract the most U.S. FDI for)Tj -14.1383 -1 TD 0.2525 Tw (the same period. China received $6.8 billion while Japan attracted $21.4 billion,)Tj T* 0.0525 Tw (Hong Kong $13.7 billion, and Singapore $13.4 billion.)Tj 1 -1 TD 0.1075 Tw (The lesson for Beijing here should be clear: American capital)Tj /F14 1 Tf 29.0241 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.1075 Tw (Western capital in)Tj -31.0241 -1 TD 0 Tw (general)Tj /F14 1 Tf 3.4629 0 TD ()Tj /F18 1 Tf 1 0 TD 0.0925 Tw (flows to nations with stable legal systems, the rule of law, strong property)Tj -4.4629 -1 TD 0.2175 Tw (rights, and transparent banking and financial systems. That is the lesson of )Tj /F21 1 Tf 38.0045 0 TD 0 Tw (The)Tj -38.0045 -1 TD 0.22 Tw (Index of Economic Freedom, )Tj /F18 1 Tf 14.1178 0 TD (published annually by The Heritage Foundation and)Tj -14.1178 -1 TD 0 Tw (the )Tj /F21 1 Tf 1.938 0 TD 0.16 Tw (Wall Street Journal. )Tj /F18 1 Tf 10.1449 0 TD (It is an outcome that supports United States policy goals)Tj -12.0828 -1 TD 0.09 Tw (in trading with China: the creation of a market economy, increased rule of law, and)Tj T* 0.0525 Tw (a China that functions in the world abiding by rules-based behavior.)Tj 1 -1 TD 0.1375 Tw (I believe that American trade with China benefits the United States. Such trade)Tj -1 -1 TD 0.0875 Tw (creates and supports American jobs. At the time that trucking unions demonstrated)Tj T* 0.1175 Tw (against permanent normal trade relations with China, in 2000, about 40 percent of)Tj T* 0.185 Tw (the shipping containers that passed through the port of Seattle, Washington, con-)Tj T* 0.2125 Tw (tained goods bound for or being imported from China. Those containers translate)Tj T* 0.0525 Tw (into American jobs.)Tj 1 -1 TD 0.1 Tw (Competition in the marketplace creates an environment in which industries must)Tj -1 -1 TD 0.265 Tw (innovate and transform themselves or face obsolescence. Corporations and whole)Tj T* 0.1725 Tw (sectors of industry revitalize themselves in the face of fair competition. That said,)Tj T* 0.2175 Tw (there are prudent reasons for national security controls on certain exports where)Tj T* 0.1325 Tw (some goods are withheld from the marketplace. If a nation poses a direct threat to)Tj T* 0.1825 Tw (the United States or its allies, or if its security policies pose a latent threat, it is)Tj T* 0.1375 Tw (prudent to restrict the sale of military goods to that country. This is the case with)Tj T* 0.085 Tw (China, especially because of China)Tj /F14 1 Tf 16.3418 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.085 Tw (s explicit threats against Taiwan. Also, given the)Tj -16.5458 -1 TD 0.19 Tw (history of the use of the Chinese People)Tj /F14 1 Tf 19.5527 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.19 Tw (s Liberation Army to suppress the demo-)Tj -19.7567 -1 TD 0.09 Tw (cratic movement in the 1989 Tiananmen Massacre, there is no reason the make the)Tj T* 0.0525 Tw (Chinese military a more effective force.)Tj 1 -1 TD 0.2775 Tw (With respect to dual-use items)Tj /F14 1 Tf 15.2398 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.2775 Tw (those with both military and civilian applica-)Tj -17.2398 -1 TD 0 Tw (tion)Tj /F14 1 Tf 1.815 0 TD ()Tj /F18 1 Tf 1 0 TD 0.175 Tw (I would encourage a careful examination of licenses with increased end-user)Tj -2.815 -1 TD 0.1275 Tw (verification as well as pre- and post-license checks. Where the United States is the)Tj T* 0 Tw (world)Tj /F14 1 Tf 2.611 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.1375 Tw (s unique possessor of technological and manufacturing capabilities with clear)Tj -2.815 -1 TD 0.0925 Tw (military application, there are prudent reasons to control the licensing of such tech-)Tj T* 0.0525 Tw (nologies or capabilities.)Tj 6.4 0 0 6.0958 269.46 249.0001 Tm 0 Tw [(REGIONAL)-412.5(SECURITY)]TJ 8 0 0 8 155 236.0001 Tm 0.09 Tw (The United States and the People)Tj /F14 1 Tf 16.0458 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.09 Tw (s Republic of China share a number of common)Tj -17.2498 -1 TD 0.1075 Tw (national interests. Both nations seek a peaceful and non-nuclear Korean Peninsula;)Tj T* 0.27 Tw (both seek to stop international terrorist organizations from disrupting commerce)Tj T* 0.105 Tw (and their respective ways of life; both work to end international trade in drugs and)Tj T* 0.0775 Tw (persons; and both want to see a stable environment where trade flourishes, creating)Tj T* 0.0525 Tw (economic growth. However, there are still a number of areas of serious disagreement)Tj T* 0.065 Tw (between China and the U.S. The resolution of how the democratic Republic of China)Tj T* 0.125 Tw (on Taiwan and the Communist government of the People)Tj /F14 1 Tf 27.3546 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.125 Tw (s Republic work out their)Tj -27.5586 -1 TD 0.1425 Tw (differences on Taiwan)Tj /F14 1 Tf 10.4518 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1425 Tw (s sovereignty is a major area where Washington and Beijing)Tj -10.6558 -1 TD 0.1225 Tw (disagree. China refuses to renounce the use of force to bring Taiwan under its con-)Tj T* 0 Tw (trol.)Tj 1 -1 TD 0.175 Tw (I do not believe that is the most volatile policy difference between the U.S. and)Tj -1 -1 TD 0.09 Tw (China, however. In my view, it is Beijing)Tj /F14 1 Tf 19.4467 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.09 Tw (s expansive interpretation of its own terri-)Tj -19.6507 -1 TD 0.105 Tw (tory that can lead to conflict, as demonstrated by the confrontation over how China)Tj T* 0.0725 Tw (handled the peaceful passage through international airspace by a United States EP-)Tj T* 0.065 Tw (3 reconnaissance aircraft in April 2001. China)Tj /F14 1 Tf 21.7257 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.065 Tw (s insistence in its own territorial laws)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00058)-1076.9(Fmt 6633)-1076.9(Sfmt 6621)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 194 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R /F21 141 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 196 0 obj << /Length 7875 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (55)Tj 8 0 0 8 147 648 Tm 0.09 Tw (that it controls airspace and the sea out to 200 miles, the Exclusive Economic Zone,)Tj 0 -0.9875 TD 0.18 Tw (is an interpretation of the Law of the Sea that the United States cannot allow to)Tj T* 0.145 Tw (stand, or the right of free passage of vessels and aircraft for free trade will be im-)Tj T* 0.1675 Tw (peded. Moreover, China)Tj /F14 1 Tf 11.3528 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1675 Tw (s expansive claims in the East and South China Sea com-)Tj -11.5568 -0.9875 TD 0.215 Tw (pete with those of Japan, Indonesia, Malaysia, the Philippines, Brunei, and Viet-)Tj T* 0.185 Tw (nam. China is building the type of military to back up those claims with credible)Tj T* 0.0975 Tw (force and to deny the United States the flexibility to operate its own forces in these)Tj T* 0 Tw (areas.)Tj 1 -0.9875 TD (China)Tj /F14 1 Tf 2.815 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.1475 Tw (s military buildup is not a challenge to American military superiority, but)Tj -4.019 -0.9875 TD 0.1225 Tw (it is worrisome because of Beijing)Tj /F14 1 Tf 16.0763 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1225 Tw (s history of using the military to reinforce its ex-)Tj -16.2803 -0.9875 TD 0.2 Tw (pansive territorial claims. Japan)Tj /F14 1 Tf 15.7138 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.2 Tw (s air and naval capabilities are purely defensive,)Tj -15.9178 -0.9875 TD 0.1675 Tw (but the Japanese Self-Defense Force)Tj /F14 1 Tf 17.5047 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1675 Tw (s technological and equipment capabilities far)Tj -17.7087 -0.9875 TD 0.1625 Tw (outstrip those of China. The single exception to this is in the area of ballistic and)Tj T* 0.1325 Tw (cruise missiles. China has developed a strong ballistic missile force and is modern-)Tj T* 0.06 Tw (izing its long-range missiles to be mobile and armed with multiple warheads. Today,)Tj T* 0.1175 Tw (both the United States and its allies, especially Japan, are without ballistic missile)Tj T* 0.1625 Tw (defenses. Because of China)Tj /F14 1 Tf 12.9873 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1625 Tw (s modernization, and the threat from North Korea, the)Tj -13.1913 -0.9875 TD 0.0925 Tw (early development and deployment of ballistic missile defenses is critical to security)Tj T* 0.14 Tw (in the Asia-Pacific region. Beijing is also building \(and buying from Russia\) a dan-)Tj T* 0.13 Tw (gerous force of land attack and anti-ship cruise missiles. Cruise missile defense re-)Tj T* 0.085 Tw (quires improved radar, but the basic defensive systems are already in the American)Tj 0 -1 TD 0.0525 Tw (and Japanese military inventories.)Tj 6.4 0 0 6.0958 225.06 467.9999 Tm 0 Tw (CHINA)Tj /F14 1 Tf 8 0 0 8 247.4536 467.9999 Tm ()Tj /F18 1 Tf 6.4 0 0 6.0958 249.0855 467.9999 Tm [(S)-412.5(PRESENCE)-412.5(IN)-412.5(U)]TJ 8 0 0 8 310.6951 467.9999 Tm (.)Tj 6.4 0 0 6.0958 312.9191 467.9999 Tm (S)Tj 8 0 0 8 316.9511 467.9999 Tm (. )Tj 6.4 0 0 6.0958 321.819 467.9999 Tm [(CAPITAL)-412.5(MARKETS)]TJ 8 0 0 8 155 454.9999 Tm 0.11 Tw (Chinese state-owned companies and the Chinese government have raised an esti-)Tj -1 -1 TD 0.12 Tw (mated $20 billion over the past decade from international bond offerings, according)Tj T* 0.0775 Tw (to the 2003 )Tj /F21 1 Tf 5.6794 0 TD (Report of the U.S.-China Security Review Commission. )Tj /F18 1 Tf 26.0021 0 TD (They have raised)Tj -31.6815 -1 TD 0.2125 Tw (more than $40 billion in international equity markets over the past decade, with)Tj T* 0.1625 Tw (over $14 billion coming from initial public offerings in U.S. capital markets in the)Tj T* 0.2375 Tw (three years preceding the publication of the commission report. Some argue that)Tj T* 0.18 Tw (such actions by China raise capital that supports Beijing)Tj /F14 1 Tf 27.6646 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.18 Tw (s military expansion. In-)Tj -27.8686 -1 TD 0.07 Tw (deed, it is very difficult to tell which Chinese entities are related to or wholly owned)Tj T* 0.1125 Tw (by the People)Tj /F14 1 Tf 6.4299 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1125 Tw (s Liberation Army. It is prudent to deny known Chinese entities that)Tj -6.6339 -1 TD 0.2475 Tw (engage in proliferation access to the U.S. markets. The Securities and Exchange)Tj T* 0.2225 Tw (Commission should require foreign companies to file registration statements elec-)Tj T* 0.1975 Tw (tronically, should review such filings to see whether the companies are subject to)Tj T* 0.145 Tw (U.S. sanctions, should seek information from filing companies about their business)Tj T* 0.15 Tw (with U.S.-sanctioned countries, and should share such information with the Treas-)Tj T* 0.0525 Tw (ury Department.)Tj 1 -1 TD 0.1425 Tw (In general, I would argue that China)Tj /F14 1 Tf 17.8747 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1425 Tw (s investment in the United States, like the)Tj -19.0787 -1 TD 0.205 Tw (trade between China and the U.S., represents a tool of influence in the economic)Tj T* 0.0675 Tw (relationship between the two countries. However, the United States should not close)Tj T* 0.21 Tw (its capital markets and must exercise caution in denying Chinese firms access to)Tj T* 0.2475 Tw (the markets. One discussion in which I participated with those who proposed to)Tj T* 0.22 Tw (keep Chinese companies from trading with the United States suggested that any)Tj T* 0.0975 Tw (Chinese entity that produces goods for military use should be kept from doing busi-)Tj T* 0.1475 Tw (ness in the United States. Such an approach is foolish in my view and would lead)Tj T* 0.065 Tw (to a response against American companies, hurting U.S. economic interests. Chinese)Tj T* 0.16 Tw (industries are increasingly producing goods for both civilian and military markets.)Tj T* 0.0825 Tw (They function like major American conglomerates. Should a U.S. company be penal-)Tj T* 0.1475 Tw (ized because it produces both toasters and military radar? I think not. In the case)Tj T* 0.215 Tw (of China, if it is a clandestinely owned PLA company, that may not be the case.)Tj T* 0.0975 Tw (But Chinese firms, even state-owned firms, ought to get equitable treatment if they)Tj T* 0.0525 Tw (operate in the marketplace according to SEC rules.)Tj 6.4 0 0 6.0958 239.84 209 Tm 0 Tw (CHINA)Tj /F14 1 Tf 8 0 0 8 262.2336 209 Tm ()Tj /F18 1 Tf 6.4 0 0 6.0958 263.8655 209 Tm [(S)-412.5(FUTURE)-412.5(ECONOMIC)-412.5(GROWTH)]TJ 8 0 0 8 155 196 Tm 0.1325 Tw (China could turn into the second largest trading nation in the world by the year)Tj -1 -1 TD 0.185 Tw (2020 with a per capita income equal to that of the Republic of Korea or Portugal)Tj T* 0.1425 Tw (today, according to the World Bank)Tj /F14 1 Tf 17.0463 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (s )Tj /F21 1 Tf 0.8835 0 TD 0.1425 Tw (China 2020 )Tj /F18 1 Tf 5.9159 0 TD (report published in 1997. Should)Tj -24.0497 -1 TD 0.135 Tw (China focus on being a trading nation rather than a major military power, and re-)Tj T* 0.21 Tw (form its legal and financial institutions, this outcome is feasible. However, China)Tj T* 0.1275 Tw (faces huge problems that will only be exacerbated when it finally complies with its)Tj T* 0.15 Tw (obligations as a member of the World Trade Organization. Today, about half of its)Tj T* 0.24 Tw (state-owned companies are not making a profit. No one knows how many of the)Tj T* 0.165 Tw (loans out from Chinese banks are non-performing, but the rate may be around 46)Tj T* 0.205 Tw (percent. There are some 140 million agricultural workers who are unemployed or)Tj T* 0.1475 Tw (underemployed and floating around the country looking for work. The World Bank)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00059)-1076.9(Fmt 6633)-1076.9(Sfmt 6621)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 197 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R /F21 141 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 199 0 obj << /Length 5907 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (56)Tj 8 0 0 8 147 648 Tm 0.19 Tw (expects that to grow to 200 million people. The Chinese state is failing to deliver)Tj 0 -1 TD 0.1325 Tw (health care and education to its people, demonstrating the bankruptcy of the Com-)Tj T* 0.0525 Tw (munist Party and undermining its legitimacy.)Tj 1 -1 TD 0.065 Tw (Anyone who gives a straight-line prediction about where China will be in 20 years)Tj -1 -1 TD 0.0775 Tw (is making it up. United States policy is about right)Tj /F14 1 Tf 24.1471 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.0775 Tw (to encourage reform and to an-)Tj -25.1471 -1 TD 0.1225 Tw (ticipate a China that has an educated populace, a productive work force, and a na-)Tj T* 0.095 Tw (tion that operates in a world of rules-based behavior. However, we must )Tj /F14 1 Tf 34.6995 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD (handicap)Tj /F14 1 Tf 4.2409 0 TD ()Tj /F18 1 Tf -39.3484 -1 TD 0.09 Tw (the potential outcomes. This particular one may get a two or three in five. It is also)Tj T* 0.1525 Tw (possible that we will see a China in chaos, with the legitimacy of the ruling party)Tj T* 0.1025 Tw (collapsed and the floating labor population tearing the country apart. And it is pos-)Tj T* 0.2225 Tw (sible that the emerged Chinese state will have a powerful, coercive military that)Tj T* 0.245 Tw (threatens not only its neighbors, but the United States as well. Thus, while the)Tj T* 0.1175 Tw (United States embraces policies that encourage the first outcome, it must maintain)Tj T* 0.1975 Tw (its military edge and the ability to defend American interests in the event of the)Tj T* 0.0525 Tw (last outcome.)Tj 10 0 0 10 157 518.0002 Tm 0.052 Tw (Senator B)Tj 8 0 0 7.6194 203.8193 518.0002 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 253.7385 518.0002 Tm 0.052 Tw (. Thank you, Dr. Wortzel.)Tj -9.6739 -1 TD 0.132 Tw (Dr. Lampton, you started all of this with The Nixon Center and)Tj -1 -1 TD 0.052 Tw (Richard Nixon)Tj /F14 1 Tf 6.7739 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.052 Tw (s trips.)Tj -5.9779 -1 TD 0.176 Tw (Dr. L)Tj 8 0 0 7.6194 183.2096 488.0002 Tm 0 Tw (AMPTON)Tj 10 0 0 10 219.9531 488.0002 Tm 0.176 Tw (. I cannot claim all the credit or the blame, either)Tj -7.2953 -1 TD 0 Tw (way.)Tj 1 -1 TD 0.064 Tw (Senator B)Tj 8 0 0 7.6194 203.9393 468.0002 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 253.8585 468.0002 Tm 0.064 Tw (. Well, it was a bold stroke, and here we are,)Tj -10.6859 -1 TD 0.108 Tw (what, nearly 25 years later)Tj /F14 1 Tf 12.9348 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.108 Tw (well, no, we are over 35 years later)Tj /F14 1 Tf 16.8518 0 TD 0 Tw ()Tj /F18 1 Tf -30.7865 -1 TD 0.052 Tw (and moving forward.)Tj 1 -1 TD 0.056 Tw (Dr. L)Tj 8 0 0 7.6194 182.0096 438.0002 Tm 0 Tw (AMPTON)Tj 10 0 0 10 218.7531 438.0002 Tm 0.056 Tw (. Well, I think President Nixon would not have envi-)Tj -7.1753 -1 TD 0.21 Tw (sioned the world that we are in, in many respects, and certainly)Tj T* 0.19 Tw (not with China, both in some of the problems we have and some)Tj T* 0.052 Tw (of the successes.)Tj /F20 1 Tf 9 0 0 9 147 390.0002 Tm 0.1422 Tw (STATEMENT OF DR. DAVID M. LAMPTON, GEORGE AND SADIE)Tj 1 -1.1111 TD 0.3444 Tw (HYMAN PROFESSOR OF CHINA STUDIES, JOHNS HOPKINS)Tj T* 0.2667 Tw (SCHOOL OF ADVANCED INTERNATIONAL STUDIES AND DI-)Tj T* 0.1667 Tw (RECTOR OF CHINESE STUDIES, THE NIXON CENTER, WASH-)Tj T* 0.0422 Tw (INGTON, DC)Tj /F18 1 Tf 10 0 0 10 157 336.0002 Tm 0.12 Tw (Dr. L)Tj 8 0 0 7.6194 182.6496 336.0002 Tm 0 Tw (AMPTON)Tj 10 0 0 10 219.393 336.0002 Tm 0.12 Tw (. Let me say it is a great honor to be with you this)Tj -7.2393 -1 TD 0.16 Tw (afternoon and this subcommittee. I think we are all aware of and)Tj T* 0.072 Tw (thinking about our forces in the Middle East and Central Asia. But)Tj T* 0.202 Tw (I do think this problem that we are talking about today is going)Tj T* 0.128 Tw (to be one of the most enduring, long-range problems we face. As a)Tj T* 0.224 Tw (great country, we have to be able to walk and chew gum at the)Tj T* 0.066 Tw (same time, and I am very pleased that your subcommittee and you,)Tj T* 0.052 Tw (Mr. chairman, are interested in this topic at this time.)Tj 1 -1 TD 0.148 Tw (I have a bottom line in my testimony and in my view, and that)Tj -1 -1 TD 0.154 Tw (is that America)Tj /F14 1 Tf 7.4569 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.154 Tw (s strategy with China ought to be to reinforce the)Tj -7.6609 -1 TD 0.092 Tw (generally positive trends associated with China)Tj /F14 1 Tf 22.4067 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.092 Tw (s rise, create as be-)Tj -22.6107 -1 TD 0.102 Tw (nign an external environment as possible in East Asia, but, as Mr.)Tj T* 0.274 Tw (Wortzel just said, maintain the capacity to respond if things go)Tj T* 0 Tw (awry.)Tj 1 -1 TD 0.164 Tw (I think there are five things that undergird that general propo-)Tj -1 -1 TD 0.07 Tw (sition, that general bottom line. The first one is that it is most pru-)Tj T* 0.172 Tw (dent to assume that China will enjoy)Tj /F14 1 Tf 18.0717 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.172 Tw (I think it will be variable,)Tj -19.0717 -1 TD 0.09 Tw (but, nonetheless, generally rapid economic growth for the next dec-)Tj T* 0.166 Tw (ade or two. China)Tj /F14 1 Tf 8.6659 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.166 Tw (s economic influence and military power, there-)Tj -8.8699 -1 TD 0.196 Tw (fore, will likely become increasingly formidable. Though it is pos-)Tj T* 0.054 Tw (sible, it is unwise, in my view, to bet that China will have a sudden)Tj T* 0.076 Tw (regime change, that there will be widespread instability, or that its)Tj T* 0.052 Tw (economic growth will stall for a prolonged period of time.)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00060)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 200 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R /F20 27 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 202 0 obj << /Length 5272 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (57)Tj -14.344 -2 TD 0.146 Tw (My second assumption is that we cannot be certain how Beijing)Tj -1 -1 TD 0.198 Tw (will use its growing power. And I would agree, anybody who has)Tj T* 0.226 Tw (certainty about how China will use its future power in any long)Tj T* 0.186 Tw (timeframe is probably not as wise as they ought to be. I think it)Tj T* 0.148 Tw (is unknowable what the internal conditions that will shape future)Tj T* 0.16 Tw (Chinese policy will be. It is going to be impossible for us to know)Tj T* 0.058 Tw (the environment that China)Tj /F14 1 Tf 13.1748 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.058 Tw (s leaders are going to be responding to.)Tj -13.3788 -1 TD 0.136 Tw (Indeed, it is going to be impossible to know who those leaders are)Tj T* 0.052 Tw (going to be in the future.)Tj 1 -1 TD 0.302 Tw (Our strategy, therefore, ought to be to try to reduce some of)Tj -1 -1 TD 0.188 Tw (these uncertainties, and there are a couple of things that we can)Tj T* 0.122 Tw (do. One is to try to connect to new Chinese leaders. Literally hun-)Tj T* 0.11 Tw (dreds of people that the United States doesn)Tj /F14 1 Tf 21.2907 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.11 Tw (t understand, or have)Tj -21.4947 -1 TD 0.212 Tw (much connection to are rising to the fore. And we ought to have)Tj T* 0.11 Tw (a national strategy of trying to connect to this new generation and)Tj T* 0.09 Tw (do what we can to understand it. In the aggregate, there is no rea-)Tj T* 0.152 Tw (son to believe we cannot work with the generation of leaders that)Tj T* 0.154 Tw (is moving up in China, but that is a proposition to be tested, and)Tj T* 0.052 Tw (we ought to do so seriously.)Tj 1 -1 TD 0.146 Tw (My third assumption is that the foundation for U.S.-China rela-)Tj -1 -1 TD 0.122 Tw (tions now is sounder than it has been since 1989, notwithstanding)Tj T* 0.232 Tw (the frustrations and, I would say, mutual strategic apprehension)Tj T* 0.074 Tw (that both countries have of each other. Beijing has been reasonably)Tj T* 0.238 Tw (cooperative in the war on terror. I think Larry had a somewhat)Tj T* 0.106 Tw (more modest estimate of how useful China has been, and I am not)Tj T* 0.074 Tw (trying to exaggerate it, but I think everybody in the administration)Tj T* 0.136 Tw (would say we have been better off with China)Tj /F14 1 Tf 22.1467 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.136 Tw (s degree of coopera-)Tj -22.3507 -1 TD 0.162 Tw (tion than certainly some of those others that have been tradition-)Tj T* 0.052 Tw (ally our allies.)Tj 1 -1 TD 0.186 Tw (Turning to economics, the foundation of economic ties has been)Tj -1 -1 TD 0.136 Tw (strengthened. I met with the Minister of Finance of China not too)Tj T* 0.208 Tw (long ago, and I have done some research with our own Treasury)Tj T* 0.294 Tw (Department. Beijing now holds 8.4 percent of all U.S. Treasury)Tj T* 0.252 Tw (notes held by foreigners, second only to Japan. And in addition,)Tj T* 0.148 Tw (holds about $50 billion in U.S. State, local, and corporate debt in-)Tj T* 0.142 Tw (struments. If you look at the total debt instruments of the United)Tj T* 0.11 Tw (States that China holds as of the end of last year, it is about $150)Tj T* 0.07 Tw (billion. If you look in Mr. Wortzel)Tj /F14 1 Tf 15.7908 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.07 Tw (s testimony you will find that the)Tj -15.9948 -1 TD 0.238 Tw (United States has invested considerably less in China than they)Tj T* 0.182 Tw (have invested here. So I just think that)Tj /F14 1 Tf 19.4057 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.182 Tw (s interesting, just a little)Tj -19.6097 -1 TD 0.068 Tw (factoid that shows you how deep this relationship is when you real-)Tj T* 0.052 Tw (ly begin to get into it.)Tj 1 -1 TD 0.234 Tw (Having said that the relationship is stronger than it has been)Tj -1 -1 TD 0.102 Tw (since 1989, I have to say a couple of things. One is that China has)Tj T* 0.242 Tw (very grave apprehensions about the national security strategy of)Tj T* 0.192 Tw (the United States issued in September of last year. It is true, as)Tj T* 0.366 Tw (I think Secretary Schriver said earlier, China is proud)Tj /F14 1 Tf 28.0026 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.366 Tw (and I)Tj -29.0026 -1 TD 0 Tw (think )Tj /F14 1 Tf 3.175 0 TD ()Tj /F18 1 Tf 0.408 0 TD (proud)Tj /F14 1 Tf 2.703 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.378 Tw [( is a well-chosen word)]TJ /F14 1 Tf 11.6238 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.378 Tw (to be considered a great)Tj -19.3177 -1 TD 0.052 Tw (power. That is the one part they like of the document.)Tj 1 -1 TD 0.188 Tw (But Senator Corzine asked the very key question: Are the Chi-)Tj -1 -1 TD 0.25 Tw (nese not also apprehensive about our national security strategy?)Tj T* 0.06 Tw (And I believe the answer is yes, they are. It has to do with preemp-)Tj T* 0.224 Tw (tion, as he suggested. It has to do with the U.S. commitment to)Tj T* 0.052 Tw (stay on top of the power heap; period; forever. And it has to do with)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00061)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 203 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 206 0 obj << /Length 4854 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (58)Tj -15.344 -2 TD 0.212 Tw (a number of other aspects of this; in particular, the commitment)Tj 0 -1 TD (to political system change. I am not saying all the Chinese criti-)Tj T* 0.066 Tw (cisms are correct, but I do want to say they are apprehensive about)Tj T* 0.204 Tw (what they perceive to be our national security strategy. So while)Tj T* 0.09 Tw (the relationship is sound, or sounder, it is in relative, not absolute,)Tj T* 0 Tw (terms.)Tj 1 -1 TD 0.158 Tw (My fourth assumption is that there is a reasonable chance, and)Tj -1 -1 TD 0.262 Tw (I would say actually a pretty good chance, that Chinese nation-)Tj T* 0.12 Tw (alism will be directed mainly, for the next two decades, toward in-)Tj T* 0.222 Tw (ternal modernization rather than, let us say, external expansion,)Tj T* 0.146 Tw (with the important exception of Taiwan, which the Chinese would)Tj T* 0.118 Tw (consider internal affairs and we would consider in some other way)Tj T* 0.156 Tw (perhaps. But in any case, I am not too worried about Chinese ex-)Tj T* 0.234 Tw (pansion, at least in a territorial sense. The economic leverage of)Tj T* 0.348 Tw (China is increasing enormously, and we could be perhaps con-)Tj T* 0.052 Tw (cerned about that.)Tj 1 -1 TD 0.22 Tw (Let me just tick off some policy implications. I do not want to)Tj -1 -1 TD 0.132 Tw (leave the impression that I think it is only the United States that)Tj T* 0.162 Tw (has things to do in this relationship in order to make it stronger.)Tj T* 0.25 Tw (China has a lot of things to do, too. But let me tick off several)Tj T* 0.052 Tw (things we can do and a couple of things that China could do.)Tj 1 -1 TD 0.196 Tw (One of the things I am most worried about is the development)Tj -1 -1 TD 0.08 Tw (of an arms race in East Asia. The administration, frankly, could do)Tj T* 0.112 Tw (several things to reduce either the intensity of it or the occurrence)Tj T* 0.116 Tw (of it. First, the administration should be exploring how the United)Tj T* 0.194 Tw (States can build and deploy an ABM system that least threatens)Tj T* 0 Tw (China)Tj /F14 1 Tf 2.815 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.098 Tw (s minimal deterrent and elicits the most restrained response)Tj -3.019 -1 TD 0.31 Tw (from Beijing possible. Washington needs to talk to the Chinese)Tj T* 0.064 Tw (about strategic nuclear and missile defenses, which the administra-)Tj T* 0.052 Tw (tion seems loath to do.)Tj 1 -1 TD 0.084 Tw (My second suggestion is that the administration should be devel-)Tj -1 -1 TD 0.162 Tw (oping a strategy for dealing with North Korea that China, Japan,)Tj T* 0.208 Tw (and South Korea can agree with and support. We have not done)Tj T* 0.068 Tw (so. This almost inevitably means, in my view, that Washington will)Tj T* 0.13 Tw (end up talking directly to Pyongyang, whether we like it or not or)Tj T* 0.14 Tw (trust them or not)Tj /F14 1 Tf 8.3829 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.14 Tw (of course, we do not trust them. But I think it)Tj -9.3829 -1 TD 0.178 Tw (is not just China that is opposed to the U.S. current approach; it)Tj T* 0.064 Tw (is, indeed, our other friends in the region, most notably, the Repub-)Tj T* 0.104 Tw (lic of Korea. They all, as far as I can see, want us to talk to North)Tj T* 0.052 Tw (Korea, however distasteful we may find that.)Tj 1 -1 TD 0.21 Tw (The third thing is, the administration should be encouraging a)Tj -1 -1 TD 0.386 Tw (trilateral security dialog among China, Japan, and the United)Tj T* 0.184 Tw (States so as to stabilize that three-way relationship. I agree with)Tj T* 0.302 Tw (one of the implications of Larry)Tj /F14 1 Tf 16.0108 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.302 Tw (s testimony)Tj /F14 1 Tf 5.6359 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.302 Tw (Sino-Japanese ties)Tj -22.8507 -1 TD 0.122 Tw (are one of the more volatile relationships for the long-term. And if)Tj T* 0.216 Tw (that relationship goes haywire, we are all in trouble. To manage)Tj T* 0.28 Tw (problems in East Asia, you need China, the United States, and)Tj T* 0.1 Tw (Japan, if not to be singing the same notes, be at least on the same)Tj T* 0.124 Tw (page of music. And frankly, we are not, and we ought to be trying)Tj T* 0.052 Tw (to get us on somewhat the same page.)Tj 1 -1 TD 0.224 Tw (And fourthly, the administration should be exploring with Bei-)Tj -1 -1 TD 0.198 Tw (jing what former President Jiang Zemin meant by his suggestion)Tj T* 0.254 Tw (in October and November of last year that China might remove)Tj T* 0.178 Tw (some of its missiles from their threatening positions near Taiwan)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00062)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 207 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 209 0 obj << /Length 9915 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (59)Tj ET 0 G 0 J 0 j 0.5 w 10 M []0 d 1 i 147 213.6 m 197 213.6 l S BT 5.446 0 0 4.55 154 206.7972 Tm (1)Tj 7 0 0 7 158.168 204.9 Tm 0.0629 Tw (David M. Lampton is George and Sadie Hyman professor of China Studies at the Johns Hop-)Tj -1.5954 -1.0571 TD 0.2257 Tw (kins School of Advanced International Studies and director of Chinese Studies at The Nixon)Tj T* 0.0714 Tw (Center. He is the author of )Tj /F14 1 Tf 13.0958 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.0714 Tw (Same Bed, Different Dreams: Managing U.S.-China Relations 1989-)Tj -13.5038 -1.0571 TD 0 Tw (2000)Tj /F14 1 Tf 2.224 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.1457 Tw [( and the editor of )]TJ /F14 1 Tf 8.9147 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.1457 Tw (The Making of Chinese Foreign and Security Policy in the Era of Re-)Tj -11.9548 -1.0571 TD 0 Tw (form.)Tj /F14 1 Tf 2.444 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.2057 Tw [( He is past president of the National Committee on U.S.-China Relations in New York)]TJ -2.852 -1.0571 TD 0.0514 Tw (City \(1988-1997\).)Tj 5.446 0 0 4.55 154 162.3972 Tm 0 Tw (2)Tj /F14 1 Tf 7 0 0 7 158.168 160.5 Tm ()Tj /F18 1 Tf 0.408 0 TD 0.1829 Tw (Hu Jintao yu Bushi tung dianhua: Zhongguo xiwang heping buyao zhanzheng)Tj /F14 1 Tf 37.8692 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.1829 Tw ([Hu Jintao)Tj -40.2806 -1.0571 TD 0.7086 Tw (and Bush Talk by Phone: China Wants Peace, Not War], Renmin Wang, )Tj /F21 1 Tf 42.0454 0 TD 0 Tw (http://)Tj -42.0454 -1.0571 TD 0.0514 Tw (www.peopledaily.com.cn/Gbshizheng/16/2003031 9/946767.html )Tj /F18 1 Tf 31.1064 0 TD (\(accessed, March 17, 2003\).)Tj 5.446 0 0 4.55 154 140.1971 Tm 0 Tw (3)Tj 7 0 0 7 158.168 138.3 Tm (See )Tj /F21 1 Tf 1.9595 0 TD 0.0514 Tw (http://news.xinhuanet.com/newscenter/2003-03/18/content 786235.htm)Tj /F18 1 Tf 5.446 0 0 4.55 154 132.7971 Tm 0 Tw (4)Tj 7 0 0 7 158.168 130.8999 Tm 0.3429 Tw (David M. Lampton, )Tj /F14 1 Tf 10.3087 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.3429 Tw (U.S.-China Relations)Tj /F14 1 Tf 10.141 0 TD 0 Tw ()Tj /F18 1 Tf 1.204 0 TD (Normalized)Tj /F14 1 Tf 5.3891 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.3429 Tw [( At Last?)]TJ /F14 1 Tf 4.8718 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.3429 Tw (, \(March 2003\), forth-)Tj -34.5301 -1.0571 TD 0.1 Tw (coming, now in manuscript. Data from: )Tj /F14 1 Tf 18.9543 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.1 Tw (Foreign Exchange Reserves,)Tj /F14 1 Tf 13.2552 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.1 Tw [( Financial Times Informa-)]TJ -33.0256 -1.0572 TD 0.0943 Tw (tion, Global News Wire, )Tj /F21 1 Tf 11.6763 0 TD (The Korean Herald, )Tj /F18 1 Tf 9.688 0 TD (February 19, 2003, )Tj /F21 1 Tf 9.324 0 TD 0 Tw (http://web.lexis-nexis.com/uni-)Tj /F18 1 Tf 10 0 0 10 147 646 Tm 0.238 Tw (were the United States to show parallel restraint in its military)Tj 0 -1.04 TD 0.12 Tw (links with Taipei. So far, the administration)Tj /F14 1 Tf 21.1507 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.12 Tw (s silence on this issue)Tj -21.3547 -1.04 TD 0.052 Tw (has been deafening.)Tj 1 -1.04 TD 0.174 Tw (So, we should look at some of the problems that are fueling an)Tj -1 -1.04 TD 0.052 Tw (arms race and address them.)Tj 1 -1.04 TD 0.092 Tw (Now, in the spirit of acknowledging that China needs to do some)Tj -1 -1.04 TD 0.12 Tw (things here, I)Tj /F14 1 Tf 6.4619 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.12 Tw (d just tick off a couple that I would suggest. First of)Tj -6.6659 -1.04 TD 0.2 Tw (all, if you just look at not only the public relations of it, but the)Tj T* 0.144 Tw (humanity of it, China ought to be supporting a way in which Tai-)Tj T* 0.094 Tw (wan can participate in the World Health Organization. And we see)Tj T* 0.274 Tw (the latest example of the problem with this flu, this upper res-)Tj T* 0.12 Tw (piratory stress syndrome. The fact of the matter is, the WHO isn)Tj /F14 1 Tf 31.1915 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (t)Tj -31.3955 -1.04 TD 0.128 Tw (dealing with Taiwan because Beijing objects, and that)Tj /F14 1 Tf 25.8636 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.128 Tw (s the fact of)Tj -26.0676 -1.04 TD 0.18 Tw (the matter. There ought to be a way to get the 22 million people)Tj T* 0.322 Tw (of Taiwan involved)Tj /F14 1 Tf 9.4049 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.322 Tw (and they)Tj /F14 1 Tf 4.3779 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.322 Tw (re not participating in a life-and-)Tj -14.9868 -1.04 TD 0.052 Tw (death organization. I think they should.)Tj 1 -1.04 TD 0.186 Tw (Also, China has made, as Mr. Wortzel said and was mentioned)Tj -1 -1.04 TD 0.19 Tw (earlier, I guess by Secretary Schriver, progress on proliferation. I)Tj T* 0.174 Tw (think you have to admit that. But, on the other hand, we need a)Tj T* 0.138 Tw (lot more progress, and the Chinese have to tighten up that export)Tj T* 0.172 Tw (control and their proliferation policy beyond what it is. So there)Tj /F14 1 Tf 31.1296 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (s)Tj -31.3335 -1.04 TD 0.052 Tw (a lot we can do.)Tj 1 -1.04 TD 0.066 Tw (The relationship)Tj /F14 1 Tf 7.7149 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.066 Tw (s better than it)Tj /F14 1 Tf 7.1439 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.066 Tw (s been in a long time, but there)Tj /F14 1 Tf 14.8538 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (s)Tj -31.3245 -1.04 TD 0.052 Tw (plenty of room for improvement.)Tj 1 -1.04 TD ([The prepared statement of Dr. Lampton follows:])Tj 8 0 0 8 147 380.0001 Tm 0 Tw (P)Tj 6.4 0 0 6.0958 152.3359 380.0001 Tm (REPARED)Tj 8 0 0 8 188.9079 380.0001 Tm (S)Tj 6.4 0 0 6.0958 193.9478 380.0001 Tm [(TATEMENT)-659.4(OF)]TJ 8 0 0 8 249.5622 380.0001 Tm (D)Tj 6.4 0 0 6.0958 255.7861 380.0001 Tm (AVID)Tj 8 0 0 8 276.8317 380.0001 Tm 0.25 Tw (M. L)Tj 6.4 0 0 6.0958 296.1674 380.0001 Tm 0 Tw (AMPTON)Tj 6.224 0 0 5.2 326.8826 382.168 Tm (1)Tj 8 0 0 8 330.3432 380.0001 Tm 0.25 Tw (, G)Tj 6.4 0 0 6.0958 343.0151 380.0001 Tm 0 Tw [(EORGE)-659.4(AND)]TJ 8 0 0 8 390.0919 380.0001 Tm (S)Tj 6.4 0 0 6.0958 395.1318 380.0001 Tm (ADIE)Tj 8 0 0 8 416.1774 380.0001 Tm (H)Tj 6.4 0 0 6.0958 422.8413 380.0001 Tm (YMAN)Tj 8 0 0 8 447.4453 380.0001 Tm (P)Tj 6.4 0 0 6.0958 452.7812 380.0001 Tm (RO)Tj 8 0 0 8 462.3812 380.0001 Tm (-)Tj 6.4 0 0 6.0958 155 371.6001 Tm [(FESSOR)-531.3(OF)]TJ 8 0 0 8 197.6015 371.6001 Tm (C)Tj 6.4 0 0 6.0958 203.3774 371.6001 Tm (HINA)Tj 8 0 0 8 224.5502 371.6001 Tm (S)Tj 6.4 0 0 6.0958 229.5901 371.6001 Tm [(TUDIES)-531.2(AT)-531.3(THE)]TJ 8 0 0 8 288.6221 371.6001 Tm (J)Tj 6.4 0 0 6.0958 293.07 371.6001 Tm (OHNS)Tj 8 0 0 8 316.0284 371.6001 Tm (H)Tj 6.4 0 0 6.0958 322.6923 371.6001 Tm (OPKINS)Tj 8 0 0 8 352.1723 371.6001 Tm (S)Tj 6.4 0 0 6.0958 357.2122 371.6001 Tm [(CHOOL)-531.3(OF)]TJ 8 0 0 8 397.4394 371.6001 Tm (A)Tj 6.4 0 0 6.0958 403.2153 371.6001 Tm (DVANCED)Tj 8 0 0 8 440.2729 371.6001 Tm (I)Tj 6.4 0 0 6.0958 443.5289 371.6001 Tm (NTER)Tj 8 0 0 8 462.2552 371.6001 Tm (-)Tj 6.4 0 0 6.0958 155 363.2001 Tm (NATIONAL)Tj 8 0 0 8 193.4352 363.2001 Tm (S)Tj 6.4 0 0 6.0958 198.4751 363.2001 Tm [(TUDIES)-412.5(AND)]TJ 8 0 0 8 244.2926 363.2001 Tm (D)Tj 6.4 0 0 6.0958 250.5165 363.2001 Tm [(IRECTOR)-412.5(OF)]TJ 8 0 0 8 295.3805 363.2001 Tm (C)Tj 6.4 0 0 6.0958 301.1564 363.2001 Tm (HINESE)Tj 8 0 0 8 330.222 363.2001 Tm (S)Tj 6.4 0 0 6.0958 335.262 363.2001 Tm [(TUDIES)-412.5(AT)]TJ 8 0 0 8 375.1531 363.2001 Tm (T)Tj 6.4 0 0 6.0958 380.4891 363.2001 Tm (HE)Tj 8 0 0 8 393.0811 363.2001 Tm (N)Tj 6.4 0 0 6.0958 399.601 363.2001 Tm (IXON)Tj 8 0 0 8 419.5466 363.2001 Tm (C)Tj 6.4 0 0 6.0958 425.3225 363.2001 Tm (ENTER)Tj -36.5691 -2.3623 TD [(THINKING)-412.5(ABOUT)-412.5(THE)-412.5(SECURITY)-412.5(IMPLICATIONS)-412.5(OF)-412.5(CHINA)]TJ /F14 1 Tf 8 0 0 8 396.5086 348.8001 Tm ()Tj /F18 1 Tf 6.4 0 0 6.0958 398.1406 348.8001 Tm [(S)-412.5(RISE)]TJ 8 0 0 8 155 335.4001 Tm 0.1325 Tw (Mr. Chairman and Members of this distinguished subcommittee, I am pleased to)Tj -1 -1.05 TD 0.0525 Tw (have this opportunity to be with you.)Tj 1 -1.05 TD 0.13 Tw (I have been asked to address the issue of what China)Tj /F14 1 Tf 25.8406 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.13 Tw (s rise means for East Asia)Tj -27.0446 -1.05 TD 0.21 Tw (and the interests of the United States, particularly in the security realm. I want)Tj T* 0.1625 Tw (to commend this subcommittee for taking time to address this centrally important)Tj T* 0.105 Tw (long-term issue even as we all are preoccupied with the welfare of our forces in the)Tj T* 0.1525 Tw (Middle East and Central Asia. It says a lot that an administration that came into)Tj T* 0.165 Tw (office skeptical about what China)Tj /F14 1 Tf 16.1068 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.165 Tw (s rise may mean for America now is cooperating)Tj -16.3108 -1.05 TD 0.145 Tw (meaningfully with China in the war against terror and that President Bush as re-)Tj T* 0.1175 Tw (cently as March 18th \(Beijing time\) called China)Tj /F14 1 Tf 23.2682 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1175 Tw (s new president, Hu Jintao, to ex-)Tj -23.4722 -1.05 TD 0.1325 Tw (press the desire for closer U.S.-China relations.)Tj 6.224 0 0 5.2 328.3253 253.5679 Tm 0 Tw (2)Tj 8 0 0 8 335.066 251.4001 Tm 0.1325 Tw (In the last thirteen months Presi-)Tj -23.5082 -1.05 TD 0.09 Tw (dent Bush met four times with Jiang Zemin \(who just stepped down from the presi-)Tj T* 0.23 Tw (dency, but may well remain the )Tj /F14 1 Tf 16.2528 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD (core)Tj /F14 1 Tf 1.888 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.23 Tw [( of the leadership)]TJ 6.224 0 0 5.2 369.6449 236.7679 Tm 0 Tw (3)Tj 8 0 0 8 373.1055 234.6001 Tm 0.23 Tw (\) and once \(last spring\))Tj -28.2632 -1.05 TD 0.0525 Tw (with just-named President Hu Jintao.)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00063)-1076.9(Fmt 6633)-1076.9(Sfmt 6621)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 210 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R /F21 141 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 212 0 obj << /Length 7698 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (60)Tj ET 0 G 0 J 0 j 0.5 w 10 M []0 d 1 i 147 124.8 m 197 124.8 l S BT 5.446 0 0 4.55 154 117.9972 Tm (3)Tj 7 0 0 7 158.168 116.1 Tm (See )Tj /F21 1 Tf 1.9595 0 TD 0.0514 Tw (http://news.xinhuanet.com/newscenter/2003-03/18/content 786235.htm)Tj /F18 1 Tf 6.4 0 0 6.0958 265.54 648 Tm 0 Tw [(A)-412.5(BROAD)-412.5(PERSPECTIVE)]TJ 8 0 0 8 155 635 Tm 0.18 Tw (Here is my bottom line)Tj /F14 1 Tf 11.2768 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD (America)Tj /F14 1 Tf 3.8699 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.18 Tw (s strategy should be to reinforce the generally)Tj -17.3508 -1 TD 0.175 Tw (positive trends associated with China)Tj /F14 1 Tf 18.0537 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.175 Tw (s rise, create as benign an external environ-)Tj -18.2577 -1 TD 0.0625 Tw (ment as possible in East Asia, and maintain the capacity to respond if developments)Tj T* 0.0525 Tw (go awry.)Tj 1 -1 TD (Five propositions capture the thinking that leads me to this conclusion:)Tj /F9 1 Tf 0 -1.5 TD 0 Tw ()Tj /F18 1 Tf 1.015 0 TD 0.06 Tw (In assessing the future impact of China)Tj /F14 1 Tf 18.6197 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.06 Tw (s rise, it is most prudent to assume that)Tj -18.8387 -1 TD 0.1225 Tw (China will enjoy variable, though generally rapid economic growth for the next)Tj T* 0.3175 Tw (ten to twenty years. Consequently, China)Tj /F14 1 Tf 20.7562 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.3175 Tw (s economic influence and military)Tj -20.9602 -1 TD 0.1325 Tw (power likely will become increasingly formidable. Though possible, it is unwise)Tj T* 0.1425 Tw (to bet that China will have sudden regime change, widespread instability, and)Tj T* 0.1225 Tw (that its economic growth will stall for a prolonged period. Nonetheless, China)Tj /F14 1 Tf 37.073 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (s)Tj -37.277 -1 TD 0.0625 Tw (modernization process will be tumultuous and full of uncertainties, one of which)Tj T* 0.07 Tw (concerns the incomplete transition of power in China that has just occurred, an-)Tj T* 0.0825 Tw (other rising inequality, and a third the unhealthy financial system. Were China)Tj T* 0.2375 Tw (to fall into disorder and revert to its pre-reform-era posture of a dissatisfied)Tj T* 0.185 Tw (power, this would be very inimical to U.S. interests. The likely scenario upon)Tj T* 0.07 Tw (which we should base policy is that of continued growth, protracted political lib-)Tj T* 0.0525 Tw (eralization, and non-trivial social disturbances.)Tj /F9 1 Tf -1 -1.25 TD 0 Tw ()Tj /F18 1 Tf 1.015 0 TD 0.0525 Tw (We cannot be certain how Beijing will use its growing power. Unknowable inter-)Tj -0.015 -1 TD 0.0575 Tw (nal considerations will shape future policy and we cannot now discern the exter-)Tj T* 0.1225 Tw (nal environment to which China)Tj /F14 1 Tf 15.4538 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1225 Tw (s leaders will be responding. To shape and re-)Tj -15.6578 -1 TD 0.22 Tw (duce these uncertainties, however, the United States needs to do two things:)Tj T* 0.2125 Tw (connect to leaders of Chinese society at all levels and work with Beijing and)Tj T* 0.275 Tw (its neighbors to construct as benign an external environment as possible. A)Tj T* 0.255 Tw (principal uncertainty for the future concerns ties between China and Japan.)Tj T* 0.0525 Tw (With respect to leadership, China)Tj /F14 1 Tf 15.7658 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0525 Tw (s November 16th Party Congress and the just-)Tj -15.9698 -1 TD 0.14 Tw (completed 10th National People)Tj /F14 1 Tf 15.1638 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.14 Tw (s Congress have brought to power hundreds of)Tj -15.3678 -1 TD 0.0975 Tw (new leaders at all system levels. Moreover, society outside the state is growing.)Tj T* 0.2125 Tw (In the aggregate, there is no reason that we ought not be able to work with)Tj T* 0 Tw (China)Tj /F14 1 Tf 2.815 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.11 Tw (s leaders and emerging middle class and there should be a concerted na-)Tj -3.019 -1 TD 0.0525 Tw (tional effort to do so.)Tj /F9 1 Tf -1 -1.25 TD 0 Tw ()Tj /F18 1 Tf 1.015 0 TD 0.145 Tw (The foundation for U.S.-China relations now is sounder than it has been since)Tj -0.015 -1 TD 0.0575 Tw (1989, notwithstanding current frustrations in the UN Security Council and else-)Tj T* 0.235 Tw (where and the mutual strategic apprehension each still has about the other.)Tj T* 0.075 Tw (Beijing has been reasonably cooperative \(and certainly not obstructionist\) in the)Tj T* 0.1175 Tw (war on terror. Witness, for example, that while Beijing is not in favor of a war)Tj T* 0.1875 Tw (in Iraq at this time, there was never a serious danger of a Chinese veto of a)Tj T* 0.195 Tw (second UN resolution and that, indeed, Beijing voted for UN Resolution 1441)Tj T* 0.1475 Tw (on November 8, 2002. Although we have ongoing and legitimate worries about)Tj T* 0 Tw (Beijing)Tj /F14 1 Tf 3.2959 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.2375 Tw (s proliferation behavior, China appears to be strengthening its export)Tj -3.4999 -1 TD 0.1125 Tw (control regime \(e.g., the August 2002 issuance of missile, chemical, and biologi-)Tj T* 0.065 Tw (cal technology and agent control regulations and lists\) and seems to see increas-)Tj T* 0.1375 Tw (ingly clearly the dangers that proliferation represents to its own interests \(e.g.)Tj T* 0.165 Tw (South Asia and North Korea\). Nonetheless, there is room for further improve-)Tj T* 0.2075 Tw (ment in China)Tj /F14 1 Tf 7.1009 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.2075 Tw (s anti-proliferation work. The foundation for bilateral ties also)Tj -7.3049 -1 TD 0.2475 Tw (has been strengthened through increasing U.S.-China economic linkages. For)Tj T* 0.225 Tw (example, Beijing now holds 8.4% of U.S. Treasury notes \(held by foreigners\),)Tj T* 0.1425 Tw (second only to Japan, and holds about $50 billion in U.S. state, local, and cor-)Tj T* 0.135 Tw (porate debt instruments.)Tj 6.224 0 0 5.2 258.4866 245.1679 Tm 0 Tw (4)Tj 8 0 0 8 265.2473 243.0001 Tm 0.135 Tw (In short, in this globalized world, a solid foundation)Tj -12.7809 -1 TD 0.1825 Tw (for ties requires both positive security and economic links, and these are now)Tj T* 0.29 Tw (more robust than at any time in the last fourteen years. Having said this,)Tj T* 0.105 Tw (China has substantial apprehensions about the September 2002 )Tj /F21 1 Tf 30.7725 0 TD (National Secu-)Tj -30.7725 -1 TD 0.0525 Tw (rity Strategy of the United States of America.)Tj /F9 1 Tf -1 -1.25 TD 0 Tw ()Tj /F18 1 Tf 1.015 0 TD 0.1375 Tw (There is a reasonable chance that Chinese nationalism will be directed toward)Tj -0.015 -1 TD 0.195 Tw (internal modernization for at least a decade or two, and not onto the road of)Tj T* 0.1225 Tw (militarization. Chinese leaders believe they cannot remain in power if they fail)Tj T* (to meet popular material demands. A widely shared analysis in China ascribes)Tj T* 0.155 Tw (the collapse of the Soviet Union to its excessive military expenditures and the)Tj T* 0 Tw (Kremlin)Tj /F14 1 Tf 3.8519 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.125 Tw (s inadequate attention to economic needs. In this light, the recent sin-)Tj -4.0559 -1 TD 0.15 Tw (gle digit \(9.6%\) military budget increase announced at the just-concluded NPC)Tj T* 0.1425 Tw (may be suggestive \(the previous 13 years saw double digit increases\). I hasten)Tj T* 0.145 Tw (to caution that other military-related expenditures may have been larded else-)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00064)-1076.9(Fmt 6633)-1076.9(Sfmt 6621)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 213 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F9 134 0 R /F14 5 0 R /F18 16 0 R /F21 141 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 215 0 obj << /Length 8342 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (61)Tj ET 0 G 0 J 0 j 0.5 w 10 M []0 d 1 i 147 138.6 m 197 138.6 l S BT 5.446 0 0 4.55 154 131.7972 Tm (5)Tj 7 0 0 7 158.168 129.9 Tm 0.0771 Tw (Xing Zhigang, )Tj /F14 1 Tf 6.9334 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.0771 Tw (Military budget rise lowest in 14 years,)Tj /F14 1 Tf 18.5962 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD ( )Tj /F21 1 Tf 0.3551 0 TD 0.0772 Tw (China Daily, )Tj /F18 1 Tf 6.3574 0 TD 0.0771 Tw (Friday, March 7, 2003,)Tj -34.6536 -0.9857 TD 0.0714 Tw (p. 3; as to possibility that defense items may be elsewhere in the budget, this information comes)Tj T* 0.0514 Tw (from a recent interview with a Chinese citizen by David M. Lampton.)Tj 8 0 0 8 163 648 Tm 0.1025 Tw (where in the national budget.)Tj 6.224 0 0 5.2 275.6303 650.1678 Tm 0 Tw (5)Tj 8 0 0 8 283.451 648 Tm 0.1025 Tw (More broadly, because about one-third of its ex-)Tj -15.0564 -0.9875 TD 0.0975 Tw (ports go to the United States and employment in China is significantly affected)Tj T* 0.0825 Tw (by economic ties to America, China)Tj /F14 1 Tf 16.6173 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0825 Tw (s leaders see a linkage between the capacity)Tj -16.8212 -0.9875 TD 0.1225 Tw (to effectively address their own internal problems and continued productive re-)Tj T* 0.1 Tw (lations with America)Tj /F14 1 Tf 9.8679 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.1 Tw (this doesn)Tj /F14 1 Tf 4.8039 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1 Tw (t assure harmony, but it increases the odds of)Tj -15.8758 -0.9875 TD 0 Tw (it.)Tj /F9 1 Tf -1 -1.2375 TD ()Tj /F18 1 Tf 1.015 0 TD 0.0525 Tw (The Chinese realize that power has different faces)Tj /F14 1 Tf 23.5901 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.0525 Tw (military, economic, and nor-)Tj -24.6051 -0.9875 TD 0.3575 Tw (mative \(ideological\) power. Right now, China is finding that in the era of)Tj T* 0.2925 Tw (globalization, economic power \(and potential economic power\) is the form of)Tj T* 0.1925 Tw (power it has in greatest abundance and which it can use most effectively. As)Tj T* 0.0925 Tw (long as economic influence continues to be effective for Beijing, as it now seems)Tj T* 0.16 Tw (to be in dealing with Taiwan, for example, China is unlikely to resort to mili-)Tj T* 0.2625 Tw (tary intimidation as its chief foreign policy instrument. Further, there is no)Tj T* 0.1325 Tw (doubt that Beijing recognizes the military superiority of the United States and)Tj T* 0.2175 Tw (consequently is cautious. Indeed, this is one reason why China is placing in-)Tj T* 0.0725 Tw (creasing emphasis on using multilateral organizations \(such as the UN Security)Tj T* 0.0525 Tw (Council\) as a means to restrain the unilateral exercise of American power.)Tj -1 -1.4875 TD 0.165 Tw (These views add up to a perspective on China)Tj /F14 1 Tf 22.3777 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.165 Tw (s rise and its implications that is)Tj -23.5817 -0.9875 TD 0.1825 Tw (much different from that of the University of Chicago)Tj /F14 1 Tf 26.1256 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1825 Tw (s John Mearsheimer. In his)Tj -26.3296 -0.9875 TD 0 Tw (book )Tj /F21 1 Tf 2.5345 0 TD 0.1075 Tw (The Tragedy of Great Power Politics, )Tj /F18 1 Tf 17.7897 0 TD (Mearsheimer asserts that it doesn)Tj /F14 1 Tf 16.2828 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1075 Tw (t mat-)Tj -36.811 -0.9875 TD 0.1175 Tw (ter whether China becomes democratic or not; the mere fact that it is growing rap-)Tj T* 0.19 Tw (idly puts it on a collision course with America \(p.4\). This is so because the inter-)Tj T* 0.1975 Tw (national system is a jungle; in the jungle force is most useful; and all states will)Tj T* 0.185 Tw (convert economic power into growing coercive power to achieve dominance in that)Tj T* 0.065 Tw (jungle. In contrast, I believe that China now defines its security principally in terms)Tj T* 0.14 Tw (of internal economic welfare and social stability, that it is not striving for external)Tj T* 0.095 Tw (dominance \(with the important exception of Taiwan\), and that if America helps cre-)Tj T* 0.06 Tw (ate a moderately benign regional security environment there is no reason China and)Tj T* 0.1975 Tw (America cannot cooperate to their mutual advantage for a considerable period. In)Tj T* 0.17 Tw (short, China is rising the )Tj /F14 1 Tf 12.7028 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.17 Tw (right way)Tj /F14 1 Tf 4.6149 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.17 Tw (, not the wrong way, from the perspective of)Tj -18.1337 -0.9875 TD 0.1075 Tw (American interests, with the principal uncertainty being Taiwan. Those who see an)Tj T* 0.2125 Tw (inevitable conflict on the horizon propose adopting measures that assure the out-)Tj T* 0.0525 Tw (come they profess to wish to avoid.)Tj 1 -0.9875 TD 0.2825 Tw (The following issues merit specific consideration in light of China)Tj /F14 1 Tf 32.729 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.2825 Tw (s increasing)Tj -33.933 -0.9875 TD 0.0525 Tw (power and influence:)Tj 1 -0.9875 TD 0.1 Tw (First, China is modernizing its military in terms of projection capability, a secure)Tj -1 -0.9875 TD 0.095 Tw (nuclear deterrent, and internal management. For the last eighteen years China has)Tj T* 0.1025 Tw (been trying to transform its military into a more professional force able to fight the)Tj T* 0.065 Tw (next regional conflict offshore, not on its own territory as Mao Zedong contemplated.)Tj T* 0.1775 Tw (This reflects the desire to protect China)Tj /F14 1 Tf 19.4167 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1775 Tw (s increasingly valuable coastal assets and)Tj -19.6207 -0.9875 TD 0.2825 Tw (to deter Taiwan from making possible independence moves. The PLA has made)Tj T* 0.105 Tw (steady progress, though it remains far behind U.S. technological and organizational)Tj T* 0.205 Tw (levels. As its national economy grows Beijing will have more wherewithal to con-)Tj T* 0.0525 Tw (tinue making progress.)Tj 1 -0.9875 TD 0.1125 Tw (Second, as the United States develops its missile defenses, and possibly transfers)Tj -1 -0.9875 TD 0.27 Tw (these capabilities to regional allies, China will increase its missile and warhead)Tj T* 0.1825 Tw (numbers and diversify its delivery modes in order to assure a second strike capa-)Tj T* 0.0925 Tw (bility. Indeed, China has been modernizing its strategic forces gradually because its)Tj T* 0.1 Tw (deterrent capability already is problematic. If one combines this )Tj /F14 1 Tf 30.7365 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD (vertical)Tj /F14 1 Tf 3.4999 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.1 Tw [( prolifera-)]TJ -35.0525 -0.9875 TD 0.105 Tw (tion in China with )Tj /F14 1 Tf 9.1809 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD (horizontal)Tj /F14 1 Tf 4.7219 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.105 Tw [( proliferation in North Korea, the Republic of Korea,)]TJ -14.7188 -0.9875 TD 0.145 Tw (Japan, and Taiwan will come under increasing pressure to develop offensive forces)Tj T* 0.16 Tw (themselves, perhaps nuclear capabilities. In short, there is no way that China can)Tj T* 0.0625 Tw (modernize its military without creating some anxiety among neighbors, thereby gen-)Tj T* 0.3575 Tw (erating pressures for regional arms expansion. Conversely, proliferation around)Tj T* 0.1325 Tw (China may push Beijing along an upward trajectory as well. What Japan does will)Tj T* 0.0525 Tw (be particularly important in this respect.)Tj 6.4 0 0 6.0958 228.02 193.6 Tm 0 Tw [(SOME)-412.5(SPECIFIC)-412.5(POLICY)-412.5(RECOMMENDATIONS)]TJ 8 0 0 8 155 180.7 Tm 0.1975 Tw (In an effort to minimize the action-reaction arms race cycle, the administration)Tj -1 -0.9875 TD 0.0975 Tw (should do several things: A\) It should be exploring how the United States can build)Tj T* 0.0725 Tw (and deploy an ABM system that least threatens China)Tj /F14 1 Tf 25.7866 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0725 Tw (s minimal deterrent and elic-)Tj -25.9906 -0.9875 TD 0.125 Tw (its the most restrained response from Beijing in terms of increasing warhead num-)Tj T* 0.105 Tw (bers. Washington needs to talk to the Chinese about strategic nuclear weapons and)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00065)-1076.9(Fmt 6633)-1076.9(Sfmt 6621)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 216 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F9 134 0 R /F14 5 0 R /F18 16 0 R /F21 141 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 218 0 obj << /Length 6190 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (62)Tj 8 0 0 8 147 648 Tm 0.165 Tw (missile defenses, which the Administration seems loath to do, particularly the De-)Tj 0 -1.0125 TD 0.2625 Tw (partment of Defense. B\) The Administration should be developing a strategy for)Tj T* 0.21 Tw (dealing with North Korea that China, Japan, and South Korea can agree upon)Tj /F14 1 Tf 38.7664 0 TD 0 Tw ()Tj /F18 1 Tf -38.7664 -1.0125 TD 0.2375 Tw (we have not yet done so. This almost inevitably means Washington will have to)Tj T* 0.26 Tw (speak directly with Pyongyang. The sooner we build this consensus and proceed)Tj T* 0.0975 Tw (with its logic, the better off we all will be. C\) The Administration should be encour-)Tj T* 0.06 Tw (aging trilateral security dialogue among China, Japan, and the United States to sta-)Tj T* 0.19 Tw (bilize that three-way relationship to the greatest extent possible. And D\), the Ad-)Tj T* 0.1925 Tw (ministration should be exploring with Beijing what former President Jiang Zemin)Tj T* 0.065 Tw (meant by his suggestion in October and November of 2002 that China might remove)Tj T* 0.095 Tw (some of its missiles from threatening positions near Taiwan were the United States)Tj T* 0.16 Tw (to show parallel restraint in its military links with Taipei. Without endorsing this)Tj T* 0.1625 Tw (rather vague proposal, it does provide an opening for dialogue that might help re-)Tj T* 0.105 Tw (tard militarization in the Taiwan Strait, a militarization that Taiwan can ill-afford.)Tj T* 0.0525 Tw (So far, the Administration)Tj /F14 1 Tf 12.3253 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0525 Tw (s response has been deafening silence.)Tj 10 0 0 10 157 516.5 Tm 0.058 Tw (Senator B)Tj 8 0 0 7.6194 203.8793 516.5 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 253.7985 516.5 Tm 0.058 Tw (. Dr. Lampton, is China moving toward a de-)Tj -10.6799 -1.01 TD 0.052 Tw (mocracy at the national level, or not?)Tj 1 -1.01 TD 0.318 Tw (Dr. L)Tj 8 0 0 7.6194 184.6296 496.3 Tm 0 Tw (AMPTON)Tj 10 0 0 10 221.373 496.3 Tm 0.318 Tw (. I would put it a little differently. I would say)Tj -7.4373 -1.01 TD 0.066 Tw (China is, as a society, developing the preconditions that make a de-)Tj T* 0.162 Tw (mocracy, or, let us say, more humane, lawful, and pluralistic gov-)Tj T* 0.13 Tw (ernment possible. But I think, frankly, we)Tj /F14 1 Tf 20.2267 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.13 Tw (re talking about a proc-)Tj -20.4307 -1 TD 0.16 Tw (ess of decades. There isn)Tj /F14 1 Tf 12.0108 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.16 Tw (t going to be a solid basis for democracy)Tj -12.2148 -1 TD 0.078 Tw (until China really has a middle class that demands rule of law. It)Tj /F14 1 Tf 31.1265 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (s)Tj -31.3305 -1 TD 0.06 Tw (going to take a tremendous amount of time to build the institutions)Tj T* 0.052 Tw (to regulate a market economy.)Tj 1 -1 TD 0.178 Tw (So the way I would put it is, they)Tj /F14 1 Tf 16.7048 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.178 Tw (re headed in the right direc-)Tj -17.9088 -1 TD 0.13 Tw (tion. The slope is up, toward what we would concede to be a more)Tj T* 0.124 Tw (desirable form of government. But I think it)Tj /F14 1 Tf 21.1837 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.124 Tw (s going to take a long)Tj -21.3877 -1 TD 0.106 Tw (time. I)Tj /F14 1 Tf 3.162 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.106 Tw (d just observe that, of course, we would have said the same)Tj -3.3659 -1 TD 0.218 Tw (thing about the Soviet Union in 1985, perhaps, and by 1991, we)Tj T* 0.2 Tw (were in a radically different situation. So analysts can be wrong.)Tj T* 0.066 Tw (I can be wrong, for sure. And almost everything of significance that)Tj T* 0.16 Tw (has happened in China in the last 30 years has been unpredicted)Tj T* 0.118 Tw (by the experts. So I guess I will say I hope this becomes one more)Tj T* 0.052 Tw (example of experts being wrong.)Tj 1 -1 TD 0.15 Tw (But they)Tj /F14 1 Tf 4.1869 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.15 Tw (re moving in the right direction. I think the U.S. busi-)Tj -5.3909 -1 TD 0.088 Tw (ness community and our engagement with China, and invitation to)Tj T* 0.15 Tw (students and scholars to study here, has been an enormously suc-)Tj T* 0.052 Tw (cessful foreign policy that we)Tj /F14 1 Tf 13.5968 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.052 Tw (ve conducted.)Tj -12.8008 -1 TD 0.07 Tw (I know many people think our policy with China has been unsuc-)Tj -1 -1 TD 0.12 Tw (cessful. I respectfully disagree. I think it has been one of the most)Tj T* 0.242 Tw (successful policies of the last 60 years that we have had with a)Tj T* 0.052 Tw (major country that you can enumerate.)Tj 1 -1 TD 0.054 Tw (Senator B)Tj 8 0 0 7.6194 203.8393 235.9999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 253.7585 235.9999 Tm 0.054 Tw (. Is China doing all it can to stop the nuclear)Tj -10.6759 -1 TD 0.052 Tw (proliferation by North Korea?)Tj 1 -1 TD 0.248 Tw (Dr. L)Tj 8 0 0 7.6194 183.9296 215.9999 Tm 0 Tw (AMPTON)Tj 10 0 0 10 220.673 215.9999 Tm 0.248 Tw (. I think largely so. Of course, I am not privy to)Tj -7.3673 -1 TD 0.192 Tw (classified information. And also one could question their behavior)Tj T* 0.304 Tw (in the past)Tj /F14 1 Tf 5.5719 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.304 Tw (I am not absolutely sure that they have not done)Tj -6.5719 -1 TD 0.144 Tw (things that were helpful to North Korea in the past. I am reason-)Tj T* 0.244 Tw (ably sure that they are not doing anything now to assist in the)Tj T* 0.052 Tw (North Korean nuclear effort.)Tj 1 -1 TD 0.302 Tw (And indeed, I just went, in November, with former Secretary)Tj -1 -1 TD 0.07 Tw (Perry and Mr. Scowcroft and others, to China and talked to the top)Tj T* 0.308 Tw (four leaders as they relate to this issue. Without presuming to)Tj T* 0.066 Tw (speak for Secretary Perry or Mr. Scowcroft, I, personally, concluded)Tj T* 0.196 Tw (from those discussions that the Chinese are increasingly alarmed)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00066)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 219 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 221 0 obj << /Length 5986 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (63)Tj -15.344 -2 TD 0.192 Tw (at the phenomenon of proliferation. I mean, now they have Paki-)Tj 0 -1 TD 0 Tw (stan)Tj /F14 1 Tf 2.019 0 TD ()Tj /F18 1 Tf 1 0 TD 0.072 Tw (which they unfortunately, from our point of view, helped cre-)Tj -3.019 -1 TD 0.09 Tw (ate as a nuclear problem. India, a very volatile situation is to their)Tj T* 0.154 Tw (south. They are worried about Taiwan eventually, and the United)Tj T* 0.068 Tw (States has played a role in damping down Taiwan)Tj /F14 1 Tf 23.6236 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.068 Tw (s efforts a couple)Tj -23.8276 -1 TD 0.258 Tw (of times in the past. They are very worried about North Korea.)Tj T* 0.19 Tw (And, as one of my friends has said, )Tj /F14 1 Tf 17.8737 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.19 Tw (You know, with friends like)Tj -18.2817 -1 TD 0.206 Tw (the North Koreans, who needs enemies?)Tj /F14 1 Tf 19.5677 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.206 Tw [( So they)]TJ /F14 1 Tf 4.1349 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.206 Tw (re very worried)Tj -24.3146 -1 TD 0.052 Tw (about that. They, of course, still have Russia, with thousands of nu-)Tj T* 0.15 Tw (clear warheads. And so I think they)Tj /F14 1 Tf 17.4197 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.15 Tw (re worried about the environ-)Tj -17.6237 -1 TD 0.206 Tw (ment that they)Tj /F14 1 Tf 7.3389 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.206 Tw (re in, and in particular the stability of the North)Tj -7.5429 -1 TD 0.298 Tw (Koreans and the decisionmaking structure that they have. So I)Tj T* 0.16 Tw (take the Chinese at their word that they do not want the Korean)Tj T* 0.052 Tw (Peninsula with nuclear weapons.)Tj 1 -1 TD 0.19 Tw (The problem is)Tj /F14 1 Tf 7.2699 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.19 Tw (and I think Mr. Wortzel captured the Chinese)Tj -9.2699 -1 TD 0.102 Tw (priority. For the United States, the first, second, and third priority)Tj T* 0.11 Tw (is no nuclear weapons on the Korean Peninsula. Those are our top)Tj T* 0.106 Tw (priorities. I think the first priority for the Chinese is no instability)Tj T* 0.238 Tw (in North Korea. And then nuclear weapons are important, but I)Tj T* 0.082 Tw (think it)Tj /F14 1 Tf 3.5829 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.082 Tw (s not the first priority. And so I think the Chinese are ulti-)Tj -3.7869 -1 TD 0.138 Tw (mately afraid that the means the United States would use to stop)Tj T* 0.262 Tw (the North Koreans from getting nuclear weapons will jeopardize)Tj T* 0.052 Tw (their first security priority, which is stability in North Korea.)Tj 1 -1 TD 0.106 Tw (The Chinese are concerned that we would use means that would)Tj -1 -1 TD 0.072 Tw (jeopardize their, meaning the Chinese, first security priority, which)Tj T* 0.052 Tw (is no instability.)Tj 1 -1 TD (Dr. W)Tj 8 0 0 7.6194 185.1096 386 Tm 0 Tw (ORTZEL)Tj 10 0 0 10 218.4451 386 Tm 0.052 Tw (. Mr. Chairman.)Tj -6.1445 -1 TD (Senator B)Tj 8 0 0 7.6194 203.8193 375.9999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 253.7385 375.9999 Tm 0.052 Tw (. Dr. Wortzel.)Tj -9.6739 -1 TD 0.156 Tw (Dr. W)Tj 8 0 0 7.6194 186.1496 365.9999 Tm 0 Tw (ORTZEL)Tj 10 0 0 10 219.4851 365.9999 Tm 0.156 Tw (. If I could. The history of strategic thinking about)Tj -7.2485 -1 TD 0.13 Tw (nuclear weapons in China is that proliferation is a good thing, be-)Tj T* 0.114 Tw (cause it breaks what they term the superpower monopoly on those)Tj T* 0.108 Tw (weapons. I think that they have)Tj /F14 1 Tf 15.3018 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.108 Tw (the history of them recently pro-)Tj -16.3018 -1 TD 0.26 Tw (liferating weapons of mass destruction and missiles is that they)Tj T* 0.224 Tw (have stiff-armed us at every turn and lied and cheated and pro-)Tj T* 0.114 Tw (liferated. And as recently as today, or was it yesterday, Bill Gertz,)Tj T* 0.118 Tw (in the Washington Times, has another example of that, of perhaps)Tj T* 0.054 Tw (more materials going into North Korea that would lead to prolifera-)Tj T* 0 Tw (tion.)Tj 1 -1 TD 0.62 Tw (Senator B)Tj 8 0 0 7.6194 209.4993 265.9999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 259.4185 265.9999 Tm 0.62 Tw (. What countries would those be, Dr.)Tj -11.2419 -1 TD 0.052 Tw (Wortzel? I mean, Pakistan has been mentioned.)Tj 1 -1 TD 0.462 Tw (Dr. W)Tj 8 0 0 7.6194 189.2096 245.9999 Tm 0 Tw (ORTZEL)Tj 10 0 0 10 222.5451 245.9999 Tm 0.462 Tw (. Pakistan has been mentioned, certainly Iran,)Tj -7.5545 -1 TD 0.214 Tw (Syria, perhaps back earlier to Iraq, we know of North Korea. So)Tj T* 0.172 Tw (the real dilemma for China now is the second and third order ef-)Tj T* 0.106 Tw (fects of what might happen in Japan, and I think that)Tj /F14 1 Tf 25.9716 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.106 Tw (s where our)Tj -26.1756 -1 TD 0.052 Tw (diplomacy has to focus.)Tj 1 -1 TD 0.13 Tw (They are happy, I think, that they)Tj /F14 1 Tf 16.5788 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.13 Tw (re at the center of diplomatic)Tj -17.7828 -1 TD 0.22 Tw (crossroads. I think they)Tj /F14 1 Tf 11.5858 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.22 Tw (re quite happy that the United States is)Tj -11.7898 -1 TD 0.15 Tw (pretty well extended militarily in a lot of other parts of the world)Tj T* 0.052 Tw (and can)Tj /F14 1 Tf 3.6819 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.052 Tw (t focus on Taiwan or on them or even on North Korea.)Tj -2.8859 -1 TD 0.154 Tw (But I think we need robust ballistic missile defense deployed in)Tj -1 -1 TD 0.164 Tw (East Asia. I think we need to work with the Japanese to get bal-)Tj T* 0.152 Tw (listic missile defenses out there, and I think we need to press the)Tj T* 0.198 Tw (Chinese to remind them that the worst consequences of their be-)Tj T* 0.052 Tw (havior would be a remilitarized Japan.)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00067)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 222 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 224 0 obj << /Length 5882 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (64)Tj -14.344 -2 TD 0.122 Tw (Senator B)Tj 8 0 0 7.6194 204.5193 646 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 254.4385 646 Tm 0.122 Tw (. Where all would you place ballistic missile)Tj -10.7439 -1 TD 0.192 Tw (defenses throughout East Asia? What countries do we need to do)Tj T* 0 Tw (that?)Tj 1 -1 TD 0.094 Tw (Dr. W)Tj 8 0 0 7.6194 185.5296 616 Tm 0 Tw (ORTZEL)Tj 10 0 0 10 218.8651 616 Tm 0.094 Tw (. I think that we have to work very closely with the)Tj -7.1865 -1 TD 0.134 Tw (Japanese. I think we need sea-based defenses, and I think we can)Tj T* 0.052 Tw (get ground-based defenses here and there.)Tj 1 -1 TD 0.124 Tw (South Korea is less interested in ballistic missile defenses, quite)Tj -1 -1 TD 0.214 Tw (frankly, because they could be obliterated by artillery. So they)Tj /F14 1 Tf 30.6526 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (re)Tj -30.8566 -1 TD 0.052 Tw (not terribly interested.)Tj 1 -1 TD 0.134 Tw (Taiwan is a place that has great need for shorter-range ballistic)Tj -1 -1 TD 0.302 Tw (missile defenses, primarily sea-base, but ground-based would do)Tj T* 0.052 Tw (them very well.)Tj 1 -1 TD 0.138 Tw (Our relationship with Japan and the interpretation of the Japa-)Tj -1 -1 TD 0.348 Tw (nese constitution makes it extremely sensitive to begin to talk)Tj T* 0.158 Tw (about architecture. In 1998, Strom Thurmond, Defense Authoriza-)Tj T* 0.262 Tw (tion Act, asked for the study of a theater architecture involving)Tj T* 0.118 Tw (Japan, Korea, and Taiwan. I think that)Tj /F14 1 Tf 18.9357 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.118 Tw (s a great goal. But I think)Tj -19.1397 -1 TD 0.196 Tw (that if we really want to move forward with Japan and we want)Tj T* 0.062 Tw (to work with the Japanese on moving into development and deploy-)Tj T* 0.108 Tw (ment, any system with Taiwan that eventually the Taiwan legisla-)Tj T* 0.15 Tw (ture may fund because they)Tj /F14 1 Tf 13.4338 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.15 Tw (ve been very slow to do that, not just)Tj -13.6378 -1 TD 0.182 Tw (for economic problems, but also because they don)Tj /F14 1 Tf 23.9607 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.182 Tw (t want to anger)Tj -24.1646 -1 TD 0.078 Tw (them, some elements in Taiwan, don)Tj /F14 1 Tf 17.3377 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.078 Tw (t want to anger the mainland.)Tj -17.5417 -1 TD 0.124 Tw (But I think it needs to be an architecture in and of itself, perhaps)Tj T* 0.074 Tw (an architecture that)Tj /F14 1 Tf 9.4629 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.074 Tw (s readily linked to the United States. But talk-)Tj -9.6669 -1 TD 0.464 Tw (ing about a theater architecture involving the United States,)Tj T* 0.16 Tw (Japan, and Taiwan will drive the Japanese public, in my opinion,)Tj T* 0.258 Tw (away from a decision that Japan needs to make, and that is to)Tj T* 0.052 Tw (move forward on a ballistic missile defense.)Tj 1 -1 TD 0.14 Tw (Senator B)Tj 8 0 0 7.6194 204.6993 355.9999 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 254.6185 355.9999 Tm 0.14 Tw (. What)Tj /F14 1 Tf 3.233 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.14 Tw (s the likelihood of Japan becoming a)Tj -14.1988 -1 TD 0.126 Tw (nuclear power if North Korea continues its track and develops nu-)Tj T* 0.052 Tw (clear weapons?)Tj 1 -1 TD 0.25 Tw (Dr. W)Tj 8 0 0 7.6194 187.0896 325.9999 Tm 0 Tw (ORTZEL)Tj 10 0 0 10 220.425 325.9999 Tm 0.25 Tw (. Well, as you know, at the Heritage Foundation,)Tj -7.3425 -1 TD 0 Tw (we)Tj /F14 1 Tf 1.278 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.18 Tw (ve had a very close relationship with some of the conservative)Tj -1.482 -1 TD 0.084 Tw (faction in the Japanese Diet. It)Tj /F14 1 Tf 14.7558 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.084 Tw (s a multiparty faction. It)Tj /F14 1 Tf 11.7078 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.084 Tw (s about 25)Tj -26.8716 -1 TD 0.052 Tw (Diet members. For 8 years, they)Tj /F14 1 Tf 15.1328 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.052 Tw (ve been coming to Heritage to talk.)Tj -15.3368 -1 TD 0.19 Tw (I go to Japan twice a year and meet with them. Five former De-)Tj T* 0.124 Tw (fense Ministers, or the JDA heads, and the current JDA head, are)Tj T* 0.052 Tw (part of the group.)Tj 1 -1 TD 0.102 Tw (I think it)Tj /F14 1 Tf 4.3899 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.102 Tw (s fair to say that there are some people that very, very)Tj -5.5939 -1 TD 0.114 Tw (seriously believe that if Japan faces that sort of threat, it needs to)Tj T* 0.126 Tw (develop the capability to respond. And it is only their belief in the)Tj T* 0.052 Tw (American nuclear umbrella that inhibits that.)Tj 1 -1 TD 0.228 Tw (Dr. L)Tj 8 0 0 7.6194 183.7296 215.9999 Tm 0 Tw (AMPTON)Tj 10 0 0 10 220.4731 215.9999 Tm 0.228 Tw (. I just might say a couple of things, one on Tai-)Tj -7.3473 -1 TD 0 Tw (wan)Tj /F14 1 Tf 1.945 0 TD ()Tj /F18 1 Tf 1 0 TD 0.114 Tw (their missile defense. I think it would be very important not)Tj -2.945 -1 TD 0.13 Tw (to, at least initially, transfer ABM technology beyond the Patriots,)Tj T* 0.198 Tw (which we already are, to Taiwan. First of all, I just made a pro-)Tj T* 0.054 Tw (posal that we at least explore with the Chinese their offer to reduce)Tj T* 0.242 Tw (some of the missiles near the Taiwan Strait and at least plumb)Tj T* 0.188 Tw (other strategies to reduce tension there. We might end up failing)Tj T* 0.1 Tw (at that and then come back the ABM option. But I think there are)Tj T* 0.052 Tw (some things to do before we get there.)Tj 1 -1 TD 0.118 Tw (Also, even if we decided that missile defense was needed in that)Tj -1 -1 TD 0.152 Tw (area, I would hope we could go to ship-borne ABM that would re-)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00068)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 225 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 227 0 obj << /Length 6336 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (65)Tj -15.344 -2 TD 0.132 Tw (main under U.S. control for a number of reasons, one of which in-)Tj 0 -1.04 TD 0.052 Tw (cludes technology leakage.)Tj 1 -1.04 TD (So let)Tj /F14 1 Tf 2.664 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.052 Tw (s explore the diplomatic possibilities in finding a way to de-)Tj -3.868 -1.04 TD 0.064 Tw (escalate tension in the Taiwan Strait first. If that fails, think about)Tj T* 0.11 Tw (alternative strategies. But I think giving the technology directly to)Tj T* 0.122 Tw (Taiwan would be way down my priority list for two reasons. First,)Tj T* 0.052 Tw (it would jeopardize Taiwan)Tj /F14 1 Tf 12.6948 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.052 Tw (s security. You would not be able to pre-)Tj -12.8988 -1.04 TD 0.162 Tw (dict Beijing)Tj /F14 1 Tf 5.4579 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.162 Tw (s reaction and then we)Tj /F14 1 Tf 11.1118 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.162 Tw (d have to cope with that. And,)Tj -16.9778 -1.04 TD 0.202 Tw (second, it)Tj /F14 1 Tf 4.5539 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.202 Tw (s going to be very expensive. And Taiwan needs to use)Tj -4.7579 -1.04 TD 0.24 Tw (its investment to increase its economic competitiveness. The big-)Tj T* 0.152 Tw (gest threat to the island is that it)Tj /F14 1 Tf 16.4378 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.152 Tw (s not doing what it needs to do)Tj -16.6418 -1.04 TD 0.106 Tw (for its own economic development. And there are many reasons for)Tj T* 0.052 Tw (that, and we could go into it.)Tj 1 -1.04 TD 0.192 Tw (But the long and the short of it is that the strategy of encour-)Tj -1 -1.04 TD 0.148 Tw (aging Taiwan to spend enormous amounts on technology trying to)Tj T* 0.164 Tw (achieve security when the biggest threat to its security is its own)Tj T* 0.122 Tw (economy is not wise. Not what I would perceive to be Taiwan)Tj /F14 1 Tf 29.4576 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.122 Tw (s in-)Tj -29.6616 -1.04 TD 0.052 Tw (terests, our interests, or anybody else)Tj /F14 1 Tf 17.5757 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (s.)Tj -16.7797 -1.04 TD 0.296 Tw (Senator B)Tj 8 0 0 7.6194 206.2593 458.8 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 256.1785 458.8 Tm 0.296 Tw (. Dr. Lampton, too, I hope your institute,)Tj -10.9179 -1.04 TD 0 Tw (you)Tj /F14 1 Tf 1.648 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.1 Tw (d look some to it, the Chinese treatment of North Korean refu-)Tj -1.852 -1.04 TD 0.306 Tw (gees, which I think is just an absolutely deplorable violation. I)Tj T* 0.304 Tw (mean, it)Tj /F14 1 Tf 4.1199 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.304 Tw (s deplorable human rights, but it)Tj /F14 1 Tf 16.7818 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.304 Tw (s a huge violation of)Tj -21.3097 -1.04 TD 0.25 Tw (their agreement under the U.N.)Tj /F14 1 Tf 15.7228 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.25 Tw (their agreement with the U.N.)Tj -16.7228 -1.04 TD 0.122 Tw (High Commission on Refugees. I mean, and this is)Tj /F14 1 Tf 24.2556 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.122 Tw (I suppose you)Tj -25.2556 -1.04 TD 0.242 Tw (could say, if it were a couple of hundred people, it)Tj /F14 1 Tf 25.2547 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.242 Tw (s not a huge)Tj -25.4586 -1.04 TD 0.278 Tw (issue to arise, although I think we should look at every person)Tj T* 0.26 Tw (uniquely. But you)Tj /F14 1 Tf 8.7799 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.26 Tw (re now in)Tj /F14 1 Tf 4.8349 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.26 Tw (a third of the population of North)Tj -14.8188 -1.04 TD 0.276 Tw (Korea is being fed by international food donations, and literally)Tj T* 0.074 Tw (thousands have walked into China, and a number are being caught)Tj T* 0.082 Tw (and repatriated)Tj /F14 1 Tf 7.3419 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.082 Tw (into a horrible situation. I would hope that would)Tj -8.3419 -1.04 TD 0.052 Tw (also cross your radar screen on the relationship.)Tj 1 -1.04 TD 0.082 Tw (Dr. L)Tj 8 0 0 7.6194 182.2696 323.6001 Tm 0 Tw (AMPTON)Tj 10 0 0 10 219.0131 323.6001 Tm 0.082 Tw (. Well, Senator, I certainly agree that forcing people)Tj -7.2013 -1.04 TD 0.14 Tw (back across the border so that they can meet an uncertain but al-)Tj T* 0.09 Tw (most certainly violent consequence is not anything I would endorse)Tj T* 0.228 Tw (and I think we all feel enormously badly about that. I think we)Tj T* 0.118 Tw (ought to be doing what we can as a government to find an orderly)Tj T* 0.144 Tw (process by which people can get into China, get out of China, and)Tj T* 0.088 Tw (go somewhere. But I think the problem doesn)Tj /F14 1 Tf 21.6357 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.088 Tw (t just stop at China)Tj /F14 1 Tf 9.2979 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (s)Tj -31.3415 -1.04 TD (doorstep.)Tj 1 -1.04 TD 0.1 Tw (You have to ask who will take people in that volume today? And)Tj -1 -1.04 TD 0.134 Tw (you can start, I think, asking the question with respect to the Re-)Tj T* 0.072 Tw (public of Korea. As I would understand the Republic of Korea)Tj /F14 1 Tf 29.0546 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.072 Tw (s pol-)Tj -29.2586 -1.04 TD 0.06 Tw (icy, it is to take people if they can get there, but they)Tj /F14 1 Tf 25.0386 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.06 Tw (re not encour-)Tj -25.2426 -1.04 TD 0.27 Tw (aging the Chinese to have large numbers of people go to South)Tj T* 0.256 Tw (Korea. And of course we would like to find other countries that)Tj T* 0.152 Tw (would be willing to take these individuals, as well. So I think the)Tj T* 0 Tw (Chinese)Tj /F14 1 Tf 3.7219 0 TD ()Tj /F18 1 Tf -2.7219 -1.04 TD 0.244 Tw (Senator B)Tj 8 0 0 7.6194 205.7393 157.2001 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 255.6585 157.2001 Tm 0.244 Tw (. I think we did that. In Indochina in the)Tj -10.8659 -1.03 TD 0.154 Tw (1970s, where there was a couple of million people that moved out)Tj T* 0.112 Tw (and various places around the world when they faced such horrific)Tj T* 0 Tw (conditions.)Tj 1 -1.03 TD 0.052 Tw (Dr. L)Tj 8 0 0 7.6194 181.9696 116.0001 Tm 0 Tw (AMPTON)Tj 10 0 0 10 218.7131 116.0001 Tm 0.052 Tw (. Yes.)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00069)-1076.9(Fmt 6633)-1076.9(Sfmt 6602)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 228 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 230 0 obj << /Length 7783 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (66)Tj -14.344 -2 TD 0.152 Tw (Senator B)Tj 8 0 0 7.6194 204.8193 646 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 254.7385 646 Tm 0.152 Tw (. I would hope we could do something simi-)Tj -10.7739 -0.99 TD 0.144 Tw (larly here. And I think it would be viable and possible, but China)Tj T* 0.052 Tw (is the door. They have to be the door to this.)Tj 1 -0.99 TD (Dr. L)Tj 8 0 0 7.6194 181.9696 616.3 Tm 0 Tw (AMPTON)Tj 10 0 0 10 218.7131 616.3 Tm 0.052 Tw (. Right.)Tj -6.1713 -0.99 TD 0.072 Tw (Senator B)Tj 8 0 0 7.6194 204.0193 606.4 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 253.9385 606.4 Tm 0.072 Tw (. And so far, they)Tj /F14 1 Tf 8.1959 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.072 Tw (ve indicated no willingness)Tj -19.0937 -0.99 TD 0.294 Tw (whatsoever to do anything but send the North Korean refugees)Tj T* 0 Tw (back.)Tj 1 -0.99 TD 0.154 Tw (Dr. L)Tj 8 0 0 7.6194 182.9896 576.7 Tm 0 Tw (AMPTON)Tj 10 0 0 10 219.7331 576.7 Tm 0.154 Tw (. I think that)Tj /F14 1 Tf 6.4449 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.154 Tw (s right, and I)Tj /F14 1 Tf 6.4809 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.154 Tw (m the last one to carry)Tj -20.6071 -0.99 TD 0.238 Tw (the water for the Chinese on anything, and including this. All I)Tj T* 0.224 Tw (would say is, I think the Chinese occasionally)Tj /F14 1 Tf 22.6077 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.224 Tw (you hear various)Tj -23.6077 -0.99 TD 0.296 Tw (numbers, but there may be up to 200,000 or more people from)Tj T* 0.196 Tw (North Korea in China in the border areas. And my sense is that)Tj T* 0.084 Tw (Beijing often turns a blind eye to those people. It)Tj /F14 1 Tf 23.2577 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.084 Tw (s when they start)Tj -23.4617 -1 TD 0.052 Tw (moving into the cities)Tj /F14 1 Tf 10.1198 0 TD 0 Tw ()Tj /F18 1 Tf -9.1198 -1 TD 0.222 Tw (Senator B)Tj 8 0 0 7.6194 205.5193 507.2 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 255.4385 507.2 Tm 0.222 Tw (. You used to. But after some of the high-)Tj -10.8439 -1 TD 0.152 Tw (level embassies were hit they)Tj /F14 1 Tf 14.1658 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.152 Tw (ve gone)Tj /F14 1 Tf 3.6149 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.152 Tw (and I went to that area in)Tj -18.9847 -1 TD 0.224 Tw (December, and after the high-level incidents took place, the Chi-)Tj T* 0.122 Tw (nese went in and really started sweeping, even through the north-)Tj T* 0.152 Tw (ern areas, to capture North Korean refugees and send them back.)Tj 1 -1 TD 0.052 Tw (Dr. L)Tj 8 0 0 7.6194 181.9696 457.2 Tm 0 Tw (AMPTON)Tj 10 0 0 10 218.7131 457.2 Tm 0.052 Tw (. That)Tj /F14 1 Tf 2.831 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.052 Tw (s true.)Tj -9.2063 -1 TD (Senator B)Tj 8 0 0 7.6194 203.8193 447.2 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 253.7385 447.2 Tm 0.052 Tw (. That)Tj /F14 1 Tf 2.831 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.052 Tw (s really bad)Tj /F14 1 Tf 5.4759 0 TD 0 Tw ()Tj /F18 1 Tf -18.1847 -1 TD 0.196 Tw (Dr. L)Tj 8 0 0 7.6194 183.4096 437.2 Tm 0 Tw (AMPTON)Tj 10 0 0 10 220.153 437.2 Tm 0.196 Tw (. I had a graduate student go there who is of Ko-)Tj -7.3153 -1 TD 0.066 Tw (rean nationality, and her 40-some-page report is an eye-opener. Let)Tj T* 0.052 Tw (me put it that way.)Tj 1 -1 TD (Senator B)Tj 8 0 0 7.6194 203.8193 407.2 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 253.7385 407.2 Tm 0.052 Tw (. It has opened my eyes.)Tj -9.6739 -1 TD 0.292 Tw (Thank you both very much. This has been a very interesting)Tj -1 -1 TD 0.124 Tw (panel. It)Tj /F14 1 Tf 4.0319 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.124 Tw (s been a very interesting overall hearing, but you provide)Tj -4.2359 -1 TD 0.172 Tw (a lot of food for thought. And you)Tj /F14 1 Tf 16.4078 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.172 Tw (ve been at this work for a long)Tj -16.6118 -1 TD 0.064 Tw (period of time, and I appreciate your willingness both to share your)Tj T* 0 Tw (expertise.)Tj 1 -1 TD 0.052 Tw (Dr. L)Tj 8 0 0 7.6194 181.9696 347.2 Tm 0 Tw (AMPTON)Tj 10 0 0 10 218.7131 347.2 Tm 0.052 Tw (. Thank you.)Tj -6.1713 -1 TD 0.24 Tw (Senator B)Tj 8 0 0 7.6194 205.6993 337.2 Tm 0 Tw (ROWNBACK)Tj 10 0 0 10 255.6185 337.2 Tm 0.24 Tw (. The record will remain open for the req-)Tj -10.8619 -1 TD 0.052 Tw (uisite number of days. The hearing is adjourned.)Tj 1 -1 TD 0.104 Tw ([Whereupon, at 4:50 p.m., the subcommittee adjourned, to recon-)Tj -1 -1 TD 0.052 Tw (vene subject to the call of the Chair.])Tj ET 0 G 0 J 0 j 0.4 w 10 M []0 d 1 i 281 294.8 m 331 294.8 l S BT 10 0 0 10 147.14 274.6 Tm 0 Tw (R)Tj 8 0 0 7.6194 154.3599 274.6 Tm [(ESPONSES)-412.5(TO)]TJ 10 0 0 10 217.271 274.6 Tm (A)Tj 8 0 0 7.6194 224.4909 274.6 Tm (DDITIONAL)Tj 10 0 0 10 275.9422 274.6 Tm (Q)Tj 8 0 0 7.6194 283.722 274.6 Tm (UESTIONS)Tj 10 0 0 10 330.7334 274.6 Tm (S)Tj 8 0 0 7.6194 337.0333 274.6 Tm [(UBMITTED)-412.5(FOR)-412.5(THE)]TJ 10 0 0 10 427.8201 274.6 Tm (R)Tj 8 0 0 7.6194 435.04 274.6 Tm (ECORD)Tj ET 291 259.2 m 321 259.2 l S BT 8 0 0 8 148.14 243 Tm (R)Tj 6.4 0 0 6.0958 153.9159 243 Tm [(ESPONSES)-412.5(OF)]TJ 8 0 0 8 204.2455 243 Tm (C)Tj 6.4 0 0 6.0958 210.0214 243 Tm (HARLES)Tj 8 0 0 8 240.1557 243 Tm (F)Tj 6.4 0 0 6.0958 245.4917 243 Tm (REEMAN)Tj 8 0 0 8 275.2324 243 Tm 0.0525 Tw (, D)Tj 6.4 0 0 6.0958 286.3243 243 Tm 0 Tw (EPUTY)Tj 8 0 0 8 311.8443 243 Tm (A)Tj 6.4 0 0 6.0958 317.6202 243 Tm (SSISTANT)Tj 8 0 0 8 353.3353 243 Tm 0.0525 Tw (U.S. T)Tj 6.4 0 0 6.0958 377.323 243 Tm 0 Tw (RADE)Tj 8 0 0 8 398.8046 243 Tm (R)Tj 6.4 0 0 6.0958 404.5805 243 Tm (EPRESENTATIVE)Tj 8 0 0 8 461.5852 243 Tm (,)Tj 6.4 0 0 6.0958 147.42 235 Tm (TO)Tj 8 0 0 8 159.308 235 Tm (A)Tj 6.4 0 0 6.0958 165.0839 235 Tm (DDITIONAL)Tj 8 0 0 8 206.2455 235 Tm (Q)Tj 6.4 0 0 6.0958 212.4694 235 Tm [(UESTIONS)-412.5(FOR)-412.5(THE)]TJ 8 0 0 8 283.4485 235 Tm (R)Tj 6.4 0 0 6.0958 289.2244 235 Tm (ECORD)Tj 8 0 0 8 315.6852 235 Tm (S)Tj 6.4 0 0 6.0958 320.7251 235 Tm [(UBMITTED)-412.5(BY)]TJ 8 0 0 8 371.7523 235 Tm (S)Tj 6.4 0 0 6.0958 376.7922 235 Tm (ENATOR)Tj 8 0 0 8 407.7586 235 Tm (G)Tj 6.4 0 0 6.0958 413.9825 235 Tm (EORGE)Tj 8 0 0 8 440.4433 235 Tm (A)Tj 6.4 0 0 6.0958 446.2192 235 Tm (LLEN)Tj /F21 1 Tf 8 0 0 8 155 222 Tm (Question. )Tj /F18 1 Tf 4.8289 0 TD 0.2 Tw (Procurement Issue: The Wall Street Journal recently reported \(March)Tj -5.8289 -1 TD 0.1275 Tw (7, 2003\) that an interagency task force in charge of the central government)Tj /F14 1 Tf 36.1625 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1275 Tw (s infor-)Tj -36.3665 -1 TD 0.1225 Tw (mation-technology planning efforts proposed procurement guidelines that may limit)Tj T* 0.23 Tw (market access and open competition for procurement of software products by the)Tj T* 0.0525 Tw (Chinese government.)Tj 1 -1 TD 0.0575 Tw (This is a cause for great concern since it would violate the spirit of free trade com-)Tj -1 -1 TD 0.155 Tw (mitments within the WTO and send the wrong message that China is not open to)Tj T* 0.0525 Tw (free trade and utilizing the best software and security technology available.)Tj 1 -1 TD 0.15 Tw (Are you aware of these guidelines? If so, what is your assessment of its applica-)Tj -1 -1 TD 0.1125 Tw (bility to software makers in the U.S.? What do you think is the best way for China)Tj T* 0.1975 Tw (to achieve its goals of developing a local high tech industry while staying true to)Tj T* 0.0525 Tw (its free trade commitments within the WTO?)Tj 1 -1.25 TD 0.06 Tw (Answer. We have encouraged China to practice fair and open procurement policies)Tj -1 -1 TD 0.1625 Tw (and to allow market conditions to be the primary determinant in government pro-)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00070)-1076.9(Fmt 6633)-1076.9(Sfmt 6621)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 231 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R /F21 141 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 233 0 obj << /Length 8679 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (67)Tj 8 0 0 8 147 648 Tm 0.2225 Tw (curement. However, China is not a signatory to the WTO Agreement on Govern-)Tj 0 -0.9875 TD 0.0625 Tw (ment Procurement, and has no trade commitments to ensure equal access to govern-)Tj T* 0.0525 Tw (ment contracts for foreign suppliers.)Tj 1 -0.9875 TD 0.2 Tw (China is clearly a growing market for American software. Many American soft-)Tj -1 -0.9875 TD 0.0975 Tw (ware companies have made sales to the Chinese government and are expanding op-)Tj T* 0.115 Tw (erations in China to better market their products to Chinese purchasers. While the)Tj T* 0.0925 Tw (Chinese government has not signed the WTO Government Procurement Agreement,)Tj T* 0.1725 Tw (we do expect China to honor all of its WTO commitments, including those related)Tj T* 0.0525 Tw (to national treatment for products regardless of national origin.)Tj /F21 1 Tf 1 -1.4875 TD 0 Tw (Question. )Tj /F18 1 Tf 4.8264 0 TD 0.1975 Tw (Software Piracy Problem in China: In 2001, the business software pi-)Tj -5.8264 -0.9875 TD 0.1875 Tw (racy rate in China was 92%, the second highest level in the world. Losses due to)Tj T* 0.0525 Tw (software piracy in China in 2001 amounted to a staggering $1.66 billion. The biggest)Tj T* 0.0825 Tw (problem facing the software industry is enterprise end user piracy, when businesses)Tj T* 0.0525 Tw (and government institutions use unauthorized copies of software.)Tj 1 -0.9875 TD 0.07 Tw (The high piracy rate not only curtails China)Tj /F14 1 Tf 20.8617 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.07 Tw (s ability to attract foreign investment)Tj -22.0657 -0.9875 TD 0.0525 Tw (but also hinder the development of its own high tech industry.)Tj 1 -0.9875 TD 0.1925 Tw (As a WTO member, what can China do to decrease the piracy rate? What type)Tj -1 -0.9875 TD 0.06 Tw (of legislative reforms and enforcement resources would be required and what is your)Tj T* 0.0525 Tw (sense of China)Tj /F14 1 Tf 6.8459 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0525 Tw (s commitment to IPR issues.)Tj -6.0499 -1.2375 TD 0.055 Tw (Answer. China)Tj /F14 1 Tf 6.9439 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.055 Tw (s proection of intellectual property rights continues to be one of our)Tj -8.1479 -0.9875 TD 0.07 Tw (greatest concerns. While China has made great strides over the past decade and im-)Tj T* 0.1575 Tw (proved its legal regime significantly prior to its accession to the WTO, the level of)Tj T* 0.0775 Tw (piracy remains disturbingly high. We are actively engaged with the Chinese govern-)Tj T* 0.0525 Tw (ment on this issue, and are pressing them to enforce the laws on their books.)Tj 1 -0.9875 TD 0.1325 Tw (The Chinese government appears to understand that piracy is not simply a mat-)Tj -1 -0.9875 TD 0.115 Tw (ter of concern to foreign companies, but also poses a dramatic threat to China)Tj /F14 1 Tf 37.2935 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.115 Tw (s do-)Tj -37.4975 -0.9875 TD 0.085 Tw (mestic economic development. While the government still has much to do to provide)Tj 0 -1 TD 0.0875 Tw (adequate protection for IPR, there have already been many positive changes in Chi-)Tj T* 0 Tw (na)Tj /F14 1 Tf 1.167 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.2075 Tw (s IPR protection regime, and we believe the Chinese government is committed)Tj -1.371 -1 TD 0.0525 Tw (to fixing the problem areas that remain.)Tj 1 -1 TD 0 Tw (China)Tj /F14 1 Tf 2.815 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.145 Tw (s WTO commitments include a promise to attain a )Tj /F14 1 Tf 24.8456 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD (deterrent)Tj /F14 1 Tf 4.3509 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.145 Tw [( level of en-)]TJ -34.0315 -1 TD 0.1 Tw (forcement against IPR piracy. We expect China to fully honor this commitment and)Tj T* 0.0525 Tw (are working with the Chinese government to ensure that this is the case.)Tj ET 0 G 0 J 0 j 0.4 w 10 M []0 d 1 i 291 378.2 m 321 378.2 l S BT 8 0 0 8 147 359 Tm 0 Tw (R)Tj 6.4 0 0 6.0958 152.7759 359 Tm [(ESPONSES)-487.5(OF)]TJ 8 0 0 8 204.0655 359 Tm (R)Tj 6.4 0 0 6.0958 209.8414 359 Tm (ANDALL)Tj 8 0 0 8 240.9357 359 Tm 0.1125 Tw (G. S)Tj 6.4 0 0 6.0958 257.5475 359 Tm 0 Tw (CHRIVER)Tj 8 0 0 8 288.5875 359 Tm 0.1125 Tw (, D)Tj 6.4 0 0 6.0958 300.1593 359 Tm 0 Tw (EPUTY)Tj 8 0 0 8 326.1593 359 Tm (A)Tj 6.4 0 0 6.0958 331.9352 359 Tm (SSISTANT)Tj 8 0 0 8 368.1304 359 Tm (S)Tj 6.4 0 0 6.0958 373.1703 359 Tm [(ECRETARY)-487.5(OF)]TJ 8 0 0 8 425.1575 359 Tm (S)Tj 6.4 0 0 6.0958 430.1974 359 Tm [(TATE)-487.5(FOR)]TJ 8 0 0 8 155 351 Tm (E)Tj 6.4 0 0 6.0958 160.7759 351 Tm (AST)Tj 8 0 0 8 177.7575 351 Tm (A)Tj 6.4 0 0 6.0958 183.5334 351 Tm [(SIAN)-634.4(AND)]TJ 8 0 0 8 222.943 351 Tm (P)Tj 6.4 0 0 6.0958 228.2789 351 Tm (ACIFIC)Tj 8 0 0 8 255.6797 351 Tm (A)Tj 6.4 0 0 6.0958 261.4556 351 Tm (FFAIRS)Tj 8 0 0 8 285.8716 351 Tm (, )Tj 6.4 0 0 6.0958 292.1595 351 Tm (TO)Tj 8 0 0 8 305.4675 351 Tm (A)Tj 6.4 0 0 6.0958 311.2434 351 Tm (DDITIONAL)Tj 8 0 0 8 353.825 351 Tm (Q)Tj 6.4 0 0 6.0958 360.0489 351 Tm [(UESTIONS)-634.4(FOR)-634.4(THE)]TJ 8 0 0 8 435.288 351 Tm (R)Tj 6.4 0 0 6.0958 441.0639 351 Tm (ECORD)Tj 8 0 0 8 155 343 Tm (S)Tj 6.4 0 0 6.0958 160.0399 343 Tm [(UBMITTED)-412.5(BY)]TJ 8 0 0 8 211.0671 343 Tm (S)Tj 6.4 0 0 6.0958 216.107 343 Tm (ENATOR)Tj 8 0 0 8 247.0734 343 Tm (J)Tj 6.4 0 0 6.0958 251.5213 343 Tm (OSEPH)Tj 8 0 0 8 277.3933 343 Tm 0.0525 Tw (R. B)Tj 6.4 0 0 6.0958 293.813 343 Tm 0 Tw (IDEN)Tj 8 0 0 8 311.2338 343 Tm 0.0525 Tw (, J)Tj 6.4 0 0 6.0958 320.5497 343 Tm 0 Tw (R)Tj 8 0 0 8 325.1705 343 Tm (.)Tj /F21 1 Tf -21.2713 -1.625 TD 0.16 Tw (Question 1. )Tj /F18 1 Tf 5.7829 0 TD (Did Secretary Powell discuss the situation of North Korean refugees)Tj -6.7829 -1 TD 0.135 Tw (in China during his recent trip to Beijing, and will this issue be on the agenda for)Tj T* 0.3475 Tw (Vice President Cheney)Tj /F14 1 Tf 11.1758 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.3475 Tw (s planned trip to China next month? What specific rec-)Tj -11.3798 -1 TD 0.095 Tw (ommendations is State making to the Chinese to address the problem from the per-)Tj T* 0.085 Tw (spective of humanitarian concerns and China)Tj /F14 1 Tf 21.4067 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.085 Tw (s international refugee protection obli-)Tj -21.6107 -1 TD 0 Tw (gations?)Tj 1 -1.25 TD 0.1425 Tw (Answer. Substantial number of North Koreans, who have entered the PRC seek-)Tj -1 -1 TD 0.1475 Tw (ing food or work or fleeing persecution in the DPRK, live in Northeast China. The)Tj T* 0.1825 Tw (PRC considers all North Koreans in China to be economic migrants, while we be-)Tj T* 0.12 Tw (lieve there are bona fide refugees among them. Their situation in China is of great)Tj T* 0.0675 Tw (concern to this Administration, and we are troubled by reports that China continues)Tj T* 0.15 Tw (to forcibly repatriate some of these people back to the DPRK where they may face)Tj T* 0.1625 Tw (severe mistreatment upon return. As a signatory to the 1951 Convention on Refu-)Tj T* 0.09 Tw (gees and the 1967 Protocol Relating to the Status of Refugees, China has an obliga-)Tj T* 0.1575 Tw (tion to allow the UNHCR access to this population in order to assess their status.)Tj T* 0.16 Tw (We have repeatedly pressed China to live up to this obligation, to treat the North)Tj T* 0.1375 Tw (Korean population in China in a humanitarian spirit, to stop all deportations back)Tj T* 0.125 Tw (to the DPRK, and to allow North Koreans who wish to leave for the ROK to do so.)Tj 1 -1 TD 0.1325 Tw (The U.S. Government has also expanded its support for humanitarian assistance)Tj -1 -1 TD 0.295 Tw (programs run through the UNDP which target the North Korean population in)Tj T* 0.255 Tw (China, providing North Koreans with food, medicine, shelter, and other humani-)Tj T* 0.0525 Tw (tarian services.)Tj /F21 1 Tf 1 -1.5 TD 0.14 Tw (Question 2. )Tj /F18 1 Tf 5.7429 0 TD (The UN Commission on Human Rights opened this week in Geneva,)Tj -6.7429 -1 TD 0.1025 Tw (and today the EU foreign ministers left the door open to supporting a resolution on)Tj T* 0.1925 Tw (China, though the EU won)Tj /F14 1 Tf 13.1598 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1925 Tw (t take the lead. Why has the administration hesitated)Tj -13.3638 -1 TD 0.2125 Tw (to sponsor a resolution this year on China)Tj /F14 1 Tf 20.8222 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.2125 Tw (s human rights record? Does it intend)Tj -21.0262 -1 TD 0.0525 Tw (to do so, and if so, when?)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00071)-1076.9(Fmt 6633)-1076.9(Sfmt 6621)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 234 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R /F21 141 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 237 0 obj << /Length 9067 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (68)Tj 8 0 0 8 155 648 Tm 0.15 Tw (Answer. After careful consideration, the Administration decided not to sponsor a)Tj -1 -0.9875 TD 0.085 Tw (resolution on China)Tj /F14 1 Tf 9.2999 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.085 Tw (s human rights practices at the 2003 session of the Commission)Tj -9.5039 -0.9875 TD 0.2025 Tw (on Human Rights \(CHR\). The decision on a resolution followed a year of limited,)Tj T* 0.0625 Tw (but unprecedented, progress on human rights issues in 2002 and was based on what)Tj T* 0.175 Tw (we believed would best advance human rights in China with the new government)Tj T* 0.165 Tw (in Beijing. This progress included China)Tj /F14 1 Tf 19.4547 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.165 Tw (s decision to allow special representatives)Tj -19.6587 -0.9875 TD 0.0575 Tw (of the Dalai Lama to visit Beijing and Lhasa and the release of a significant number)Tj 0 -1 TD 0.2575 Tw (of political prisoners, including democracy activist Xu Wenli and Tibetans Jigme)Tj T* 0.0525 Tw (Sangpo and Ngawang Sangdrol.)Tj 1 -1 TD 0.17 Tw (Unfortunately, the progress on human rights that we saw in 2002 has not been)Tj -1 -1 TD 0.0725 Tw (sustained in 2003. In recent months, we have seen significant backsliding, including)Tj T* 0.2325 Tw (the arrests of democracy activists and those posting information on the Internet,)Tj T* 0.1325 Tw (continued denial of due process for those accused of political crimes, as well as the)Tj T* 0.055 Tw (execution of a Tibetan without due process. We are also concerned by China)Tj /F14 1 Tf 35.6805 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.055 Tw (s failure)Tj -35.8845 -1 TD 0.25 Tw (to take steps to live up to the commitments it made during the December 2002)Tj T* 0.2075 Tw (human rights dialogue, including cooperation with UN human rights mechanisms)Tj T* 0.0675 Tw (and the release of political prisoners. We have conveyed our concern and disappoint-)Tj T* 0.1575 Tw (ment over these negative developments at the highest levels in Beijing and Wash-)Tj T* 0.1625 Tw (ington. In the months ahead, we will continue to press China)Tj /F14 1 Tf 29.8316 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1625 Tw (s government to im-)Tj -30.0356 -1 TD 0.16 Tw (prove its human rights record and to implement the commitments it undertook as)Tj T* 0.0525 Tw (part of our human rights dialogue.)Tj 1 -1 TD 0.12 Tw (In consultation with like-minded governments, we will decide whether to sponsor)Tj -1 -1 TD 0.2575 Tw (a resolution on China at the 2004 session of the CHR based on China)Tj /F14 1 Tf 35.26 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.2575 Tw (s human)Tj -35.464 -1 TD 0.17 Tw (rights progress over the course of the year. We have made it clear to the Chinese)Tj T* 0.0525 Tw (government that progress will be necessary to avert a resolution.)Tj ET 0 G 0 J 0 j 0.4 w 10 M []0 d 1 i 291 446.2 m 321 446.2 l S BT 8 0 0 8 147 427 Tm 0 Tw (R)Tj 6.4 0 0 6.0958 152.7759 427 Tm [(ESPONSES)-487.5(OF)]TJ 8 0 0 8 204.0655 427 Tm (R)Tj 6.4 0 0 6.0958 209.8414 427 Tm (ANDALL)Tj 8 0 0 8 240.9357 427 Tm 0.1125 Tw (G. S)Tj 6.4 0 0 6.0958 257.5475 427 Tm 0 Tw (CHRIVER)Tj 8 0 0 8 288.5875 427 Tm 0.1125 Tw (, D)Tj 6.4 0 0 6.0958 300.1593 427 Tm 0 Tw (EPUTY)Tj 8 0 0 8 326.1593 427 Tm (A)Tj 6.4 0 0 6.0958 331.9352 427 Tm (SSISTANT)Tj 8 0 0 8 368.1304 427 Tm (S)Tj 6.4 0 0 6.0958 373.1703 427 Tm [(ECRETARY)-487.5(OF)]TJ 8 0 0 8 425.1575 427 Tm (S)Tj 6.4 0 0 6.0958 430.1974 427 Tm [(TATE)-487.5(FOR)]TJ 8 0 0 8 155 419 Tm (E)Tj 6.4 0 0 6.0958 160.7759 419 Tm (AST)Tj 8 0 0 8 177.7575 419 Tm (A)Tj 6.4 0 0 6.0958 183.5334 419 Tm [(SIAN)-634.4(AND)]TJ 8 0 0 8 222.943 419 Tm (P)Tj 6.4 0 0 6.0958 228.2789 419 Tm (ACIFIC)Tj 8 0 0 8 255.6797 419 Tm (A)Tj 6.4 0 0 6.0958 261.4556 419 Tm (FFAIRS)Tj 8 0 0 8 285.8716 419 Tm (, )Tj 6.4 0 0 6.0958 292.1595 419 Tm (TO)Tj 8 0 0 8 305.4675 419 Tm (A)Tj 6.4 0 0 6.0958 311.2434 419 Tm (DDITIONAL)Tj 8 0 0 8 353.825 419 Tm (Q)Tj 6.4 0 0 6.0958 360.0489 419 Tm [(UESTIONS)-634.4(FOR)-634.4(THE)]TJ 8 0 0 8 435.288 419 Tm (R)Tj 6.4 0 0 6.0958 441.0639 419 Tm (ECORD)Tj 8 0 0 8 155 411 Tm (S)Tj 6.4 0 0 6.0958 160.0399 411 Tm [(UBMITTED)-412.5(BY)]TJ 8 0 0 8 211.0671 411 Tm (S)Tj 6.4 0 0 6.0958 216.107 411 Tm (ENATOR)Tj 8 0 0 8 247.0734 411 Tm (R)Tj 6.4 0 0 6.0958 252.8493 411 Tm (USSELL)Tj 8 0 0 8 281.9277 411 Tm 0.0525 Tw (D. F)Tj 6.4 0 0 6.0958 298.3554 411 Tm 0 Tw (EINGOLD)Tj /F21 1 Tf 8 0 0 8 155 398.0001 Tm (Question. )Tj /F18 1 Tf 4.7889 0 TD 0.16 Tw (The title of this afternoon)Tj /F14 1 Tf 12.4928 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.16 Tw (s hearing is )Tj /F14 1 Tf 6.1289 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.16 Tw (emerging China,)Tj /F14 1 Tf 7.8639 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.16 Tw [( which seems)]TJ -33.2945 -1 TD 0.2425 Tw (to assume that China)Tj /F14 1 Tf 10.6923 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.2425 Tw (s recent impressive economic growth performance will con-)Tj -10.8963 -1 TD 0.1475 Tw (tinue. Yet China has a number of emerging problems that it could have a difficult)Tj T* 0.09 Tw (time emerging from. These include an insolvent banking system, widespread official)Tj T* 0.315 Tw (corruption, labor unrest, urban-rural and regional inequality, an HIV/AIDS epi-)Tj T* 0.0525 Tw (demic, a worsening water shortage and severe environmental degradation. How like-)Tj T* 0.1875 Tw (ly do you think any one or combination of these factors is to disrupt China)Tj /F14 1 Tf 36.8315 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1875 Tw (s eco-)Tj -37.0355 -1 TD 0.0525 Tw (nomic future?)Tj 1 -1.25 TD 0.2825 Tw (Answer. The complexity of development challenges facing China is significant.)Tj -1 -1 TD 0.1875 Tw (China is not unique in this regard, as many nations in the developing world face)Tj T* 0.1275 Tw (similar challenges. Thus far, China has had comparative success, despite these dif-)Tj T* 0.1975 Tw (ficulties, in promoting growth and raising income levels. It is difficult to quantify)Tj T* 0.105 Tw (the extent to which any one, or a combination of the problems cited in the question)Tj T* 0.19 Tw (will curtail the continued growth of China)Tj /F14 1 Tf 20.5667 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.19 Tw (s economy, although we recognize it as)Tj -20.7707 -1 TD 0.0575 Tw (a serious concern. It is clear that the Chinese government)Tj /F14 1 Tf 27.2211 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0575 Tw (s overriding goal is to pro-)Tj -27.4251 -1 TD 0.13 Tw (mote growth and that it increasingly recognizes and is taking concrete steps to ad-)Tj T* 0.0525 Tw (dress these problems, albeit in mixed fashion.)Tj 1 -1 TD 0.1075 Tw (After recording the largest economic expansion in history between the late 1970)Tj /F14 1 Tf 38.0739 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD (s)Tj -39.2779 -1 TD 0.36 Tw (and the year 2000, China still relies on a state-run banking system which is)Tj T* 0.155 Tw (weighed down by a high-level of non-performing loans. Capital markets are imma-)Tj T* 0.26 Tw (ture and the inefficient state-owned enterprises are a drag on growth. Added to)Tj T* 0.0725 Tw (these very real structural problems are problems resulting from reductions in public)Tj T* 0.07 Tw (health services, diseases like HIV/AIDS, water scarcity, labor unrest over corruption)Tj T* 0.2425 Tw (and unemployment, and other issues generate serious dissatisfaction and will no)Tj T* 0.065 Tw (doubt create frictions in China. China is working both domestically)Tj /F14 1 Tf 31.6065 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.065 Tw (putting greater)Tj -32.6065 -1 TD 0.1525 Tw (emphasis on environmental protection, and establishing social safety net measures)Tj T* 0.1175 Tw (in recent years)Tj /F14 1 Tf 7.1049 0 TD 0 Tw ()Tj /F18 1 Tf 1 0 TD 0.1175 Tw (and with many of its international partners to address these chal-)Tj -8.1049 -1 TD 0.16 Tw (lenges but they are not subject to a quick fix. For example, China engages in dia-)Tj T* 0.2 Tw (logue with international financial institutions, whose assistance strategies are de-)Tj T* 0.2625 Tw (signed to improve the institutional underpinnings, efficient functioning, and sus-)Tj T* 0.0525 Tw (tained growth of the Chinese economy.)Tj 1 -1 TD 0.2225 Tw (We discuss these problems and possible approaches to resolving them with the)Tj -1 -1 TD 0.065 Tw (Chinese, using the opportunities to promote better economic governance and encour-)Tj T* 0.1075 Tw (age political reform in China. China)Tj /F14 1 Tf 17.1872 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1075 Tw (s success at resolving these problems will have)Tj -17.3912 -1 TD 0.1375 Tw (important implications for stability in the region as a whole; China)Tj /F14 1 Tf 32.3245 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1375 Tw (s neighbors, no)Tj -32.5285 -1 TD 0.1925 Tw (less than China itself, need a China that has clean and sustainable development,)Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g 0 Tw [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00072)-1076.9(Fmt 6633)-1076.9(Sfmt 6621)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 238 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R /F21 141 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 240 0 obj << /Length 7030 >> stream BT /F18 1 Tf 10 0 0 10 300.44 666 Tm 0 g /GS1 gs 0 Tc 0 Tw (69)Tj 8 0 0 8 147 648 Tm 0.0775 Tw (a healthy population, an economy that acts as a positive engine of trade and growth)Tj 0 -1 TD 0.0525 Tw (for the region, and a productive Chinese workforce.)Tj /F21 1 Tf 1 -1.5 TD 0 Tw (Question. )Tj /F18 1 Tf 4.7889 0 TD 0.16 Tw (Labor protests, some of them quite large in scale, have been sweeping)Tj -5.7889 -1 TD 0.1525 Tw (parts of China for more than a year now. How do you rate the significance of this)Tj T* 0.1 Tw (movement, and can we use it as an opening to encourage China)Tj /F14 1 Tf 30.3996 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.1 Tw (s leaders to respect)Tj -30.6036 -1 TD 0.0525 Tw (their obligations as a member of the International Labor Organization?)Tj 1 -1.25 TD 0.0725 Tw (Answer. Labor protests over the past year in China have increased in number but)Tj -1 -1 TD 0.1975 Tw (remain mostly uncoordinated and most are relatively small scale. Public anger at)Tj T* 0.185 Tw (corruption and layoffs caused by the downsizing of the state-owned sector are the)Tj T* 0.0525 Tw (principle driving force behind recent protests.)Tj 1 -1 TD 0.145 Tw (Chinese labor law allows )Tj /F14 1 Tf 12.3608 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD (strikes,)Tj /F14 1 Tf 3.445 0 TD ()Tj /F18 1 Tf 0.408 0 TD 0.145 Tw [( but in practice there has been to date no na-)]TJ -17.6218 -1 TD 0.31 Tw (tional, coordinated movement that affects China)Tj /F14 1 Tf 23.9037 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.31 Tw (s economic health or results in)Tj -24.1077 -1 TD 0.235 Tw (major social disruptions. While Chinese leadership is increasingly concerned over)Tj T* 0.08 Tw (the number of protests, without a significant growth in scope and coordination, they)Tj T* 0.295 Tw (are not in themselves likely to provide sufficient incentives to implement inter-)Tj T* 0.1975 Tw (nationally recognized labor practices. The ILO is active in working with China to)Tj T* 0.0525 Tw (implement international labor standards that are not yet in place in China.)Tj 1 -1 TD 0.1525 Tw (The U.S. government is engaged in a number of programs to improve the condi-)Tj -1 -1 TD 0.205 Tw (tions for workers in China. We have funded, either through State Department or)Tj T* 0.21 Tw (the Department of Labor, advocacy and mediation of labor disputes, programs on)Tj T* 0.0525 Tw (labor law reform, work safety and health, mine safety, corporate social responsibility)Tj T* (and protection of women and children in the workplace.)Tj /F21 1 Tf 1 -1.5 TD 0 Tw (Question. )Tj /F18 1 Tf 4.7464 0 TD 0.1175 Tw (There has been some recent reporting in the press speculating that Hu)Tj -5.7464 -1 TD 0.2325 Tw (Jintao and Wen Jiabao, who will take over as President and Premier this week,)Tj T* 0.0725 Tw (since they have both served in some of China)Tj /F14 1 Tf 21.3777 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0725 Tw (s poorer regions, will take a somewhat)Tj /F14 1 Tf -21.5817 -1 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.0575 Tw (kinder and gentler)Tj /F14 1 Tf 8.7449 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.0575 Tw [( approach than their predecessors to managing China)]TJ /F14 1 Tf 25.2181 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0575 Tw (s economy)Tj -34.983 -1 TD 0.0825 Tw (and dealing with its myriad of social problems. Are there grounds for optimism that)Tj T* 0.0525 Tw (this will be the case?)Tj 1 -1.25 TD 0.1525 Tw (Answer. It is too early to tell exactly what policies the new Chinese leaders will)Tj -1 -1 TD 0.085 Tw (implement, but both President Hu Jintao and Premier Wen Jiabao have given some)Tj T* 0.26 Tw (early indications that they may focus more attention on improving conditions in)Tj T* 0 Tw (China)Tj /F14 1 Tf 2.815 0 TD ()Tj /F18 1 Tf 0.204 0 TD 0.0525 Tw (s rural and poorer regions.)Tj -2.019 -1 TD 0.1625 Tw (In his first press meeting after being confirmed as Premier, Wen noted that ad-)Tj -1 -1 TD 0.06 Tw (dressing rural economic stagnation and creating more jobs are among his main chal-)Tj T* 0.2375 Tw (lenges. He also confirmed that )Tj /F14 1 Tf 15.5033 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.2375 Tw (only through continued reform and opening)Tj /F14 1 Tf 21.2972 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.2375 Tw [( can)]TJ -37.6165 -1 TD 0.135 Tw (China develop. So, although no new policy details have been announced yet, we do)Tj T* 0.1375 Tw (believe that the new leaders will continue and deepen the reforms started by their)Tj T* 0 Tw (predecessors.)Tj /F21 1 Tf 1 -1.5 TD (Question. )Tj /F18 1 Tf 4.7114 0 TD 0.0825 Tw (There is a report in Monday)Tj /F14 1 Tf 13.3573 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0825 Tw (s Washington Post that Chinese journalists)Tj -19.2727 -1 TD 0.3 Tw (have been forbidden to report on a potentially serious new disease outbreak in)Tj T* 0.0725 Tw (Guangdong Province until after the meeting in Beijing of the National People)Tj /F14 1 Tf 36.56 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.0725 Tw (s Con-)Tj -36.764 -1 TD 0.16 Tw (gress. What does this imply about China)Tj /F14 1 Tf 19.7217 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.16 Tw (s ability to live up to its trade and other)Tj -19.9257 -1 TD 0.0525 Tw (commitments that require transparency and disclosure?)Tj 1 -1.25 TD 0.2 Tw (Answer. The outbreak of Sudden Acute Respiratory Syndrome \(SARS\) was first)Tj -1 -1 TD 0.2625 Tw (reported in China)Tj /F14 1 Tf 8.7469 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.2625 Tw (s Guangdong Province in late November. Starting in mid-Feb-)Tj -8.9509 -1 TD 0.08 Tw (ruary, some information on the disease was shared with World Health Organization)Tj T* 0.235 Tw (and U.S. Centers for Disease Control and Prevention \(CDC\) specialists, although)Tj T* 0.0525 Tw (they were not allowed to travel to the sites in question.)Tj 1 -1 TD 0.0825 Tw (Chinese media were reportedly not allowed to cover this outbreak at the time due)Tj -1 -1 TD 0.105 Tw (to a ban on reporting )Tj /F14 1 Tf 10.5078 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.105 Tw (bad news)Tj /F14 1 Tf 4.4209 0 TD 0 Tw ()Tj /F18 1 Tf 0.408 0 TD 0.105 Tw [( during the National People)]TJ /F14 1 Tf 13.2368 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.105 Tw (s Congress. China has)Tj -29.1856 -1 TD 0.1575 Tw (shared data on SARS at the technical level with the U.S. CDC and the WHO and)Tj T* 0.0525 Tw (continues to do so.)Tj 1 -1 TD 0.085 Tw (In recent years, Chinese authorities have banned public reporting on social issues)Tj -1 -1 TD 0.285 Tw (such as health problems during politically sensitive periods. We cannot assume,)Tj T* 0.2375 Tw (however, a linkage between these acts and China)Tj /F14 1 Tf 24.4442 0 TD 0 Tw ()Tj /F18 1 Tf 0.204 0 TD 0.2375 Tw (s sharing of information under)Tj -24.6481 -1 TD 0.0525 Tw (other agreements they have signed.)Tj /F22 1 Tf 18 0 0 18 300.96 172 Tm 0 Tw ()Tj /F5 1 Tf 6.5 0 0 6.5 60 20 Tm 1 g [(VerDate 11-MAY-2000)-1076.9(15:58 Aug 26, 2003)-1076.9(Jkt 000000)-1076.9(PO 00000)-1076.9(Frm 00073)-1076.9(Fmt 6633)-1076.9(Sfmt 6011)-1076.9(87990)-1076.9(SFORELA1)-1076.9(PsN: SFORELA1)]TJ ET endstream endobj 241 0 obj << /ProcSet [/PDF /Text ] /Font << /F5 4 0 R /F14 5 0 R /F18 16 0 R /F21 141 0 R /F22 242 0 R >> /ExtGState << /GS1 9 0 R >> >> endobj 9 0 obj << /Type /ExtGState /SA false /SM 0.02 /OP false /BG 11 0 R /UCR 12 0 R /TR /Identity >> endobj 243 0 obj << /Type /FontDescriptor /Ascent 737 /CapHeight 722 /Descent -205 /Flags 34 /FontBBox [-195 -250 1000 965] /FontName /NewCenturySchlbk-Roman /ItalicAngle 0 /StemV 92 /XHeight 464 /FontFile3 244 0 R >> endobj 244 0 obj << /Filter /FlateDecode /Length 19580 /Subtype /Type1C >> stream HtTiPSYN I["/++%[3 (=QB!lad_I ΰ@C*LEOuLCwO/z)'8c[W|VK$x"%G2"3xA MbsRy3nFHn?ޤQo/7{1kߕK #V?7H4./@&S͛lܼ9cGDŽORTvFN ;: `D|A0?RG;vC K"P Yn"BċIJ~FYNN(< )I367an{?+]i]nꅒEE/i3?[-DF",u+]_,F m@YԲW(\IXٺrzwZڢukؐap zPlЍћ7}fK[mmCopG';..fn_MȪ!=!C^ - K 3DGL|)|?kꨉ<8ߣmob|tѶXs+.0.d n^XoYB]nBwah&(-AϢ]9@_џw,l6-lۉc1aL010 ֎`U6Δ` ':W\Iw䖁AzJ3!<D䃔MiΏ;Cg ). 7|袙4H9;0=kxg A *5 Z3Fbq.Lbɔ] }J7QS5}86Da,Kr*8VWo{IȊ:&!_ޜXF]!>{׫"CGD /=xzs L({w/O\t<=%@3|Xc1@fQu<#)y2E׎9S`5 6$Y]jcM-Nf=/{_ԡpBz 79<?0 M:'M`$WdrTq "҃CX^6򛌇cט[_Х'mϟ f؅O!yBpo.IDD pv:IdRDjw${) XJBqKUs_\ծk-VNb#rT#ז5Vd54*邭"fꙦ暶RL'HiIŠ2qYuADOvP5}K5r{nQee 96 QŲrD/3jE%*\&KRER"7IJBh(ZdyF1dPWTy T(K%rŌV.VˍZNR+w6d]ɥe08z!:?ULyΕlN] Τ5z=Y+)D!4}|N):{:~7o7C KHs 4ʕ:Zz l6N$46'/RabuFHETi׶.8/3 ;OӻE;lȢѼyjw5#2 g3sj^Ԛ)%,jBKf`-7R(4daW5} $G3r"<}tRsHma4fT̗R<_.p9U")J(zLg,S~pb'dBjve>$k6MW1ccx |-KDJqd T3ㆩ@:W 򨵢܁~8>J;&v׉xF]C?3/ ggFUAc~Uo bJ &HSAaMu-/5d2)݂܅MQ^jeΩ2f},yd4PՌXMmhs~PWwZJ&$眍6+.&.9IkS'lwz8Mmav2`2;LR^#e^CO!hH,Z^vC~ z8g9z8)kPf" 5$B7-2=jk>Ψ*[W;s۲8vOxJM0/} S=8j(j{V<lC@d` q[~m uY3 jmv&%3j{LƩArK:aY\H e0 ~oLPn5a`Eq^TQZÔ, IG/QyyFU)3:eTm{7Z%A nnWwম3JZfߛ-MZJ4!$1KH0 X%ݖlK'YKeal`Hj  C $:%L>U;bix{sONtiUVZ@m!:-3u,ƒݾD̷X$ u;5] R&bD}3$(lcy=t?k)VL딪$sVM%3g̙% _&^rFg֣m+gJ ԲzE_ɜ|97д Wr:VP/.*feKub߽gN.Op!ArLm"K%,۪ZuH OJN>-9Gy9 K }F4Ep>/*3WwV.p'{-i#k,[ocXBUo=uLvQ/8s#9qOǶ*mgu2QTd2UM/oXăbVC(l*;!E+pMJN,> ;s/3}W^'g%5Vׄ@n)pXNxG+8)2P{8WV5a2S0 pן$Oُz֞$ 坜)cWI!aupy`Jf =QP,"#2-Rei:V뾻\%vt) Ay"5KDY]8" a&!me 7TM|9Xl.[=1tmN_\񻡹C3jy(É$A{bZ@TIBT2~¶p#1ڥv)FB`I܉v[2HMau=ς@ V+j%k3OMX4M>B8UP%nšx@{y$v1" I2`_}&I4V'ח9htrNCLqtC3 9K])y{?VOЗr Φ._=(K{1 Mf:QL'L-5L&cPQy*[w={rq܃;<́!j:4j0-;;>y18x"`7 )&<{;pd8)+ٺ:M,W[E?͡`O\}zhb7W`}b6=z#&f,>9}0v_j'`QbyP @2,& Zl&8L-f n@XIpVmXzEajHyVGx,§1 AEޛ<̚ VZNEkt+쭥>i%w X}:n/-6hjs¢lS29V:4ڮm]cdZȡo7G\*r`v>W\'L;kRi%*X9dPZ-:'sN]N$7H](̩ʥ'B:ؿq1h ~48>sЬ;Eóe3q=L^$))SiV0!X?d2M|Ea/]Alpg b^kG(`g8q1x d:wlMM:b'| 6-玢Ou`jE-YozYX1S==~_@TmO 4 n_K##dt*%:,-j?OhKRmсa2,D]'(<=x&?19ob\ a Q)YCVz:X;NL^.QH1Ԗiϒ3S@@*W>ϓ Kmݫ5B5c6#OX`[ܠ$E+4{v8]ꦨ3#o` Y<3%4 kp+r%WʫltvǛbM? 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