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COMMITTEE ON FOREIGN AFFAIRS
U.S. HOUSE OF REPRESENTATIVES
WASHINGTON, D.C. 20515

STATEMENT OF THE HONORABLE ENI F.H. FALEOMAVAEGA, CHAIRMAN
Before the SUBCOMMITTEE ON ASIA, THE PACIFIC, AND THE GLOBAL ENVIRONMENT
US-China Relations
March 27, 2007

US-China trade has risen from $5 billion in 1980 to $343 billion in 2006. China is now the second largest trading partner of the US, the 2nd largest source of imports, and the 4th largest export market.

However, serious issues affect the relationship. Our trade deficit with China rose from $30 billion in 1994 to $232 billion in 2006 making this the largest US bilateral trade imbalance.

China's currency policy is also a point of contention with many analysts suggesting that China's policy of buying foreign reserves to influence the value of its currency against the dollar constitutes a form of currency manipulation intended to make its exports cheaper and imports into China more expensive than they would be under free market conditions.

China's record on intellectual property rights is considered by the US to be one of its most serious deficiencies to its World Trade Organization (WTO)'s obligations.

As a global economic power, China's rising power is beneficial in many ways to the US but also poses concern for American workers especially as China moves from low-cost labor intensive manufacturing to more advanced industries such as autos and high technology products.

China's growing demand for energy with a population of more than a billion people will create new challenges as the US also competes for these resources.

China also continues to make investments in Africa and the South Pacific. Two weeks ago, during our subcommittee hearing on US-Pacific relations, the US State Department expressed concern that the People's Republic of China and Taiwan are engaged in 'checkbook diplomacy' to obtain favors from South Pacific Island nations. I find it hard to believe that this Administration is accusing China and Taiwan of checkbook diplomacy while our own government transferred billions of dollars in cash for distribution to the Iraqi people as part of our national policy that has now created a terrible mess in that region of the world.

Personally, I want to commend the people and leaders of China for providing real, substantive assistance to the island nations of the Pacific. In his meeting in April last year with the island nation leaders, Chinese Premier Wen Jibao announced that his nation will establish about a $400 million trust fund whereby Pacific island nations can obtain low interest loans to develop their agricultural, fishery, tourism, telecommunication and aviation needs. China will also be offering training opportunities for some 2,000 qualified persons from among island nations.

I am saddened by the fact that US foreign policy in the Pacific continues to be well known throughout the region as one of 'benign neglect' and I am hopeful that given China's activity in the region our own US State Department will follow suit and be more pro-active in offering assistance to the Pacific region.

Regarding the environment, China's rapid growth has had a serious impact on the environment being that China has a heavy dependence on soft coal and is now second only to the United States as the largest contributor to CO2 emissions.

Beijing has made efforts to address its environmental problems and has undertaken to develop cleaner technology including hydro-power. Projects such as the Three Gorges Dam are underway but are also being criticized. It is my intention to visit the Three Gorges Dam in the very near future and engage in discussions about the benefits of the project as well as the downside about how this project may be affecting China's neighbors.

Finally, I am interested today in determining where we are now as a result of China's recent anti-satellite test conducted on January 11, 2007. The test confirmed China's long suspected anti-satellite program and capability. But, given that this test followed three previous ASAT tests, did the test show a threat to the United States or was China responding to the Bush Administration's National Space Policy of 2006?

I welcome Deputy Assistant Secretary Christensen and I look forward to his remarks. However, first I would like to recognize our Ranking Member for any opening remarks he might have.