U.S.-China Economic and Security Review Commission, "Hearing: The Impact of China’s Economic and Security Interests in Continental Asia on the United States," May 20, 2009

May 20, 2009
Room 562 Dirksen Senate Office Building
First Street and Constitution Avenues, NE
Washington, DC 20510

Hearing Co-Chairs: Commissioners Daniel Blumenthal and Jeffrey Fiedler

Opening Statement of Carolyn Bartholomew, Chairman

Good morning and welcome to the fifth hearing of the U.S.-China Economic and Security Review Commission’s 2009 reporting cycle. Today, the Commission will examine the impact of China’s economic and security interests in Continental Asia on the United States. This hearing will address China’s security interests in Afghanistan and Pakistan, and its energy and commercial interests in Central and South Asia. I hope through this discussion that we will be able to identify the specific interests that China has in this region, as well as the broader strategic issues affecting both the United States and China.

To help us understand these issues, we will be joined by a number of expert witnesses from the Government, academia, and the private sector. In particular, we are pleased to welcome Mr. Michael Schiffer, Deputy Assistant Secretary of Defense for East Asia.

The co-chairs leading this hearing are Commissioner Dan Blumenthal and Commissioner Jeff Fiedler. Once again, I welcome all of you to this hearing, and I now turn to Commissioner Blumenthal for his opening statement.

Opening Statement of Commissioner Jeffrey Fiedler

Thank you, Commissioner Blumenthal. And, thanks to our witnesses for being here today. The Department of Defense 2009 Annual Report to Congress on Military Power of the People’s Republic of China states, “China’s current strategy is to manage external tensions to assure an environment that is conducive to economic development.” With tensions along its land borders in Central and South Asia, China views instability in this region as a challenge for improving its trade and commercial ties.

Currently, China’s trade and investment in the region is heavily concentrated in raw materials, infrastructure, and energy. In 2007, China Metallurgical Group’s $3.5 billion investment in Afghanistan’s Aynak copper field is Afghanistan’s largest foreign investment. Its participation in the “New Silk Road” project will construct and improve existing roads linking China to the entire region, and all the way to Iran. Furthermore, China’s construction of pipelines in Central Asia will provide alterative supply routes for oil and gas that bypass the critical Malacca Strait. These investments in Central and South Asia demonstrate that China is diversifying its resources and building critical links to foster trade and commerce.

Therefore, this hearing is to determine the impact of this activity on the United States, particularly as it seeks to build up security in Afghanistan and Pakistan by improving their prospects for economic development. What role can China play in this endeavor through its investments and trade? What concerns, if any, should the United States have about China’s investment strategy in Central and South Asia? And, finally, what should be done to ensure that U.S. economic and security interests in the region are protected? These are a few questions that I am interested in exploring during today’s hearing.

We thank all of you for participating, and we’ll begin with today’s first panel.

Commissioners’ Opening Statements
Opening Statement of Chairman Carolyn Bartholomew
Opening Statement of Commissioner Jeffrey Fiedler

Panel I: Administration Perspective
Mr. Michael Schiffer, Deputy Assistant Secretary of Defense for East Asia, U.S. Department of Defense, Washington, DC

Panel II: China’s Interests in Afghanistan and Pakistan and Their Impact on the United States
Mr. Abraham M. Denmark, Fellow, Center for a New American Security, Washington, DC
Dr. Walid Phares, Director, Foundation for the Defense of Democracies’ Future of Terrorism Project, Washington, DC
Ms. Lisa Curtis, Senior Research Fellow, The Heritage Foundation, Washington, DC

Panel III: Continental Asia in China’s Global Energy Strategy
Ms. Julia Nanay, Senior Director for Country Strategies, PFC Energy, Washington, DC
Dr. Stephen J. Blank, Research Professor of National Security Affairs, Strategic Studies Institute, U.S. Army War College, Carlisle, PA

Panel IV: China ’s Trade and Investment in Continental Asia
Mr. Daniel Twining, Senior Fellow, German Marshall Fund, Washington, DC
Dr. Martin Spechler, Professor of Economics, Indiana University-Purdue University, Indianapolis, IN