US-China Commission Report - Fatal System Error

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PART 2: JAPAN’S RELATIONSHIP WITH CHINA Introduction The U.S.-Japanese alliance is a vital relationship in Asia, making the Sino-Japanese relationship important to U.S. interests. Sino-Japanese relations are influenced by centuries of war, most recently World War II. Japan and China have strengthened their relationship in recent years by focusing on expanding economic opportunities. This has resulted in significant trade and investment between the two countries. In addition, they have expanded cultural, science and technology, and education interaction. In May 2008, the Government of Japan invited Chinese President Hu Jintao to discuss bilateral relations. As a result of the successful state visit, President Hu and then-Japanese Prime Minister Yasuo Fukuda issued a joint statement regarding a ‘‘Mutually Beneficial Relationship Based on Common Strategic Interests.’’ 177 The visit marked a fresh start in bilateral relations in the 21st century, and both nations pledged to support greater cooperation. Today, the Japanese government’s official posture toward China is to encourage Beijing to participate more actively in the international community. In a 2008 joint statement, the two countries recognized that ‘‘the Japan-China relationship is one of the most important bilateral relationships for each of the two countries and that Japan and China now have great influence on and bear a solemn responsibility for peace, stability, and development of the Asia-Pacific region and the world.’’ 178 To this end, Japan has encouraged China to improve compliance with its obligations to the World Trade Organization (WTO) and has promoted bilateral and multilateral dialogue through high-level exchanges and engagement in regional forums, such as ASEAN+3,* and APEC (Asia-Pacific Economic Cooperation). Japan and China also have cooperated in the Six-Party Talks aimed at improving security in Northeast Asia and globally by persuading North Korea to destroy its nuclear weapons and dismantle its nuclear program. Trade and Economic Relations Japan’s economic relationship with China has been steadily growing over the past 10 years. From 1995 to 2006, Japanese investments comprised an annual average of over 8 percent of the total value of foreign direct investment in China. 179 After a steady rise in Japanese investments in China between 2001 and 2006, manufacturing investments dropped in the first two quarters of 2007. 180 This decrease is attributed to increasing labor costs in * ASEAN is the Association of Southeast Asian Nations. ASEAN+3 includes the member nations of ASEAN plus China, Japan, and South Korea. (264)
265 China, appreciation of the RMB, and Japan’s shift to a broader foreign investment strategy, encompassing other nations like Vietnam and Thailand, in order to reduce risk. 181 In addition, according to the Japan External Trade Organization (JETRO), the boom of Japanese-funded projects in China around the time of China’s entry into the WTO in 2001 now is nearing completion, and the flow of funds from Japan has substantially slowed. 182 Nonetheless, Japan ranked as China’s third largest investor in 2006. Japanese Investment in China, 2000–2006 Number of Projects in China Realized Foreign Direct Investment Value ($ are in billions) Year Japan National Total Share Japan National Total Share 2000 1,614 22,347 7.22% 291.58 $4.071 7.16% 2001 2,019 26,140 7.72% 434.84 $4.688 9.28% 2002 2,745 34,171 8.03% 419.00 $5.274 7.94% 2003 3,254 41,081 7.92% 505.41 $5.350 9.45% 2004 3,454 43,664 7.91% 545.15 $6.,063 8.99% 2005 3,269 44,019 7.43% 652.97 $7.241 9.02% 2006 3,208 41,501 7.73% 655.40 $6.950 9.43% Source: Ministry of Commerce (MOFCOM), China. www.fdi.gov.cn/pub/FDIlEN/Statistics/ AnnualStatisticsData/AnnualFDIData/FDIStatistics,2006/t20070930l85380.htm. Comparative Investments in China Country/Region of Origin Amount Invested 2006 ($ in billions) Amount Invested 2007 ($ in billions) Year-on-Year Growth South Korea $3.99 $3.68 ¥7.89% Japan $4.76 $3.59 ¥24.59% Singapore $2.46 $3.18 29.30% United States $3.00 $2.62 ¥12.79% Taiwan $2.23 $1.77 ¥20.43% Source: U.S.-China Business Council, ‘‘Forecast 2008: Foreign Investment in China,’’ p. 3. http://www.uschina.org/public/documents/2008/02/2008-foreign-investment.pdf. China currently is Japan’s largest import partner, accounting for 20.5 percent of Japanese imports, and second largest export partner, accounting for 15.3 percent of Japanese exports. 183 In 2007, China replaced the United States as Japan’s largest trading partner, with imports and exports totaling over $236 billion. 184 Although trade between China and Japan has been increasing, the Japanese Ministry of Economics, Trade, and Industry (METI) noted four concerns regarding Japan’s relationship with China when Commissioners visited in Tokyo in August 2008. First, like the
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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
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121 361. Food & Water Watch, ‘‘
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123 Louisiana and the U.S. Gulf Coa
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126 While witnesses concluded that
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128 China’s Nonproliferation Comm
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130 State during the interdiction o
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132 Northwest National Laboratory
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134 UN Security Council resolutions
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136 ployment, this change would inf
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138 ing Iran’s missile program on
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SECTION 2: CHINA’S VIEWS OF SOVER
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142 ficing the principle behind it.
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144 baseline. Other states enjoy ov
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146 India, Vietnam, Taiwan, and oth
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148 as, ‘‘What constitutes a sp
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150 The proposed PAROS treaty itsel
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152 enhance China’s assertions of
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154 Media and Public Opinion Warfar
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SECTION 3: THE NATURE AND EXTENT OF
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158 Today, China’s space program
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160 The Management Structure for Ch
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162 • Launching geostationary orb
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164 bility to conduct cyber operati
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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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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
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
Page 231 and 232: 221 ENDNOTES FOR CHAPTER 3 1. U.S.-
Page 233 and 234: 223 tent.aspxdata=EmergingMktlconte
Page 235 and 236: 225 13, 2008. These tools include s
Page 237 and 238: 227 137. U.S.-China Economic and Se
Page 239 and 240: 229 ergy Group, Environmental Energ
Page 241 and 242: CHAPTER 4 CHINA’S FOREIGN ACTIVIT
Page 243 and 244: 233 China will seek to displace the
Page 245 and 246: 235 China to help resolve them. 22
Page 247 and 248: 237 presenting itself as an accepta
Page 249 and 250: 239 China’s infrastructure invest
Page 251 and 252: 241 IMF. The Angolan government exp
Page 253 and 254: 243 China’s Conventional Arms Sal
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Page 257 and 258: 247 pendent of their legislatures a
Page 259 and 260: 249 diplomacy and in the internatio
Page 261 and 262: SECTION 2: CHINA’S RELATIONSHIPS
Page 263 and 264: PART 1: TAIWAN The Significance of
Page 265 and 266: 255 PRC pressure directed against T
Page 267 and 268: 257 this end. 150 (Additional infor
Page 269 and 270: 259 Discussions Regarding Arms Sale
Page 271 and 272: 261 ernment is committed to set ann
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Page 277 and 278: 267 Days later, although they did n
Page 279 and 280: Introduction PART 3: THE REPUBLIC O
Page 281 and 282: 271 South Korean officials emphasiz
Page 283 and 284: 273 mount among the ROK’s diploma
Page 285 and 286: 275 Even after approving these grad
Page 287 and 288: 277 exercising undue influence—be
Page 289 and 290: RECOMMENDATIONS China’s Expanding
Page 291 and 292: 281 ENDNOTES FOR CHAPTER 4 1. U.S.-
Page 293 and 294: 283 42. UN Conference on Trade and
Page 295 and 296: 285 87. U.S.-China Economic and Sec
Page 297 and 298: 287 134. Calculation performed by C
Page 299 and 300: 289 184. ‘‘Factbox: Key facts o
Page 301 and 302: CHAPTER 5 CHINA’S MEDIA AND INFOR
Page 303 and 304: 293 The central role of the Propaga
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Page 307 and 308: 297 Some of the measures taken by C
Page 309 and 310: 299 Images of ‘‘Jing-Jing’’
Page 311 and 312: 301 Legislation was introduced duri
Page 313 and 314: 303 In addition to promoting a powe
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Page 317 and 318: 307 search engine and the servers s
Page 319 and 320: 309 media, the Internet, popular en
Page 321 and 322: 311 ENDNOTES FOR CHAPTER 5 1. David
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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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