OPENING STATEMENT BY COMMISSIONER ROBERT F. ELLSWORTH
U.S.-China Economic & Security Review Commission
Field Investigation on “China as an Emerging Regional and Technology Power: Implications for U.S. Economic and Security Interests”
University of California, San Diego
La Jolla, CA
As the Chairman and Vice-Chairman have explained, our field investigation in Southern California addresses the issue of China’s high-tech development and the regional and U.S.-China bilateral implications. I thought it would be helpful for the Commission in fulfilling its Congressional mandate if it came out West to dialogue on this issue with those in the California academic and technology communities who have unique perspectives on these important matters. With the help of Dean Peter Cowhey and Professor Susan Shirk, we have put together what I believe will be an informative session for the Commission. I thank UCSD and the Graduate School of International Relations/Pacific Studies for their first-rate assistance.
The rise of China in my view is the economic and geopolitical event of our age. It is bringing two centuries of global domination by Europe and subsequently, America, to an end. World-transforming change has begun. Measured by purchasing-power parity, China is already the second largest economy in the world – second only to the United States – and the world’s largest population by far. Its potential for the future is huge.
For American high-tech companies, China presents both a challenge and an opportunity. While barriers to trade and investment have come down following China’s accession to the World Trade Organization (WTO), these firms still face an array of obstacles in China, from remaining tariffs and non-tariff barriers to China’s weak protection for intellectual property. Moreover, down the road, U.S. and other technology firms likely will face increasing competition from Chinese domestic firms whose technological advancement is on the fast track.
China’s cell phone consumption is the highest in the world and it is a major market for semiconductors. It has become a growing center for high-tech manufacturing, and in some cases research and development, for global technology firms. As a result China plays the role of lucrative market to high-tech companies, as well as a cost effective production and research base. The Commission seeks to understand these dynamics – particularly the rapidity with which China is developing its high-tech capacities – as they pose issues for both our economic competitiveness as well as national security concerns where certain sensitive or military-related technologies may be involved.
The quality of China’s military modernization program is impressive, albeit the quantities are small. Most of China’s effective military power threatens Taiwan. Precision-guided missiles, strike aircraft, fast-attack submarines, nuclear and space capabilities – all are being modernized.
A second major issue that will be addressed during our field investigation is how these dynamics are affecting trade and investment trends for the Asian region as a whole. The re-export of high-tech manufacturers through China has changed the investment and trade flows of the region. China’s major role in the global supply chain for technology goods and its corresponding economic clout is impacting the political landscape of Asia. The Commission needs to assess these trends and their implications for U.S. interests in the Asia region.
Following an introduction by Dean Cowhey on “China as an Emerging High Tech Giant,” the morning portion of this hearing will consist of two panels. The first will explore the current trends and future challenges in China’s economy. Professor Barry Naughton of UCSD, Professor Scott Rozelle of UC Davis, and Professor K.C. Fung of UC Santa Cruz will speak about the economic trends in China’s rural areas and the thriving economy of its foreign invested eastern coast.
The second panel will examine China’s role in regional production and investment networks. Professors Gordon Hanson, Stephen Haggard, and Richard Feinberg, all from UCSD, will testify.
During the second portion of the day, the Commissioners will have an opportunity to dialogue with California’s high-tech industry leaders. The afternoon will begin with a panel focusing on the biotechnology industry. Dr. Lee Zhong, President of NatureGen and Elene Pharmaceuticals, Mr. Greg Lucier, President and CEO of Invitrogen Corp., Mr. Joseph Panetta, President and CEO of BIOCOM, and Dr. Kerry Dance, Managing Partner of Hamilton Apex Technology Ventures, LP will join the Commission.
The final two panels will cover a range of other key high-tech industries. We will have a panel with William Bold, Vice President of Government Affairs for Qualcomm, Jason Dedrick of the Center for Research on Information Technology and Organization (UC, Irvine), and Dr. Francine Berman, Director of the Supercomputer Center (UCSD). They will testify from the perspectives of the telecommunications, electronics manufacturing and supercomputing industry, respectively. During the last panel of the day the Commissioners will hear from Dr. Michael May of the Center for International Security and Arms Control (Stanford University) who will focus on the energy industry.
Our field investigation will conclude tomorrow with a roundtable discussion on China’s role in Asia. Professors Susan Shirk and Ellis Krauss of UCSD and Professor David Lampton of the Johns Hopkins School of Advanced International Studies will participate.
Again I thank UCSD and the Graduate School for their help in putting together our two-day event, and look forward to the written_testimonies.