US-China Commission Report - Fatal System Error

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118 302. U.S.-China Economic and Security Review Commission, Hearing on Research and Development, Technological Advances in Key Industries, and Changing Trade Flows with China, written testimony of Charles McMillion, July 16, 2008. 303. U.S.-China Economic and Security Review Commission, Hearing on Research and Development, Technological Advances in Key Industries, and Changing Trade Flows with China, testimony of Ernest H. Preeg, July 16, 2008. 304. Organization for Economic Cooperation and Development (OECD), ‘‘OECD Reviews of Innovation Policy: China Synthesis Report,’’ September 2007, p. 14, chart 1.15. http://www.oecd.org/document/60/0,3343,enl2649l201185l39160380l1l1l 1l1,00.html. 305. U.S.-China Economic and Security Review Commission, Hearing on Research and Development, Technological Advances in Key Industries, and Changing Trade Flows with China, testimony of Kathleen Walsh, July 16, 2008. 306. Ernest H. Preeg, India and China; An Advanced Technology Race and How the United States Should Respond (Manufacturers Alliance/MAPI, Arlington, Virginia: 2008), p. 11. 307. U.S.-China Economic and Security Review Commission, Hearing on Research and Development, Technological Advances in Key Industries, and Changing Trade Flows with China, testimony of Kent Hughes, July 16, 2008. 308. Alan William Wolff, ‘‘China’s Drive Toward Innovation,’’ Issues in Science and Technology, National Academy of Sciences, Spring 2007. 309. World Trade Organization, ‘‘Accession of the People’s Republic of China’’ (Geneva, Switzerland: November 23, 2001), p. 5. 310. U.S.-China Economic and Security Review Commission, Hearing on Research and Development, Technological Advances in Key Industries, and Changing Trade Flows with China, testimony of Kathleen Walsh, July 16, 2008. 311. Some of the result of China’s currency policy also can be seen in the trade surplus in the manufacturing sector, which rose from $45 billion in 2000 to $465 billion in 2007 and was up 32 percent in the first five months of 2008 compared with the same period in 2007. U.S.-China Economic and Security Review Commission, Hearing on Research and Development, Technological Advances in Key Industries, and Changing Trade Flows with China, testimony of Ernest H. Preeg, July 16, 2008. 312. Stephen J. Ezell and Robert Atkinson, ‘‘RAND’s Rose Colored Glasses: How RAND’s Report on U.S. Competitiveness in Science and Technology Gets it Wrong,’’ The Information Technology & Innovation Foundation (Washington, DC: August 2008), p. 8. 313. Stephen J. Ezell and Robert Atkinson, ‘‘RAND’s Rose Colored Glasses: How RAND’s Report on U.S. Competitiveness in Science and Technology Gets it Wrong,’’ The Information Technology & Innovation Foundation (Washington, DC: August 2008), p. 8. 314. U.S.-China Economic and Security Review Commission, Hearing on Research and Development, Technological Advances in Key Industries, and Changing Trade Flows with China, testimony of Qingjiu Tao, July 16, 2008. 315. globalEDGE, ‘‘Aerospace and Defense Trade Statistics’’ (Michigan State University, 2005). http://globaledge.msu.edu/industries/tradeInfo.aspSortBy=&Industry ID=42&View=&sector=8800. 316. U.S.-China Economic and Security Review Commission, Hearing on Research and Development, Technological Advances in Key Industries, and Changing Trade Flows with China, testimony of Charles McMillion, July 16, 2008. 317. globalEDGE, ‘‘Technology Industry Trade Statistics’’ (Michigan State University: 2005). http://globaledge.msu.edu/industries/tradeInfo.aspindustryID=35. 318. Titus Galama and James Hosek, ‘‘U.S. Competitiveness in Science and Technology’’ (National Defense Research Institute, RAND Corporation, Washington, DC: 2008), p. xvi. 319. Titus Galama and James Hosek, ‘‘U.S. Competitiveness in Science and Technology’’ (National Defense Research Institute, RAND Corporation, Washington, DC: 2008), p. xxi. 320. Titus Galama and James Hosek, ‘‘U.S. Competitiveness in Science and Technology’’ (National Defense Research Institute, RAND Corporation, Washington, DC: 2008), p. xxiii. 321. The ITIF is a two-year-old, Washington-based nonprofit educational 501(c)(3) foundation promoting advanced technological innovation. 322. Stephen J. Ezell and Robert Atkinson, ‘‘RAND’s Rose Colored Glasses: How RAND’s Report on U.S. Competitiveness in Science and Technology Gets it Wrong’’ (The Information Technology & Innovation Foundation, Washington, DC: August 2008), p. 10.
119 323. U.S.-China Economic and Security Review Commission Hearing on Research and Development, Technological Advances in Key Industries, and Changing Trade Flows with China, written testimony of Charles McMillion, July 16, 2008. 324. U.S.-China Economic and Security Review Commission, Hearing on Research and Development, Technological Advances in Key Industries, and Changing Trade Flows with China, testimony of Mary Amiti, July 16, 2008. 325. Peter Morici, ‘‘Analysis of U.S. Current Account Deficit Rise in First Quarter 2008,’’ Finfacts. http://www.finfacts.ie/irishfinancenews/articlel1013947.shtml. Dr. Morici notes that interest payments on the accumulated debt now exceeds $2,000 per year for every working American and that, ‘‘In the first quarter, foreign governments loaned Americans $173.5 billion or 4.9 percent of GDP. That well exceeded net household borrowing to finance homes, cars, gasoline, and other consumer goods. The Chinese and other governments are essentially bankrolling U.S. consumers who, in turn, are mortgaging their children’s income.’’ 326. U.S.-China Economic and Security Review Commission, Hearing on Research and Development, Technological Advances in Key Industries, and Changing Trade Flows with China, testimony of Kent Hughes, July 16, 2008. 327. Laura H. Kahn, ‘‘Bring Back the Office of Technology Assessment,’’ Bulletin of the Atomic Scientists, May 20, 2007. http://www.thebulletin.org/web-edition/columnists/laura-h-kahn/bring-back-the-office-of-technology-assessment. 328. U.S.-China Economic and Security Review Commission, Hearing on Research and Development, Technological Advances in Key Industries, and Changing Trade Flows with China, written testimony of Charles McMillion, July 16, 2008. 329. U.S.-China Economic and Security Review Commission, Hearing on Research and Development, Technological Advances in Key Industries, and Changing Trade Flows with China, testimony of Qingjiu Tao, July 16, 2008. 330. U.S.-China Economic and Security Review Commission, Hearing on Research and Development, Technological Advances in Key Industries, and Changing Trade Flows with China, testimony of Qingjiu Tao, July 16, 2008. 331. U.S.-China Economic and Security Review Commission, Hearing on Research and Development, Technological Advances in Key Industries, and Changing Trade Flows with China, testimony of Qingjiu Tao, July 16, 2008. 332. Justine Lau, ‘‘Buffett Buys BYD [Build Your Dreams] Stake,’’ Financial Times, September 29, 2008. http://www.ft.com/cms/s/0/235c9890–8de5–11dd–8089– 0000779fd18c,dwpluuid=9c33700c–4c86–11da–89df–0000779e2340.html. 333. U.S.-China Economic and Security Review Commission, Hearing on Research and Development, Technological Advances in Key Industries, and Changing Trade Flows with China, testimony of Ernest H. Preeg, July 16, 2008. 334. Over the past 60 years, manufacturing output increased by 3.7 percent a year, while employment in manufacturing remained relatively flat, below 20 million workers. Meanwhile, manufacturing productivity increased by 3 percent a year on average. Manufacturing productivity grew at a 4.2 percent rate from 2000 to 2006, compared to a 2.7 percent rate for nonfarm, nonmanufacturing businesses. Source: William Strauss, ‘‘Is the U.S. Losing its Manufacturing Base’’, Federal Reserve Bank of Chicago, October 2, 2007. http://www.chicagofed.org. 335. U.S.-China Economic and Security Review Commission, Hearing on Research and Development, Technological Advances in Key Industries, and Changing Trade Flows with China, testimony of Owen Herrnstadt, July 16, 2008. 336. The Boeing Company Web site. http://www.boeing.com/companyoffices/ aboutus/boechina.html. 337. The Boeing Company Web site. http://www.boeing.com/companyoffices/ aboutus/boechina.html. 338. U.S.-China Economic and Security Review Commission, Hearing on a Case Study of the Local Impact of Trade with China: Seafood Imports from China into Louisiana and the U.S. Gulf Coast, and Related Safety Issues, testimony of Patrick Woodall, April 24, 2008. 339. UN Food and Agriculture Organization, State of World Aquaculture 2006, FAO Fisheries Technical Paper 500 (2006), p. 1. 340. Patrick Woodall, senior analyst, Food & Water Watch, telephone interview by Commission staff, Washington, DC, October 2008. In 2007, out of 2.285 million metric tons of fish imported from all sources, 526,000 metric tons were from China. 341. U.S. Census Bureau, County Business Patterns, http://censtats.census.gov/ cbpnaic/cbpnaic.shtml. 342. National Marine Fisheries Service, ‘‘Fisheries of the United States 2006,’’ ed. Elizabeth S. Pritchard (Office of Science and Technology, Silver Spring, MD: July 2007). 343. U.S.-China Economic and Security Review Commission, Hearing on a Case Study of the Local Impact of Trade with China: Seafood Imports from China into
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USCC 2008 ANNUAL REPORT
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1 2008 REPORT TO CONGRESS of the U.
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U.S.-CHINA ECONOMIC AND SECURITY RE
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CONTENTS Page TRANSMITTAL LETTER TO
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INDEX OF TABLES AND FIGURES 2008 RE
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2 economic, security, diplomatic, a
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4 China’s Capital Investment Vehi
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6 • Antidumping penalties imposed
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8 rities of other nations and cause
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10 Conclusions China’s Current En
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12 other countries that rely on Chi
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14 vein, there appears to be a stro
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16 lator of all financial services
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18 • Identifying substandard ship
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20 During the year, China continued
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22 U.S. inspections of prisons to e
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24 to the uncertainty during the su
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26 U.S. exports to China were 20 pe
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28 currency for RMB to obtain forei
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30 of supply and demand in the fore
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32 troversial is whether the treaty
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34 erty (IP) rights holders from en
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36 New Currency Rules China’s und
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38 brought in 2006 by the United St
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40 sectoral talks on farm trade. In
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42 tinue buying foreign exchange, t
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44 difference between temporary, th
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46 The Administrative Structure and
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48 U.S. dollar and has appreciated
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50 Development Committee and other
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52 drawn some fairly conventional l
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54 demonstrates the great length to
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56 cent revelations of the activiti
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58 of China by way of the investmen
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60 Ltd. attempted to acquire the U.
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62 not be applied necessarily in th
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64 economy—from ports and telecom
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66 asset allocations, benchmarks, a
Page 78 and 79: 68 the investments, viewing them as
Page 80 and 81: 70 and printed circuits in order to
Page 82 and 83: 72 2006, R&D spending in China from
Page 84 and 85: 74 tios—two of Asia’s technolog
Page 86 and 87: 76 The last time the United States
Page 88 and 89: 78 pendent players. However, this m
Page 90: 80 aviation industry and has a role
Page 93 and 94: SECTION 4: A CASE STUDY OF THE LOCA
Page 95 and 96: 85 The rise of industrial fish farm
Page 97 and 98: 87 According to the Southern Shrimp
Page 99 and 100: 89 the increasing import base. The
Page 101 and 102: 91 nated fish are discovered after
Page 103 and 104: 93 At the time this Report was comp
Page 105 and 106: 95 port with the hope it will be ad
Page 107 and 108: 97 Restaurants also are exempted by
Page 109 and 110: 99 entire dusted product is from Ch
Page 111 and 112: 101 written and approved, which is
Page 113 and 114: RECOMMENDATIONS The U.S.-China Trad
Page 115 and 116: 105 gress could enable consumers to
Page 117 and 118: 107 26. ‘‘China Central Bank to
Page 119 and 120: 109 82. USTR, ‘‘2008 National T
Page 121 and 122: 111 121. U.S.-China Economic and Se
Page 123 and 124: 113 173. ‘‘China’s Stake in B
Page 125 and 126: 115 236. U.S.-China Economic and Se
Page 127: 117 282. International Working Grou
Page 131 and 132: 121 361. Food & Water Watch, ‘‘
Page 133: 123 Louisiana and the U.S. Gulf Coa
Page 136 and 137: 126 While witnesses concluded that
Page 138 and 139: 128 China’s Nonproliferation Comm
Page 140 and 141: 130 State during the interdiction o
Page 142 and 143: 132 Northwest National Laboratory
Page 144 and 145: 134 UN Security Council resolutions
Page 146 and 147: 136 ployment, this change would inf
Page 148 and 149: 138 ing Iran’s missile program on
Page 150 and 151: SECTION 2: CHINA’S VIEWS OF SOVER
Page 152 and 153: 142 ficing the principle behind it.
Page 154 and 155: 144 baseline. Other states enjoy ov
Page 156 and 157: 146 India, Vietnam, Taiwan, and oth
Page 158 and 159: 148 as, ‘‘What constitutes a sp
Page 160 and 161: 150 The proposed PAROS treaty itsel
Page 162 and 163: 152 enhance China’s assertions of
Page 164 and 165: 154 Media and Public Opinion Warfar
Page 166 and 167: SECTION 3: THE NATURE AND EXTENT OF
Page 168 and 169: 158 Today, China’s space program
Page 170 and 171: 160 The Management Structure for Ch
Page 172 and 173: 162 • Launching geostationary orb
Page 174 and 175: 164 bility to conduct cyber operati
Page 176 and 177: 166 tions between the NIPRNet and t
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RECOMMENDATIONS China’s Prolifera
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170 ENDNOTES FOR CHAPTER 2 1. U.S.-
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172 41. U.S.-China Economic and Sec
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174 80. Janice E. Thomson, ‘‘St
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176 112. Reinhard Drifte, ‘‘Jap
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178 149. U.S.-China Economic and Se
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CHAPTER 3 CHINA’S ENERGY AND ENVI
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185 A growing share of energy deman
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187 pleted. Without the discovery a
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189 A Survey of China’s Interests
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191 projects that imports of natura
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193 and design of the units. 71 Chi
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195 dioxide, nitrous oxide, mercury
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197 sions are realized and producti
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199 ferent interests that motivate
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201 the oil, gas, coal, and power i
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203 fluential figures in business a
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205 The Terminology Used to Describ
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207 velop international and domesti
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209 that growth must occur in an en
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211 servation. Officials highlighte
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213 grated Gasification Combined Cy
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215 Obtaining sufficient movement f
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217 nology and finding ways to make
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219 • As the negotiations for a p
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223 tent.aspxdata=EmergingMktlconte
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225 13, 2008. These tools include s
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229 ergy Group, Environmental Energ
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CHAPTER 4 CHINA’S FOREIGN ACTIVIT
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233 China will seek to displace the
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235 China to help resolve them. 22
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237 presenting itself as an accepta
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239 China’s infrastructure invest
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241 IMF. The Angolan government exp
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243 China’s Conventional Arms Sal
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245 Kurlantzick testified that Chin
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247 pendent of their legislatures a
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249 diplomacy and in the internatio
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SECTION 2: CHINA’S RELATIONSHIPS
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PART 1: TAIWAN The Significance of
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255 PRC pressure directed against T
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257 this end. 150 (Additional infor
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259 Discussions Regarding Arms Sale
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261 ernment is committed to set ann
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263 • Arms purchases from the Uni
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265 China, appreciation of the RMB,
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267 Days later, although they did n
Page 279 and 280:
Introduction PART 3: THE REPUBLIC O
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271 South Korean officials emphasiz
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273 mount among the ROK’s diploma
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275 Even after approving these grad
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277 exercising undue influence—be
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RECOMMENDATIONS China’s Expanding
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283 42. UN Conference on Trade and
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287 134. Calculation performed by C
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289 184. ‘‘Factbox: Key facts o
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CHAPTER 5 CHINA’S MEDIA AND INFOR
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293 The central role of the Propaga
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295 thoritarian post-Soviet governm
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297 Some of the measures taken by C
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299 Images of ‘‘Jing-Jing’’
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301 Legislation was introduced duri
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303 In addition to promoting a powe
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305 Chinese Government Restrictions
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307 search engine and the servers s
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309 media, the Internet, popular en
Page 321 and 322:
311 ENDNOTES FOR CHAPTER 5 1. David
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313 image-of-internet-police-jingji
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318 China’s prison labor system,
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320 most literal sense, the term la
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322 treatment of Falun Gong practit
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324 lowing its signing. According t
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326 granted just three of 18 prison
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328 Mr. Marck, who is the partial o
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330 complaints involving internatio
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RECOMMENDATIONS • The Commission
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334 28. U.S. Department of Homeland
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COMPREHENSIVE LIST OF THE COMMISSIO
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339 gram. By expanding this volunta
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341 27. The Commission recommends t
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343 43. The Commission recommends t
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345 ADDITIONAL VIEWS OF COMMISSIONE
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347 ADDITIONAL VIEWS OF COMMISSIONE
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APPENDIX I UNITED STATES-CHINA ECON
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351 (iii) make all subsequent appoi
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353 (2) Information. The Commission
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355 In each Section and Subsection
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357 ecutive Schedule under section
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360 member of the Academic Advisory
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362 nomic, defense, and foreign pol
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364 formulated by the Committee suc
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366 Commissioner Shea is an attorne
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368 than twenty years, leaving his
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APPENDIX III PUBLIC HEARINGS OF THE
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373 May 20, 2008: Public Hearing on
Page 385 and 386:
APPENDIX IIIA LIST OF WITNESSES TES
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377 Alphabetical Listing of Panelis
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379 Alphabetical Listing of Panelis
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382 REPUBLIC OF KOREA, JAPAN AND TA
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APPENDIX V LIST OF U.S. SANCTIONS I
Page 397:
387 Date Imposed Entity/Person Cont
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APPENDIX VII ABBREVIATIONS AND ACRO
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393 UNGA UN PKO USD USDA USITC USTR
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