U.S. Dept. of State - IIP: The United States and China

Excerpt: Assistant Secretary of State Testimony Before House Subcommittee
(Discusses need for "productive," "forward-looking" U.S.-China relationship)

In testimony June 12 before the House International Relations subcommittee on East Asia and the Pacific, Assistant Secretary of State for East Asian and Pacific Affairs James Kelly said the United States shares "common interests with China that are best served by a productive -- and forward-looking -- relationship."

"We view China as a partner on some issues and a competitor for influence in the region," Kelly said.

Kelly added that recent events have "highlighted the importance of not allowing our relationship to be damaged by miscommunication, mistrust, and misunderstanding about our respective intentions and objectives."

The United States intends either to continue or to expand policies of cooperation with China on issues such as the Korean Peninsula, non-proliferation, open markets, narcotics trafficking, HIV/AIDS, environmental protection and sustainable development, Kelly told the subcommittee.

The United States has a "significant" trade deficit with China, Kelly acknowledged, but added that "the cutting edge of reform and positive social development in China is our trade relationship."

"Our trade with China and our investment there are, without any doubt at all, in our interest," Kelly said.

"The marketplace promotes American values; trade encourages more freedom and individual liberties," he added.

American investment, Kelly went on, "establishes higher standards of enterprise behavior -- in regard to corporate governance, labor relations, or even environmental attention."

With this principle in mind, Kelly said, the United States supports China's accession into the World Trade Organization (WTO) and looks forward to China's hosting of this year's Asia-Pacific Economic Cooperation (APEC) summit in October in Shanghai.

"The President has said that he plans to go to Shanghai and Beijing in the fall. His presence at the APEC Leaders' Meeting will speak volumes about our commitment to market-oriented economic reform in China," Kelly said.

"We have been, and will continue to be, clear and straightforward with China about our interests, including our commitment to peaceful resolution of differences with Taiwan, to the Taiwan Relations Act [TRA], and to freedom of navigation in international waters and airspace," he added.

He noted that China "continues to deploy forces across the Taiwan Strait specifically aimed at Taiwan -- and at U.S. -- capabilities."

"The defensive systems that we provide Taiwan [under the TRA] do not make the peaceful resolution of cross-Strait differences more difficult. On the contrary, they make such a resolution more likely," Kelly said.

He suggested that the answer to resolving cross-Strait relations consists of a combination of political dialogue, economic cooperation and mutual understanding.

United States Policy in East Asia and the Pacific
Challenges and Priorities
Testimony before the
Subcommittee on East Asia and the Pacific
House Committee on International Relations
by
James A. Kelly
Assistant Secretary of State for
East Asian and Pacific Affairs

June 12, 2001

Mr. Chairman, thank you. I appreciate the opportunity you have offered me to testify before this subcommittee today.

Our relationship with China is firmly grounded in pursuit of tangible U.S. national interests. We understand, and we believe China also understands, that our relationship will have a profound impact on the security of Asia. The United States seeks a constructive relationship with China that contributes to the promotion of our shared interests in peace, stability, and prosperity in the region.

Recent events have called into question where we stand in our relationship with China and where we want to go. They have highlighted the importance of not allowing our relationship to be damaged by miscommunication, mistrust, and misunderstanding about our respective intentions and objectives. We do not view China as an enemy. We view China as a partner on some issues and a competitor for influence in the region. The Secretary of State has been clear about our vision of this relationship, stating that "China is a competitor and a potential regional rival, but also a trading partner willing to cooperate in the areas, such as Korea, where our strategic interests overlap. China is all of these things, but China is not an enemy and our challenge is to keep it that way."

From promoting peace and stability on the Korean Peninsula to non-proliferation to trade, we share common interests with China that are best served by a productive -- and forward-looking -- relationship.

Clearly, we have some differences. Taiwan has long been one; human rights is another, particularly freedom of expression and freedom to express and practice one's personal faith. Arms sales around the world and the proliferation of weapons of mass destruction are also important issues about which we have expressed concern to China.

We have been, and will continue to be, clear and straightforward with China about our interests, including our commitment to peaceful resolution of differences with Taiwan, to the Taiwan Relations Act, and to freedom of navigation in international waters and airspace.

We want to work both with the current leadership and with the coming generation of leaders in China. We will hold China to its bilateral and international commitments. If China chooses to disregard its international obligations in areas as diverse as security issues, human rights, nonproliferation or trade, we will use every means available to the Administration to persuade it to move in more constructive directions.

The cutting edge of reform and positive social development in China is our trade relationship. We do have a significant trade deficit with China. In 1999, the deficit was $69 billion. In CY 2000, we exported $16 billion to China, but China exported $100 billion to the United States, leaving us with a net trade deficit with China of over $84 billion.

Nevertheless, our trade with China and our investment there are, without any doubt at all, in our interest. The marketplace promotes American values; trade encourages more freedom and individual liberties. U.S. investment establishes higher standards of enterprise behavior -- in regard to corporate governance, labor relations, or even environmental attention. You can see that happening today in China, where trade and investment have led to greater openness and fewer government controls on day-to-day life, particularly in the coastal region most affected by international trade and investment.

We therefore support China's WTO entry as soon as China is ready to meet WTO standards. Taiwan is ready for entry now, and we expect both to enter the WTO.

For the same reasons, we look forward to China's hosting of this year's APEC summit in October. The President has said that he plans to go to Shanghai and Beijing in the fall. His presence at the APEC Leaders' Meeting will speak volumes about our commitment to market-oriented economic reform in China.

Beyond the Korean Peninsula, non-proliferation, and open markets, there are additional areas where we share interests with China and would like to see it continue or expand constructive policies. We want to build on cooperation against narcotics trafficking; China realizes that drugs are a threat to the Chinese people. We want to work with China to combat the spread of HIV/AIDS. And we will continue to work together where possible to protect the environment and promote sustainable development.

China is in a position to chart a mutually beneficial course for our future relationship. This Administration wants a productive relationship with Beijing that promotes our interests and those of the entire Asia-Pacific region. The ball is in the PRC's court. We encourage China to make responsible choices that reflect its stature in and obligations to the community of nations.

We will have to see how China deals with its own growth as a rising member of the community of nations and with the obligations and responsibilities that come with it. For our part, a productive relationship with China can only be based on a true reflection of our values, including human rights and religious freedom. These are our greatest strengths.

Turning to Taiwan, I think this Committee is quite familiar with our policy regarding cross-Strait issues. Let me say simply: the abiding interest of the United States is that differences be resolved peacefully. This interest lies behind the commitments undertaken in the three communiques, and it is at the heart of the Taiwan Relations Act (TRA).

The PRC continues to deploy forces across the Taiwan Strait specifically aimed at Taiwan -- and at U.S. -- capabilities. Some have suggested that our commitment to assist Taiwan in maintaining a sufficient self-defense capability, as articulated in the TRA, is at odds with our commitments in the three communiques. I disagree. The President disagrees. The defensive systems that we provide Taiwan do not make the peaceful resolution of cross-Strait differences more difficult. On the contrary, they make such a resolution more likely. It is worth noting that Taiwan President Chen Shui-bian has repeatedly expressed his continuing commitment to cross-Strait dialogue in statements this Spring.

The central question is how cross-Strait relations can move from a focus on the military balance toward a focus on ways to begin resolving differences between Taipei and Beijing. It seems to me that the answer lies in three areas.

The first priority for the PRC and Taiwan ought to be the resumption of direct dialogue. Both have said they support such dialogue, and such dialogue between authorized representatives has taken place several times over the past decade, including the meeting in Singapore in 1993 and the meetings in Shanghai and Beijing in 1998. The United States does not have a formula for resolving cross-Strait differences, and we do not seek to play a role in this process. But we do have an abiding interest in seeing that the process is pursued only by peaceful means. The prospects are good for cross-Strait progress if the PRC has the political will to advance these important talks. The parties must be clear with regard to their actions in the area of the Strait to avoid any miscalculations -- that is a start. But we would like to see not just a start but real accomplishments in cross-Strait dialogue.

Even while progress on political dialogue seems stalled, economic relations across the Strait are growing exponentially. Taiwan businessmen have invested billions of dollars in the PRC. Annual cross-Strait trade is estimated to be approximately $32 billion. There were over two million visits from Taiwan to the PRC last year. Thousands of Taiwan businessmen and their families live and work in the PRC. Revenues generated by these businesses are fueling the growth of a wide range of Taiwan businesses. Taiwan is also taking initial steps to open its market to businesses from the PRC. The entry of both the PRC and Taiwan into the WTO may well accelerate the economic cooperation between the two sides.

The third area I would highlight is what I would call mutual understanding. Both sides need to have a better understanding of the other side and what it seeks from a closer relationship. In particular, we have urged the PRC to shift from seeking to put pressure on -- even intimidate -- Taiwan and instead appeal to the people of Taiwan. Beijing needs to explain to Taiwan the benefits of a closer relationship rather than the perils of a more distant one.

This is part of the challenge in working with a democracy. The PRC cannot ignore the elected representatives of the people of Taiwan if cross-Strait dialogue is to resume and be revitalized. Instead, it must offer a case that is attractive to a democratically elected leadership.

A combination of political dialogue, economic cooperation and mutual understanding offers the prospect that both sides will find they have increased interests in common and therefore increasing reasons to find practical ways to resolve their differences.

A key provision of the Taiwan Relations Act (TRA), to which the United States remains committed, requires that the United States ensure that Taiwan has sufficient self-defense capability. We believe the TRA is working well.

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