Washington Post



Panel: Toughen China Policy

Beijing Makes Manufacturing Gains, Sees U.S. as Vulnerable

By Glenn Kessler
Friday, July 12, 2002

A bipartisan congressional commission warns that China is making dramatic economic and strategic advances against the United States, requiring a much tougher response to ensure compliance with trade laws and to prevent the spread of weapons of mass destruction.

A 200-page report from the U.S.-China Security Review Commission, scheduled for release Monday, is noteworthy for its skeptical view of Chinese intentions and the near-unanimous endorsement of that view by members of the panel.

The report asserts that the Chinese leadership often portrays the United States as a "powerful protagonist and overbearing bully" but also views the United States as a declining power with exploitable military vulnerabilities. The report concludes that, despite the advent of China's entry into the World Trade Organization, the U.S. trade deficit with China will continue to worsen.

The report also determined that despite the popular perception of China as mostly a manufacturer of toys and other simple products, the Chinese have made huge strides in the production of advanced goods. The United States runs a trade deficit with China in a majority of the items on the Commerce Department's advanced technology product list, the report said, warning that a growing reliance on Chinese imports might eventually "undermine the U.S. defense industrial base."

The commission also warns that China is one of the world's leading sources for missile-related technology and nuclear materials for terrorist-sponsoring nations, presenting "an increasing threat to U.S. security interests, in the Middle East and Asia in particular." While China has made numerous multilateral and bilateral commitments to stop proliferation, "despite repeated promises [it] has not kept its word," the report said.

The report, the product of nine public hearings involving 115 witnesses, was the first produced by the commission, which was evenly divided among Democrats and Republicans. It was adopted 11 to 1. A copy of the report was obtained yesterday.

The report has stirred concern among business executives, who fear it could spur congressional efforts to limit business investment and trade with China. The lone dissenter, William A. Reinsch, a Clinton administration undersecretary of commerce, noted: "The commission majority has bent over backwards to avoid describing the Chinese as a 'threat;' yet the belief that they are permeates every chapter."

Congress created the commission at the end of 2000, when U.S.-China relations were at a low point. In the past year, especially after Sept. 11, relations have improved, and it is unclear if the report will generate renewed furor about Chinese intentions.

The report urges an "immediate review and overhaul" of U.S. sanction policies, including giving the president authorization to invoke economic sanctions against foreign nations that proliferate weapons of mass destruction or related technologies. The report also recommends the use of financial sanctions, such as denial of access to U.S. capital markets to companies involved in proliferation.

"The toolbox of incentives and disincentives needs to be broadened," said commission Chairman C. Richard D'Amato. "Quite clearly, jawboning does not work in this area."

The report notes that the Chinese government and state-owned enterprises have raised more than $40 billion in the international capital markets in the past decade, including $14 billion in the United States in the past three years. But the report said the U.S. government lacks ways to monitor national security concerns raised by this development, requiring beefed-up disclosure and reporting requirements for Chinese companies at the Securities and Exchange Commission.

The commission was formed in part to provide a congressional imprimatur to U.S.-China policy, which many lawmakers believed has been dominated by the White House since Henry A. Kissinger, as national security adviser, secretly traveled to Beijing in 1972 to reopen relations. "We hope to build some kind of common ground in the Congress as we go forward," said D'Amato, a former foreign policy aide to Sen. Robert C. Byrd (D-W.Va.), who had pushed for the commission's creation.