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| Speakers: | Dennis C. Blair, Task Force Chair, Former Commander in Chief of U.S. Pacific Command, and immediate past President, Institute for Defense Analyses |
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| Carla A. Hills, Former U.S. Trade Representative, and Chairwoman and CEO, Hills & Company |
April 10, 2007
Council on Foreign Relations
FEINSTEIN: Well, welcome. Welcome, all, to this Tuesday brunch. Dennis Blair and Carla Hills are here this morning to present the report of the Independent Task Force on U.S. Policy toward China, sponsored by the Council on Foreign Relations.
Dennis and Carla are co-chairs of the commission, on which 30 Americans served. I believe you will recognize many of their names; they're listed in the report. They include ex-government officials, business leaders, academic leaders, NGO leaders, among others. They're experts in Chinese history and society, trade and economics, foreign and security policy. They're Democrats, Republicans, independents, unaffiliated and other. And they were selected by the president of the Council on Foreign Relations and the co-chairs for the diversity of their views and for their expertise as well. I think we can say quite candidly that the group represents a wide spectrum of views on this important issue.
As I said, this report is sponsored by the Council on Foreign Relations, but the findings and recommendations are those of the co-chairs and their fellow members on the task force. And we believe that they've produced a very important and very clear report with a strong message about the direction U.S.-China relations ought to take.
I want to personally thank them for their staying power and commitment to this process. And you'll see -- after this hour, I think you'll agree that we chose our co-chairs very, very well.
You've got their bios. I'll just very briefly say that Carla Hills is chairwoman and chief executive officer of Hills & Company. She was the U.S. Trade Representative from 1989 to 1993. She has many other present affiliations, but the most important clearly is that she's vice chair of the Council on Foreign Relations. She also served, you may or may not know, as secretary of the Department of Housing and Urban Development, and I don't want to steal Dennis's line --
CARLA A. HILLS: (Laughs.)
FEINSTEIN: -- but earlier he reminded us that he was a White House Fellow in HUD when Carla was the secretary there.
HILLS: And the best White House Fellow I ever had. (Laughter.)
DENNIS C. BLAIR (?): (Off mike) -- brings out good qualities.
FEINSTEIN: Dennis will hold the Omar Bradley Chair of Strategic Leadership at the Army War College and Dickinson College in 2007 and 2008. He was from 2003 to 2006 president and CEO of the Institute for Defense Analysis (sic). And of course he was in the Navy in a 34-year career. He served as commander in chief of the U.S. Pacific Command and also commanded the Kitty Hawk Battle Group.
It's been a real pleasure and honor to serve with them. And what our format today will be is, Carla and Dennis will each begin with brief statements about the report and then we will open the floor to your questions.
We'll begin with Carla.
HILLS: Thank you, Lee.
Well, it's a pleasure to join with all of you to talk about the task force report. We took more than a year to talk about it, and as Lee said, we have a very diverse membership.
The task force first looked at the 35 years of opening that has gradually and -- occurred in China and recently much more rapidly. And we applauded the benefits to the Chinese people, lifting 400 million people out of poverty. And we noted the fact that there was an increasing convergence with U.S. interests as China has liberalized.
And yet we also noted that there was considerable unease in this country politically, worrying about China's growth, particularly since the 1990s; and that we hear voices in our Congress and around that this unprecedented growth imperils our domestic prosperity; that China's growing influence abroad, from Latin America to Asia, is going to challenge our future leadership and influence. The military buildup is a worrisome factor for security, and the human rights record is not an enviable one.
And at the same time, the Chinese express concern that the United States' outreach to Central Asia gives the appearance that they -- that we want to curtail China's growth, that the military deployment in the region gives evidence that we wish to encircle it, and that our export controls deprive China of necessary technologies for its continued development, and our calls for increased democracy is seeking to foment domestic upheaval and cause China problems.
We concluded, after assessing and meeting many times -- assessing all the facts, that the U.S. could, by a policy of integration, alleviate many of these concerns on both of the sides of the Pacific.
We defined "integration" as a blend of engaging China on issues of mutual concern, of which we identified many; and weaving China into the fabric of the international system, of which there are many groups -- plural-lateral and multilateral where we thought that there could be -- they could be helpful in the realm of security, trade, human rights; and that thirdly, we would balance China's increasing military power.
We noted that China faces a daunting series of challenges that range from a rapidly aging population to a clamoring middle class for more benefits to rural poor that are unhappy with their circumstance in the disparity in wealth to volatile ethnic and religious issues and the problem of enormous corruption that infects China's government. And we recognize that the Chinese leadership is trying to deal with most of these issues. We think they're falling short with respect to tackling political reform. We took note of their basic interest in their outreach to the world, that they want to maintain cooperative relationships with the United States to ensure their continued development. They want to maintain a zone of peace in the region to permit their being able to continue on the trajectory of growth, and they want to have access to a diverse source of supply for indispensable commodities, including oil.
We have clashes with China, without question. We don't like their no-strings-attached diplomacy, where they are working with nations in Africa, where we're trying to work with the international community to curtail what we regard as unseemly behavior and in some cases genocide, whereas China is giving aid and arms. We have sharp differences over the protection of intellectual property, and we think that China is -- the problem there is -- evidences more a lack of will than a lack of capacity to enforce those rights.
We found that the currency issues are more complex, that although China has aggregated more than a trillion dollars in foreign reserves, we understand their concerns about rapidly liberalizing their currency or permitting them to respond to market forces, fearing that there would then have dramatic increase in food products and depress wages in their rural sector, which is already quite depressed; that a cut in exports, which would come from an appreciated currency, would lose urban jobs, and they already have gross unemployment; and an appreciation would put pressure on a number of loans that were made for unworthy investments that have fueled China's recent growth and jeopardized their banks.
Having recognized that they have these challenges, we also recognize that our relationship with China has tremendous benefits. There are studies out that show that the average American household gains in wealth as a result of our economic relations with China. It's projected to be about a thousand dollars per average American household by the year 2010. And that China is our fastest-growing export market; it grew in last year 160 percent as opposed to world growth of exports, where the rest of the world averaged 10 percent.
We also found that we need China's cooperation on a range of issues or we won't solve them, whether it be environment or energy policy or stability in the Asia region. And so we have recommended to the president that he state clearly and more often that the United States wants to establish a closed, candid, cooperative and constructive relationship with China. We want him to describe the various benefits that flow to the American people as a result of this relationship. We want more in the administration to state and for the American people to understand that our interests are furthered by a responsible and cooperative China, a prosperous and open China and a peaceful and equitable China.
And so we have recommended that there be regular and candid talks and that -- on a range of issues, which we can get into in your questions, from the trade balance, which is out of whack, that will take both of us to address; intellectual property rules, which we think China should address; human rights issues, we think that are best addressed in international forum rather than unilateral hectoring; and the various government procurement issues, where we recognize that China prefers domestic firms over foreign or government contracts; we would like it to join the WTO Procurement Code; and there are a host of other recommendations that we think that we can encourage China to take steps that will not only further its own economic interests but also advance ours.
So with that, I'll stop and turn it over to Admiral Blair to talk about the security issues.
BLAIR: If you look at the recommendations section of the report, you find that we really grouped them into five areas: economic relations; security relations; nonproliferation; the cluster of issues -- civil society, human rights and rule of law; and then the environment. And Ambassador Hills just talked about the economic relations area and about the environmental area. Let me spend most of my time talking about the security area, but first let me quickly mention this cluster of issues on civil society, rule of law, human rights, because it's very important in the task force.
In the first section of the report, in which we survey -- in which we survey what's been going on in China, you find that we point to many developments in this area, but also a Chinese government policy in which firm controls in many areas have actually gone backwards in some years in the interest of maintaining tight control over society. We strongly recommend it as being in China's interest to develop these -- a closer approach to international norms in these areas of the independent judiciary, the human rights and so on. We think that's in their relationship in order to realize the full potential of their country.
The Chinese government, for its part, is concerned about loss of control and that this will be ultimately detrimental for their control of society and reaching their goals. And they use a combination of repression in some areas and the Internet censoring and other techniques.
We argue strongly that it's in China's interest to move in the direction of international standards in this area, but we think, as Ambassador Hills said, that this should be accomplished, from an American point of view, not by adopting a high moral tone and delivering public lectures, but by building a broad interaction of institutions to institutions to help along this way -- many nongovernment organizations, legal societies, trade unions, international organizations, world organizations. We think that this is the best way for China to develop in this area that will be beneficial to itself in the long term, and we think that the official American role should be quiet and persistent rather than public and loud. But we do stand by these principles as being what America believes in and an agenda that we should be in favor of.
Let me turn to the security area and talk about the two aspects of the diplomatic international relations aspect on the one hand and the military policies and activities on the other hand.
A key phrase that we use, we stole from Bob Scalapino, one of the eminent scholars of U.S.-Asia relations, and that is to supplement balance-of-power thinking with concert-of-power thinking in Asia. And you'll find that our recommendations in the security area, both on the diplomatic side and on the military side, favor these twin overlapping approaches.
We think that the United States needs to reemphasize its relations with countries in Asia, both allies and partners, and in other areas. That we have spent -- current events have focused a lot of national attention on the Middle East because we've been involved there in combat and that's the epicenter of the war on terrorism. We need to make another -- we need to strengthen our attention to Asia. That attention should reinforce our traditional bilateral relationships with Japan and Australia, the newly emerging ones with India and so on.
But in addition to this traditional American hub-and-spoke approach, we should overlay it with the concert of power -- concerted power, network-thinking that involves China as in the -- in our diplomacy in Asia. We call this out particularly in the case of our relationships with Japan in which we believe that the American role in building better relationships between Japan and China is very important; that the antagonism born of history and rivalries in key areas is not to the advantage of either country, nor is it to the advantage of the United States. We call that the relationship -- the developing American relationship with India that this should also include a Chinese dimension so that we are addressing common problems together, the same for Southeast Asia.
So our diplomatic prescriptions, a very much renewed attention on Asia, but in a context that involves China rather than being simple U.S. bilateral relations.
On the military issues, you'll find early in the report a fairly extensive analysis of the Chinese military build-up, which has been strong in the last dozen years or so, and you'll find the -- a treatment of it there. We also point out that there are very large obstacles that the PLA cases in terms of building up its military power, coming from basically a conscript, land-based army to a high-tech armed forces with an air, space and maritime dimension. And we point out that the rest of the countries of the -- that have power in the region, including the United States, are not standing still by any means. American power is increasing in that part of the world.
The Japanese are developing their armed forces, Republic of Korea is. And so that as you net out the advances on both sides, we do not -- certainly do not see China becoming a (fair ?) competitor of the United States in the next 15 or 20 years. We see a military balance, which is at a higher level of arms, but has about the same characteristics that we now see.
We say that the United States, again, in its approaches -- military approaches to China, in addition to carrying out the traditional military activities of military preparedness and worrying about worst-case contingencies, particularly involving Taiwan, that the United States needs to emphasize the military dialogue with China. There's an imbalance now. We talk at the ministerial level in virtually all areas of our relationship with China. In the military area, we talk at the undersecretary -- level three areas now, and we think this dialogue should be raised and intensified particularly on the key questions of nuclear weapons development on both sides, missile-to-missile defense, missile build-up. There needs to be a stronger dialogue than it is now.
On the activities side, we recommend strongly that the United States armed forces and the People's Liberation Army undertake cooperative activities on the many areas in which our military missions are the same; everything from search and rescue to -- through combating piracy, protecting the sea lines of communication, up through peacekeeping activities in which both countries are involved. And that by doing these practical activities -- which can very well be done with neither side revealing military secrets to the other; it's done all the time in international military activities -- by building with these small steps for common missions we can build habits of cooperation that can lead to cooperation across the board.
So again, in our military affairs, we -- our military recommendations, we believe that the United States needs to maintain the air, space and naval superiority in the Western Pacific, which we have exercised responsibly for 50 years, and we should add to it a cooperation with the Chinese on the many areas in which our interests run parallel.
And fundamentally, we conclude that the United States in a very powerful position. It has tremendous sources of strengths in its approach to our policy towards China and towards Asia, and we should be confident of these as we build cooperative relationships which will be in the interests of China, the United States and the region, and will lead to a better Asia for all of us.
FEINSTEIN: Well thank you both for those opening statements. We're at war with the ventilation system, so I'll ask everybody -- questioner and question -- to speak up so that everybody can hear. And the floor is now open.
Yes?
SPIEGEL: Peter Spiegel with The Los Angeles Times. Admiral Blair, can I ask you, the report talks quite a bit about your concerns about the opacity of the intentions of the Chinese military buildup, and it mentions specifically the space efforts and the most recent ASAT test. Can you talk a bit about that, particularly as a former CINC for Pacific Command, what goes through your mind when you see China attempting to use that capability, developing that capability? And particularly as a combatant commander, what concerns does that raise in your mind about what vulnerabilities we have in that regard?
BLAIR: I think that the Chinese opacity and attempts to cover up their capabilities reflect a couple of factors. Number one, in the past, Chinese military power, with the exception of defensive ground power, have been relatively modest. And Chinese officers believe that if you're weak, you have to be secretive because you want to make your potential enemies think you're stronger than you may be. So there certainly is that factor on the Chinese side.
The second thing is, when I used to go to China I would get constant lectures on the Chinese military philosopher, Sun Tzu, who believes that through deception and veiling your intentions you can win a thousand battles without firing a shot, and so on. And I would tell my Chinese counterparts, you know, you have to be careful with dealing with Americans from a Sun Tzu point of view; we might take your fake and get into trouble here.
And so I think from the Chinese point of view, they have to realize that they are becoming a much more powerful armed forces that is a factor in the region, and that with that comes responsibilities, which are to make your intentions clear and have your actions consistent with your words, and have people be able to -- have countries in the region be able to count on you. And I think China is in transition there.
The firing of an anti-satellite test at the same -- shortly after they've been telling the United States that we need to talk in Geneva on limitations on weapons in space, makes the rest of the region wonder what the hell is going on. And so China has got to get its words consistent with its actions. It has to realize that many areas of national power can be shared for common advantage rather than it being a simple zero-sum game.
So all of the things you're discussing I think are more an attitude of maturing Chinese military policy rather than something that the United States is missing. Our intelligence about what China is actually doing is pretty good, as is theirs about ours, and we can handle that.
SPIEGEL: Can I press you a bit about -- specifically with the ASAT test. Is there anything the Pentagon should be doing now in terms of contingencies, now that we know that China has that capability, particularly -- again, obviously in your old AOR, I mean is there anything that makes you particularly nervous that we have either in ISR assets or other assets in space that are essential to combatant commander in Pacific that are now vulnerable that the Pentagon should look at in terms of finding work-arounds or other contingencies to deal with that kind of capability?
BLAIR: I'd say that the ASAT test itself showed nothing new. That our knowledge of Chinese counter-space capabilities and their space vulnerabilities as they move into space are fairly well known and are being dealt with.
FEINSTEIN: Tom Omestad.
OMESTAD: Thank you. For any -- or either of you, but perhaps more for the admiral. Based on your conversations with the Chinese in preparation for this report, could you shed some light on the important question of the degree to which the Chinese are willing ultimately to pressure -- and I know they specifically want to avoid using that word -- but pressure the North Koreans to fulfill their obligations in the September '05 agreement and the February 13 agreement to really go down this path of denuclearization. It seems to me that it's critical not only specifically for the North Korea issue, but also for the different American and Chinese visions of how to run Northeast Asia. If we can't work together towards a successful conclusion on North Korea, it's hard to see that our visions of security are going to be -- are going to coincide sufficiently.
HILLS: I can start and say that the task force looked carefully at China's interests in North Korea, and they diverged from ours. This is not one of the areas where we can say, absolutely, we have a common interest, as we do in environment. In North Korea, our interests are not contradictory, but they diverge.
China is worried about instability on the peninsula. It's worried about refugees coming across if there is a problem in North Korea. They worry about nuclearization less than we do. And so their interests -- no, they don't want North Korea or the Korean Peninsula to be nuclearized. But I think they worry more about the refugees that come across and create instability. And we should be understanding of the fact that they have their concerns and we have our concerns, and see how we work together.
Actually, I'll leave it to the admiral to say whether he thinks that the Chinese have become more helpful over time rather than less. My takeaway is that they've become more helpful. And at the same time, I think, you know, if you and I sit down and we look at an issue somewhat differently, I should listen very carefully to what you say and try to figure out, is there a way I can meet your worries and advance my concerns? And we think there has been too little of that in the past.
BLAIR: I think that if you look at our report, we say that the way forward is more Asian sticks and more American carrots, is the way forward on Korea. The emphasis has been pretty much the reverse. And I would say that the recent signs -- I would agree with Ambassador Hills that they are encouraging.
China is becoming increasingly exasperated with North Korea. They want North Korea to get rid of its nuclear weapons and not to cause trouble in that region of the world right on China's border. But I would also agree that the long-term visions for the Korean Peninsula of China and the United States have not really been -- don't really overlap totally, that would give you the grounds for a completely unified policy. So I think we need to keep working on it, but I'd say the recent signs are encouraging.
SANGER: Thanks.
You mentioned in your presentation that the U.S. has obviously been focused much more on counterterrorism, on the Middle East and so forth, and that it was time to focus more on Asia. Many times that many of us at this table have asked that question of the administration, they have always said, no, no, clearly we have not. You know, there was Bob Zoellick's responsible stakeholder moves. They've talked about what Treasury has done and so forth.
And so I was wondering, just as you went through your study, what you determined on that, and whether or not again the Chinese share any of our objectives in war on terror, counterterrorism issues. Or do you think that they have sort of managed to say, that's fine; you go off and deal with that for the next 15 years while we pursue our agenda?
BLAIR: I would say that it is simply a matter of the immediate important driving out the longer-term important -- simply from a crisis point of view, I would agree with those in the administration who told you that they recognize the importance of Asia and the importance in which the future of Asia will affect the United States. And the policy documents have been written, the ideas are out there. But just inevitably, if you're involved in military conflicts, in war on terrorism and other parts of the world, it tends to get senior decision-maker attention pulled away onto that rather than being able to work on other areas.
So -- (chuckles) -- those of you who have been in government know that these calls by outside groups that say pay attention to the important and the long term are sort of one more rock in your rucksack, which we all get. But we do think that Asia merits steady, long-term emphasis, and that we could all improve in that regard.
I don't think that China simply regards the war on terrorism as something that the United States can go off and do. They are becoming increasingly -- increasingly recognize that the Middle East is an important region to them as it is to the United States, that the intertwined issues in that part of the world, from terrorism to Iran to the other issues are going to be important to China as it becomes interlocked in the global economy and comes out there. So I don't think they are just stepping aside and saying we'll meet you in 15 years back in Asia. They are coming to be involved with us on those issues also.
HILLS: I agree with the admiral. I was -- he made mention that there is an inference that we disapprove of the administration's efforts. We applaud and cite Bob Zoellick's strategic dialogue. He went to China or had an exchange I believe three times before his departure. We very much applaud Secretary of Treasury Paulson's strategic economic dialogue, and we just think that it should be intensified.
We did cite that there have been uneven statements, even conflicting statements from different parts of the administration over a period of time. We would -- that's why we recommend that the president speak loudly and clearly -- both for the benefit of Americans but also for the benefit of Chinese -- how important the relationship is, that he wants to establish a close, collaborative relationship to deal with a broad range of issues. And we think that there are overlapping interests on issues, including terrorism. And we also believe that if China is not involved, we will be less successful in addressing the issue. You name any issue, and if we -- with a country of that size, that population -- if they're pulling the oars in a different direction, we're going to be less successful.
SANGER: Do you think that the reason that he hasn't made those statements yet is that is runs afoul of what some in the administration came to power in 2000, in 2001 with, which was this aversion to the Clinton-era reference to a strategic partner?
HILLS: Well, if you look back over administrations for a period of time that predates the current, you'd have to say that most have had a rocky couple of years in getting used to dealing with China. And so what we want is that this and any succeeding administration think long and hard from day one about working with China, speaking often to China and having a regular dialogue. We call it integration.
We think that we can shape China's interests, in conjunction with the last question, to be more akin to ours, even when they're not an exact carbon copy, by talking about what we each can do. And we have seen that. We would like to integrate them into global regimes, whether they be multilateral or plural-lateral. The G-8 -- we recommend that they be added to the G-8. And if the president offers these sorts of associations and at the same time says we want to be friends and have a close, collaborative, cooperative relationship to deal with these issues, we think that it'll go a long way in shaping behavior.
FEINSTEIN: Yes, sir.
LI: Well, I guess probably two things are very important here, related with the mutual trust. Of course, we cannot have totally mutual trust.
The first thing is, we are talking cooperation first and hedging probably second. But from the Chinese side, they tend to think that United States policies -- that your policy is hedging first and cooperation second. They say their treaty and Japanese treaty -- security treaty recently -- they say they advocate of U.S., India, Japan talking together. And of course, from the Chinese side, they have Russia, India and China summit. And so here it's a talking and reality gap.
Another thing is -- actually, I recently came back from Beijing, and people are starting worrying about `08. Many things are happening in `08. In the past two decades also United States has two new presidents, each time relations between the two sides experienced a very breakdown. And a new president is coming. China is worrying -- worries in the waiting.
And in 2008, China has the Olympics. Taiwan is going to have a new president, and everything -- and the United States is going to have a new president. So everything is concentrating on 2008, and -- (inaudible) -- in China they are starting to worry.
So here my question is: What kind of mechanisms the two sides could build to prevent this kind of mutual distrust leading to whether disaster or a big breakdown, deterioration of the relations between the two countries?
BLAIR: Thanks. I think that's the first time somebody's mentioned the Olympics today, which was surprising.
It's interesting. It was -- I had the job of commander in chief Pacific when this administration came in, and one thing that was very important was that within the -- I think the first six months of the new administration President Bush had met with President Jiang three times. There was the APEC Summit, which happened to be scheduled about that time, then there was a visit to Crawford, and there was one more multilateral group, and that really set, I think, a very good tone for the relationship. Then the EP-3 crisis (ginned ?) things up, but that certainly wasn't something that was planned by either side. So this reinforces in my mind the importance of authoritative, high-level dialogue in these relationships.
I agree with you that those who would tend to suspect China's motives from the American side or America's motives, the Chinese side, can go around both countries and put together articles, statements, actions which can give a very sinister interpretation to the other side. In my mind, the way to combat that is to have the leaders on both sides say very clearly that although they are both taking prudent actions for -- or action -- prudent steps for actions that the other country might take, their primary emphasis is on constructive, integrated policy which has the following goals. And if that is -- if that message is consistently made from the top and is consistently followed down through the bureaucracy, then to my mind that's the best way to protect the relationships against the buffeting that will come from any society in terms of those who see things a different way.
HILLS: I agree. I think that the report uses the phrase "habits of cooperation." When you have mutual distrust, which is what you're describing, the way to try to dissipate that distrust is to meet often. We won't agree on every issue, but we will be surprised by how many issues we have a common interest. And once you have success that comes out of solving common interests, you feel more comfortable about moving outside that circle to deal with differences. And I think that we need to try to have some successes that are -- that emanate from our common interests, which will give us the muscle to deal with differences. And at the same time, the United States and China will continue to protect their vital interests that -- we do that with every country, and we will do it with China as China will do it with us. We should talk candidly about that.
FEINSTEIN: Danny.
SAGALYN: Admiral Blair, you said that the Chinese ASAT test shows nothing new about their space capabilities or vulnerabilities. What did you mean about their vulnerabilities?
BLAIR: The Chinese have put up roughly half a dozen satellite military application photo reconnaissance radar, and they're working on a navigation system of their own. They will find if they move into space for their purposes, they will have major vulnerabilities, do counter-space procedures -- just counter-space measures. So, as they go into the -- go into space, they not only have opportunities, but they open up big vulnerabilities for their own operations.
And I think the best way to -- the best way for the United States and China is to undertake some discussions on these aspects of space use, because there are many things that are in the common interest: debris that's caused by activities; mutual interference. All of these are the sorts of sort of nuts and bolts understanding of what's possible and what's probable in space that need to be worked out.
So I think that we can't just look at this Chinese ASAT test, which is, you know, something the United States did, what, 35 years ago, something like that. We have to look at the whole space dimension, military and civil, in terms of what it means in the United States and China and evaluate it that way.
FEINSTEIN: I've got several people on my list. Paul is next, Ken, and others.
Paul.
ECKERT: For Ambassador Hills. Both the report and your brief comments this morning talked about trade and especially IPR, making it especially timely given the actions taken by the administration. I'm wondering how you read China's initial response to the WTO action, where it said basically this will damage trade relations.
My understanding of the benefits of WTO is it's a neutral court, it's a referee that takes -- should take some of the heat out of bilateral disputes. So does sort of hawkish kind of reaction, is that just sort of for domestic consumption, or is it something that calls into question how they view the WTO?
HILLS: It doesn't surprise me that they're disappointed that the case was brought. But the two cases are actually linked. The counterfeiting case permits China to bring in -- you know, to have an extra prod in producing products. So this is a very high issue for us. And I think this does take it out of the bilateral shouting match and into a multilateral organization. I'm confident that this is a case that was properly brought, and I hope that it has an effect. I think that it -- here's an area where we definitely have a difference. But as the report points out, we think that the failure to enforce intellectual property laws in China is more a lack of will than a lack of capacity. Even though the mountains are high and the emperor is far away, we think that if this dealt with a primary concern of the central government, you would have a different approach. And if we could sit and say, look, this is an issue that we really care about. Now, when we look at the currency issue, we can factor-in their interests, their concerns, and talk about how does that affect us. And we can agree that there's been a great exaggeration there. But the IPR, there's no exaggeration; it has to be fixed.
FEINSTEIN: Ken.
FIREMAN: Thanks. I'd like to return to the North Korea issue for a moment. Is it your view that the Chinese share, genuinely share U.S. concerns about the consequences of North Korea's nuclear program as a strategic concern, as the administration has articulated? Or is it your view that they actually care very little about the issue itself and are worried about it only as a -- indirectly because it irritates the United States and, therefore, roils the waters in Asia?
BLAIR: I'd say that perhaps your second characterization was true maybe three or four years ago. However, I would say that now the Chinese concern is rising. I think they felt, three or four years ago, that the United States was overestimating North Korea's abilities; that in any case, the chances of North Korea using a nuclear weapon against China were just absolutely remote, and the proliferation of North Korean activities was not a real threat either. Since the exposure of the A.Q. Khan network, since North Korea exploded a nuclear device of some sort, I think China's concern has come up. I don't think it's on the same level of criticality that that of the United States is. We are -- of course, you know, have forces in the Republic of Korea that are lined up against North Korea. We are the primary target of international terrorism. And if international terrorists had WMD, the primary target would be Americans and the results would be horrific. So I think China's concern is increasing, and I think that's a good sign in terms of the convergence of our interests.
FIREMAN: One quick follow-up. Do you think the Chinese government has made a strategic decision that this is an issue they have to deal with and have to commit fully to resolve?
BLAIR: It's hard to guess what -- you know, no government commits to anything fully. (Laughter.) You sort of -- it's always "compared to what." But I think it's gone up on their list of priorities. And I agree with Ambassador Hills that there are still remaining differences in our vision of what Korea will be. Will there be big U.S. forces stationed there, which China doesn't regard very favorably? Will there not be? Will a unified Korea have a nuclear capability or will it not?
So I think there are still areas of -- there are areas that need to be worked out, but nonetheless I'm very sure that the level of Chinese concern for China's purposes -- not just because the United States has been (excited ?) about it -- has gone up substantially in recent years.
HILLS: I also think that we have similar interests, but one, two, three and four for each of us are in a different order. And that comes through in the task force report. It isn't that China wants North Korea to be nuclear, it's just it worries more about instability. We worry less about instability and we worry very much about North Korea becoming nuclear and the fact that it might export nuclear weapons to terrorist groups. China doesn't think that that export will occur. It gives lesser weight to it. So if you line up the half a dozen interests that China has, they're not different from, they're just in a different order.
FEINSTEIN: George is next.
GEDDA: Admiral, China has a lot of neighbors. Do you get the sense that China's military buildup, coupled with its opaqueness, is making these countries nervous? Do they want a powerful economic, sort of superpower, so to speak, with lots of military prowess at its disposal? And if so, does this translate into considerable support for the American military presence in the region? There's not all that many. It's something like 100,000, I think. But do they welcome that presence because of concern about what China may be up to?
BLAIR: If you talk to the leaders of the countries in Asia, their overwhelming desire is that the United States and China get along so that they don't have to choose sides and have to rely on American support against Chinese pressure or against -- Chinese support against American pressure. They want there to be a relative balance there so that they can pursue their own interests dealing with both.
Traditionally there's been no question that the countries in the region have benefited from American military dominance, and those countries actually include China. It's provided the backdrop, after bloody wars of the last century, that those countries could develop economically, starting with Japan, Korea and others, going on through the more recent economic development of China itself and many countries in Southeast Asia.
So the countries of the region are very -- they thought the overall military situation, which was underwritten by American predominance, was in their interest. So they want any change in that to be gradual, to be reinforcing of a military balance out there. They certainly don't want to be coerced by China any more than they want to be coerced by any other country, so they are looking at it carefully. And most of them, I think, believe they'll see a way that the Chinese increased military and economic and diplomatic power can be to their advantage if it's handled right. I think they do fear the consequences if it's handled wrong and if the United States and China develop an antagonistic military rivalry in the region.
FEINSTEIN: Yes, sir.
PONNUDARAI: The report stresses about dialogue and China being a responsible stakeholder, and quoting what Mr. Zoellick has said. But a question is, how do you strike a happy balance between talk and action, you know? You have the USTR say here today that they were fed up with talking with China on IPR. And the action on IPR basically culminated a series of economic actions, CVD, countervailing duties, and then you have other things that have been brought to the WTO. So basically, how do you really, you know -- say you have a talk with China about it, and then you have congressional pressure, a Democratically controlled Congress pressuring the administration, which seems to have basically only in recent times taken economic actions against China.
HILLS: There are lots of ways to shape economic interests without taking action against. I agree on the intellectual property, it was time to bring a case. But rather than hectoring, we brought it into a multilateral forum, and that is always preferable. When we have a complaint about human rights, we should bring it to the multilateral forum and broaden it.
The more that China is brought onto the international stage and wants the respect from the international community, the less it seems hostile from one party and more a international norm which a responsible stakeholder, to use Bob Zoellick's words, would want to embrace. But you have to talk and have a game plan before you move forward. So many of our interests are overlapping and even identical. And we can talk about, what are the next steps?
For example, on energy, we could work with China; we should work with China. It is a huge energy consumer, and yet it uses nine times more energy for a dollar of output than does Japan. We could help and work with a combined environmental approach, because where is the most polluted land on the planet? China. 16 of its 20 top cities that are polluted today are in China. Its rivers are polluted. 75 percent of its groundwater is contaminated. It has a shortage of water. Its plants spew out mercury and all sorts of things where if we sold technology to them or worked with them, it would benefit our interests, their interests.
And so that we have a lot of potential for how we can work together. Now that's the best case. Worst case: If we don't work together, we're not going to solve the problems, not in the environment, not with energy, not with most of these issues.
So we have a combination of multilateral groups that we can take. We've balanced where we have vital interests, and we try to collaborate where we have common interests. If we build these habits of collaboration, we'll probably be able to get more results, more action as you put it and less talk, in the areas where our interests are not perfectly overlapping.
FEINSTEIN: Richard Finney.
FINNEY: Yeah, yesterday I was reading some of the dissent to the report, and I was struck by this one by Ambassador Lord. He says, "I believe that the nature of China's political system will importantly shape its international behavior in future decades." And then he goes on to say, "The more open, humane and democratic China becomes, the more likely it will be cooperative rather than disruptive on the world stage."
I wonder if I could get both of your views on that, especially as that would apply to the building of habits of cooperation, as you expressed it.
HILLS: We do not applaud the form of government that there is in China, but we didn't think in the near term that the Communist party was going to step down. It relies for its legitimacy on economic growth, and we think in the near term, we need to work with China. And in fact the forces that are unleashed when we do work with it have been liberalizing.
If you look over the last 35 years, China is nothing like it was in 1975, in 1980, even 1990. And that has come about by reason of international businesses bringing their values and their different perspectives to China, by NGOs. There are now about 230,000 NGOs active in China -- unheard of a decade ago -- that the openness and the internet have brought ideas to China that have really been quite startling. And the middle class has developed in China.
So it is clamoring for change. And rather than throw up our hands and say, "You're not sufficiently like us, so we don't want to talk," we do want to talk. Our task force recommendation is that we talk now. We hope that there will be a continual -- they'll stay on a trajectory for greater liberalization. And we think that if they can feel secure, and their middle class grows, we're likely -- not certainly, but likely -- to see the same kind of change that we saw in other East Asian countries, like Japan and South Korea.
BLAIR: As you look across the countries in Asia that we have relations with, you find varying degrees of different types of government, different expressions of rule of law, different development of civil society and so on. And I think that the United States can deal with countries that -- in cooperative ways that have different forms of government and different expressions of those basic aspirations with their government. I think that in general, the more that we see countries tending in that direction, the better we can move together in the future with. And I think that's what Ambassador Lord is saying.
FEINSTEIN: Okay. Thanks.
Last question for Michelle.
KELEMAN: I just want to follow up on this talk versus action issue. I mean, on Darfur, you've had everyone from Andrew Natsios to George Clooney going to Beijing and urging them to do something on this. Does any of that make a difference? Have you seen China changing its stand in the Security Council on its stand on Iran, on the many issues that the U.S. needs Chinese cooperation on?
HILLS: Iran may be a test case, and we point to that in the report. There are areas where we do think that China has moderated its behavior. Maybe it's because it -- one of its key interests is to maintain a positive relationship with the United States. Another may be that it earns the respect of the international community.
China also wants to secure supplies of commodities, particularly oil, and it sees Africa as a place where it can do that. So we're colliding with that interest. Whether China will over time moderate or take into consideration our view, we think it is more likely if we are discussing energy issues and raising ways of how the world is going to deal with a supply of energy to the advantage of the international community.
No, China is not a member of the International Energy Administration. It's not a member of the G-8. And we find that when it becomes a member of these international groups, it does affect their behavior.
I cannot give you a certainty as to one issue. We have seen moderation on other issues. And it's -- as we say, China is not the same place it was during the time of Mao, nor in the time of even Deng Xiaoping, or even in the time of Jiang Zemin. It has changed. And we want to encourage positive change.
BLAIR: I think that one of the most interesting aspects of the speech by Secretary Zoellick on the responsible stakeholder concept was the debate that that sparked within China. What did those phrases mean?
What Secretary Zoellick meant was that China's become so big in the world that it has to assume some of the responsibility for keeping the world system going, rather than simply pulling pieces from it that are in its own national and primarily short-term interests.
And what -- when I -- as I read the debate within China on what does that mean, I saw a recognition of that. And I think that is the overall trajectory of China.
Just one little indicator that is in the world that I live in, which is the Chinese participation in international peacekeeping activities around the world. When I was CINCPAC five, six years ago, the numbers used to be tiny -- six, two, three here, there. The numbers have ramped up into the hundreds of Chinese light-blue helmets which are now around the world. I take that as a favorable sign of them assuming some of their responsibilities for keeping a system going on which we all depend.
FEINSTEIN: I want to thank you all for a very good hour-plus, and also thank the ambassador and the admiral for an excellent discussion.
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