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170 ENDNOTES FOR CHAPTER 2 1. U.S.-China Economic and Security Review Commission, Hearing on China’s Proliferation Practices, and the Development of its Cyber and Space Warfare Capabilities, testimony of Patricia McNerney, May 20, 2008. 2. ‘‘Full text of white paper on Arms Control,’’ China Daily, September 1, 2005. http://www.chinadaily.com.cn/english/doc/2005–09/01/contentl474248.htm. 3. ‘‘Full text of white paper on Arms Control,’’ China Daily, September 1, 2005. http://www.chinadaily.com.cn/english/doc/2005–09/01/contentl474248l3.htm. 4. ‘‘China’s National Defense in 2006,’’ issued by the Information Office of the State Council, People’s Republic of China, December 29, 2006. http://www.fas.org/ nuke/guide/china/doctrine/wp2006.html. 5. Article 1, Comprehensive Test Ban Treaty. http://www.ctbto.org/treaty/treaty text.tt.html. 6. Shirley A. Kan, China and Proliferation of Weapons of Mass Destruction and Missiles: Policy Issues (Congressional Research Service, Washington, DC: updated April 6, 2006), p. 1. 7. Shirley A. Kan, China and Proliferation of Weapons of Mass Destruction and Missiles: Policy Issues (Congressional Research Service, Washington, DC: updated December 13, 2007), p. 2; U.S.-China Economic and Security Review Commission, Hearing on China’s Proliferation and the Impact of Trade Policy on Defense Industries in the United States and China, testimony of Donald Mahley, July 12, 2007. 8. The Australia Group, ‘‘AG [Australia Group] Objectives,’’ http://www.australia group.net/en/objectives.html. 9. Inventory of International Nonproliferation Organizations and Regimes, ‘‘Hague Code of Conduct Against Ballistic Missile Proliferation (HCOC)’’ (Center for Nonproliferation Studies, Monterey, CA). http://cns.miis.edu/pubs/inven/pdfs/icoc.pdf. 10. U.S. Department of Commerce, Bureau of Industry and Security, ‘‘The Waasenaar Arrangement.’’ http://www.bis.doc.gov/wassenaar/default.htm. 11. Shirley A. Kan, China and Proliferation of Weapons of Mass Destruction and Missiles: Policy Issues (Congressional Research Service, Washington, DC: updated December 13, 2007), p. 2. 12. U.S.-China Economic and Security Review Commission, Hearing on China’s Proliferation Practices, and the Development of its Cyber and Space Warfare Capabilities, testimony of Patricia McNerney, May 20, 2008; Nuclear Threat Initiative, ‘‘Chemical Overview,’’ China Profile, December 2007. http://www.nti.org/elresearch/ profiles/China/Chemical/index.html. 13. U.S.-China Economic and Security Review Commission, Hearing on China’s Proliferation Practices, and the Development of its Cyber and Space Warfare Capabilities, testimony of Patricia McNerney, May 20, 2008. 14. ‘‘U.S.-China Economic and Security Review Commission, Hearing on China’s Proliferation Practices, and the Development of its Cyber and Space Warfare Capabilities, testimony of Stephen Rademaker, May 20, 2008. 15. David E. Sanger, ‘‘U.S. and Russia Will Police Nuclear Terrorists,’’ New York Times, July 15, 2006. 16. Ministry of Foreign Affairs of the People’s Republic of China, ‘‘The Proliferation Security Initiative,’’ February 29, 2008. http://www1.fmprc.gov.cn/eng/wjb/zzjg/ jks/kjlc/fkswt/t410725.htm. 17. In July 1993, American intelligence officials suspected that the Chinese ship, the Yinhe, was carrying ingredients for chemical weapons and began tracking and photographing the ship after its departure from the port of Dalian. U.S. naval vessels followed the ship into waters near the Strait of Hormuz and urged countries in the region not to allow the Chinese ship to dock. In August, the ship anchored off the coast of Oman, taking on fuel and supplies, while the U.S. government and China negotiated to allow inspection of the Chinese ship by U.S. and Saudi Arabian officials. Upon agreement, the Yinhe docked at a Saudi port, and a Saudi-American inspection team searched the ship for the suspected chemical weapons ingredients— thiodiglycol and thionyl chloride. The inspection did not find these materials aboard the ship. John F. Copper, Playing with Fire: The Looming War with China over Taiwan (Praeger Security International, Westport, CT: 2006), p. 76; Statement by the Ministry of Foreign Affairs of the People’s Republic of China on the ‘‘Yin He’’ Incident (September 4, 1993). http://www.nti.org/db/china/engdocs/ynhe0993.htm; Nicholas D. Kristof, ‘‘China Says U.S. Is Harassing Ship Suspected of Taking Arms to Iran,’’ New York Times, August 8, 1993; ‘‘Chemicals on Chinese Ship Usable for Arms, U.S. Says,’’ Los Angeles Times, August 10, 1993; ‘‘China Says Cargo Ship Will Anchor Off Oman,’’ New York Times, August 14, 1993; Jim Mann, ‘‘Saudis May Inspect Chinese Cargo Due in Iran Diplomacy,’’ Los Angeles Times, August 24, 1993;
171 Patrick E. Tyler, ‘‘China Says Saudis Found No Arms Cargo on Ship,’’ New York Times, September 3, 1993. 18. Wang Lidong, Guojia Haishang Liyi Lun [On Maritime National Interest] (Guofang Daxue Chubanshe, Beijing: 2007), pp. 262–263. 19. ‘‘’There will be sanctions’ on Iran: France,’’ Agence France Presse, December 6, 2006; ‘‘China tells Iran to make ’serious response’ to UN resolution,’’ Agence France Presse, January 5, 2007. Nexis.com; Robin Wright, ‘‘U.S., Britain Drafting Stricter Iran Sanctions,’’ Washington Post, June 23, 2007; U.S. Senate, Committee on Finance, statement of visiting associate professor at the University of Washington Orde Kittrie, International Wire, April 8, 2008. Nexis.com. 20. UN Security Council Resolution 1737 (2006); UN Security Council Resolution 1747 (2007). 21. UN Security Council Resolution 1803 (2008). 22. UN Security Council Resolution 1803 (2008). 23. U.S.-China Economic and Security Review Commission, Hearing on China’s Proliferation Practices, and the Development of its Cyber and Space Warfare Capabilities, testimony of Patricia McNerney, May 20, 2008. 24. Alistair Lyon, ‘‘Iran seen impervious to world nuclear offer,’’ Reuters, July 7, 2008. http://www.reuters.com/article/newsOne/idUSLYO71725620080707 pageNumber=2&virtualBrandChannel=10112&sp=true. 25. Alistair Lyon, ‘‘Iran seen impervious to world nuclear offer,’’ Reuters, July 7, 2008. http://www.reuters.com/article/newsOne/idUSLYO71725620080707 pageNumber=2&virtualBrandChannel=10112&sp=true; Matthew Lee, ‘‘China blocks new Iran sanctions talks: diplomats,’’ Associated Press, October 16, 2008. 26. U.S.-China Economic and Security Review Commission, Hearing on China’s Proliferation Practices, and the Development of its Cyber and Space Warfare Capabilities, testimony of Patricia McNerney, May 20, 2008. 27. U.S.-China Economic and Security Review Commission, Hearing on China’s Proliferation Practices, and the Development of its Cyber and Space Warfare Capabilities, testimony of Patricia McNerney, May 20, 2008. 28. Condoleezza Rice, ‘‘U.S. Policy Toward Asia,’’ Address at The Heritage Foundation, Washington, DC: June 18, 2008. http://www.state.gov/secretary/rm/2008/06/ 106034.htm. 29. Norimitsu Onishi and Edward Wong, ‘‘U.S. to remove North Korea from terror list,’’ International Herald Tribune, June 26, 2008. 30. Edward Cody, ‘‘N. Korea to Resume Nuclear Talks in Beijing,’’ Washington Post, July 8, 2008. 31. Elaine Sciolino, ‘‘N. Korea is Closer to Restart of Nuclear Program,’’ New York Times, September 22, 2008. 32. Foster Klug, ‘‘U.S.: NKorea steps up disabling of nuclear reactor,’’ Associated Press, October 17, 2008. 33. U.S.-China Economic and Security Review Commission, Hearing on China’s Proliferation Practices, and the Development of its Cyber and Space Warfare Capabilities, testimony of Patricia McNerney, May 20, 2008. 34. U.S.-China Economic and Security Review Commission, Hearing on China’s Proliferation Practices, and the Development of its Cyber and Space Warfare Capabilities, testimony of Patricia McNerney, May 20, 2008. 35. ‘‘PNNL [Pacific Northwest National Laboratory], U. OF WASHINGTON HELP NNSA [National Nuclear Security Administration] ACHIEVE CHINA EX- PORT CONTROL: [1], U.S. Federal News Service, including US State News, June 1, 2007. Proquest.com. 36. U.S.-China Economic and Security Review Commission, Hearing on China’s Proliferation Practices, and the Development of its Cyber and Space Warfare Capabilities, testimony of Patricia McNerney, May 20, 2008. 37. U.S.-China Economic and Security Review Commission, Hearing on China’s Proliferation Practices, and the Development of its Cyber and Space Warfare Capabilities, testimony of Henry Sokolski, May 20, 2008. 38. Shirley A. Kan, China and Proliferation of Weapons of Mass Destruction and Missiles: Policy Issues, Updated (Congressional Research Service, Washington, DC: December 2007), p. 3. 39. U.S.-China Economic and Security Review Commission, Hearing on China’s Proliferation Practices, and the Development of its Cyber and Space Warfare Capabilities, testimony of Patricia McNerney, May 20, 2008. 40. ‘‘Serial proliferators,’’ as in U.S.-China Economic and Security Review Commission, Hearing on China’s Proliferation Practices and the Challenge of North Korea, testimony of Paula DeSutter, July 23, 2003.
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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
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68 the investments, viewing them as
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70 and printed circuits in order to
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72 2006, R&D spending in China from
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74 tios—two of Asia’s technolog
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76 The last time the United States
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78 pendent players. However, this m
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80 aviation industry and has a role
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SECTION 4: A CASE STUDY OF THE LOCA
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85 The rise of industrial fish farm
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87 According to the Southern Shrimp
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89 the increasing import base. The
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91 nated fish are discovered after
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93 At the time this Report was comp
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95 port with the hope it will be ad
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97 Restaurants also are exempted by
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99 entire dusted product is from Ch
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101 written and approved, which is
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RECOMMENDATIONS The U.S.-China Trad
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105 gress could enable consumers to
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107 26. ‘‘China Central Bank to
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109 82. USTR, ‘‘2008 National T
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111 121. U.S.-China Economic and Se
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113 173. ‘‘China’s Stake in B
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117 282. International Working Grou
Page 129 and 130: 119 323. U.S.-China Economic and Se
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
Page 178 and 179: RECOMMENDATIONS China’s Prolifera
Page 182 and 183: 172 41. U.S.-China Economic and Sec
Page 184 and 185: 174 80. Janice E. Thomson, ‘‘St
Page 186 and 187: 176 112. Reinhard Drifte, ‘‘Jap
Page 193 and 194: CHAPTER 3 CHINA’S ENERGY AND ENVI
Page 195 and 196: 185 A growing share of energy deman
Page 197 and 198: 187 pleted. Without the discovery a
Page 199 and 200: 189 A Survey of China’s Interests
Page 201 and 202: 191 projects that imports of natura
Page 203 and 204: 193 and design of the units. 71 Chi
Page 205 and 206: 195 dioxide, nitrous oxide, mercury
Page 207 and 208: 197 sions are realized and producti
Page 209 and 210: 199 ferent interests that motivate
Page 211 and 212: 201 the oil, gas, coal, and power i
Page 213 and 214: 203 fluential figures in business a
Page 215 and 216: 205 The Terminology Used to Describ
Page 217 and 218: 207 velop international and domesti
Page 219 and 220: 209 that growth must occur in an en
Page 221 and 222: 211 servation. Officials highlighte
Page 223 and 224: 213 grated Gasification Combined Cy
Page 225 and 226: 215 Obtaining sufficient movement f
Page 227 and 228: 217 nology and finding ways to make
Page 229 and 230: 219 • As the negotiations for a p
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221 ENDNOTES FOR CHAPTER 3 1. U.S.-
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223 tent.aspxdata=EmergingMktlconte
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225 13, 2008. These tools include s
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Page 239 and 240:
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
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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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281 ENDNOTES FOR CHAPTER 4 1. U.S.-
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283 42. UN Conference on Trade and
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285 87. U.S.-China Economic and Sec
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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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315 90. U.S.-China Economic and Sec
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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
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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
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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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