Remarks by U.S. Senator Robert Byrd, West Virginia
U.S.-ChinaCommission's Organizational Meeting
Room 128 of the U.S. Capitol
April 24, 2001

SENATOR BYRD: Gentlemen, if you will forgive me. I want to use the lectern. I hope you won't misunderstand, but from my standpoint it's better for me to be standing.
I subscribe one thousand percent to what Senator Sarbanes has said. I'm pleased to welcome the Members of the Commission. When we first met you had a special responsibility and unique opportunity to provide fresh eyes and independent judgment on the volatile emerging relationship between the United States and China.
The relationship that we're developing with China is surely the most delicate, bilateral relationship for our country in the foreseeable future. This arises from at least two widely recognized phenomena. First, America's primary center of strategic interest is shifting away from Europe and the North Pacific. Second, China has enormous untapped economic resources. Consequently, while mutual perceptions and policies are evolving, we face a complex amalgam of opportunity and danger.
This Commission has a difficult job because of a host of unknowns in both the economic and security spheres that need serious investigation. The guiding principle from each Member of this Commission must be to discern what is in the best long-term national security interest of the United States. Your conclusions will be invaluable and will help to guide debates and influence legislation in the Congress.
The mandate that you've been given in the legislation that created the Commission was intentionally broad in both the economic and securities sphere. Little of vital importance has been vetted off the table. The enabling statute and I think we all should read it again and I want to touch upon it just for a moment. The enabling statute provides you the time and the resources to explore all productive avenues and broad spheres of inquiry. There are many unknowns such as the full range of transactions that link the Chinese and American economies and the extent to which such transactions help maintain the vitality of the Chinese leadership. The USSC enabling legislation requires that the Commission's report include a full discussion of the PRC's acquisition of dual use and military high technology from the United States. The PRC is concentrating from technology acquisition from the United States and the West in lieu of Chinese research and development as a means of accelerating its military build up.
Obviously, much time can be saved by leap frogging the R & D process if the work that the United States has already performed at great cost to the taxpayers, does not have to be duplicated by and for the PRC military. Equally important is China's acquisition of older and cheaper technologies that can circumvent our military systems precisely because they are so primitive.
Besides the direct acquisition of technology by contract or use of technology offset requirements as the cost of doing business in China, the PRC is utilizing the Peoples Liberation Army and the Defense Ministry-owned front companies operating in the United States to procure advanced dual use and military technology and high tech items such as high performance computers and navigation and communication equipment for the Chinese military.
Some sources estimate that there are as many as 3,000 PRC front companies in the United States. They typically have non-Chinese American-sounding names and some even have stock traded on our stock exchanges. Similarly, in our tech markets which the Chinese are fully utilizing to borrow tens of billions of dollars for military purposes, U.S. investors may also be unknowingly helping to accelerate the Chinese military build up.
On the trade side there are other issues, but we as a nation have not really formulated a coherent approach to Chinese trade and balances. We must recognize that the Chinese leadership refuses in many instances to play the trade game according to the understandings that have long formed the basis of America's bilateral relationships.
The Commission, which preceded you, did some preliminary work on these issues and I encourage you to review their work. It is clear that the Chinese regime is testing the mettle of this Administration on the security side and here, we as a nation, face real danger because there is the possibility that the Chinese have miscalculated our resolve to protect our interests and our commitments, particularly toward Taiwan and your organization can help to ensure that such miscalculations can be avoided or minimized.
The Chinese has written openly about new forms of warfare such as cyber-warfare that they feel could offset America's military and strategic advantage and traditional military forces. This is another example of refusing to play ball in the customary manner. I expect that you will examine China's intentions and programs in this area. The incident with our EP-3 reconnaissance plane was unfortunate, but it has had the salutary benefit of broadening the view that the Chinese-U.S. relationship must be approached as a coherent whole. We cannot compartmentalize the relationship and the economic factors on one side, unconnected and unaffected by our military and strategic relationship on the other. Chinese perceptions and intentions on security matters and the overall military balance are certainly affected by the range and type of our economic connection.
Indeed, the mandate of the Commission arose from the need to develop such an integrated assessment that has been likened in U.S.-PRC contacts for too long. There is obviously a very broad range of topics that you can find to investigate. For your initial effort, your initial report, you will have to choose the most important htmects of your mandate. You would serve our country well and you would serve the Senate well if you could first determine the magnitude of the economic resources China has accumulated through trade and investment flows and to what extent they are being used to fuel a growing military establishment.
Secondly, there's a need to know what military useful technologies the Chinese are acquiring and why and finally, we must try to deduce China's apparent intentions and behaviors from their leaders' stated remarks. You certainly have support for your on-going efforts. I look forward to conferring with you from time to time. The Commission's first required report is due next March and I expect that it will be the first of many regular exigencies about the nature and the dangers and the opportunities of this relationship. You are charged with providing an overall assessment of the state of our bilateral security relationship, which necessarily includes economic and military variables.
In the interim period, however, if events of the same important nature arise and compel you to provide advice or recommendations on a specific matter, I would encourage you to do so even in an open or confidential manner.
China's military officials have openly stated that war with U.S. early in this century is to be expected. We should take these statements seriously. I urge the Commission to fully investigate it from all htmects of PRC's security-related activities in strict compliance with the mandates set forth in USCC administration. It is in our national security interest to do so.
If you'll forgive me, but having lived a long time, longer than any of you, I feel it important, I feel it important to emphasize what we say in this legislation. We have a lot to do with what's in there. And so if you'll forgive me, you've read this time and time again, perhaps more times than I have by far, but let's think about it together. The purposes, the purposes of this are to establish the U.S.-China Security Commission to review the national security implications of trade and economic ties between the United States and the Peoples Republic of China.
I voted against the legislation, the trade legislation for many reasons. It was my feeling that if we're going to have it, we ought to have a way of monitoring an assessment what we're trading with China, what effect, what impact it is having on our national security certainly in the long run. And this wasn't easy to sell, you know. We had some people who were against it, at least in the beginning. But it was the right thing to do. It was in the interest of the United States. You can hardly argue with that.
Dropping down the page, the purpose of the Commission is to monitor and investigate and report to Congress on the national security implications of the bilateral trade and economic relationships between the United States and the Peoples Republic of China. Let me say that again. Report to Congress on the national security implications of the bilateral trade and economic relationships.
Now skipping over in the legislation -- I'm on page 3 now and I'm going to page 4, I'm passing that. I'm going to page 5, go to page next. Contents of the report. Each report under paragraph 1 shall include at a minimum a full discussion of the following: (a) the portion of trade of goods and services with the United States and Peoples Republic of China dedicated to military systems or systems of the dual nature that could be used for military purposes.
(b) The acquisition by the Peoples Republic of China of advanced military or dual use technologies from the United States by trade to include, procure and other technology transfers, especially those transfers, if any, that contribute to the proliferation of weapons of mass destruction or the delivery systems or that undermine international agreements of United States laws with respect to nonproliferation. These are pretty heavy assignments. (c) Any transfers as those identified under subparagraph (b) to the military assessment of the Peoples Republic of China made by U.S. firms and U.S.-based multinational corporations.
(d) An analysis of the statements and writings of the Peoples Republic of China officials and officially sanctioned writings that bear on the intentions of any of the government of the Peoples Republic of China regarding the pursuit of military competition with and leverage over all or incorporated with United States or our allies.
(e) The military actions taken by the government of the Peoples Republic during the preceding year that bears on national security of the United States and the reasonable stability of the Asian allies to the Union.
(f) The effects, if any, on the national security interest of the United States of the use by the Peoples Republic of China of financial transactions and capital flow and currency manipulations.
(g) Any action taken by the government of the Peoples Republic of China in the context of the World Trade Organizations that is adverse or favorable to the United States national security interest.
(h) Patterns of trade and investment between the Peoples Republic of China and its major trading partners other than the U.S. that appear to be substantively different from trade and investment patterns with the U.S. and whether the differences have national security implications for the U.S.
(i) The extent to which the trade surplus in the Peoples Republic of China with the U.S. enhances the military budget of the Peoples Republic of China.
(j) And finally, an overall assessment of the state of the security challenges presented by the Peoples Republic of China to the U.S. and whether the security challenges are increasing or decreasing from previous years.
Now this is a big order. This is a tough assignment that you have. And to undermine the importance that Senator Sarbanes and others who have signed this authorization of appropriation, in general, it is authorized to be appropriated a Commission for the year 2001 and for each fiscal year thereafter a set sum as may be necessary to enable the Commission to carry out its function under this section. That's a pretty impressive underwriting of the work you have before you. Amounts appropriated to the Commission shall remain available until expended.
As an appropriations Committee Member, I fully subscribe to this and support. I don't know of anything more important for the future of our country.
I'm not against trade. I'm not against trade. But I'm been in the Congress now for 49 years and as long as Strom Thurmond has been here.
(Laughter.)
But I haven't seen an Administration yet, Democratic or Republican, that I felt viewed trade negotiations with others in the State Department complex. We would always come out on the short end. Go to West Virginia. Talk to those people down there. Steel is heading out the door now. We used to have 14,000 workers in steel. Now we have about 400. The same thing can be said about pottery, leather goods, shoes and on and on and on. We used to have 125,000 coal miners in West Virginia when I first started out in politics. Today we have 18,000 or 19,000 and with machines they're getting as much coal as 125,000 could.
But I still would like to say this. Trade is important, but this is a different problem here than we've had before. We're talking about a country that already has a magnitude in size and population beyond the comprehension of the average person, a country that's growing and a country that has an agenda, leaders that have an agenda and they're still communist leaders and you can bet your boots that they'll be working when you're sleeping and I'm sleeping. They'll be working to get ahead. And so that's why I thought we ought to have a Commission. I thought it was important that if we open the trade doors with China, let's see -- we have to be sure that our own manufacturing goods, our own money is not going to be used to enhance their national security. I wish you success in your endeavors. If you'll excuse me, I've got to go. I appreciate it.
(Applause.)
Thank you, gentlemen. You certainly have my support. Ladies.
COMMISSIONER DREYER: We'll try to be worthy of it.
SENATOR BYRD: I'm sure you will and I'll say a closing word about Dick D'Amato. He was on my staff for many years. He was my specialist in arms relations, China affairs, national defense and national security and these important subjects. I've been in many parts of the world with him. He has a fine mind, highly dedicated. He's smart and I have great confidence that he and you will be justified in the confidence that Congress has invested in him.

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