U.S.-China Economic & Security Review Commission
Hearing on
“China’s Growth as a Regional Economic Power: Impact and Implications”
December 4, 2003
Today our Commission will hold the fifth in its series of hearings during the 108th Congress.
Our hearings in September and October – on the questions of China’s exchange rate and investment policies and the geopolitics of China’s growing energy requirements, respectively – offered a useful framework for the discussion we will be having today on the security dimensions of China's emergence as a regional economic power. China’s currency and industrial policies impact its economic relations with its Asian neighbors, just as they do with respect to the United States. The so-called “hollowing out” of industry is not an expression confined to headlines in the U.S. South Korea, Japan and Taiwan all face similar challenges from China.
There is a growing acknowledgment in Asia of China’s central role in the region’s web of trade, investment, manufacturing and distribution. For some regional neighbors, China represents a fierce competitor for trade and investment dollars, for others China represents an expanding market for its goods and a potential source of investment. In many cases, China represents both dynamics at the same time. What is clear is that China’s growing economic clout in the region inevitably will expand its political influence in the area, with corresponding economic and security consequences for the United States.
While today's focus is on the economic dynamics of China's relations with regional states, the political and security dimensions are always in play, particularly with respect to the relationship between Taiwan and China. Recently, new tensions have arisen as a result of Taiwan's decision to hold national referenda on a number of issues. China reportedly views this democratic development as a provocation and has engaged in threatening rhetoric concerning any actions by Taiwan that it interprets as movement in the direction of independence, including referenda on unrelated subjects.
Given this environment, the United States would be well-advised to maintain its long-standing unstated policy of not actively supporting, but also not opposing, Taiwan's independence or democratic moves in that direction with the goal of a peaceful outcome. Moreover, it would be counterproductive, and even perilous, for our government to allow itself to be perceived as, in effect, endorsing Beijing’s view of what constitutes a "provocation" in cross-Strait relations.
Today, with experts organized in four panels, we will explore some of the details of China's growing economic prowess, first in an overview, followed by a more country specific discussion. We will consider the implications of these regional economic trends for the countries involved as well as for American economic and security interests.
We appreciate the participation of all of our distinguished panelists, who have committed their time and effort to enrich our hearing today and, in turn, the Commission’s work in this vital area of our legislative mandate.
The co-chairs of our hearing today will be Commissioners June Teufel Dreyer and Carolyn Bartholomew. Commissioner Dreyer will preside over the morning session and Commissioner Bartholomew will take the gavel after lunch. I am now pleased to turn over the proceedings to our Commission Vice Chairman Dick D'Amato.