U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION (USCC)

2009 REPORT TO CONGRESS of the U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION ONE HUNDRED ELEVENTH CONGRESS, FIRST SESSION NOVEMBER 2009 http://www.uscc.gov/annual_report/2009/annual_report_full_09.pdf [full-text, 381 pages]

Among the topics addressed in the 367-page Report are: * China’s increasingly aggressive espionage efforts to obtain U.S. secrets and technology for the benefit of China’s military and its economy. * China’s stepped-up cyber espionage and cyber warfare capabilities that constitute a growing threat to U.S. computer networks. * China’s extensive use of foreign propaganda and China’s efforts to influence public opinion and policymaking in the United States. * China’s detailed industrial policy designed to attract foreign investment and production and to create “national champions” to compete on a global scale. * China’s use of subsidies and other trade-distorting measures in violation of its international commitments. * China’s role in the creation of the economic imbalances that that helped produce the global financial crisis. * The expansion and modernization of the Chinese navy and its effects on U.S. access to the waters around China and Taiwan and the likelihood of a maritime arms race. * The use of new and more sophisticated methods by Chinese authorities to control the Chinese news media and the Internet. * China’s activities in Afghanistan, Pakistan, and Central Asia. * Mainland China’s increasing influence in Taiwan and Hong Kong. * The effect of China’s policies on the economy of the upstate New York region.

CONTENTS

TRANSMITTAL LETTER TO THE CONGRESS ............................................................... iii COMMISSIONERS APPROVING THE REPORT .............................................................. v EXECUTIVE SUMMARY ............................................................................................... 1 KEY RECOMMENDATIONS TO CONGRESS ........................................................... 12 INTRODUCTION .......................................................................................................... 15 2009 REPORT TO CONGRESS OF THE U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION Chapter 1: The U.S.-China Trade and Economic Relationship ............... 19 Section 1: The U.S.-China Trade and Economic Relationship’s Current Status and Significant Changes During 2009 ..................................................... 19 Section 2: China’s Role in the Origins of the Global Financial Crisis and China’s Response .............................................................................................. 38 Section 3: China’s Industrial Policy and its Impact on U.S. Companies, Workers, and the American Economy ............................................................. 56 Section 4: China’s Industrial Policy and its Impact on Upstate New York .... 80 Recommendations .................................................................................................. 90 Chapter 2: China’s Activities Directly Affecting U.S. Security Interests ........................................................................................................................ 113 Section 1: China’s Military and Security Activities Abroad ............................. 113 Section 2: China’s Naval Modernization ............................................................ 128 Section 3: China’s Human Espionage Activities that Target the United States, and the Resulting Impacts on U.S. National Security ..................... 148 Section 4: China’s Cyber Activities that Target the United States, and the Resulting Impacts on U.S. National Security ................................................ 167 Recommendations .................................................................................................. 182 Chapter 3: China in Asia ................................................................................... 209 Section 1: China in Afghanistan, Pakistan, and Central Asia ......................... 209 Section 2: Taiwan ................................................................................................. 231 Section 3: Hong Kong .......................................................................................... 245 Recommendations .................................................................................................. 254 Chapter 4: China’s Media and Information Controls—The Impact in China and the United States ......................................................................... 269 Section 1: Freedom of Expression in China ....................................................... 269 Section 2: China’s External Propaganda and Influence Operations, and the Resulting Impacts on the United States ......................................................... 289 Recommendations .................................................................................................. 310 Comprehensive List of the Commission’s Recommendations .................. 325 Additional Views of Commissioners ................................................................ 331 Appendices: Appendix I: United States-China Economic and Security Review Commission Charter .......................................................................................................... 335 Appendix II: Background of Commissioners ....................................................... 345 Appendix III: Public Hearings of the Commission ............................................... 355 A. List of Witnesses Testifying Before the Commission—2009 Hearings ........ 359 Appendix IV: Interlocutors’ Organizations—2009 Asia Fact Finding Trip ........ 363 Appendix V: List of Research Material ............................................................... 365 Appendix VI: Abbreviations and Acronyms ......................................................... 367 Commission Staff and Acknowledgements .................................................... 369

**************************************** Stuart Basefsky Director, IWS News Bureau Institute for Workplace Studies Cornell/ILR School 16 E. 34th Street, 4th Floor New York, NY 10016

Telephone: (607) 255-2703 Fax: (607) 255-9641 E-mail: smb6@cornell.edu ****************************************