China Senate Floor Statement by

Mr. President, I rise to address a national security issue of the highest importance, one that demands our utmost attention. I wish to alert this body and the American people to China's spreading global influence and the imminent threat this poses to our national security. Our past concerns have come to fruition; on all levels-economically, militarily, and ideologically-we are on a collision course. As I will detail, China has become a progressive danger that we can no longer afford to overlook.

But this is not new. Over the years I have made numerous remarks on the Senate floor in regards to our national security and China. During the Clinton administration, there were growing concerns about Chinese espionage, which were later confirmed in the Cox report. The report showed that reality surpassed our worst fears: China had been stealing U.S. nuclear secrets. The W-88 warhead was the crown jewel of our nuclear program, which allowed for up to ten nuclear warheads to be attached to the same missile. In 1995, we discovered that China had stolen this technology. Under President Clinton, U.S. companies such as Loral Space and Communications and Hughes Electronics were given the green light to improve the precision and reliability of China's satellites and nuclear missiles, undoing 50 years of technology-export restrictions. China also gained the capability of accurately reaching the continental U.S. with nuclear missiles and targeted between 13 and 18 US cities. All of this occurred while President Clinton proclaimed, "not one missile is pointed at American children." This body responded by investigating what extent we were lied to and our security was compromised, but ultimately nothing changed.

From those events, the Chinese government learned that it could rely on our acquiescence, and charged ahead. China transferred prohibited weapons technology to North Korea, Pakistan, Libya, Iran, Iraq, Syria and other countries. China threatened to absorb Taiwan and intimidated our regional treaty allies, South Korea and Japan.

That was five years ago. Since then we have had a new administration and gone through such major events as 9/11, the current conflict in Iraq, and an ideological shift in the way we fight war. I wish that I could say that with the new administration, China's conduct has changed. President Bush has taken some steps in the right direction, notably rejuvenating the missile defense system. However, I am afraid that transpiring events tell a different story.

Since 2000, the U.S.-China Security Economic Review Commission has been holding hearings and issuing annual reports to evaluate "the national security implications of the bilateral trade and economic relationship between the United States and the People's Republic of China." Congress established the Commission to act as the bipartisan authority on how our relationship with China affects our economy, industrial base, China's military and weapons proliferation, and our influence in Asia. I fear their reports have gone largely unnoticed. In the most recent report, dated June 2004, the Commission makes this alarming opening statement:

Based on our analyses to date, as documented in detail in our Report, the Commission believes that a number of the current trends in U.S.-China relations have negative implications for our long-term economic and national security interests, and therefore that U.S. policies in these areas are in need of urgent attention and course corrections.

As the report and recent events show, China has continued on an alarming course in conflict with our national security.

Last January, the Bush administration imposed sanctions against eight large Chinese companies for aiding Iran's missile program and transferring technology to other problematic countries. There was no public announcement and the only reason we know about it is that some Sino-American websites came across this information on page 133 in The Federal Register. Last December, four companies were sanctioned for the same reason. Many other examples can be cited from 2004 with some of these companies being repeatedly penalized for more than a decade. The fact is that China has repeatedly vowed to curb its weapons sales and gone back on its promises. This has been going on for some time. I spoke of this on the Senate floor on June 23, 1999. Beijing has made nonproliferation commitments in 1992, 1994, 1998, 2000, and most recently in 2002. The U.S. State department admits that these guarantees came about "only under the imminent threat, or in response to the actual imposition, of sanctions." The Commission report comments on China's continued assistance to countries such as Libya, Pakistan, Iran, and North Korea. This assistance has continued despite nonproliferation assurances, as the report outlines,

China's assistance to weapons of mass destruction-related programs in countries of concern continues, despite repeated promises to end such activities and the repeated imposition of U.S. sanctions. The Chinese government and Chinese enterprises have assisted such states to develop their nuclear infrastructure, chemical weapons capabilities, and/or ballistic missile systems notwithstanding a consistent history of denials. Libya's decision to open up its WMD programs, and the revelations by Pakistan that A.Q. Khan supplied uranium enrichment technology to Libya, Iran, and North Korea, provides new insight into China's legacy of proliferation. China's continued failure to adequately curb its proliferation practices poses significant national security concerns to the United States.
Again, this is not new. As I stated in my floor speech on March 15, 1999, China has been stealing our nuclear secrets. But as the Commission points out, China is now sharing its nuclear knowledge-some of it quite possibly ours-with other countries. For years, China has transferred ballistic and cruise missile technology to countries with troubling proliferation records. But these transfers have evolved to become even more problematic, as the Commission details:

… Chinese transfers have evolved from sales of complete missile systems, to exports of largely dual-use nuclear, chemical, and missile components and technologies … Recent activities ''have aggravated trends that result in ambiguous technical aid, more indigenous capabilities, longer range missiles, and secondary proliferation.'' Continuing intelligence reports indicate that Chinese cooperation with Pakistan and Iran remains an integral element of China's foreign policy… Beijing's failure to control such transfers gives the appearance that these are allowed in accordance with an unstated national policy. China has generally tried to avoid making fundamental changes in its transfer policies by offering the United States carefully worded commitments or exploiting differences between agreements.

As further evidence of this disturbing proliferation, the CIA reported to Congress in mid-2003, that ''firms in China provided dual-use missile-related items, raw materials, and/or assistance to … countries of proliferation concern such as Iran, Libya, and North Korea.''

Virtually every country we worry about possesses or has access to some form of chemical, biological or nuclear weapon, but most lack effective delivery systems. China is a proven violator of non-proliferation treaties that keep such countries from gaining access to delivery system technology. According to State Department testimony, China has a "serial proliferation problem," and while the official line is to crack down on weapons trade, "reality has been quite different." In her January Senate confirmation hearings, Secretary of State Condoleezza Rice listed six countries as "outposts of tyranny." China has strong ties to four of these: Cuba, Burma, North Korea and Iran.

Recently Iran has been in the headlines because of its support for terrorism, threatening posture and nuclear program. China supplying them with weapons technology is similar to the role the Soviet Union played in the Cuban missile crisis. It's probably worse, because at least in Cuba, the USSR maintained control of the weapons and technology. On the other hand, China is fully willing to proliferate regardless of the consequences. Some say that the real issue is with private companies and Beijing doesn't have knowledge of what is going on. With the delicate situation in North Korea, the Bush administration is holding that line. But the fact remains that at the very least, the Chinese government is negligent in deterring such proliferation and apparently does not feel any pressure to do so. However, as some of these companies are closely linked with the Chinese military, it is clear the government is not so ignorant as we may like to imagine. This continued proliferation in the face of intense pressure to stop makes me ask the question: What is China getting in return? China seems to proliferate with countries that have been terrorist sponsors such as Iran, Iraq and Libya. These countries offer China something they desperately need: oil.

Energy is a major problem facing China, which ranks No. 2 in the world for consumption. Since my floor speeches in 1999, its oil imports have doubled, and surged upwards of 57 percent in the last year alone. As the chart here shows [Chart A], China's oil production has topped out while its demand continues to rise at an alarming pace. Some analysts project China's oil needs will double again by 2010 and it will use up its reserves within fourteen years. China's alarming need for oil has caused it to look around the world for new sources, sources that are often problematic states with security concerns for the United States.

The Commission makes an unpopular but straightforward observation:

This need for energy security may help explain Beijing's history of assistance to terrorist-sponsoring states, with various forms of WMD-related items and technical assistance, even in the face of U.S. sanctions … But, this pursuit of oil diplomacy may support objectives beyond just energy supply. Beijing's bilateral arrangements with oil-rich Middle Eastern states also helped create diplomatic and strategic alliances with countries that were hostile to the United States. For example, with U.S. interests precluded from entering Iran, China may hope to achieve a long-term competitive advantage relative to the United States. Over time, Beijing's relationship-building may counter U.S. power and enhance Beijing's ability to influence political and military outcomes. One of Beijing's stated goals is to reduce what it considers U.S. superpower dominance in favor of a multipolar global power structure in which China attains superpower status on par with the United States.

In Venezuela, anti-American President Hugo Chavez announced a $3 billion trade strategy with China, including provisions for oil and gas. Army General Bantz Craddock, who heads the United States Southern Command, stated that China is increasing its influence in South America, filling a vacuum left by the U.S. In his March 9th House testimony, General Craddock called China's progressing interest in the region ''an emerging dynamic that could not be ignored."

I have been traveling to Africa for many years. The Chinese are everywhere. In Benin, I saw a conference center being constructed, and in Congo I saw a large sports stadium, both donated by the Chinese. China has been expanding its influence throughout Africa with projects like this. One saying I heard was, "The U.S. tells you what you need, but China gives you what you want." Has China suddenly become compassionate and generous? I think the fact these countries have large oil and mineral deposits paints the real picture.

In the Middle East, Beijing recently signed a $70 billion oil/gas deal with Iran, from whom it receives 14 percent of its oil imports. Naturally, China has come out firmly against the U.N. Security Council holding Iran economically accountable for its nuclear program. Likewise, in Sudan, China seeks to defuse or delay any U.N. sanctions against Khartoum. It hardly seems coincidence that 7 percent of its oil imports come from that conflict-stricken country, a supply that China seems ready to protect at all costs.

Not only is China willing to use the U.N. to safeguard its energy sources, but also its regional influence. But this is not new, in 2003, the United States spearheaded the Proliferation Security Initiative as a multilateral WMD interdiction strategy. The initiative has proven effective, particularly in the interception of centrifuge parts bound for Libya. The Bush administration believes this success was a major reason Libya peacefully ended its nuclear program. Major European and Asian countries have joined and China was invited to participate. It refused, citing dubious concerns about the delicate situation in North Korea. To quote the Commission, "China appears to be working through the United Nations to not only undermine the initiative but also to render it globally ineffective. This has been accomplished by getting the United States to drop a provision on the interdiction of foreign vessels carrying banned weapons on the high seas."

I think it is worth repeating the Commission's statement here, "One of Beijing's stated goals is to reduce what it considers U.S. superpower dominance in favor of a multipolar global power structure in which China attains superpower status on par with the United States."

The tense situation in Taiwan continues to simmer. A few days ago the Chinese Communist Party formalized a new stance on Taiwan. The following was approved by the National Peoples Congress: "If possibilities for a peaceful reunification should be completely exhausted, the state shall employ nonpeaceful means and other necessary measures to protect China's sovereignty and territorial integrity." This represents a change from earlier ambiguous language that would have allowed China flexibility to consider other options should conflict arise. As it is, China has taken away its own alternatives.

The Chinese are solidifying and increasing their presence in East Asia. When not using overt political influence, they are expanding economically. As political economist Francis Fukuyama observed, "The Chinese [have been] gearing up a series of multilateral initiatives of their own, including Asean Plus One, Asean Plus Three, a China-Asean Free Trade Area, a Northeast Asian Free Trade Area, and so on in seemingly endless profusion. The purpose of these proposals, it seems fairly clear in retrospect, was to allay fears of China's growing economic power by offering selective trade concessions to various Chinese neighbors. The Chinese greased the path to the East Asian Summit last December by offering its Asean neighbors a free trade agreement that would open access to much of the Chinese market by 2010. Asean Plus Three appears to be a weak and innocuous organization. But the Chinese know what they are doing: Over the long run, they want to organize East Asia in a way that puts them in the center of regional politics."

China is also expanding militarily. Their "string of pearls" strategy includes a listening post in Pakistan, billions of dollars of military aid to Burma, military training and equipment to Cambodia, increased naval activities in the South China Sea, and expanded cooperation with Thailand and Bangladesh. The purpose of this strategy is to create a military corridor from the Middle East of this strategy is to create a military corridor from the Middle East to mainland China that would be impervious to any potential U.S. oil embargo. As a recent internal Pentagon report outlines, "China…is not looking only to build a blue-water navy to control the sea lanes, but also to develop undersea mines and missile capabilities to deter the potential disruption of its energy supplies from potential threats, including the U.S. Navy, especially in the case of a conflict with Taiwan." The weapons China is investing in include cruise missiles, submarines, long-range target acquisition systems- specifically, cutting-edge satellites and unmanned aerial vehicles- and advanced SU-30 fighter aircraft which are superior in many ways to our F-15 and F-16 fighters.

New intelligence reports state that China has accelerated its amphibious assault ship production. It plans to build 23 new boats capable of ferrying tanks and troops across the Taiwan Strait. This development is potentially destabilizing and has alarming implications.

Of further concern is China's investment in nuclear submarines. It recently launched the "Type 094" class, the first capable of striking the continental US with nuclear missiles from its home waters. China has also been developing the JL-2 submarine-launched ballistic missile, expected to have a range of 4,600 miles. These represent a departure from traditional Chinese deterrent strategies: they have little tactical purpose-they will not be used in a regional battle. Rather, their importance is strategic-they can target our homes.

China has modernized its military at an unprecedented rate. According to testimony from Dr. Evan Medeiros of the RAND Corporation, between 1990 and 2002, China's official defense budget for weapons procurement grew approximately one thousand percent. Nearly every year since 1997 has seen a defense budget increase of 13 percent, an increase far above China's GDP growth average of 8.2 percent for those same years. (In comparison, President Bush's FY2005 budget increases defense spending 4.8 percent. Keep in mind we are currently engaged in two major operations and numerous smaller ones as part of the global war on terror.) Yet this is just China's officially announced defense budget. The Commission and the Defense Department assess that "the PLA defense budget is grossly underreported and that official figures exclude much of China's military modernization program." The Commission estimates that the actual defense budget is two to three times the stated amount.

In the midst of this ominous military expansion, the European Union is planning on lifting its arms embargo against China. The embargo was put in place after the 1989 Tiananmen Square massacre to reflect China's appalling human rights record. The EU claims that the embargo is no longer effective, but ignores the obvious-why lift the embargo without replacing it with a better one? Their solution, an informal "code of conduct", allows for no comprehensive enforcement. Without uniform and enforceable standards, competing European firms will be left to themselves to determine acceptable arms sales. Even with the embargo, Europe's sales to China recently doubled this past year to half a billion dollars. Underneath all the semantics, the E.U. appears to have more to gain in Euros than by maintaining whatever principled respect for human rights it once had. Any weapons technology China buys will only add to its leverage against Taiwan and our other Asian allies. If the Embargo is lifted, Europe and Russia will be in competition to sell China increasingly higher technologies. We can also expect E.U. technology to proliferate beyond China's borders, to states that would gladly use it against the U.S. The E.U. does not consider this a strategic threat. The U.S.-China Commission report observes, however:

Access to more advanced systems and integrating technologies from Europe would have a much more dramatic impact on overall Chinese capabilities today than say five or ten years ago. For fourteen years China has been unable to acquire systems from the West. Analysts believe a resumption of EU arms sales to China would dramatically enhance China's military capability. If the EU arms embargo against China is lifted, the U.S. military could be placed in a situation where it is defending itself against arms sold to the PLA by NATO allies.

Imagine, we share military technology with our European allies and then find our security threatened and possibly our servicemen killed by this same technology. We cannot allow for this potential to exist.

Because of China's centralized economy, economic issues are irrevocably intertwined with security implications. The Commission reports, "The Chinese government has selectively chosen firms-predominantly state-owned enterprises (SOEs)-to list on international capital markets…Many SOEs were previously controlled by the People's Liberation Army (PLA), and there is concern that unofficial links to the PLA remain intact after privatization…As of 2002, more than three-quarters of companies listed as A shares in China's capital market are state-controlled. These include known proliferators such as NORINCO, which was sanctioned by the U.S. government on four separate occasions in 2003 for offenses including missile proliferation and sales of equipment or expertise to Iran that could be used in a WMD or cruise or ballistic missile program." Chinese firms lack adequate disclosure; as the case of NORINCO demonstrates, American investors may unwittingly be supporting companies that oppose our national security.

One company, China National Nuclear Corporation (CNNC) is currently slotted to receive five billion dollars from the U.S. Export Import Bank to build nuclear power plants in China. However, there are two problems: first, this company was discovered to be sending Pakistan prohibited materials that weaponize uranium. Sanctions were imposed for one month and removed. Later that same year, a subsidiary of CNNC was discovered to be selling more illegal materials to Pakistan. Connections have also been made to Iran's weapon program. Second, because the Export-Import Bank of the United States supplies the credit, the U.S. Treasury will have to back this loan, either by direct payment or guarantee. Ultimately, American taxpayers will be aiding a Chinese company that is a known proliferator. Doesn't that bother anybody?

Another issue is China's purchasing of U.S. companies. On March 9th, the Committee on Foreign Investment in the United States (CFIUS) approved China's Lenovo Group buying IBM's PC business. The $1.75 billion deal creates the third largest PC maker in the world. The problem is that there is potential for Chinese computer experts to use this as a base for espionage. Some say that this is ridiculous; that China could never use IBM networks that way. I would ask that they consider not only the immediate situation, but also China's track record. As a side note, I believe that CFIUS does not apply a broad enough conception of U.S. security. I understand that Representatives Hyde, Hunter and Manzullo expressed similar views in a January letter to Treasury Secretary John Snow, the chairman of CFIUS.

One example of CFIUS falling short is with Magnequench International Incorporated. In 1995, Chinese corporations bought GM's Magnequench, a supplier of rare earth metals used in the guidance systems of smart-bombs. For over twelve years, the company has been moved piecemeal to mainland China, leaving the U.S. with no domestic supplier of neodymium, a critical component of rare-earth magnets. CFIUS approved this transfer. The problem takes a unique twist, as Nathan Tabor of The Conservative Voice outlines, "China [has] become the dominant supplier of rare-earth elements, also called lanthanides (`lan-tha-nides). But in the U.S., owners of the Mountain Pass mine in California, one of the finest rare-earth deposits in the world, have been spending millions of dollars over many years to resolve an environmental complaint that processing the element threatens the habitat of the desert tortoise."

Dependence on outsourcing has the potential to be a paralyzing problem in time of war. During the current Iraq conflict, Switzerland stopped shipments of smart-bomb components to the U.S. because it disagreed with our role. As more and more of our military equipment is outsourced, we have become dangerously dependent on the whims of foreign countries. Current law requires only fifty percent of defense equipment be American-made. When Representative Duncan Hunter tried to raise this to 65 percent, defense contractors told him that it would force them out of the market.

Information technology is also leaving our borders at an alarming rate. John Chambers, the CEO of CISCO Systems, said, "China will become the IT center of the world, and we can have a healthy discussion about whether that's in 2020 or 2040. What we're trying to do is outline an entire strategy of becoming a Chinese company."

However, this technology transfer can also have a darker side. The Commission report states, "U.S. advanced technology and technological expertise is transferred to China in a number of ways, both legal and illegal, including through U.S. invested firms and research centers in China, Chinese investments in the United States, bilateral science and technology cooperative programs, and Chinese students and researchers who return home following their work and study at U.S. universities and research institutes."

In a previous speech that I gave on China, on June 23, 1999, I called attention to China's covert stealing of our technology. The F.B.I. is currently investigating numerous instances of alleged industrial espionage; over 3,000 companies in the U.S. are suspected of supplying illegal technology and collecting information for China. Such cases are major problems in industrial centers like Silicon Valley where espionage investigations linked with China have increased 20 to 30 percent annually.

Most recently, the Bush administration is investigating whether China has illegally altered legitimate U.S. exports for military use. One instance of this is U.S.-made Boeing 737 jetliner being modified to have military capabilities. Experts believe that China is using the aircraft to monitor tests of its long-range cruise missile similar to our Navy Tomahawk. Such a missile would be capable of delivering long-range conventional or nuclear payloads.

Whether it is military or economic expansionism, human rights, illegal proliferation or outright stealing of military technology, China has continued to defy the U.S. and the world unabated and unchallenged.

Mr. President, let me repeat what concerns me, and apparently the U.S.-China Commission, about China:

  1. 1. Eight major Chinese companies, some of which are directly connected with the military, were sanctioned last January for illegally selling weapons technology to countries including Iran. This is only one example of an ongoing and grave strategic problem. It is a problem we cannot afford to tolerate.

  2. 2. China has been modernizing and expanding its military to reduce any leverage we may have in a conflict situation, particularly over Taiwan. They have been stealing or developing highly advanced technology, including nuclear warhead designs and technology that would enable them to reach the continental U.S.

  3. 3. Skyrocketing energy consumption is a major problem for China and a potential conflict with us. It is drawing the PRC into cooperation with Iran and other problematic states. These bilateral arrangements improperly influence Chinese action in the U.N., and in some cases may involve illegal weapons transfers.

  4. 4. The European Union is projected to lift its arms embargo on China by this summer, an embargo that was meant to pressure China to improve its human rights record. That record has not improved. Europe has also failed to address the question: What country will China most likely use the new European technology against? It is ultimately the United States.

  5. 5. Despite Justice Department and Homeland Security concerns, China's Lenovo Group is taking over IBM's PC manufacturing business, based in North Carolina. This is revealing of a distressing trend that threatens the U.S. industrial base. Our practice of outsourcing military equipment is also of deep concern.

  6. 6. China continues to repress religious and human rights, and intimidate our Asian allies while expanding their influence in areas like South America and Africa. The recent Taiwanese "anti-secession" bill is further evidence of this hegemonic outlook.

  7. 7. According to the FBI, cases of Chinese espionage in the States are increasing at thirty percent annually in some places. Civil aircraft that the U.S. sold to China appear to be outfitted with military surveillance equipment. Revelation of such activities garners few headlines because this behavior is nothing new.

Indeed, Mr. President, we are used to this pattern and have become all too complacent about it. Scolding the Chinese for their disregard for proliferation treaties, while providing them unprecedented economic benefits is at best a bizarre foreign policy. We must link China's trading privileges with its human rights record and its conduct abroad, including its weapons proliferation. As China's No. 1 importing customer, accounting for 35 percent of total Chinese exports, we have the influence. I agree that the way we handle an emerging China must be dynamic, but it must not be weak. As the Commission report concludes:
We need to use our substantial leverage to develop an architecture that will help avoid conflict, attempt to build cooperative practices and institutions, and advance both countries' long-term interests. The United States has the leverage now and perhaps for the next decade, but this may not always be the case. We also must recognize the impact of these trends directly on the domestic U.S. economy, and develop and adopt policies that ensure that our actions do not undermine our economic interests … the United States cannot lose sight of these important goals, and must configure its policies toward China to help make them materialize…If we falter in the use of our economic and political influence now to effect positive change in China, we will have squandered an historic opportunity…China will likely not initiate the decisive measures toward more meaningful economic and political reform without substantial, sustained, and increased pressure from the United States.

There is an inherent tension between drawing China to freedom through relaxed policies, and a vital need to protect US security. I fear we have conceded far too much and contributed to the emergence of a very real threat.

Finally, I wish to applaud the U.S.-China Economic and Security Review Commission. Their efforts to provide this body with a clear picture of a very complex and multifaceted situation have been illuminating and challenge us to face these real problems. Thank you for your hard work.

The Chinese have something called an idiom, a four-character phrase that is sometimes used to simplify a complex thought. I would borrow one to describe the current situation: "One who obeys on the surface but not from one's heart." Unless our relationship with China is backed up with strong action they will never take us seriously. We will certainly see more violations of proliferation treaties and in the context of the growing threat of terrorism. That is unacceptable. We have also ignored the danger that China is becoming in its own right. Some think that I am alarmist. If China breaks its consistent pattern of human rights abuses, military and economic expansionism, and illegal weapons proliferation, I am prepared to concede my concerns are unfounded. But I fear that the next few years will continue to confirm an obvious trend. The time to act is now, before the problem is beyond the realm of policy. We urgently need a coherent strategy for dealing with China, one that allows room for China's changing role without sacrificing our national security and other interests.

As I have demonstrated, we are on a collision course with China on all levels: economically, militarily, and ideologically. The situation has only worsened since my previous floor speeches about China in 1999. We are two trains accelerating in different directions on the same track. After the last decade I think we've seen that appeasement doesn't work; it's time to deal with our unpaid bills.

Mr. President, I hope that this speech will awaken the American people to the real threat China poses. To that end I intend to deliver several more speeches highlighting the U.S.-China Commission's report and will then introduce a resolution to formally adopt the Commission's recommendations.