What is China’s Future?

• Potential military threat to the US?
• Potential partner in trade with the US -- with internal stability?
• Potential collapse of the Chinese State?

Can US Trade Policy Shape China’s Future?

• Is the present US export policy detrimental to our future relations with China?
• Would a more open policy lead to better communications between the US and China?
• Would this lead to reduced tension between China and the US?
• Will restricting military and dual use exports delay or prevent the Chinese military from becoming a threat?

Answers to These Questions Are Conflicted

• Honest adherents of different economic and political persuasions support different solutions.
• A better understanding of what we can and can’t do could lead to some agreement on how to proceed.
• In this regard, a recent Defense Science Board study might be helpful.

Report of the DSB Task Force on Globalization & Security

• The Task Force was composed of a number of knowledgeable individuals who studied various issues for more than a year and issued a final report in December 1999.
• Some of the findings and recommendations of this Task Force may be of interest to this Committee.

The Findings Support Changes to Our Present Export Control

• The phenomenon of accelerated global integration is largely irresistible and is a fact to which policymakers must adapt.
• Globalization is altering fundamentally the composition of DoD’s supporting industrial base.
• DoD now is supported by a more commercial intensive industrial base that is becoming increasingly international in character.

The Impact of Globalization on National Security

• Globalization and the commercial sector are driving development of much of the advanced technology.
• Over time, all friendly and adversarial States will share access to the majority of the technology underpinning the modern military.
• U.S. military-technological advantage will derive less from advanced component and subsystem technology than from our defense sector’s superior system integrators.

Effect of Our Export Control Policy

• Increasing the US dependence on export controls to maintain the capability gap between US military forces and those of our competitors will ultimately increase, not decrease,the likelihood that the gap will narrow.
• DoD should attempt to protect for the purpose of maintaining military advantage only those capabilities and technologies of which the US is the sole possessor.

External Threats Are Increasing

• With military “cook books” globally available to construct weapon systems, the US will face a number of threats.
• Russia and China have the capability of developing superior weapon systems.
–e.g., Russia’s doubled hulled titanium submarines
• Even poor nations can develop “good enough” weapon systems.
–e.g., North Korea’s ballistic missiles
• Threats can evolve quickly.
–Consider how Germany transformed its military might between 1932 and 1939.

With an Unknown Future…What Actions Should the US Take?

•US Export Control policy may play a minimal role in National Security.
•The first responsibility of our Government is the Survival of our Nation.
•The Federal Government alone has responsibility for National Defense.
•Unfortunately, the Defense Sector’s capability as a system integrator is slowly eroding.

Defense of Our Nation Must Be Given the Highest Priority

•Between 1985 and 1999, Defense procurement, in real terms, fell 50 percent--from approximately $100 billion to $50 billion per year.
–FY01 Defense funds are expected to consume 2.9 percent of the GDP, the lowest level since WWII.
–At the height of the Reagan build-up, we spent 6 percent of the GDP on Defense.
•Democracies often have been unwilling to divert sufficient funds to meet future threats and then have had to pay a horrible price.

The US Needs To Be Better Prepared for Future Threats

•While this Administration recognizes the need to restructure our military force to meet future threats, the super sandboxes of Congress, the Defense Industry, and the Military make it impossible to do with the present budget.
•In addition to export controls and Globalization, over which we have limited control, we need to focus on policies and resources under our direct and full control.
•This Nation must give Defense a higher priority.