China Prepares to Confront U.S. Militarily and Backslides

[Reciprocity]

China Prepares to Confront U.S. Militarily and Backslides on Market Reforms
By Gary Feuerberg
Epoch Times Washington, D.C. Staff Nov 26, 2007

http://en.epochtimes.com/news/7-11-26/62312.html


CONCERNED OVER CHINA'S MILITARY BUILD-UP: Daniel A. Blumenthal spoke on Capitol Hill, Nov 15, of China's continual build-up of military capacity with the intent to challenge the U.S. Mr. Blumenthal is Vice Chairman of the U.S.-China Economic and Security Review Commission for its 2007 annual report. He is a Resident Fellow in Asian Studies at the American Enterprise Institute, and a defense policy expert on China and Taiwan. (Gary Feuerberg / Epoch Times)
WASHINGTON, D.C.—The Chinese communist leadership appears to be back-tracking on implementing market-based reforms that the U.S. and other market economies regard as necessary for good trade relations. The Chinese regime's new policy retains state-control of a number of industries, including telecommunications, civil aviation, and information technology, as well as 155 of China's largest corporations, and nearly all the nation's largest banks.

China's retrenchment on economic reform is one of the key findings of the U.S. Economic and Security Review Commission (USCC), which released its weighty, 333-page annual report, November 15, on Capitol Hill.

According to the Commission, China is "developing its military in ways that enhance its capacity to confront the United States," especially with its focus on cyber warfare and anti-satellite weapons. The report is critical of China's increased use of military and industrial espionage.

Potential threats to the U.S. economy are seen looming ahead with China's enormous trade surplus and concern is expressed on how it will choose to use its accumulation of foreign currency—$1.4 trillion—the largest in the world. The report also raises alarm regarding the erosion of the U.S. defense industrial base.

Meanwhile, no progress is forthcoming in reforming the political process and allowing the freedom to practice one's religion. The report finds that China has in place "one of the most effective information control regimes in the world."

"China's media and information controls have actually grown more rigid as the Communist Party seeks to maintain its monopoly of power through its sophisticated technology to monitor … the Internet," said Carolyn Bartholomew, Chairman of the Commission. She added that these controls impact the U.S. because it suppresses information regarding dangerous products.


OPPOSING CHINA'S SUBSIDIZED INDUSTRIES: Carolyn Bartholomew spoke on Capitol Hill, Nov 15, of China's backsliding on market reforms. Ms. Bartholomew is Chairman of the U.S.-China Economic and Security Review Commission (USCC) for its fifth annual report. Photo was taken last year (Nov 16, 2006) at the release of the USCC's fourth annual report when Ms. Bartholomew was Vice Chair. (NTDTV)The Commission is composed of 12 members, appointed by each party's leadership. It is tasked by the U.S. Congress to review the bilateral economic and security relationships between China and the United States.

The Commission held seven public hearings, which were conducted in Washington except for a field hearing held in Chapel Hill, North Carolina. It took testimony of over 100 witnesses from the Congress, executive branch, industry, academia, and policy groups. The Commission also traveled to China, Hong Kong, Taiwan, and India, and met with U.S. diplomats, host government officials, foreign business representatives, and local experts.

The Commission conducted two days of classified and unclassified briefings at Wright-Patterson Air Force Base, Ohio arranged by the Department of Defense on China's research, technology and military objectives in relationship to the U.S. A classified report will be sent to the Congress.


China's Military Modernizations Marches Rapidly Forward
A major area of the Commission's concerns lies in China's recent military progress, which has sometimes taken our defense intelligence by surprise, and raised serious doubts about the quality of our assessments. An example is the launching of the Jin class submarine by the navy of the People's Liberation Army.

"New generations of warships, fighter aircraft, space craft, submarines, missiles, and other sophisticated weapon platforms are coming off production lines at an impressive pace and … quality," says the report.

China has saved much time and research money in developing new technology by the extensive use of industrial espionage.

"Chinese espionage in the United States, which now comprises the single greatest threat to U.S. technology, is straining the U.S. counterintelligence establishment," says the report. In order to stem the flow of protected U.S. technology and manufacturing expertise, the Commission recommends that Congress take a hard look at U.S. export control enforcement and counter-intelligence efforts.

The report raises the alarm about the erosion of the U.S. defense industrial base and China's role here. The report analyzes in some detail how the lengthening of the supply chains of U.S. weapons and defense equipment has meant that critical foreign-made components are being moved out of the United States. China has become an increasingly attractive outsource for American companies engaged in R&D. Unfortunately, there are substantial security risks relying on the use of foreign-made parts and components in weapon systems important to the U.S. defense, says the report.

The report concluded that no one in the U.S. government is monitoring the parts and components which are obtained from China and are being used in weapon systems or equipment critical to our national defense. The Commission hired a contractor to document the parts supply chain of the Air Force's F/A-22 Raptor fighter/attack aircraft, the Army's UH-60 Blackhawk utility helicopter, and the Navy's DDG-100 Destroyer. The contractor's research was not ready in time for the Commission's report, but "initial work suggests that information beyond the secondary or tertiary levels is sparse or nonexistent," says the report.


The Chinese Regime's Increasing Control of Its Economy
The Commission concluded that the Chinese communist regime is orchestrating an export-driven economy, resulting in a trade surplus with the United States that is growing dramatically. Its trade relationship with the United States "is severely out of balance," says the report. In 2006, China's exports to the United States ($287.8 billion) exceed imports ($55.2) by more than five to one.

This imbalance is largely the outcome of the Chinese regime's financial and economic policies that promote exports and discourage imports, such as subsidies, tax advantages, and currency manipulation. Even without the state interventions, China has a natural advantage in the extreme wage differentials between the two countries that lower Chinese manufacturers' production costs. Using 2004 for comparison, the average hourly wage rate of all workers in China was 67 cents; in the U.S., production wage was $15.65 (not including fringe benefits), says the report.

A new charge by the Commission is to regard China's manipulation of its currency, the renminbi, as a subsidy for Chinese exporters, which makes imports artificially expensive for importers and Chinese consumers. The Commission cites a report from the U.S. Treasury that the renminbi is 20 to 50 percent below where it would be relative to the dollar if it were traded freely on international currency markets.

The Commission recommends that Congress designate the Chinese regime's currency manipulation as an "illegal export subsidy," and as such, it should be taken into account with other prohibited subsidies when determining penalty tariffs.

And the Commission is concerned about what China might do with its $1.43 trillion foreign currency reserves of which an estimated 70% or $1 trillion is invested in mostly U.S. government and corporate bonds.

China's progress towards economic reform comes only with great reluctance and prodding from other nations and the World Trade Organization. "China is unwilling to embrace market-oriented mechanisms, such as freely traded currency, because it maintains a preference for authoritarian controls over its economy."

The regime violates free-market principles and WTO rules with its extensive government subsidies, often illegal, to favored industries. In December 2006, the Chinese regime announced a new policy and identified seven strategic industries—armaments, power generation and distribution, oil and petrochemicals, telecommunications, coal, civil aviation, and shipping, which will be under the regime's control.

The nearly complete lack of intellectual property protection is another indication of the Communist regime's indifference to WTO rules. To be sure, China has passed many regulations to comply with copyright, patents and trademark protections, but the enforcement is lacking.

The Congressional Research Service estimated that counterfeits constitute 15 to 20% of all products made in China, says the report. Nine out of 10 DVDs sold within China are counterfeit, and the industry lost $6.1 billion to piracy worldwide, due in part to Chinese exports of their DVDs, according to Dan Glickman, president and CEO of the Motion Picture Association of America.

Some examples are given in the report of China's refusal to enforce the law. Their media may show bulldozers running over pirated DVDs and CDs, but next door, a counterfeit factory is allowed to dismantle its counterfeit equipment and move to another facility where the counterfeiting starts anew, says the report.

With three decades of record economic growth, the regime has plowed back little of the accrued wealth into programs for education, pensions and health. There is still little in the way of consumer credit and affordable insurance. "As a result, Chinese workers save much of their income to enable them to contend with life's vicissitudes and they purchase few imported goods," says the report.

Workers in Communist China—the "Worker's Paradise"—lack basic rights. Independent unions are not permitted. "Labor [in China] is not cheap. It is deeply disenfranchised and disempowered, which leads to horrible abuses of workers' individual liberties, but also to dangerous and unsafe working conditions, unpaid wages, and abuse of prison labor," testified Thea Mei Lee, the AFL-CIO's policy director before the Commission.

and Backslides on Market Reforms
By Gary Feuerberg
Epoch Times Washington, D.C. Staff Nov 26, 2007


CONCERNED OVER CHINA'S MILITARY BUILD-UP: Daniel A. Blumenthal spoke on Capitol Hill, Nov 15, of China's continual build-up of military capacity with the intent to challenge the U.S. Mr. Blumenthal is Vice Chairman of the U.S.-China Economic and Security Review Commission for its 2007 annual report. He is a Resident Fellow in Asian Studies at the American Enterprise Institute, and a defense policy expert on China and Taiwan. (Gary Feuerberg / Epoch Times)
WASHINGTON, D.C.—The Chinese communist leadership appears to be back-tracking on implementing market-based reforms that the U.S. and other market economies regard as necessary for good trade relations. The Chinese regime's new policy retains state-control of a number of industries, including telecommunications, civil aviation, and information technology, as well as 155 of China's largest corporations, and nearly all the nation's largest banks.

China's retrenchment on economic reform is one of the key findings of the U.S. Economic and Security Review Commission (USCC), which released its weighty, 333-page annual report, November 15, on Capitol Hill.

According to the Commission, China is "developing its military in ways that enhance its capacity to confront the United States," especially with its focus on cyber warfare and anti-satellite weapons. The report is critical of China's increased use of military and industrial espionage.

Potential threats to the U.S. economy are seen looming ahead with China's enormous trade surplus and concern is expressed on how it will choose to use its accumulation of foreign currency—$1.4 trillion—the largest in the world. The report also raises alarm regarding the erosion of the U.S. defense industrial base.

Meanwhile, no progress is forthcoming in reforming the political process and allowing the freedom to practice one's religion. The report finds that China has in place "one of the most effective information control regimes in the world."

"China's media and information controls have actually grown more rigid as the Communist Party seeks to maintain its monopoly of power through its sophisticated technology to monitor … the Internet," said Carolyn Bartholomew, Chairman of the Commission. She added that these controls impact the U.S. because it suppresses information regarding dangerous products.


OPPOSING CHINA'S SUBSIDIZED INDUSTRIES: Carolyn Bartholomew spoke on Capitol Hill, Nov 15, of China's backsliding on market reforms. Ms. Bartholomew is Chairman of the U.S.-China Economic and Security Review Commission (USCC) for its fifth annual report. Photo was taken last year (Nov 16, 2006) at the release of the USCC's fourth annual report when Ms. Bartholomew was Vice Chair. (NTDTV)The Commission is composed of 12 members, appointed by each party's leadership. It is tasked by the U.S. Congress to review the bilateral economic and security relationships between China and the United States.

The Commission held seven public hearings, which were conducted in Washington except for a field hearing held in Chapel Hill, North Carolina. It took testimony of over 100 witnesses from the Congress, executive branch, industry, academia, and policy groups. The Commission also traveled to China, Hong Kong, Taiwan, and India, and met with U.S. diplomats, host government officials, foreign business representatives, and local experts.

The Commission conducted two days of classified and unclassified briefings at Wright-Patterson Air Force Base, Ohio arranged by the Department of Defense on China's research, technology and military objectives in relationship to the U.S. A classified report will be sent to the Congress.


China's Military Modernizations Marches Rapidly Forward
A major area of the Commission's concerns lies in China's recent military progress, which has sometimes taken our defense intelligence by surprise, and raised serious doubts about the quality of our assessments. An example is the launching of the Jin class submarine by the navy of the People's Liberation Army.

"New generations of warships, fighter aircraft, space craft, submarines, missiles, and other sophisticated weapon platforms are coming off production lines at an impressive pace and … quality," says the report.

China has saved much time and research money in developing new technology by the extensive use of industrial espionage.

"Chinese espionage in the United States, which now comprises the single greatest threat to U.S. technology, is straining the U.S. counterintelligence establishment," says the report. In order to stem the flow of protected U.S. technology and manufacturing expertise, the Commission recommends that Congress take a hard look at U.S. export control enforcement and counter-intelligence efforts.

The report raises the alarm about the erosion of the U.S. defense industrial base and China's role here. The report analyzes in some detail how the lengthening of the supply chains of U.S. weapons and defense equipment has meant that critical foreign-made components are being moved out of the United States. China has become an increasingly attractive outsource for American companies engaged in R&D. Unfortunately, there are substantial security risks relying on the use of foreign-made parts and components in weapon systems important to the U.S. defense, says the report.

The report concluded that no one in the U.S. government is monitoring the parts and components which are obtained from China and are being used in weapon systems or equipment critical to our national defense. The Commission hired a contractor to document the parts supply chain of the Air Force's F/A-22 Raptor fighter/attack aircraft, the Army's UH-60 Blackhawk utility helicopter, and the Navy's DDG-100 Destroyer. The contractor's research was not ready in time for the Commission's report, but "initial work suggests that information beyond the secondary or tertiary levels is sparse or nonexistent," says the report.


The Chinese Regime's Increasing Control of Its Economy
The Commission concluded that the Chinese communist regime is orchestrating an export-driven economy, resulting in a trade surplus with the United States that is growing dramatically. Its trade relationship with the United States "is severely out of balance," says the report. In 2006, China's exports to the United States ($287.8 billion) exceed imports ($55.2) by more than five to one.

This imbalance is largely the outcome of the Chinese regime's financial and economic policies that promote exports and discourage imports, such as subsidies, tax advantages, and currency manipulation. Even without the state interventions, China has a natural advantage in the extreme wage differentials between the two countries that lower Chinese manufacturers' production costs. Using 2004 for comparison, the average hourly wage rate of all workers in China was 67 cents; in the U.S., production wage was $15.65 (not including fringe benefits), says the report.

A new charge by the Commission is to regard China's manipulation of its currency, the renminbi, as a subsidy for Chinese exporters, which makes imports artificially expensive for importers and Chinese consumers. The Commission cites a report from the U.S. Treasury that the renminbi is 20 to 50 percent below where it would be relative to the dollar if it were traded freely on international currency markets.

The Commission recommends that Congress designate the Chinese regime's currency manipulation as an "illegal export subsidy," and as such, it should be taken into account with other prohibited subsidies when determining penalty tariffs.

And the Commission is concerned about what China might do with its $1.43 trillion foreign currency reserves of which an estimated 70% or $1 trillion is invested in mostly U.S. government and corporate bonds.

China's progress towards economic reform comes only with great reluctance and prodding from other nations and the World Trade Organization. "China is unwilling to embrace market-oriented mechanisms, such as freely traded currency, because it maintains a preference for authoritarian controls over its economy."

The regime violates free-market principles and WTO rules with its extensive government subsidies, often illegal, to favored industries. In December 2006, the Chinese regime announced a new policy and identified seven strategic industries—armaments, power generation and distribution, oil and petrochemicals, telecommunications, coal, civil aviation, and shipping, which will be under the regime's control.

The nearly complete lack of intellectual property protection is another indication of the Communist regime's indifference to WTO rules. To be sure, China has passed many regulations to comply with copyright, patents and trademark protections, but the enforcement is lacking.

The Congressional Research Service estimated that counterfeits constitute 15 to 20% of all products made in China, says the report. Nine out of 10 DVDs sold within China are counterfeit, and the industry lost $6.1 billion to piracy worldwide, due in part to Chinese exports of their DVDs, according to Dan Glickman, president and CEO of the Motion Picture Association of America.

Some examples are given in the report of China's refusal to enforce the law. Their media may show bulldozers running over pirated DVDs and CDs, but next door, a counterfeit factory is allowed to dismantle its counterfeit equipment and move to another facility where the counterfeiting starts anew, says the report.

With three decades of record economic growth, the regime has plowed back little of the accrued wealth into programs for education, pensions and health. There is still little in the way of consumer credit and affordable insurance. "As a result, Chinese workers save much of their income to enable them to contend with life's vicissitudes and they purchase few imported goods," says the report.

Workers in Communist China—the "Worker's Paradise"—lack basic rights. Independent unions are not permitted. "Labor [in China] is not cheap. It is deeply disenfranchised and disempowered, which leads to horrible abuses of workers' individual liberties, but also to dangerous and unsafe working conditions, unpaid wages, and abuse of prison labor," testified Thea Mei Lee, the AFL-CIO's policy director before the Commission.

[Paige]

China, Russia and Iran. These are our biggest national threats. We also have the illegal immigrant threat. If we want to be able to take care of China, Russia and Iran we need to get rid the states of illegals, quit paying for their benefits and close the damn borders.

[nntrixie]

We are not going to be able to 'take care of China, Russia or Iran' in our present state.

We are going to go after China - and who is going to finance it - ask China for more money.

Yes, we do need to get rid of the illegals - bring our soldiers home from the far flung corners of the globe and start rebuilding this country and it's manufacturing capacity.

Why don't we really, truly, begin to protect America and America's interest?

[BrightNail]

China, Russia and Iran. These are our biggest national threats. We also have the illegal immigrant threat. If we want to be able to take care of China, Russia and Iran we need to get rid the states of illegals, quit paying for their benefits and close the damn borders.

I disagree. This is the fear mongering that has plagued americans, generated by the MSM and special interests so we can agree to their outrageous ideas of conquest.

Iran is NOT a threat. More trumped up propaganda to wage war. We have seen this all before.

China is NOT a threat. We borrow billions from them a day to fund our war in the middle east. We have promised them ports in Mexico. They are not a threat. We allow them special concessions in trade and accept their money.
No, they are not a threat. We allowed them and gave them leverage over our markets because we decided it was most advantageous to line the pockets of special interests, than take care of american workers and american markets.

Russia? How are they a threat? I have NOT seen anything nor read anything that would denote such. Again, this is just more "boogyman" scenarios to drum up business for the military industrial complex.

IF one is to look at foreign expansion, wars and military manueverings I would say America is the most prolific in creating aggression. NOT china, not Russia. In reality, I would think "they" are saying "America is a threat". We are. We are manuevering in the middle east for oil, debasing our currency to move into the Amero - so the central bank can now have its claws into three countries view the NAU.

I don't know. I don't trust the government anymore. I don't think they have the American people in their hearts. Not all government, there are some great and true patriots, but the special interests and such control washington, not the puppet politicians.

[ALIPAC]

I believe this article is correct that China is building up their military to confront the US. We may already be at War.

W

[nntrixie]

I am going to have to disagree that China is not a threat. I think it is a very big threat economically and probably militarily already. If not already, certainly in the near future.

But we can confront that economically.

We can bring the troops home - bring all military personnel home, use the money saved, and the monies that are being spent overseas to be recirculated in the US and rebuild this country.

We can send the illegals home, put the Americans to work, recirculate that money rather than sending it to Mexico.

Do some real energy discussion -

[Paige]

Already at war? What do you mean? I would imagine that the government is afraid to do anything to rock the boat at this time. You would think that they would start making plans to counter attack Russia and China but keeping illegals here and not sending the troops home is crazy. I wonder if this is what Bush is going to use as an excuse to put us all under marshall law and start SPP.

[Reciprocity]

China has long used its proxy puppets to harrass the US and its interest abroad, with its newest puppets being Iran, Argentina and Cuba. Chiefly because of oil interest. Even Russia is being indirectly used by China in aiding Iran. In reality China is after Oil wherever she can attain it. If the US pulls out of Iraq too quickly and leaves a power vaccuum, its a sure bet the Iranian Army will attempt to seize the southern oil fields in Iraq. This is why China wants another Clinton in the whitehouse. The Turks have already anticipaticated this and there useing the Kurds as an excuse to build up forces on the border and i don't blame them.

[BrightNail]

I believe this article is correct that China is building up their military to confront the US. We may already be at War.

W

Well, confronting our expansion and foreign interventions is one thing, war is another.

Why would China wage war? It wouldn't be for land, or for resources. There is nothing to gain from such a war. No, I see them as just staking their claim. We have involved ourselves too much in world affairs, manipulating and conniving and now China wants to step up and say "chill out".

We all saw this coming for decades. Talking about China building up their military and such. This is not new. Yet, why are we borrowing billions from them? Why, according to Corsi - getting concessions for ports in Mexico.

To me, sounds like another "boogyman" scenario. "IF" China is such a threat, why are we all over the world, spread thin like paper with NO money to wage any wars?

This is just another ploy to form the NAU to beat back the evil Chinese.

BUT, this would just make our assertions of coming home more viable..

"The report also raises alarm regarding the erosion of the U.S. defense industrial base."

So we are going broke, hugely in debt, borrowing money from the very country we say will move against us, have bases thruout the world and spread very very thin, our wars are already over extended in all areas....
... yeah, and who put us in this mess?

the very same people who told us war is good and needed. Now, we have a new enemy.. China.. when will it end? ColdWar, Russia, axis of evil, terrorism, iran, now china..etc.......

[BrightNail]

China has long used its proxy puppets to harrass the US and its interest abroad, with its newest puppets being Iran, Argentina and Cuba. Chiefly because of oil interest. Even Russia is being indirectly used by China in aiding Iran. In reality China is after Oil wherever she can attain it. If the US pulls out of Iraq too quickly and leaves a power vaccuum, its a sure bet the Iranian Army will attempt to seize the southern oil fields in Iraq. This is why China wants another Clinton in the whitehouse. The Turks have already anticipaticated this and there useing the Kurds as an excuse to build up forces on the border and i don't blame them.

More the reason to get out and develop alternative sources of fuel, or just make friends to trade with instead of manipulaton. Another reason to stop all of this before WWIII develops.