1% of the people in this room know about minimal loss ratios and it is huge. what does it do? the federal government went out and said to private insurers," here is how much money you need to spend on health benefits as opposed to the money you bring in. when bill clinton put his health care plan together, he put it together and made a horrible mistake that barack obama was not going to repay -- repeat it is made his program cost trillions of dollars. obamacare does not count as much, but it is worse. he did something by learning what clinton did wrong. minimum loss ratios. really? [laughter] that's what it was.

the congressional budget office, looking at clinton-care, said that the clinton a administration set the minimum loss ratio at 90%. every insurer has to pay about 90% of their premium dollars in medical benefits. the congressional -- by the way, the average is anywhere between mid 60's to high seventies. they said 90. the congressional budget office said that if you factor in the cost of marketing the health insurance and paying the folks who sell it and paying the full to a minister the plans, there is no money left. there is no real insurance, here. there is no management of care. there is no nothing. all the private sector is is working as a third-party administrator for the

government. so, we are going to count all the money that the insurance company collects as federal revenues. thus, the clinton health care program was trillions of dollars. what the obama administration did, they did not set it at 90%, they set it at 85%. what is going to happen? everyone of your plans has to have 85% minimum. does that mean that some plants will be more? yes. so the insurance money is going to meet money? >know. they will have to increase their premiums. premiums have already gone up and will go up even more once this is implemented because they cannot make it on those margins. the reason i give a long answer

is because the essence is what are you want to do about government interference in the marketplace? what are you going to do about reforming the system so we have real cost reduction? what works to reduce cost? ladies and gentleman, in health insurance, americans do not have any skin in the game. unless you have any skin in the game, you are not going to control costs. the only way you're going to control costs is rationed care. i give a speech at the state capitol on saturday. i talked about -- it was a pro- life speech and i spent most of my time talking about obamacare and this great fight for the

pro-life movement to what obamacare will do without question is ration care. the folks in the progressive movement, the folks on the left, they do not look at it and individual as someone of value. they do not. that is a famous " talked about stalin. socialists love people in groups of a million or more. that is how they look at you. listen to how obama talks. he devised to look into sections. he divided into your racial group, or gender group or class. that is how he sees you. he does not see you. he sees you as a form of military. he sees you as a group that he can appeal to and he can pick off he sees you as a means.

i see you as an end. because you are you. you have rights. your the end of this country. every individual is an end. that is the fundamental difference between them and us. that is held a look at unless we fix health care by using you and focusing on you, it is not one to work. i can give you all sorts of issues. if i get another question on health care of will the new ideas. >> what do you see as the ultimate solution to the problem of illegal immigration? >> this is probably -- i find it interesting that the president ran on illegal immigration and

the senate democrats never even brought it up for a vote. they have a super majority and could have passed any " -- any law they wanted until after the election when they could not pass any bill they wanted and then they bring to boston blamed republicans for blocking it. what does that tell you about what this issue is really about? >> it is about politics. >> it is tragic. you have a group of people in america who are political pawns being used by this president to break you up into class's and pit one group of americans against another. if you want to look at immigration, it will always be us versus them. it will always be the douglas, the insurance companies, employers of do not care about who they hire. on immigration, the basic bottom

line is that we have to secure this border. it is not just an immigration issue. [applause] is a national security issue. would it was going on in mexico. -- look at what is going on in mexico. if mexico did not have so much wealth, they would be on the verge of teetering over, but it has a big enough economy that it will probably be able to hold on, but it will be done -- it will be unstable. from a standpoint of national security and fighting the drug war, is substantial for us to have a secure border because that is where all this crime and drugs are coming through. not to mention the additional threat of terrorism on always remind people that three times a week, a commercial service

between tehran and venezuela arrives at a military base before it comes into a civilian terminal for the there is no question that there are ji hadist training camps and south america. i do not know about you. i do not know if i can tell a spanish-speaking iranian from a spanish-speaking venezuelan. these are serious issues that a border security should address. we have people on both sides of the aisle that have refused to deal with it. but that has to be dealt with. on the issue of immigration, generally, i mentioned before that my father was an immigrant. when he came to this country at the age of 8, he did not speak a word of english. he was put in school where they

spoke english. when i was growing up, my grandmother never spoke english. when i got old enough to figure that out, i asked my dad why he hadn't taught us the italian so i could talk to my grandmother and he said that it was because i and american. -- i am american. i did not need to speak italian. he said the greatest gift of america gave me was that they taught him what it means to be an american. that, first and foremost, is to speak the language of america. [applause] what we need to do -- i am pro- immigration. i am pro-legal immigration if it were not for immigration, we would decline in population america is the least densely populated western country in the world.

there is plenty of room in america for more people who want to come here to be americans. who want to come here to raise their children to learn what america is and to assimilate into our culture. but to buy into the document that all men are created equal and that understands freedom, most people come to this country legally not because they want government to give them something. they want the opportunity that all of us have. one of the ways you can solve this problem is to bring more people in. people who want to work. we have a screw up immigration system that says we have family unification which means we have people here that do not want to work.

we need to focus on getting immigration right. if we get immigration right, i am not concerned that more mexicans want to come to this country. that does not bother me at all. the reason i say that is because i look at our neighbors in europe. they have an immigration problem, too. but where did their immigrants come from? in asia, algeria, turkey, i could go on. there is a difference. we are blessed. we have people who want to come here to buy into america. i am ok as long as they subscribe to the model that is on our corn. not just in god we trust, but the purpose unum -- but e tour

pluribus umum. [applause] >> what are the chances that the department of education could be dismantled? [applause] >> the question is, what are the chances that the department of education be dismantled? >> we should focus on canceling programs in the department of education and show why these programs simply cannot and should not be done on the federal level. in for a very radical concept in education. i home schoolchildren to a certain point, and then they went to public school. why?

because we think that there is a lot more to education than just book learning. they have to understand that. we also think that learning their faith is important and character is important. we think of doing things in the community and been involved with people that are not just their own age is important. we want to provide a different kind of vegetation. we were criticized and penalized by the state of pennsylvania because the teachers unions are very strong and they do not like that. what i believe that we have to do what -- the one good thing about no child live behind is it filed a measured across the country and we found out that our education system is not working very well. that is the good thing that came from a child left the hand of -- left behind. we have to change the way we look at education.

we developed education based on the progressive left wing model. we have government schools. it is a turn-of-the-century factory model. that is what is based upon. schools have not changed since the turn-of-the-century factory model. we have buildings that everybody goes to and get stuck together and it is almost like building a multi cost a model t. we have changed. we have figured out that there are better ways to do this. the other thing that it does is it puts the experts in charge. even good, decent, conservative people, even some people in this room have deferred to the experts in education when it came to it originally. that is foolish. he should listen to them, do not

defer to them. nobody knows your child better than you. we have forgotten that in education. i believe in a system of education that is not a child based, not government based, not school based, classroom based, it is parents based. why? because it is the parents obligation to teach her children. teach your -- teach your children. an ideal world for me is the superintendent of the aiken since school district sitting down with you as a parent and asked what resources they can deploy and how they can structure a system for your child to give them the best chance to learn. i have seven children and they all learn differently. they are all different. if you put them in the same

caution, i guarantee you that they will not all the same. my boys learn differently than my girls. we have an education system -- let's be honest, it is geared toward girls. why? because you have to sit still in the third grade and learn. now, raise your hand if your boy can sit still and learn all they? [laughter] again, is the smart people who think that they know best. having been a home schooling , you have to do what is best for your child. you have to put them in an environment where they can thrive. much as by learning what they need to learn, but when you are hiring people, do you hire a person who has the best grades or do you hire someone with the best character? you can teach them things if

they are good kids and willing to learn. we get so focused on numbers and statistics that that somehow is one to tell us how our kids are doing in some respect. our kids are not machines. we need an education system that is human again. we need parents involved in that period will some parents be bad parents? yes. >> but darn few. we will lose a lot less children because parents did not do their job. this is the kind of -- i think we are thinking too small if we eliminate the department of education. i think we need to think bigger. we need to think about how we can change the education system in this country to greengage parents in the education of

their children. [applause] >> new hampshire the other presidential straw poll listed. this is from this morning's " washington journal." e are joining on the phone by dr. james kimball. let's begin with some of the news in state party politics. you are quoted by saying for years, two families dominated politics. that changed over the weekend. guest: judge greg retired from the u.s. senate.

he is argue nlly the most success fum jge in new hampshire. beginning in 1996. went went to the senate in 1992. for a number of years, these two families dominated the politics. now we are finishing with a new person.

>> he was really outraged by some of the spending done in the first few months in office. he began to put his first political act putting anti-obama

messages on h business's sign saying something about bail outs. started some tea party groups and ran for governor. he received about 30% of the vote in a republican primary. we had a con tenuous u.s. senate race. he is solidly conservative. sometimes, he puts his foot in his mouth. he compared paying taxes to rape for example. he has brought a lot of energy

to the table. there were over 400 people out of 500 state committee members. the national story came out of the meeting. 400 committee members in this none binding straw poll. now getting 35% of the vote. coming in second, congressman

ron paul. sarah pali four and backman safeth. let me remind you mit romney did announce he will run for president later in the spring. the primary is a year away. a number of these candidates, we knew everybody running for president. now we have a situation where maybe a handful of candidates have staffers on the ground. romney is not a new hampshire

residence. he is technically a resident of massachusetts. he had the expectations he had to do fairly well. i think he met those with a clear victory. we covered michelle friday

evening let's listen to what she sa about the question of whether she'll run next year. >> i know it is shocking that when a girl goes to iowa but i'm here to be a part of that conversation for 2012. there's been no decision but i want to be a part of the conversation. michelle bachmann on friday in iowa.

we've seen so much energy. activists are ready to go. we had a house party and former u.s. senatoror's house. almost 200 p.m. attended this house party. people are ready to ge this process going. >> previewing the

>> now, a discussion on mental health services on the nation's college and university campuses. this is half an hour. the shooting in arizona two weeks ago, a renewed debate on the issue of mental health. the president elect of the american college council association. let me begin with one figure i want to put on the table. according to "new york times" found that 44% of college students in counseling have severe psychological disorders up from 16% in 2000. and 21% are on medication, up from ten years ago.

guest: we now have better treatment and better medication than we had 10 or 15 years ago. students are receiving treatment and therapy earlier. parents are more aware of issues and bringing teens in to receive help rather than waiting until they seek help on their own. we are able to receive college students that are better able to receive that therapy host: i understand that's 44% of college students overall. caller: it is simply self disclosure host: what leads to mental disorders, depression and anxiety?

guest: there are environmental issues, triggers and traumas. we commonly deal with depression and anxiety. those are the things we probably spend most of our time on host: is it easier to treat somebody with medical than it is

a medical condition? guest: i think the stigma is slowing fading. it does make it more difficult to treat, there is that stigma. at the same time, medical doctors are some of our greatest referrals. they are understanding and being able to say that needs to be sent to a therapist or pyschologist. what are some of the signs parents should look for that could lead to potential need for therapy? guest: radical behavioral change. that same thing with parents. if you know the child one way

and suddenly you see these changes of isolating, anger, depression, no ability to sooth or cope when something happens. those are all indications to pay attention and sit down and talk to your child host: 202-737-0001. 202-737-0002. also 202-628-0205. one of the reasons we wanted to invite you on was a r asry result of the shooting that took plays in arizona. the defense lawyers will be using his mental health what's

your assessment of who he is and what he was like? guest: that's difficult to say, i don't have my hands on any of the clinical information to know what his state was. i would say clearly he was struggling. it was a tragedy for everyone involved including him. it's hearted to nail down quickly. the insanity defense is tough to prove and also difficult in a sense that if they send him off to treatment, once he is deemed stable, he will then be tried for those crimes host: what are the levels of disorders? guest: it has to do with each individual case. there's no global way to deal

with it. for that individual, that depression is par liesing level is functioning is that decision morning the adult population, 25-26% claim to have some mental disorder. that's a huge number. that could be something that par lieses them in groups. individuals that are violent are a small percentage of of that group, even a smaller percentage would ever act on those violent

thoughts. that's an important thing to remember that mental health doesn't equate to violence. how we see the world. disordered individuals, their ability to operate is very impaired. linda joining us from novmville, tennessee. good morning.

caller: my qualification to speak on these is that i live with a relative that suffers. one aspect i have not heard is the extremely hi cost of the drugs. i calculated it out, the anti-pschotic drugs for my relative cost $24,000 a year. this creates a huge issue. a lot of people are familiar with the problem of an old folk home but they can't afford it. if you don't have private

insurance that will cover the cost of the psychologist and psychist and drug, the only thing do is get the kid on medicaid. if you have a psychotic kid, you have to drop them on the side walk to make them indigent, poor to qualify for medicare. i don't know what happened with the fellow in arizona but i bet that's the dill ema that the family faced. the parents haven't spoken yet. i bet they tried get help. they found out they didn't have insurance, made too much for the

public health system to take him. they kept him in the house and he got out and it blew up in their face. it is a struggle all the way around. >> our guest studied at suni and stone brook and university of

colorado. steve is joining us from colorado. caller: good morning. in light of the shootings there in arizona i guess this loughner guy was kicked out of school and not going to be let back in until he had a mental evaluation. i wonder if it is a good idea maybe the college could have notified any of those entities that would have stopped him from buying the gun. fur kicked out of school awaiting a mental evaluation whether high school or college, your name should go on a list so

you can't buy a gun host: as the caller pointed out, he was kicked out of a community college but had committed no crimes. guest: right. i commend the community college for taking the time to document that. they requested that he leave and could not return to the community until he had an outside psychiatric evaluation. they took the extra step of calling the parents. he's over 18. in truth, they didn't even need to do that. we don't know if he refused that evaluation. we don't know what the results

were. it's difficult but i think the community college went as far as they could within their authority to make sure their community was safe and make sure to offer him treatment. being able to say, i don't think it is a good idea for you to be here now. look at the status of the stu department at that time. they didn't have the ground to send police in or to get involved with the fbi list or any of those kinds of pieces.

i'm not sure if it was a good part of the question. i'm not sure what part of names get moved to that list. if you have a record in public hospital, i don't know a whole lot of details about that host: do you believe laws enacts are in jeopardy because of the tucson incident? guest: that's a tough one for me to answer. i am concerned about that. i would pay attention to that. confidentiality and retekting those individuals is a foundation of therapy and treatment. it is hard for me to stand by and watch that get eroded in terms of this particular

incident, other incidents that we've seen. the media is spending time on the very rare cases and enacting that violence. very small number that looks big in the media host: our guest is mary jane reilgh. next from maryland. caller: if i could add anything to thes first lady's conference about the parents double standard. you got a 22-year-old normal son, he moves away from the home and ends up with a bill of $50,000. no one comes back and says, you are liable for this bill because he's your son. when it comes to the mentally ill, they turn to the parents to

be responsibly for their behavior. society can't make the connection. i'm upset about the media and how these people are talking about politics and guns. the manifestation there is of his mental sickness. he was around a college so it is pointed at the school situation. it's incredible, nobody has this conference.

in the prison, wearing a deliver color uniform so guys don't get on them if they act ee rad yik. one of the issues is often we don't have a solid diagnosis of that until 18-25. we may see signs or concerns there wasn't a very good idea. some of his friends in high

school indicate they were shocked. when we are talking about this, it is not until the late adolescents, early 20's we start to see a clear sense of this come together. >> why not have people. interpreting to be a part of the reporting process. where would you story that data? how would you determine the cutoff. it becomes a bigger question there isn't a simple assessment. how do you deal with a system

set up in place where we are a free country how do you protect someone. maybe severely depressed for a period of time. most mental illnesses have an ebb and a flow.

are there any programs that help facilitating programs community of two-year colleges. they have to develop those kind of referral bases. it really depends on which university you are talking about and which college you are talk about. caller: i find siekology to be

an fluke and a deef way of controlling somebody for job security. psychology is a bunch of intelligent people taking advantage of lesser intelligent or slower people. justice department and shrinks go hand in hand. psychologists have been popping up all over the country by putting fear into the public. district attorneys do the same thing.

the mention of oversite is important. we are required to have continuation and credit we have close issues and oversite host: pete from texas. good morning. caller: thank you for c-span.

there's not enough money spent on this issue as a whole. encourages help and hope in difficult situations it needs to be in the community thank you for approaching and adopting caller: that's one of the issues as a provider i try to let people know

host: nooez had an article describes jennifer, not a real name. felt the pressure of school, it overwhelmed her, she thought about suicide and was able to work through the system. the story is about how universities are training everyone to try to pinpoint some of the red flags suicide more than anything. who to refer to and who are the networks and resources if a

friend talks about killing themselves take it seriously. i often say when they might be kidding around about killing themselves and they are surprised when they end up in my office for evaluation. it's kind of like saying bomb in an airport. maybe it's just one visit to say all right, don't do that again or maybe it's a more serious opening to talk about bigger issues. the more people we have aware of that sensitivity, the better out reach we have host: let me bring it back to the issue of stigma. has that changed ten years

later? caller: it's hard to change determine. people are out there talking about it. a lot more students picking up information for friends. i've seen an increase of that type of foot traffic. kind of wanting to check in because they have a difficult

decision to make host: a couple more of your phone calls. sg morning. caller: i'm calling about grade schools. they take young children. if they have any kind of a disturbance in a class or they don't function exactly how the teacher thinks then they start pill pushing. my one grandson, they said he needed to be on some kind of a medicine because he is hyperactive. they call him into the office to

give the pills and all the kids want to know what's going on. they are looking at the use of psychiatric drugs. parents being as well informed as possible about the education and the style. you have to balance that out with quality of life of the child host: many callers have said many children need to be on ritilin. guest: that's something you have toway out. if the child is not doing well

social socially it's a tough decision. is this the right thing to do. do it carefully host: janet. you are next. caller: i have this turned down. i have an unusual perspective. i was born in the time state hospital for the insane back in 1937. i lived there for the first 9.5 months of my life. at the age of 22, i was

addressed with schzitfrenia. i also went to school in the meantime and got two masters degrees. it's very difficult for anyone to get mental help anymore. i started out in the community placement program where patients were just dumped out. most hospitals have been closed and turned over for less crimina criminals. others are going to jail and prisons where they don't have

treatment for them. there's places where you could go. the doctor can evaluate and slap medicine on them. they need a relationship with a therapist host: and how are you doing today? caller: right now, i'm fine. i lost my husband and got diagnosed with hung cancer. i'm 73. but mentally, i'm doing fine host: thank you for sharing your story with us. guest: there were problems in some of the hospital systems. there were pros and cons. it was kind of a broken syste

host: let me conclude with this question, what's your advice? guest: for me, it's that idea of be kind, understand people are struggling and doing the best they can. each individual has their own struggles. talk to people, it is not an isolated experience. if there's a struggle or concern, reach out to others. don't allow someone to be struggling or be in pain host: jeff, with the last question. caller: thank you for taking my call. pardon my voice.

i had a mental break down as a result of being in desert storm. i had so many issues of what i did and issues that i have to deal with the war now. i can't figure out where my life is going i was fortunate enough to know several people of higher

ranks and made it out of the mental ward and i was so paranoid going back. i was like a warrior his whole life that never had any issues and nobody could believe i could do something like that. i was so afraid of how people thought of me and how i was weak. it was so hard going back. in the end, it cost me my marriage of 17 years. i turned to alcohol after my wife left me. i was drowning in sorrow.

i had a potential six-figure job running a hospital but i gave it up because i needed the support of my family host: what do you think about his story? guest: a lot of veterans are coming back to school now. the veteran's administration are understanding treatments more

>> thank you very mh. thank you. [ applause ] >> thank you very much. please, thank you very much. thank you. all right. thank you. >> lieutenant governor governor michaels, mr. speaker, members of the legislature. chief justice get berthson, juste he is of the supreme court, constitutional officers and fellow south dakotans. thank you very, very much for giving me the enormous challenge and wonderful

privilege of being your governor. it is my privilege today to offer thoughts on the state of our state. to do this one must first ask the question against what standards do we measure ourselves? and i believe we should look to the citizens of south dakota to answer that question. over the last year, most of us were involved in political campaigns. we visited with thousands and thousands of south dakotans. they told us what they want from their government. they want balanced budgets. they want the deficit eliminated. they want fewer and simpler gulations. they want more and better jobs. they want to be protected from crime. they want help for those who need education or training to become self-reliant. they want care for those who have no one to care for them, and they want more opportunities and better lives for themselves, their children and grandchildren.

in short, the people want a strong foundation for our state. and that's where we must focus our energy. that's why the people elected us. i'm grateful for the opportunity we all have toork towards this goal. i'm also very grateful for the hard work that was done over the past eight years by the state legislature and by governor mike rounds. our state is in a much stronger position than almost any other state inhis nation because of decisions governor rounds and this legislature made. each after the national recession, south dakota has more jobs now than when governor rounds took office. we have made improvements in our gross domestic product, visitor spending and capital investment. our unemployment rate is second lowest in the nation. we have made substantial increases in ethanol production and wind energy.

our schools receive $109 million more annually than they did in 2003. we have record enrollments and dramatically more research at our state universities. and we have secured the future of ellsworth air force base and continued the development of the home steak lab. all of this happened because of the hard work of the people of south dakota, our state legislators andovernor mike rounds. please join me in thanking governor rounds and all those who served over the past eight years for their service to south dakota. [ applause ] >> the dominant challenge of this legislative session will be the state budget. i have asked legislative leaderso convene a joint

session ojanuary 19, eight days from now, to receive my budget proposal. the budget will psent tough choices. this challenge stems from the national recession, which has caused revenues to fall even as the demand for services has risen. that is why my number one priority as governor is to create jobs and grow the economy. it is the best long-term solution to solving our budget problem. during the campaign, i released an economic development plan entitled building a stronger south dakota. this is my goal. it must be the goal for all of us, to create a state with more jobs, more wealth and more opportunity for our young people. it is a four-year plan, not a one-year plan. but i'm always open to improving this plan, or adding to it as circumstances change. but i will act vigorously to implement this plan starting today.

i propose to elevate the governor's office of economic development to cabinet level, reporting directly to me as governor. i plan to be personally involved every day in our state's economic development efforts. i'm proud to have pat cost sell low as commissioner of the office of economic development. pat has practiced as a cpa, run a business and served his community as a civic leader. he will be a great partner to me in leading our economic development efforts. i intend to be south dakota's number one salesman. often, a governor is called upon to be a deal-closer and that's an important role. i will also be a door-opener and i'll use my officeo seek opportunity for our state. our economic development efforts will utilize a three-pronged approach,nvite, increase and innovate. first, invite. we should continue to invite businesses to south dakota from

high-tax, overregulated state second, increase. we should encourage those businesses that are already here to increase their production and the number of people they employ. we need to help them find orders and contracts, we need to help them add new lines of business third n oh vacate. we should foster innovation and entrepreneurship because some of our best businesses, the ones that are most likely to expand here and stay here, are businesses that were started in south dakota by south dakotans. that's why we need to keep expanding our research efforts at our universities and strengthen our efforts to match those researchers with entrepreneurs so that new knowledge can lead to new business. another economic development goal i set during my campaign is to revamp the revolving

economic development initiative fund, the redi fund. an important first step is to increase the total value of that fund. i'm proud to announce today an innovative and forward-thinking partnership with o state's ethanol industry that will refocus state ethanol incentives and provide an extra $10 million for the redi funds over the next five years. currently our state provides $7 million a yea in incentives to ethanol plants operating in south dakota. i will be introducing a bill to save the state $13.5 million over the next five years by spreading out the current ethanol incenves over an additional two years. $3.5 million of that savings will be used to install even more ethanol blender pumps in south dakota. allowing our citizens to use higher blend ethanol in their vehicles. the extra savings will be deposited into the redi funds

over a five-year period. this approaches a wynne-wynne i wynne. first -- a win-win-win. first, our economic efforts will have more money tonvt in south dakota business. second, our ethanol industry will get an investment in blender pumps, the infrastructure needed to expand ethanol markets, and, third, we'll do this at no additional cost to our budget. i want to recognize the innovation the industry has shown in recrafting this plan, they're redeploying millions of dollars short-term incentive to expand their markets and strengthen their industry over the long term. i want to talk about small towns. i appreciate the ethanol industry has brought jobs to theural part of our state. south dakota is a state with many small towns and is they must be an important component of our economic development efforts. we'll work with local and regional economic development organizations and nonprofits to

identify and train small-town specialists who can work with local leaders to make contacts, create plans and goals and promote themselves to business. i will revamp ouricro loan program which provides loans to small businesses forapital assets. this program is underutilized because it is too bureaucratic. some are reluctant to apply because of the burdensome application process. that is government at its worst. i will ask the office of economic development to streline the application paperwork and approval process. i will also prioritize loads to aid in the sale of small businesses. in many small towns, the value of a business inventory iso high, banks are hesitant to finance a potential purchaser. this can leadn aging shopkeeper to shut down for lack of an available buyer. we can use the micro loan

program to help younger owners purchase these businesses and keep our small-town businesses open. of course our small towns rely heavily on the agriculture economy. agriculture is our state's number one industry and the foundation of our economy. over the past few years, mother nature has provided some challenges. heavy rains, hail storms, blizzards and the outbreak of grass hopper and mountain pine beetle but our producers have still enjoyed strong financial returns. euro bus ag economy is the principal reason that south dakota's personal income growth is among the best in the nation, and a strong ag economy not only helps our farmers and ranchers but also the numerous ag-based businesses on main streets across south dakota. i will aggressively pursue opportunity to expand value-added agriculture, like the dakota provisions plant in

huron, and the beef plant in aberdeen. and i will host an annual governor's forum on agriculture in conjunction with the second annual governor's ag development summit to discuss the future of ag with every commodity group and stakeholder. i want to open the lines o communication to ensure that state gernment is always acting in the best interests of farmers and ranchers. my door will always be open. just as we focus on our largest industry, so too must we continues to promote our second largest industry, tourism. the visitor industry in south dakota has enjoyed great success over the past several years, and i expect to announce another strong total for last year at the tourism conference next week. wile the recession -- while the recession caused visitor spending to fall in much of the nation, we have held strong in south dakota. we need to build upon that

success. i will be elevating tourism back into the cinet to give this industry a strong voice, and i will be bringing a bil to retain the extra half-cent tax that the visitor industry placed upon itself in 2009. that tax is set to expire but these revenues are important to continue to provide for our very scessful tourism promotion efforts. south dakota is a great place to visit and we must continue to tell our story and to invite people from all over the world to enjoy south dakota. aisle also be introducing a bill for the resource funding program. this topic was under much discussion last year, was cread to encourage investment in large projects in south dakota. it has worked, ethanol plants, ag processing plants, and windpower projects have all been built in south dakota, in

rt because of this tax incentive program. however this program has also been used by some projects that would likely have been built in south dakota anyway. we should reform this project so it only funds projects with tax refunds to projects that would have been undertaken anyway. as you know, this program is scheduled to sunset at the ends of 2012. it would be a mistake toet this program expire and lose this important economic development tool. i will be asking the legislature to reform the program to provide that refunds only be given to those projects that would not otherwise be undertaken and to give discretion to determine when a project meets this standard. now, i recognize there's no way to write aaw that perfectly anticipates every situation. it makes more sense to allow for discretion in a rate in awarding the tax rebates so

that hoopholes cannot be used to secure unneeded rebates. i would ask that you provide this authority so that south dakota can be protected from unnecessary tax giveaways. now i would like to update you on developments at the sanford underground lab at homestake. today, biology and geology experiments are already being conducted at the sanford lab and nearly all of our state universities are participating. more experiments are preparing to commence yet this year. under a preliminary agreement, the original plan was for the national science foundation to build the deep underground science and engineering laboratory, and for the department of energy to pay for the excavation of large cavities, but recently, the national science board has taken the position that the departme of energy should own and build the facility, and

that the national science foundation should pay only for experiments. therefore, $29 million in funding is being withheld by the national science board and has not been released to homestake. over the past several weeks, i'm sure you've read in the news media that governor rounds and i have worked closely with the national science foundation, the department of energy and our congressional delegation to secure short-term funding to continue this important project. although this is a challenging situation, i will keep working to secure this funding so the lab can continue to operate while a new agreement is rehe i hope this can be accomplished very soon. everyone in south dakota should be proud of the commitment that governorounds, the state legislature and every citizen has made towards securing the deep underground lab for our state and our nation. i promise i will work hardo ensure that the setback suffered in the past few weeks does not undermine the work of the past several years.

just as homestake has great potential to transform the economy ofhelack hills, ellsworth air force base is already an important economic driver. i was proud as lieutenant governor to help create the ellsworth development authority which encourages development that compliments the base. aviation is an industry that would fit near ellsworth well, and i will be proposing legislation that will make sout dakota more attractive to the aviation industry. i will ask you to reform south dakota's product liability tort law for aviation manufacturers based in our state to protect manufacturers from claims arising years after the aircraft is manufactured. this bill is baited on the state law of kansas, wch is home to many large aviation manufacturing operations, such as boeing. just as we acted in the past to

attract the financial services industry, we can change this law to give the aviation industry a reason to look at south dakota. these are some of the initiatives i will be undertaking in the next year to create jobs and grow our state's economy but we cannot forget the important advantages we already have. we have the best business climate in the nation and i intend to keep it that way. our first advantage is our low tax burden. i am proud that south dakota has the lowest per capita tax burden in the nation. i've said many times during my recent campaign that i will not raise taxes except in case of an emergency like a blizzard or flood and i mean it. a recession is the worst time to raise taxes and if you send me a bill to raise taxes, i will veto it. our second advantage is our reasonable, predictable and simple regulations but this

second advantage can be improved. it is the nature of government over time to become more regulatory and we must be deliberate about resisting and reversing this. over the next year, we must undertake a comprehensive review of regulations in every agency of government. we must first repeal the regulations we don't need. secondly, simplify those that are too complex and, third, we must also seek the input of our customers, those who are regulated to find ways to make government more streamlined and sensible. now as we discuss economic development, we must remember the foundation of our economy is an educated workforce. every year education is one of the dominanissues of the legislative session but too often the discussion is only about funding. now, that is an important discussion. after all, education is half of the general fund budget.

certainly we'll have that important discussion again this year but we should not measure our schools by how much money they receive or spend. we should measure them by the success of our students. by many measures, south dakota students are succeeding. 89% of our high school freshmen complete high school, one of the bes rates in the nation. 72% of high school graduates go on to college or thnical school. also one of the best rat i the nation. and among states that test at least half their students, our average a.c.t. score is near the top. i believe our students and schools are successful because of good parenting. that sends most south dakota kids to the schoolhouse door ready to learn. they're met there by hard-working, committed educators who cause that learning to occur. my lie wife, linda, worked for

years as a school librarian and a coach. these professionals dedicate their careers to our young people and it is because of committed teachers and administrators, hard-working students and involved families that our schools achieve at the high level they do. now, can we do better? of course. of course we can. i am firmly committed to ensuring every student who wants to go toollege, is fully prepared to enternd graduate. a if you a fully committed to ed educational opportunities with colleges and tech schools and private businesses so high school students can have exposure to skilled technical fields. i will also be sponsoring a bill to increase the bonding capacity of our postsecondary technical schools t allow them to contie to expand their campuses and add new programs in technical fies. we must also do a better job in

the fields of scice, technology, engineering and mathematics. south dakota does relatively well in these fields when compared to other states but our children are not competing against only iowa or minnesota or other states. they are competing against india and china. over the next year, i will begin to work toward new approaches to strengthen education in the importa areas of science, technology, engineering and mathematics. i want to use my office to promote newppaches in education and help schools implement them but i also want to allow local school boards and administrators to run their own districts. that is why i will be sponsoring a bill -- i will be sponsoring bills this year to repeal the 100-student minimum for state aid to school districts and also to remove the cap on school-district reserve fund balances. we must trust local officials

to make the best decisions for their districts, and if they fail, we must trust local voters to find new local officials. our system of education is the source of tomrow's workforce and we have no greater workforce need over the next ten years than in health care. by 2014, southakota will require an additional 13,000 health care workers. partnering with health systems, professional organizations, educational institutions and local governments, we must increase efforts to encourage our students to consider careers in health care. should encourage local school districts to give high school credit toward graduation for training in fields like e.m.t., dietics or nursing assistance. we must also continue to promote the privately funded dakota corps scholarship. governor rounds created this

program with no state funding, wi generous support from corporate and private donors. i have also continued discussions with da -- dakota corps because this program gives... in the area of health care, my administration wil also be working to comply with the new requirements that congress has imposed upon us as part of the health care reform legislation at the federal level. at the same time, however, i am going to continue to support the efforts begun by governor rounds and attorney general marti jack lee to challenge the federal health care reform law in court. i will also support efforts in congress to repeal or reform this bill. over 90% of south dakotans have health coverage. here, our most serious problem is not coverage but cost.

yet t federal law focuses almost entirely on getting coverage for the few witho and does little to control rising costs for the many already insured. this is a law that does not make sense for our state. now the federal health care law is a frequent topic ofebate. likewise, economic development and education are often discussed in the political arena, and rightlyo. but another important issue in our state has not received as much attention, something i would like to talk about. infant mortality. over the past decade,13,517 babies have been born in south dakota. 794 of them died before their first birthday. that is an average of 79 deaths each year. south dakota's infant mortality rate is significantly higher

than in north dakota, minnesota, iowa, nebraska or montana. and although we saw dramatic improvements from the 1960s to the 1990s, over the past decade, our infant mortality rate has exhibited a worsening trend. in the last several years, the good news is that infant mortality among native americans in our state has improved. the bad news, it's still higher than in most places. worse yet, in the worst -- in the rest of south dakota, the mortality trend has worsened. it haseen said that the infant mortality rate is the gold standard for measuring the health of a population. i will make it a priority t face this problem head on. we already know many of the factors that contribute to instant deaths. too many mothers in our state, almost 20%, use tobacco products while they're

pregnant. in one-third of south dakota counties, over 30% of motrs don't seek prenatal care during the first trimester and more young parents need to learn about safe sleep positions and other important infant care tips. one tool our state has to combat infant mortality is the bring start home visitation program. nurses visit expectant mothers in sioux falls, rapid city and pine ridge to educate them about healthy behiors during pregnancy and after their baby is born. i'm pleased to announce that the state has been awarded a $645,000 grant to expand this bright start program to more communities. but there is more to do. i'm going to ask doctors, hospitals, parents and ste and tribal leaders to come together to face this problem. each of us has a role to play. we all want more south dakota

infant to reach their first birthdays. infant mortality is one of the issues that will encourage close cooperation between regional and tribal leaders. the tribes are integral parts of our state and i do notace any challenges faced there as tribal challenges, they are south dakota challenges. as governor, i'm going to wor very hard to build a positive working relationship between the state and each of our nine tribes. i want to base they relationships on two principles. first, i will always remember that the nine tribes are nine separate governments, each with their own set of circumstances. they shod not be subject to a one-size-fits-all approach. second, i want to be respectful of the wishes to tribal leaders. my first question to them will be, what are your challenges and opportunities, and my second question will be, how

can we work together. i am creating a cabinet level secretary of tribal relation toss help me build these relationships and hold these conversations. i want every tribal leader to knowhat'm serious about working with them to bull a stronger south dakota. i'm not looking to attend more meetings as window dressing. this is not window dressing. i want to build real relationships that can lead to positive results for all south datansivingn or off servatio. in addition to the bills and other proposed cnges i've described already, i will be recommending several ornitional changes. this week, i wil be submitting an executive reorganization order for your consideration. i've already mentioned i will be abolishing the department of tubism and state development and elevating into the cabinet the governor's office of economic development, the department of tourism and the department of tribal relations.

eave of these interests deserves a seat -- each of these interests deserves a seat at the governor's table. in addition, i will be moving most of the business regulatory functions from the crent department of revenue and regulation to the department of labor. i believe that these regulatory functions such as banking, insurance and securities fit more closely with the current labor department, which already includes workers' compensation, unemployment and many professional boards and commissions. making this change will also allow the department of renue to focus on its core mission, collecting tax dollars ode to our -- owed to our state. i will also be moving three behavioral health divisions from the department of human services to the department of social services. these three divisions are funded heavily by medicaid, which is administered by the department of social services. i'm hopeful this realignment will allow social services to work with these agencies to find efficiencies and safe

medicaid dollars. finally, i will be splitting the department of current veterans affairs into two cabinet level department. the department of the million larry will be led by the adjutant general and will oversee the national guard. the department of veterans affairs will oversee the veterans' benefits and programs, including the state veterans' homes. creating separate departments for the 34eur8 tear and for veterans affairs will allow the adjutant general to focus on leading an increasingly active national guard while allowing the secretary of veterans affairs to ensure that we always meet our obligations to our veterans. over the past few years, it's been my honor to serve on the board of directors for south dakota's honor flight program. this program charters flights to fly to washington, d.c., with world war ii veterans to see their memorial and other

sights. it was an honoro be associated with honorlight and meet these heros now in the twilight of their lives, who fought to protect our world from facism and military leaders. we have a current generation of heros who have put their lives on the line to protect our freedom. we owe them our thanks and strong support and i would like us to pause at this time and thank them together for their service. please join me in thankg our verans. [ applause ]

>> beyond the cabinet changes i've just described, i've also reorganized the governor's office. in most governor's office ins south dakota and around the nation, the governor has employed a single chief of staff. i've opted instead to have six officials reporting directly to me as an executive committee. these six people will dide up the traditional duties of the chief of staff and will also assume many other responsibilities. one key member of that team is our lieutenant governor. matt michels is one of the most impressive people i've ever met. he came from a single-parent home and worked his way through school. he served his country in the

united states navy. he graduated from law school and is one of the leading attorneys in health care l. he's a brilliant legislator and a two-term speaker of this use and most importantly, matt is a family man with a great wife and son and has great values. having matt michels as a full-time lieutenant governor is a great asset to the people of south dakota. he will be working with me every day to make our state a better place and if something happens to me, matt will be ready to lead our state as governor. the elevation of lieutenant governor to full-time and any other organizational changes i have made does not add a player of bureaucracy, these changes have not added a layer of expenses or employees. my governor's office will have the same number of positns as the previous administration but by reshuffling duties and personnel dollars, we have cut e governor's office payroll by more than 10%, effective yesterday.

i would like to say a few words now about the state budget. i'll be introducing several bills on behalf of the bureau of finance and management that are necessary to implement by budget proposal. this will include a special appropriation bill to fund the omnibus water bill and our obligations under the physician tuition reimbursement program. there will also be other more technical bills that i will discuss with you next week when i present my budget proposal. beyond legislation, though, i'll be working with my cabinet this year to find ways to make government more efficient and to save money. one area that iould like to revis it is state travel, the motor fleet and the airane fleet. i know that studies have been done in the past but austerity measures currently in place have limited the amount of travel that is being done a i want to ask the department of transportation transportation

to undertake a study of usage, both of theuto fleet and airplane fleet to determine whether we need all that we have. as my last words on the budget today, i would like to say something about the principles that guided me as i crafted the budget proposal i will present next week. as the first principle i am committed to eliminating the structural deficit. a structural deficit exists when ongoing expenses exceed ongoing revenue. let me emphasize that definition because clear communication depends upon a common understanding of language. a structural deficit exists when ongoing expenses exceed ongoing revenue. one-time revenue items do not enter into the calculation. one-time expenses do not enter into that calculation.

ongoing versus ongoing. over the past few years, we have had an increasing structural deficit, notecause of ms. management but because of the national recession. our ongoing revenues, our sales tax, our contractors's excess talks, our bank franchise tax, our colleive ongoing revenues -- revenues fell in fiscal '09 and fell still further in fiscal year '10 and although they're now turning around, ongoing revenues for this fiscal year, ending this june, are still expected to be below fiscal year 2008 ongoing revenues. and even as those ongoing revenues werealling, our ongoing expenses were growing. to fill the gap, the federal government gave us money. buts a condition, we were

forbidden to cut spending in most areas. this dend us the freedom to address our structural deficit in a meaningful way. that money will be gone in fiscal year 12012 and we must now confront our condition. i am committed to eliminating the structural deficit and that is my first principle. as a second principle, i believe we must not use one-time dollars to perpetuate overspending. that just kicks the can down the road. it defers the problem to another year. one-time monies should be used only for one-time costs. reserves should be used only for unexpected needs. the budget i propose next week will meet our goals within these principles. my budget proposal will clearly demonstrate to you, and to the people of south dakota, that if

we truly want to balance our budget without raising taxes, as i do, we must be prepared to make some very difficult decisions. i intend to lead by example. the agencies under the control of the governor will be cut by at least 10%. the governor's office will be cut by 10% overall. every member of my cabinet has agreed to cut his or her salary by at least 10%, some almost 15%. and i will be cutting my own salary by 15%. it is my duty as governor to begi the budget discussion with a proposal. i do not claim that that proposal is the plan. it is a plan. i look forward to an open and honest dialogue with you and the people of southaka about this proposal. i am willing to reconsider the details of the budget i present

but i am committed to the principal goal of a structurally balanced budget. during session, the halls of our capitol are filled with those who represent the many interest groups of our state. these are good people and they have a job to do, advocate for their employers. and it is important that someone fills this role. but we who have been elected must remember that there is another interest group who is not so well organized. they are the taxpayers who elected us to come to pierre. we are here to represent all of south dakota, the taxpayers as well as the tax spenders. the taxpayers ask that we look at the big picture, that we ke the long view andhat we spend their hard-earned tax dollars responsibly and provide government services efficiently. as governor, i will put

taxpayers first and i will make sure that their voice is never forgotten. let me close now with a little history. every year, our legislature opens its session by inviting the governor to report on the state of the state as i have just done. it was exactly 100 years ago last week, on january 3rd, 1911, that theegislature convened for the vy first time in this building. to hear the governor's state of the state address. the governor that day discussed many of the same issues that we talked about a minute ago, and that we will debate and discuss. the budget, education, agriculture, state institutions, law enforcement, transportation. the governor had been elected in 19308 and had won his second term by a margin of more than 20%.

yet i would venture to guess that yet almost no one here would be able to recall the name of that governor if asked. you see, that's the point. a century from now, governor dennis daugaard will be as forgotten as governor robert s. fessy. let us seek to be remembered not for our names but for our deeds. we all stand on the shoulders of those who came before us i invite you all to join me to build a stronger south dakota. there will be times when we disagree but if we can agree on the fact and set politics aside, there's much that we can accomplish. it's amazing what youan do if you don't care who gets the credit. let's stand tall together so that t generations who follow us may live in a stronger,

freer, better south dakota. thank you all very much. [ applause ] we are joining on the phone by dr. james kimball. let's begin with some of the news in state party politics. you are quoted by saying for

years, two families dominated potics. that changed over the weekend. guest: judge greg retired from the u.s. senate. he is argue nlly the most success fum judge in new hampshire. beginning in 1996.

went went to the senate in 1992. for a number of years, these two families dominated the politics. now we are finishing with a new person.

>> he was really outraged by some of the spending done in the first few months in office. he began to put his first political act putting anti-obama messages on his business's sign saying something about bail outs. started some tea party groups and ran for governor. he received about 30% of the vote in a republican primary. we had a con tenuous u.s. senate

race. he is solidly conservative. sometimes, he puts his foot in his mouth. he compared paying tes to rape for example. he has brought a lot of energy to the table. there were over 400 people out 500 state committee members.

the national story came out of the meeting. 400 committee members in this none binding straw poll. now getting 35% of the vote. coming in second, congressman ron paul. sarah palin four and backman safeth. let me remind you mit romney did announce he will run for president later in the spring. the primary is a year away.

a number of these candidates, we knew everybody running for president. now we have a situation where maybe a handful of candidates have staffers on the ground. romney is not a new hampshire residence. he is technically a resident of massachusetts. he had the expectations he had to do fairly well. i think he met those with a clear victory.

we covered michelle friday evening let's listen to what she said about the question of whether she'll run next year. >> i know it is shocking that when a girl goes to iowa but i'm here to be a part of that conversation for 2012. there's been no decision but i want to be a part of the

conversation. michelle bachmann on friday in iowa. we've seen so much energy. activists are ready to go. we had a house party and former u.s. senatoror's house. almost 200 p.m. attended this

house party. people are ready to get this process going. process going.

live coverage just getting under way here on c-span2. >> that china u.s. emperor has just landed in washington is at the front lawn of the white house. the pressing issues which for a serate our country need to be urgently addressed. three of those many issues which will be the focus of today's briefing include security concerns, a human-rights, and how our trade imbalance and the chinese currency manipulation adversely impact our u.s.

economy. when the cold war ended over two decades ago many in the west it seemed that the threat from communism had been buried with the rubble othe berlin wall, however, while america slapped an authoritarian china was on the rise. china became one of our biggest mortgage companies, holding over $900 billion of our international debt. in these past two decades western observers forgot that while freedom blossomed in eastern europe reform in china failed. china was led by a cynical group of leders to sobered by the teeeleven massacre and the marred by the blood of its victims were determined to go forward with economic but not political change. the china that embraced has fallen far short of the benign china which former decker to -- secretary of state spoke in the colony of freeze responsible

stakeholder to read a response will say : as this -- reported allows the transshipment of north korean missile components to run. it open defiance of those u.n. sancons which has the five member states -- a five member states it is duly bound to force. there is a responsible stakeholder declare that the south china sea is one of its core interests in open defiance of the navigational and territorial not -- writes of a southeast asian neighbor? does a responsible stakeholder admonish the u.s. navy that it cannot operate in the yellow sea in the very waters where gneral douglas macarthur undertook the heroic landing which turned the tide of the war? would irresponsible stakeholder refer to the nobel peace prize committee as a bunch of clowns

for awarding an honor to a distinguished chinese human rights advocate? would irsponsible stakeholder the arrests of the wife of a nobel peace prize winner as further respond -- retaliation for speaking the truth about the gross human rights violations in china? the u.s. took a big gamble when it voted for premier and normal trade relations for china over a decade ago in what some termed as the most important vote since world war ii. the vote was based upon what i see as a sadly mistaken belief that economic openings in a ee-market reform would lead to democracy, respect for the rule of law, and a full array of political and human rights for the chinese people. yet today, as we meet here, the research foundation estimates that they are close to 7 million people currently in chinese labor camps. it is as if the entire

population of switzerland were being held behind barbed wire. the ruthless campaign against practitioners, a peaceful organization which promotes trade, compassn, and tolerance, has continued unabated for more than 11 years. i was proud to be the sponsor of a resolution in the last congress which received overwhelming bipartisan support addrssing the persecution of fallon gone. the brutal denial of rights to people of tibet and the weaker people, the forced repatriation of number three and red fiji's continues to draw the attention of concerned citizens throughout the world. the american people have also borne the brunt of china's mercantile trade policies which promote trade surpluses through cheap exports based upon an artificial depreciation of china's currency. jobs and american dollars have blown across the pacific to

china for the past two decades as the american people have suffered high unemployment and a diminished standard of living. last fall i was pleased to be able to vote in favor of the currency reform for trade -- fair trade act which overwhelmingly passed the house. we are back with a new energy from a newly electemember who is determined to take back america's economy and are committed to a foreign policy the stance with our allies and hold accountable those to threaten our nation's security interests. and please deterrent to my distinguished ranking member for this committee, mr. berman, for his remarks. >> thank you very much, madam chairman. chinese president hu jintao is in washington this week for a state visit. as we speak he and president obama our meeting at the white house. after an often tense year the

two lears will try to set the contours of the relationship for the immediate future. the u. s-china relationship, one of the most interconnected and complex in global affairs has major implications for the future of asia and the entire world. the challenge for the obama administration is to manage that relationship in no way that strengthens our cooperation with beijing in areas where we have shared interests while at the same time addressing the serious concerns we have regarding a number of china's policies. china is neither an allied nor an enemy. it is both a competitor and a partner in foreign affairs, security, and economics. a key goal of our china policy must be to prioritize our myriad of global interests, identified those issues where we are most likely to positively change china's position and then find and use our leverage with the

chinese to achieve those changes and accomplish our wider foreign-policy objectives. in my view our highest priority should be a rock. tougher sanctions on a ron was a significant diplomatic achievement for the obama administration there is ample evidence that chinese entities continued to invest in the energy sector of iran. this helps them avoid the full impact of sanctions and facilitate the continued development of a nuclear weapons capability which turns the u.s., our allies in the middle east, and china, which is dependent on unstableources of oil from the middle east. we must intensify our efforts to ensure china's full participation in the multilateral sanctions is aimed against -- against iran. the u.s. and china must always deep in our -- asnorth korea's

economic lifeline beijing holds considerable leverage over perrier incoming yet it has been too slow to make it clear to the number three that security and respect can be attained only by giving up its nuclear weapons and refraining from other aggressive behavior. the promotion of human rights andpolitical freedom is a ntral goal of american foreign policy. these universal values must remain essential focus of our relationship with china appears record in this area remains deplorable. moreover those values are in china's self-interest, both its international image and in its economic growth are dependent upon developing a society based on the rule of law. in the sphere of economic and trade one area of particular concern is china's theft of intellectual property and it indigenous innovation policy.

in addition to compliance with the recent wto decision, china must do more to stop the piracy and counterfeiting that occurs openly on streetcorners and over the internet and step up its enforcement efforts. the crossroads we currently face and the u.s.-china relations present less of a choice for the united states and more of the toys for china. the obama administration has articulated a pragmatic policy and in several key areas the demonstration has said some success. there is no sign that china has made a fundamental decision to change its decision of leveraging with heightened political control and military modernization with regional and extra regional power projection. at the same time and so letting china as much as possible from outside influences. as much as the rest of the world looks to china to play a

constructive role it is not clear that china wants to play a positive influence beyond its borders. i look forward very much to hearing testimony from all of our witnesses today, and i yield back. >> thank you very much. now live would like to yield three minutes to its chairman designate of the subcommittee on asia and the pacific. >> thank you, madam chairman for calling this important briefing, i strongly believe that hina is one of the greatest foreign policy challenges we must face in this century. china's wait in the global economy cannot be ignored. that nation's rapid modernization represents both opportunity and apparel for america. as chairman designate of the subcommittee on the asian-pacific i am keenly aware of the challenges our nation faces when it comes to dealing

with china. as experience has shown signs as unfair trade practices including currency manipulation, illegal subsidies and lax enforcement of intellectual property law make it very difficult for the hard-working people of america to compete on a level playing field that benefits this relationship. american manufacturers have been hurt most by this unbalanced relationsh. manufacturing is the lifeblood of the 16th congressional district of the illinois, which i represent. our congressional district as summer between 142500 factories supporting more than 51,000 jobs. 24 percent of value added manufacturg in our congressional distrt represents exports. it is one of the most dense areas in terms of manufacturing base and one of the most exporting congressional districts in the country. these hard-working men and women want to know what their government is doing to enforce

trade laws with china and preserve america's industrial base bag. i hope our distinguished witnesses will focus their remas on what the administration is doing and what it can do to urge the chinese government to follow the rules. very little has been done in the past several years. in my experience the chinese government is capable of stopping violators when they see it is in their interests to do so. so many americans are out of court. now is the time for thi of ministration to work with congress to hold generous possible and give american manufacturers a chance to compete with china on a level playing field so that manufacturers can create jobs. madame chairwoman, i commend you for giving the american people a well-deserved voice and a look forward to the testiny of our witnesses. thank you very much. but we woulde recognizing the ranking member designate, but he is not present.

we will proceed with the testimony. we are pleased to have as our witnesses a wonderful panel. thank you. we are pleased to welcome mr. larry wortzel to today's briefing. larry is a commissioner on the u.s.-china economic and security review commission appointed by speaker banner. among his many qualifications he served two tours of duty as a military attache of the american embassy in china and retired from thermy with the rank of colonel. thank you for a briefing yesterday. also with us is gordon chang, currently a columnist at forbes. he practiced law in china and hong kong for nearly 20 years and has written extensively sat and wote rea. we are grateful to have him here today as he is a much sought after expert on the future of china's economy. but if mr. yang jianli is the founder and president of initiatives for china.

he was imprisoned in china following an outcry by congress and others for his release he was freed in april of 2007. immediately following his return to the u.s. he formed initiatives for china, a pro-democracy committee that is committed to peaceful transition to democracy in china. leslie, mr. robert sutter to has been a visiting professor of asian studies at the school of porn servis in georgetown university since 2001. in addition o his full-time position mr. center teaches regularly as an adjunct professor of asian studies in the elliott school of its financial affairs, george washington university. he has extensive government career in congressional research service and other u.s. federal agencies that lasted 33 years. we will begin with mr. larry wortzel.

i'm sorry that i'm not so great with the pronunciations, but look at my name. i don't get too picky. i will be rather ruthless with the five minutes, so please confine yourself to five minutes. larry, you are recognized. thank you. >> chairman, ros-lehtinen, ranking member berman, members of the committee, thank you for the opportunity to address you today. that use at present are my own informed by my service in the u.s. army, on the u.s.-china security and review commission and my own research. in late 2004 chinese communist party chairman ileana ros-lehtinen set out a new set of missions for the people's liberation army. these new historic missions provide the basis for china's future defense research and weapons acquisition plans. they also set the stage for a more assertive use of the armed forces inside and outside of asia in pursuit of expanding national interest.

the pl a military modernization efforts provide the means for the armed forces to fill these new missions. china's military modernization efforts are comprehensive, affecting all the domains of war including space and cyber operations. in recent years china has auired advanced surface ships and submarines to modern combat aircraft, ballistic and cruise missiles, and advanced command and control systems that tie everything togethe in addition, the commander recently stated that china will field a ballistic missile a potential threat against u.s. aircraft carriers in the region's. the pla is still the fallback force of repression for the communist party against the populist. the combination of these new missions and means to carry thm out has brought about changes in china's military operation.

traditionally the pla focused on domestic response and local contingencies. now is a military with a wider range of missions and the activities. the distch of chinese naval vessels in support of nti piracy operations of africa is one example. china's national interests are global, and the pla is beming a force capable of acting beyond china's periphery. a more capable military accompanies a more assertive chinese foreign policy. this can be seen in china's recent provocative activities concerning its disputed territorial claims in the south and east tennessee's and in the economic zone. china's military capabilities also stoke beijing's competence. china's him stridently complained about operations and the western pacific. beijing failed to condemn north korean attacks on south korea and strongly objected to a joint

military exercises in the region between the united states and south korea. in military operations beijing continues to circumscribe the range of discussions between china and the u.s. refusing to address strategic issues such s cyber warfare and space operations. i'm pleased to see that secretary gates get to visit the second until record and there was some discussion of nuclear doctrine during his visit. despite his noticeable -- a noticeable improvement in relations across the taiwan strait beijing continues to insist on the right to use force should it interprets taiwan's activities as moving toward independence. across straight military balance increasingly favoring china, and beijing has deployed over 1100 short-range ballistic missiles opposite the island. in my view twan's most pressing need is for new or

modernized fighter aircraft. china continues arms sales and support to international pariah states such as north korea, burma, and ron. in addition food and energy bad foreign investment th china provides to north korea indirectly enables pyongyang to continue its nuclear efforts, it shows its economic power by a stoppage by a supplier of rare earth minerals to japan and it was unhappy with japanese policy. madam chairman, members of the committee, the key for the opportunity to do it addressee today. i look forward to your questions. >> ty do so very mh and take you for the time limit. we appreciate your time. five minutes please. >> chairman ros-lehtinen, remember berman, distinguished members of the commission, thank you for the opportunity to be here today. the dominant narrative in the united states and elsewhe is

that china has the upper hand when it comes to the united states. that is what president obama is hosting a state visit for an autocrat, chinese president hu jintao. this generally have the upper hand? i think most americans misperceive the economic relationship between the united states and china. today i would like to comment on three of those misperceptions. first of all, everybody says that china is decreasing its dependence on the united states back. well, china has an economy that is geared to selling things to last. the chinese economy is dependent upon exports, and its export sector is especially reliant on sales to the united states. last year when all the statistics are in at the we are going to see within 140 percent of china's overall trade surplus related to sales to the united states.

that is up from an already stupendous 90% in 2008. that trade dependence gives us enormous leverage because china is not a free trader. it has accumulated surpluses because of clear violations of its obligations under the world trade organization. second, everybody says that china's debt provides up -- our debt held in the hands of china provides a weapon. since august 2007 the chinese have talked in public about using that as a weapon, and, of course, they call it appropriately the nuclear option. welcome but china hasn't used the nuclear option since it first started talking about it. the reason is they know their attack plan won't work. let's think about the worst possible scenario. the chinese stump all of our dead at one time. we have to look at the way global markets operate. if they do that they have to buy

something which means they have to buy things denominated in pounds, euros, and in. that would send those currencies soaring through the ceiling in values which means that london, brussels, and takeya would have to go out into that global market to rebalance our currencies and bring them back down in value. the only way they can do that is to buy dollars. there would be turmoil, but it would not last long, just a few weeks, maybe a calendar quarter at the most dubious after this is all done we would have our debt held by our friends, rather than our potential enemy. i think the global markets are deep and can handle just about everything. although i do not think the united states should be accumulating debt and suddenly i don't want the chinese to hold it, i also don't think it gives them a weapon. third, you hear many commentators say that china's currency manipulation is not the

sole cause of america's trade deficit. well, of course that is right. there are a number of reasons that relate to our trade deficit. china's currency manipulation is an important reason. due to beijing's active manipulation it inervenes every day. the discounted value to the u.s. dollar is somewhere in the vicinity of 20-40%, maybe 30 percent would be a good estimate for today. a discount of that magnitude, of course, is significant. and i practiced law in asia many of my plans for u.s. manufaurers, and i would watch my plans haggle for days over pennies on unit prices. that is how important prices. it is counter intuitive to think that a discount of 30-40%, and that is what we are talking about, would not have an affect on our trade deficit. you don't have to take my word for it. chinese premier bob, the top of

economic officer came to the united states last september and talked about the possibility of countless chinese enterises going bankrupt and countless chinese workers becoming unemployed if it incread in value. well, if that is what the currcy does to china's manufacturers and their employers, then what to you think it does to hours? nonetheless, many economists say, you should not do this currency bill, h.r. 2378 which passed the house. i think we certainly need to. chinaon't change its destructive currency practices if we appeal to its self-interest, which is what the bush to administration and obama administration were doing. we have to apply pressure. >> thank you. take you so much. mr. yang. thank you, your excellency. the key for the opportunity for

me to testify on the fundamental matter in the relationship between u.s. and china. it is the matter of how chine government treats its own citizens. china is the country with the most prisoners in the world, including a nobel peace prize winner. ..

>> there are three new types of measures to control that the chinese authorities have been increasingly using in the past three years. number one, direct violence. the direct violence against dissidents, human rights activists and petitioners has creased in recent years. the people who have been doing this are local policemen or thugs hired by police. in some cases government officials are also involved. number two with, house arrest. this recent years -- in recent years house arrest has become more and more widely used as a means of limiting us the dents -- dissidents and their families. as the wife of a blind human

rights lawyer or, li jing was placed under house arrest. ever since he was released after sevenning four years and three -- serving four years and three months in prison last september, the entire family has been put under house arrest. the chens, the entire family, has not -- has been cut off from all contacts with the outside world. those who tried to visit them were badly beaten. lu shah's wife has been put under house arrest since last year when her husband won the 2010 nobel peace prize. and her communication with the outside world has been completely cut off since october 20th last year. number three, disappearance. i also urge you to pay attention to the disappearance of chinese

citizens as a result of the government's unwarranted actions. the most notorious case is shin. he has not been heard from ever since last april. afterepeatedly detained and severely tortured, and his wife has be with us today here. here. anher important case is that mongolian scholar who was arrested in december 1995 for peaceful activities demanding more autonomy for the mongolian region. he was later sentenced to 15 years in vail request, his -- in jail. his prison term was set to end in december last year, but a few days before that the chinese authorities detained his wife and son. he was never seen getting out of of riz, and today the entire --

prison, and today the entire family has not been heard from. around the time of the nobel peace ceremony, liu xiaobo friends and supporters were either put under house arrest -- [inaudible] so coming pack -- back to the issue, i guess the question is why should china's treatment of its citizens be important concern for u.s. foreign policy toward china? we have a slew of analysis and answers to this question, and some people can even denounce this question as irrelevant, but i just want to echo the questi from "the wall street journal" article last monday. will a rising power that fails to honor commitments to its own people -- >> thank you, mr. yang. >> -- responsibility to fulfill

its commitments to other -- >> thank you. that's a good question. thank you. mr. sutter. >> thank you very much, madam chairman and members of the committee. the u.s. relationship with the people's republic of china has been troubled throughout its twisted history. important areas of converging interests between the two powers are usuallyccompanied by important areas of differences. the relationship has become very broad-ranging, multifaceted and complicated, and it is the most important bilateral relationship inhe world today. a pattern of seeking to advance common ground while managing differences prevail throughout most of the george w. bush administration. like president bush, president obama showed a course with china involving pursuing constructive contacts, preserving and protecting american interests and dealing effectively with challenges posed by rising chinese influence and power. a strong theme in presiden obama's initial foreign policy was to seek cooperation of other

world powers to deal with salient international concerns. he worked very hard at this, but he found the chinese leaders offered only limited cooperation on issues like climate change and others. more worrisome were the challenges that the chinese administration posed for the obama government, and this has been well documented by my ceeg, mr. wortzel, particularly about the maritime areas around the periphery of china butlso a hard line on the president's arm sales to taiwan, on his meeting with the dalai lama and u.s. interveptions in the south chi ya sea and other issues. the obama administration reacted calmly to these tests of assertiveness by chin it gave no ground on any of the chinese demands. it also found that the chinese

assertiveness over various issues damaged china's efforts to portray a benign image in asia. these asian governments became more active this working more closely with the united stes and in encourage an active u.s. presence in the asia pacific. the overall effect was a decline in china's position in the asia pacific and a rise in the position of the united states. meanwhile, the obama government made clear to the chinese covet and to the world that the united states is prepared to undertake military measures needed to deal with the buildp of chinese forces targeting americans and american interests in the asia pacific. it also helped to move china to curb north korea's repeated provocation by warning privately as well as publicly that the united states viewed north korea's nuclear weapons development as a direct threat to the united states. over the past few months, china has tried to ease differences with the united states in the period leading up to the current visit of president hu jintao.

they've done a number o different things in calming the situation between the united states and china over these various areas of differences. looking out, president obama wants to pursue closer engagement with china as part of his administration's overall reengagement with the asia pacific. his administration, also, has made clear it will not give in to pressure and, if needed, will respond to such chinese actions with appropriate military, diplomatic or other means. it may appear less certain that president hu jintao shares president obama's interests in reengagement. on the other hand, china's recent assertiveness has proven much moreostly than beneficial for china's broader interests. it's against this background it seems likely that prevailing circumstances will preserve and reenforce the positive equilibrium in u.s./china relations for three general

reasons. first, both administrations seek benefit from positive engagement in various areas. second, both administrations see that the two powers have become so interdependent that emphasizing the negatives in their relationship will hurt the other side, but also will hurt them. third, both leaderships are preoccupied with a long list of urgent, domestic and foreign priorities. in this situation one of the last things they would seek is a serious confrontation in relations with one another. thank you for your attention, i look forward to responding to your questions. >> thank you so much to an excellent set of panelists. i will be recognizing members for five minutes of questions and answers in order of seniority. for those who were in their seats when the gavel fl, and in order of arrival for those who arrived after the briefing began. i would like to yield my five minutes for questions and answers to congresswoman burkle

of new york. the congresswoman is recognized for five minutes. >> thank you, madam chairman. i'll direct my question to colonel wortzel, but if anyone else on the panel would like to comment, i would welcome the answer as well. first of all, thank you for your service. according to recent news reports, china facilitated the shipment of missile parts from north korean aircraft to air iran cargo flight at beijing's airport. how involved are both the chinese government officials and chinese companies in weapons procurement for iran and in the development of iran's nuclear and missile programs? >> congresswoman buerkle, pretty heavily involved, i guess would be -- >> could y push the button? put the microphone closer to your mouth. thank you. >> thai very heavily involved. -- they're very heavily involved. they accept those shipments from north kore through china, they

facilitate them. those things don't happen without the concurrence of central authorities in the provinces and from a national air control system. they've got their own customs people, so they're well aware of it, and they could stop it. they have refused to participate in the proliferation security initiative which would have the effect of at least helping to control north korean proliferation. i mean, they simply hav very dierent interests in iran than we do. and i would argue that one of their interests is frustrating united states policy and creating a second potential military competitor that is at least a barb down in that part of the world.

that limits what we can do, that means we have to be a lot more careful in how we act. they've sold -- everything falls below the limits of the missile technology control rege, but they have sold short-range missiles, they have sold cruise missiles, antiaircraft missiles. so they're not doing a thing to reduce the potential level of violence and tension in that region. >> thank you very much. >> the gentle lady yields back? if i'd like to reck these the ranking member, mr. berman, for five minutes. >> thank you very much, madam chairman. i'd like to get mr. chang's response and also, perhaps, hear from mr. wortzel and sutter on

the very interesting thesis that mr. chang had which, essentially, looking at the issue of our debt obligations to china and our trade deficit as, perhaps, more our leverage than china's lev ram. leverage. and to ask you to play that out a little longer. to what extent are you suggesting we use that leverage and whether it's in countervailing duties or in passing the kind of legislation that the house passed last year, and for what policy purposes should they be restricted to persuading and pushing china to live withithe wto ground rules? or should they be utilized to

achieve broader geopolitical and military or purposes? so that's one question. i'll ask 'em all right now, and then the second question 15, 20 years ago there was a notion that in its heart of hearts china liked american presence in the western pacific, that that was a lot better for them than japan reconsidering its traditional military policy of thinking about it own nuclear weapons. more recently, what south korea might decide to do. in a way there was a beneficial effect. is that just out the window now? is the chinese military modernization so strong now that they're not concerned about that, and they are truly seeking to have us reverse a position we've had since the end of world

war with ii? -- world war ii? and add to that if either robert sutter or larry wortzel would do it, this weekend this isn't the visit of the most recent emperor of china, there's a people's liberation army out there that's starting to do their own hinges without necessarily can -- things without necessarily under the direct direction of the leadership of the communist party. is there anything to those couple of ories that are emerged recentl and finallyf we can get it, i don't know if there'll be time, mr. yang, you were eloquent regarding the issue of political disappearances and the families and the abuse and whatoes on inside china. but what you weren't able to get into is how do you think -- what role can we play in affecting and can changing that? i do worry that there won't be time for that last, but ahead. >> first of all, i'd like to thank the congressman forking fg

so polite in his characterization of my views. most people think that i'm wrong, and you were very nice in saying so. [laughter] i think there's a couple things that we thesto do. first of all, we need a little bit less diplomacy. we're feeding china's sense of self-importance. i think we don't need new agreements on economic matters because everyone says, you know, when there's a problem with china, let's go out and negotiate a new deal. we have tons of deals with the chinese. all we need to do is enforce them, and we need to enforce them more vigorously which means we need to take cases to the wto more quickl and also because of theeal problem that china does pose to american manufacturers as i heard earlier, i think we need to do a little bit of self-help which is h.r. 2378. in other words, imposing penalties at an early stage for chinese subsidies. of course, currency manipulation is one --

>>asically, you want to limit that to the economic issues, the currency valuation, the violation of tde rules, the subsidies, not to larger geopolitical issues? we only have 30 seconds. i'd just like to get real quickly from mr. wortzel and be mr. sutter. >> i think the pla is not an independent actor, it is firmly under the control of the standing committee of the chinese communist party and the central military commission. i think china's ambivalent about the u.s. presence. it vy happy that extended deterrence restrains japan from becoming a nuclear power t wants aore forceful role in the pacific, and i think gordon is absolutely correct on -- >> thank you. we'll continue with mr. sutter at another time. before yielding to mr. smith, i'd like to recognize as has been pointed out the presence of

chinese human rights dissidents in the audience representing a cross-section of pressed groups inside china including representatives of the fallon gong -- falun gong, one of several american citizens unjustly imprisoned by the chinese regime. and now i'm pleased to recognize the chairman of the subme for five minutes -- subcommittee for fi minutes. >> you know, lads and gentlemen, besides being the jailer of the 2010 nobel peace prize winner, we have to ask oursels who is hu jintao? let's not forget that in 198ed just a few months before the massacre at tiananmen square, hu jintao w beijing's iron fist. the man who ordered the savage beat being of tibetan nuns and

monks. hu jintao presides over a gulag state, clearly a dictatorship. he is directly responsible for the syematic detention and torture of millions of peaceful chinese, tibetans and uighur harry wu knows what happens this those gulags. torture, cattle prods put under the armpits and genitals. president hu jintao presides over that sickness and that perversity. president hu's secret police hunts down christians, falun gong and tibetan buddhists, especially e falun gong who are massively being killed in this china today. president hu is responsible for the barbaric end and, really, the worst violation of women's' rights, in my opinion, ever. the one child per couple policy

relies on forced abortion to achieve it goals. and president hu's china, brothers and sisters are illegal. they are illegal. anyone in the audience who has a sibling in china, you're only allowed one. as a direct result, the cumulative effect of this barbaric policy, there are 100 million missing girls in china. most of the feminists have been silent about this terrible gendercide directed against little girls. let me ask yang jianli who has been an outspoken leader on behalff of chinese human rights, it seems to me when a man like hu jintao comes in, the press give him a free pass. i would ask the press to ask the hard questions, not just the generic question about human rights. ask specifics about what is happening to liu xiaobo, what is

happening to gao whose wife is with us today? missing and repeatedlyortured and the terrible burden they put on the children of the dissidents. ask the tough questions to the press, president obama a hillary clinton. just a glossing over of we talked about human rights, something on a list of talking points won'tut it. be specific and press this hand who, i believe, ought to be at e hague being held to account for crimes rather than being treated with a state dinner. so i wouldsk . jianli, please. >> [inaudible] >> i'll answer congressman berman's question in last round. i think u.s. government should,

the least the u.s. government can do and should do is raise i the specific cases invarious meetings with their counterparts. this upcoming, i mean, this meaning, for example, if obama really raises the issue of liu xiaobo, it works. it worked with my case, it will continue to work with other cases. and can -- look at the practice of the u.s. government in the last two years. the government believe that private talking will work more effectively. but look at the record. the u.s. government has not been successful this past two years in helping get think of the rirses out of the prison -- prisoners out of the prison. so we have to apply pressure raising specific cases both privately d publicly. and that's the least the u.s. government can do and should do. and another way to do it to

engage with chinese democracy movement directly. now we have a recognized leadership. thousand we have a shared principle -- now we have a shared principle that is enshrined in china -- [inaudible] so democracy movement is viable in china. so engagement with china contains a part that if engaged with the people with china's democracy movement. thank you. >> thank you. and you emphasized the word publicly. not just private conversation. >> yeah. >> thank you. the gentleman's time has expired. pleased to recognized mr. payne for five minutes. >> thank you very much for yielding, ms. chairperson. i would like to focus my line of questioning on china's economic interests in africa and the impact and implications china's engagement with african nations for governance, economic growth and human rights across the continent.

expansion of china's investment in africa we witness today began in the 1990s. in that decade alone, china's investment grew by an impressive 700%. accompanying this economic expansion was the wave of chinese migrants from be 750,000 in 2007 who live in africa now, mainly cotruction, mining workers and oil workers an private traders, but not an expansion of the africa middle class that would normal hi accompany -- normally accompany infrastructure delopment. there's been p complex and varied reactions among analysts regarding china's engagement in africa ranging from enthusiasm and guarded optimism to concern over potential chinese strategy and economic threats to western or african interests. so i'd like to g your thoughts on the overall scope of china's growing tie with africa, what are the main political and

economicoles, the main benefits and drawbacks, also, in this what way would you say china's relations with african governments have a negative impact on human rights in africa, and what are the potential opportunities for u.s./china cooperation on political, humanitarian and development priorities in china? they've had a meeting where 43 countries were invited to china, 42 showed up. on one hand they had open fire on workers who protested about poor working conditions in zambia, chinese soldiers just fired on the and wounded 11 or 12 of them. but on the other hand, they give 4,000 scholarships a year to african students, and that may be to indoctrinate them to china. so maybe mr. wortzel and mr. sutter would like to take >>ou v .

africais somewhat desperate in a way. they need resources. and so what you find is a highly-competitive environment where companies of china are in africa getting these resources. this a way -- in a way the government is sort of lagging behind these companies as they search and get these resources. the intensity of the chinese economic development is such that for the chinese to improve their gdp, they have to use four times the level of resources that are used in the united states for the same amount of improvement. they need stuff. and so they're all over africa trying to get the material they really need to promote their economic developme. at the same time, china's full of comtitive companies that are looking to sell things, and the chinese administration wants to have a balanced trade with africa. and they he one because all these chinese enterprises -- very competitive among one another -- are building things throughout africa, selling things. ask as you say, these migrants

have gone to africa to sell these sorts of things. it's a very understandable way to keep the balance the chinese seek with africa. you can see the driving force isn't really to control africa, it's really to get the stuff and to make money at the same time. and there are several good books on this. american university has done an excellent book on this if you're interested in this topic, as you are interested. so the upshot of chinese behavior vis-a-vis the united states and so fort, it's second -- so forth, it's secondary. and as a result there is collateral damage, if you will. there is a variety of things that are done that aren't very good. just a small point, i'm not sure the pla were the people that shot these people in zambia. i think it may have been guards of some sort. >> congressman payne, thank you for the question. i agree with mr. sutter. i do not believe there are pla soldiers in africa. i believe they are people out of the pla working for

government-controlled security companies, and we've done a lot of of work on that in our commission. >> this ethiopia -- in ethiopia they were soldiers that actually were killed by the olf there in the ogadon region. >> i think they were u.n. peace keeps, united nations peace keepers. i'll look at that. >> all all right. they were there protecting the oil reserves. >> i may be incorrect. china doesn't care about human rights in those countries, and they bring in their own labor and transfer no jobs what whatsoever to the african citizens, and that's a major dissatisfaction in africa. >> the gentleman's time has expired. i recognize mr. rohrabacher, the chairman-designate on the subcommittee of oversight. for five minutes. >> thank you very much.

i'd like to thank you for having this hearing at this moment because we have to understand that as we speak our country is officially welcoming prime prest hu as if he had the same stature and acceptability here as a democratic leader. we welcome him the same as we do countries that are democratic and respect human rights. this is wrong we should not be granting monstrous regimes that are engaged with massive human rights abuses -- and in this case the world's worst human rights abuser is being welcomed to our white house with respect. now, what does that do to those people in china who are our only hope for a peaceful future with that large chunk of humanity? the people of china are hurricane's greatest allies. the people of china who want democracy, the people of china who want to respect human rights and are looking forward to a

more humane stem at peace with the world, those are our allies. what do we do to them when we welcome their oppressor, their murderer, the one who's murdering their children here to the united states with such respect? as we look at this visit with president hu, if our president follows suit the way our former presidents have as well -- this isn't just president obama -- we are doing a great disservice not only to the people of china and to our future, the cause of peace, but we're doing a great disservice to the american people. because what's happening, we have for three decades permitted the regime in china, a monstrously human rights-using regime, to have trade benefits that we wouldn't give to democrat countries. we have built them with technological transfers, with investments. we have let them get away with

murder economically as well as human rights, in the area of human rights. well, ese are things we've got to call them to task for, or our situation will continue to deteriorate. we are now vulnerable to a regime that was weak 30 or 40 years ago. we are vulnerable to them. if we do not change our way of dealing with that regime, they will destroy the peace of the world, and we will be to blame for that. not only the repression of their own people. so i'd like to ask mr. wortzel in particular, china now -- not only does it have a more peaceful stando the rest of the world, we see claims slowly but surely, more land claims and sea claims coming out. china is making claims in the pacific that threaten korea, japan and the philippines. and commerce throughout that air. area. we see claim against india and vietnaand, frankly, let me just say our russian friends

someday are going to wake up and find outthat they are being, they have now become partners with some, with a countryhat means them great harm and is willing to take away territory. do you see any major threat to the peace of the world and the expanding territorial claims of china? ..

>> for that reason i think it is very important that both secretary clinton and secretary gates, pretty forceful stands on ensuring a peaceful resolution of these disputed claims in the south china sea and east china sea here i think it's very important that our military works with and backs up japan even though we don't take a position on the disputed claims. >> let me just note that this government which we have bolstered with policies that we knew would make that country stronger under the idea it was more prosperous it would be more peaceful, that strategy hasn't worked. and this country is now the head of an alliance of rogue nations that threaten the peace and freedom of the entire world.

>> the gentleman's time has expired i would like to recognize mr. sears of new jersey for five minutes. >> thank you, madam chair. as i read the newspaper, so the accounts i'm always fascinated by the statement that the chinese simply have different interests in many parts of the world than we do. think that that hides an awful lot. i do think that the chinese have a hidden agenda, and their agenda in my eyes is more like world domination. somehow, we go back 2000 years ago, and i think that they never lost that. but we seem to help them in their goals.

they just fill a void where we are not. take north korea, for example. they do nothing. they do nothing and the use north korea to their benefit. the relationship of iran. all they do is just boost iran. and everywhere we seem to have a voice. i look at south america and i see south america and many other businesses. i look at what they do in africa, the way they use in africa. i don't know, we just don't seem to get it. and i was just wondering, doctor, you've been a spokesman for human rights and the abuses that have gone on in china, do you still fear for your life or your family's life back home? >> yes. >> you still do. after all, these years.

and some of themembers that are here today, from so many other groups, i assume they also fear fo their families. as they speak up against this, you know, this monster, that is developing before our eyes. i just wonder if you can comment on that. >> the chinese -- >> do your families still get threats back on? >> yes. my family members in china need to report to the authorities on the database is. >> they have to report to the authorities on a regular basis? >> yet. that's why minimize my correspondence to them to minimize the trouble. for mike? may not be the worst. i think that many of my colleagues and family members are being -- i want to emphasize, the chinese, ina has the largest department system in the whole world, and it is still able to put anybody in prisn, disappear anybody, if

they determined to do so. so they come, if not responsible, responsive to its own pople, treat its own people harshly. so i was wondering, these kind will do any good i the rest of the world. so we have to keep asking this question once and once again. so when we come to the foreign policy to all of china, we cannot forget these component. and i often hear many people in this country talking about mentality, so whatever you hear the word war, they will fear. so i don't understand. but my comment is we just cannot simply explained away component whiccan be described as cold war in the relionship between

u.s. and the china. japan, south korea, taiwan. these countries e democratic, and these two countries, i mean u.s. and china, have fundamentally conflict in values, which you just cannot explain away. it will -- so there's a component that can be called cold war. and the only difference is hat u.s. and china have eonomic interest, dependence, that is cold war have not. u.s. has no such close economic relationship with former soviet union, eatern europe. but that's the only different element. but i ago what he says.

china always has and in economic relationships with u.s. -- >> the gentleman sun has expired. thank you. i recognize mr. manzullo. >> thank you, madam chair. as i mentioned in my opening statement, manufacturing is the backbone of our economy in northern illinois. this question is for mr. chang, but others on the panel are welcome to enter. i spent much of my time working with numerous small and medium-sized manufacturers that have been harmed in one way or another in china. most of the time the issue is stuff of intellectual property and piracy, which is the case of the wastewater treatment, in my district called aqua aerobics. we engage the chinese amnesty and asked them to anything and actually got a favorable ruling in the chinese courts on that

issue. at times, but how many companies can pick up the phone and go to their congressmen to get a direct intervention on an obvious ip violation? other times it probably is more competent such as the case of the office shorter maker, fellows. i think the number one paper shredder maker in this country. they are fighting a fierce battle in china, a joint venture where they were locked out. inventory stolen, machine tools, business practices and ip. and if you are big you can succeed. but the small guys,he medium-sized manufacturers are having an extraordinary difficult time. and so, how do we encouge the national prevention local government in china to force the law and beyond rhetoric and grand themes, there's got to be a better way of dealing th

china. i guess that's an easy question. >> right. i think the important thing that we haveto do is start, as i said, let's diplomacy and away. but i also think we need to follow the approach of h.r. 2378 which is really to impose penalties whenever we see that there are violations of china's trade obligations. because this gives us immediate relief. if you talk about the province of small manufacturers, they can't wait for the three or four years that it takes to get through a dispute resolution mechanism of the world trade organization. that is just not practical remedy for them. and that's why i think we need legislation wch is tough, because when we do that the chinese will understand. they had reacted to pressure, and this is really about the only way i think we can do it in terms of saving small manufacturers. because their plight is not only important, it's also urgent. >> but sometimes it's kind of like whack a mole. i have testified twice before

the itc on tires, recreation vehicle tires and automobile tires. once was on a surge in the other two were on dumping, illegal subsidies. and you get the remedies and they come right back again and all of a sudden someone does the same thing under a different name. it's over and over and ver and over again, and these companies spend fortunes on attorney fees trying to protect their property. can't there be a mechanism that our government can have, for lack of a better word, an 800 number, for people who are the options of piracy, that simply can't afford attorneys to go into battle for then? >> well, we certainly could do that in many ways. that would basically involve beefing up the commercial section of our embassy in beijing and consulates around china, but also in the

department of commerce. this needs to be put at a higher priority that we have. normally what happens in trade disputes as you point out is you have this enormous itigation, and the united states really relies on injured parties to bring their case and to rosecuted. i think that your suggestion is an excellent one, which is that the government be much more proactive and to bring all sorts of proceedings, both internally in the united states and through the wto because that's about the only way we can do it. we need to speed up the process because time i think is critical. >> i would look forward to meeting you in my office and put our heads together to try to come up with some type of remedy. >> i will be there. >> thank you very much i yield back the rest of my time. >> thank you very much, mr. manzullo. proud to recognize the member from rhode island. welcome to ourcommittee. >> a.q. madam chairwoman. i appreciate the opportunity to ask questions. my questions also relate to the

impact of our relationship with china on american manufacturing. and i know i think it's been pretty clear to most of us that the chinese have really been willfully weak in aressing the theft of property and it's been present promise for american businesses but i would like to hear your thoughts on what actions we might take to rid protect american businesses from the theft of intellectual property, the seizing of aspects and joint ventures and the refusal to meet contractual obligations. and related to that, i'm particularly interested in your thoughts on what mechanisms we have come up er ticket to the opportunities that exist for production development of renewable energy. i know there was a recent complaint wild against the chinese subsidy policy which the administration contends favor chinese producers of wind, wind equipment, and that have been examples where those kinds of concepts have been resolved at

the u.s.-china joint commission of commerce and trade. so ensure that unwanted what you think those are an effective place or solution, if there are changes we need to make that really will help american manufacturers to be sure we are enforcing in every way policies that protect american manufacturers and the jobs connected to those manufacturers. >> we really have to problems. one of them is china's internal role such as the new inigenous innovation product rules that president hu jintao has been pushing. those would basically force a transfer of american intellectual property to joint venture companies for anyone who wants to sell to government or state enterprises. and that is really an issue where the united states itself in its discussions with china. the obama administration has put us up at a higher priority because it is so important. and i think it's a question of these needo be discussed all the time. the other point which as you

raise, is the outright theft. this is extremely difficult because you can't litigate in a chinese court because the courts are controlled by the party. and often controlled by local interest thahave been really the culprit. and so the only way to united states can deal with this issue really is that the commercial section in the embassy and in the various consulates, make it known to both national and provincial authorities that this is a case which is of importance to the united states which oftentimes is sending the ambassador or the consulate general to a court case to show the presence ofwashington and it's important to us. but this is extremely very difficult. >> mr. sutter, do you have anything? >> i would agree. i think you need to keep the pressure on. it has to cost of the chinese i think you are advocating an approach, you're pushing on an open door with the obama administration, it seems to me.

listening to the secretary of commce and t usgr, they very much want to do this kind of thing. maybe they nee more people. maybe they need some funding from the congress to help in this regard, but i think there's a broad sentiment in the obama government that they should be done, just what mr. chang was saying. ique case by case, you need to work these issues. you need to pressure in a way that is credible. and i think that a high lvel of attention to it with officials is a way to go, and i think that's, as i say, win some support from the usgr and the commerce department. >> make you very much. i yield back the bounce of my time. >> mr. cicilline gets back. thanks for that. recognize mr. rivera of florida for five miutes. >> a key very much madam chair and. i'm going to ask about to either nations, cuba and taiwan. one, an island prison and the other a bastion of democracy

surrounded by a fortress of journey. and we will start with cuba. given china's involvement, and this question we will throw out for doctor wartsilla. given china's involvement in cuba, i wonder if you could, it was -- give us your thoughts as to china's geopolitical intentions in cuba, perhaps as establishing another beachhead in latin america, generally you can specifically what you believe china is up to with regard to oil drilling given information that has been published regarding the companies involved in drilling also have a a a nexus. so generally speing, china's geopolitical interest in cuba, and specifically with regard to oil drilling. >> thanks for the question. first of all, china has taken

over, as i understand it, the entire signals computer complex that the soviet union had in cuba. so the is, without question, a military and intelligence purpose for their relationship. i think part of it is also support for another socialist state. and i think you can link chinese activities with venezuela and support there. there's support in cuba and for cuba. with respect to reources, i think they would be very happy to extract resources any way they could get it. but if you look at the this is a chinese military leaders and political leaders, i always ask

myself why the head of china's strategic rocket forces, second artillery, is visiting cuba. we are not going to be in another cuban missile crisis, but there's certainly something to military relationship going on there, and the same goes with venezuela. in some cases, their relationships in central america and latin americ are related to diplomatic relatns with taiw. and they have managed to wean a couple of countries away from recognition of taiwan toward recognition to china. and that's part of it. i think it's fair to say that, and i sum it up, that they should recognize the monroe doctrine. >> thank you very much. with respect to taiwan, i will

correct this question to mr. chang, and the issue of the f-16s, and this administration's decision, or decisions, previous decisions on prolonging shipment of f-16's to want and what you believe is your perspective on how this affects the taiwan relations act and fulfillment of the taiwan relations act. >> i would love to talk about this topic, but sitting next to the world's expert. so perhaps -- >>hank you. >> taiwan's air force really needs modernize aircft. the debate is f-16s which has a longer range and could be used for deeper strikes inside china if the military chose to do that, versus modernizing the ap. when i talk to aviation engineers they think you could take the ab, put in brand-new radar, targeting equipment, it needs no refrigeration to be able to handle that, and the

would then have a very, very capable aircraft. it's not one that would necessarily satisfy the taiwan's legislature, and it would still be a fight over the programming for the weapons systems and avionics. they want program codes. we will not transfer them. we never do. so they need it. if you made the decision, i don't think there's any guarantee that they would accept the way we make it. and then there's the political cost of approving a brand-new system that china would object to. they will object no matter what we do, but they need aircraft, and i think they have to have that addressed. >> thank you, madam chairwoman. >> pleased to recognize mr. conley of virginia. welcome back, my friend. >> thank you so much, madam

chairman. and thank you for your service. i want to thank the panel, and particularly box elder. bob, we work together when i was in the senate foreign relations committee. great to see you on the other side of the table. let me ask you, bob, understanding serious, serious human rights issues in china and lots of other issues that we're concerned about that event enumerated here, in your view given the fact that had a level of relations with the head of state of the country notwithstanding, is a mistake for this administration to receive the president of china? >> thank you, congressman. it's great to be here. i think what you find is that with a very complicated and interdependent type of relationship. we have so many priorities. we have to balance them.

and as you've indicated, every president that we have had since nixon has done this. and so people can't object in various ways and had very good reasons for this, but obviously publics -- republicans and democratic presidents, they prioritize these things and they say no, this is the best way to go. we may be at a crossroads now. we may have to change the situation. china may be trying to dominate the world with this type of thing. i don't think so. i think china has too many problems. i think the united states is leading power in the world, and it going to stay that way for some time so it gives me a lot of confidence in this situation. but i think about my is you have to figure out where to come down on these priorities. and i think as you have indicated, every psident of the unit states has endorsed this kind of approach. >> thank you. mr. wortzel, you're talking a little earlier about taiwan's defense capability, and you said they're in bad need of an

upgrade of the fighter aircraft. is there any reason to believe that the government of taiwan is not capable of defending itself in the event of a military incursion? >> i don't think that that is the issue. i think that the isse is how capable would they be doing it, and what form might any attack take. they would have a hard time defending against all those 1100 ballistic missiles, which could do a lot of damage. i think it would be very hard-pressed if there were massive special operations insertions into taiwan to disrupt infrastructure. they themselves could do more to harden some of their airfields and storage facilities. i think they have been woefully deficient in the way they tripled in -- dribbled in the

command-and-control and data links for their current forces. i mean, if i -- i said this to their minister of defense. if there's one thing you could do to immediately improve your capalities, it is take the whole datalink and package and link all your ground and air assets so they could take part in cooperative targeting and engagement. t they are doing this. they are also developing their own multiple launch rocket systems. they probably use assistance with precision guide-- >> let me ask you another part of that given the limitation of time. we have one minute. is their -- one of the things that i was concerned summary about the taiwan strait is there's a misunderstanding about the nature of the united states commitment to the curity of

taiwan. in your view does the current government of china fully understand the nature of the u.s. commitment to taiwan? >> i think the government of china does. i think at times some of the political actors in taiwan misinterpret our support as -- i an, i had a legislator from taiwan safe we are glad to get this 16 billion arms package as far as we concerned, its $16 billion insurance policy that you will come to our defense. they have to be ready to defend themselves. >> mr. chairman, we have 20 seconds. did you want to answer that? >> i think with the remilitarization of chinese politics and policy, there's a danger that beijing does not understand our commitment, and thinks that we will not defend taiwan. >> thank you. >> tnk you so much, mr. connolly. i would like to recognize congresswoman commerce of north carolina. so pleased that you have

selected our committee. welcome. >> thank you, madam chairman. i would like to thank our distinguished panel, and i also like to reach out to the individuals and family membrs of all the human rights violations in china. you are a constant reminder to us that we need to be vigilant around the world to human rights violations and how fortunate we are here in united states. my question is for dr. wortzel and doctor sutter, and dr. wortzel, do you prefer to be referred to as colonel, doctor? >> it doesn't matter. these are very polite. i've bn called a lot of other things. >> along the security issues we have been discussing, last septembea chinese fishing boat thought to be a spy vessel deliberately collided with some japanese coast guard vessels in

the vicinity of the island. tensions rose when unprecedented level before the chinese boat captain was released. how close did the two sides come to military conflict wrecks and in your opinion, what are the implications of the united states given our treaty obligations with japan? >> i don't think in that instance they came close t military conflict, but it isa very serious iplomatic. but i think these things can escalate, and could escalate if there are other incidents. we have a treaty obligation with japan. it's a very, very important ally, and without question if japan got into a conflict, military conflict with china, we would be at their side. i think that pacific command,

commander, the secretary of state, have taken very strong and principled sitions, not recognizing the sovereignty of the island, the islands, but at the same time ensuring that the chinese understand that the united states is fully supportive of its treaty ally. and i think the japanese understand that. we need to be very close to them. we need to work very closely with them, and even under the democratic party of japan, i know the foreign minister will, they've got a strong leadership that understands the threats from china. >> if i could say something about this. it's part of a pattern we've seen over the past two years of china being very assertive about the maritime area around the south china sea, yellow sea, this type of thing.

the net effect of this has really damaged china's position in the asia-pacific region. china is weaker today than it was a year ago because of this behavior. the u.s. is much stronger and the obama government has this strategy which feeds into. is what you're doing is reinforcing america's stature and strength in asia while retaining china. if i were as calculating person in china, i would say this s a dumb policy. we have to stop doing this type of thing. and so the thing to watch after mr. hu jintao's visit is will they stop, will he stop doing this kind of thing? is done. is hurting, i think this is not u.k.etention of the chinese leaders. it cost them. i think this topic i think about, has done a very good job very quietly intervening in various ways and saying, we're not going to allow this, it's not going to happen. and i think it's been quite effective. and so let's watch. let's see what happens. if we have a situation where the

military is out of control in china, if it's been being met we know to rise, then it could be more dangerous situation. but at this point i would have to agree with mr. wortzel, i think the civilian leaders to have ultimate control. when you look at their cost and benefits of his kind of behavior hurts them. so i think they have to call it back. >> make you very much. and thank you, madam speaker. i yield back to make of m time. >> pleased to recognize mr. ackerman, the ranking member designated on the subcommittee on the middle east and south ia. >> thank you, madam chair. the chinese have always been bad actors. they were the national focus of attention of being almost exclusively the world's number one reckless -- reckless and to richard nixon has put out came along and decide to have an intervention, and decided it was

a better policy to try to engage the chinese rather than to continue china bashing, which to some seems counterproductive to reaching a particular policy and behavior change. and now we have noticed that there is a small club of recluse nations, and the chinese and the north koreans have found each other, and have swung reckless anonymous. with the chinese being, trying sometimes very unsuccesully to affect the behavior of the north koreans. both seem to be engaging in very productive -- evocative activities on and off, especially of late. can the chinese really affect

the behavior of the north koreans? they seem to be looking like they are trying, sometimes looking like they are not. is that somethingthat they dial up, dial down, depending on china's needs, kind of a controlled? or do they lack any influence? >> i don't think it's a candidate. the question is will they, congressman. >> you are saying they can't? >> well, they provide somewhere tween 70 and 90% of north korea's energy needs. somewhere around 40, 50% of their fuel needsand a great deal of foreign investment. so yes, you can. they fear that if they cut some of that, it would lead to instability in north korea and they would end up with south korea, japan and the united states on the border. that's one thing. second, my view is that they

absolutely enjoy the fact that the united states is pretty heavily dependent on them, at least perceptually to interact with north korea and that certain restraints in my view a lot of the state department's diplomacy against china, or for china. >> i think china could help with north korea, also. and i think their interest is very much on stability. that's what they want. and they worry that pressure on north korea not only could lead to the effect that mr. wortzel point out, but north korea, you could see them as any. north koreans talk about this quite often. but the net effect is what was the chinese do. i think they will seek their terest in school. at the situation looks like a will become very unstable, then they will intervene. and i think they did intervene

in the case of the north korean provocation at the artillery barrage that killed several south koreans and the latter part of last year. and the u.s. has maintained to the north koreans that north korea's provocations and particularly its development of nuclear weapons as a direct threat to the united states. so the u.s. put i think very good pressure on the chinese to get them off the dime, the north koreans into their -- >> you're saying that the chinese have an actual 12 step plan? >> no. they don't -- they don't have a 12 -- this is the id of china rising and beingn control. they are ot writing -- they are not in control. they don't control north korea. they have a lot of influence over it. >> the same could be said with their very different but also dangerous relationship with iran. >> iran is much further away and influence in iran is much lower than it is in a place like north korea. their fundamental and north

korea. it is right on their border. >> but they are getting with a nuclear power and a nuclear nnabe. wannabe. >> exactly. >> the chinese are pretty farsighted. do they see this as a threat not just to us but themselves? >> they see the mark near-term threat. it's not so much that you political -- the geopolitical out of south korea been on the border of china, it's the basic lady of instability. >> talk about the economic instability? >> absolutely. >> yield back the remaining four sends. >> thank you very much, mr. ackerman. i recognize mr. burton. >>hank you, madam chairman. or chair. thank you for -- >> prefer as your excellency. [laughter] >> thank you for having this hearing. i'm going to ask a couple of questions and eld to my friend mr. smith. first of all, you may have answered this question,

mr. yang. but you have any idea how many pele are in communist gulags? >> it's really difficult that number. so for the reason, and i talk about prison system. i talk to to present system. one is official. through the court you c get record of how many people they detain. but there's another prison system that is like joe. there are hundreds of them in china now, run by local government at various level. so we just cannot know, cannot find it how many people are being detained. on top of that, many people are missing, and many people are being put under house arrest. so we just don't know how many people. >> we've been told it's in the millions, and presume you would agree with that. >> i don't have specific number,

and i would say many. i would say china has most prisoners in the world. >> one of the things that i gather from listening to these learned people is that i believe china is not dub. i believe they are very smart. and their leaders. and i think that they are playing chess, and they're doing it over a long very good time. they are moving as they can into the craving and into south america. they are making friends with supporting tyrants who are not socialist bumany of them are communists. and they're putting us in a trick bag because of the economic things that they're doing to us. right now we have a $270 billion trade deficit with them. i think we are what, well over a trillion dollars in hock to them as far as what we owe them.

and if they started pulling the strings, which i think they probably will at some point, they can make us at least to some degree dance to their tune. and so i would like to get from you, and, your perception on the long-term goals of china, and whether or not they're doing what i think they're doing both economically and militarily. they are building their military up dramatically. and so, they have got us by the throat as far as our debt to them. and that would threaten our economy long-term. and if they're building up their military and making these connections around the world, does that pose as a real long-term threat to the united states and our security? and i yield to mr. chang and mr. wortzel. >> that me say, that in my view there is a long-term historical

and cultural -- >> but can you sum up pretty quickly? >> yes. long-term cultural affinity for the tools of power and comments in china. and that creates -- were they can almost dictate other independent states how they should behave. and that's the way i read a lot of their behavior, particularly around their periphery. >> i believe that they want to be a. competitor to the united states. they want to drive the u.s. out of asia, which i think is very clear. they would like to remedy their currency to be the worlds reserve currency, and certainly they want to dominate nations on their periphery. this is clear from what the chinese have been doing. and as we've seen in this past year it's been very concerning about the relations with japan, south korea, india, we say litary or semi-military moves against these countries which are, after all, our allies. so clearly, china is an adversary, when we have to be

very careful about because yes, i do think that they to play chess, but the one thing though is that they often make very serious strategic errors. they are, tactics, but long-term strategic moves maybe not so good as we saw in this past year, and as doctor to talk about. >> mr. smith is recognized. >> thank you very much. my friend asked the question about receiving a chinese presidt like hu jintao. it's not like you meet with or receive, it is how you do it. the concern that many of us have is at stake againhen bush had a working lunch in 2006, it nds a message, especially when he is the jailer of -- >> thank you, mr. smith. thank you. we welcome congresswoman bass of california to our committee. thank you. and i'm pleased to recognize mr. schakett of ohio. we are so pleased to have you return to serve with us.

thank you. the gentleman is recognized. >> thank you very much, madam chairwoman. mr. wozel, i have a couple of questions for you first. i was for quite a few years when the co-chairman of the congressional taiwan caucus, it's been very interested in is issues and been there many times over the years. and relative to their defense, you had mentioned the fighter planes in particular. could you discuss, at the time there was a move for some submarines as well, and that ultimate didn't go anywhere or icu frannie. what are your thoughts about that? >> it's a very difficult problem. it's a problem for the united states navy because they really don't want to have to work on or produce diesel submarines. >> they were talking i doing in france or europe or someplace? >> the french got away with a variety enough chinese and taiwanese to get some destroyers there. everybody involved in that had

accident fought off a tall building. i do think that will work the second time. they need submarines. i mean, if the united states could get costa rica to buy a dozen suarines from germany and then transfer them, it doesn't hurt anybody. the germans look the other way on the retransfer license if we bought them and we transferred, they need -- but i don't think it's a viable to think that they're going to begin to produce them from nothing and then fill out the rest of the defense budget. >> and relative to the missiles, i think when we first organized the caucus, and it's been 12, 14 years ago or so, i think the number that was 400 were 500 missiles, it went to 700. now is 1100. i mean, clearly china has been threatening taiwan for many, many years now, and bullying to

a considerable degree. relative to the missiles, is ere antimissile technology that would be helpful? there was talk about that at the time. you mentioned some missile system. could you elaborate on that slightly? >> we have sold them ballistic missile defense technology. a limited amount. it will help them. it could protect specific areas. that's still an awful lot of missiles. my personal view, and this is really the united states defense, we need to be working lasers. we don't want to be shooting two or three missiles at another missile. we need to melt them right out of the sky quickly. >> and slightly off topic but not really that much, and begin mentioning that taiwan theme, there president has been in prison now for some time. and certainly he has been

punished or his alleged transgression. isn't enough in of? isn't it about time was had a recent point where perhaps the criminalization of politics here that mr. chang, i see you nodding. if you want to jump in here welcome to do so. >> i think the real issue with former president chen is the procedures under which he was convicted. and at this point there needs to be a thorough review of the way that the current government has been prosecuting and persecuting members of the democratic progressive party. this is really a very bad story. the united states needs to pay attention. freedom house has talked a lot about the erosion of human rights in taiwan. and it is going to be a big story in taiwan for the nexttwo or three years. >> thank you. and -- >> if i could, your comments on taiwan. one thing, first, yes have been

problems perhaps with a due process, but my god, the charges against him that have been proven are very damaging. the fact that he's in j-lo seems to make a lot of sense to someone like me. >> how long has he been in prison that? >> two years maybe. a little less than two years. >> family members in j-lo as will? >> i'm not sure where she is right now but she has been convicted. this is the corruption. and so i think the charges are worth looking at carefully. on the military side, just keep in mind with one reservation i have about this, one of the most important ones, is taiwan willing to buy? taiwan, their gdp, their military budget is less than 3% of their gdp. you are not dealing with a country that really wants to militarize itself or build itself up militarily. >> i only have five seconds. that was one of the frustrating

part. we kept pushing them to buy the -- >> thank you. recognize mr. marino of pennsylvania, who will be yielding has done to mr. smith. if you could make that motion. >> madam chair, i did yield my time to mr. smith. >> thank you. mr. smith is recognized. >> thank you, madam chair, for the courtesy. and my good friend and a member. i have just a coupleof questions and follow-up. i kind of ran out of time, we go about the issue of how you receive a person who, with his past and present, raises serious issues about what we are actually doing, especially to the dissidents who will do and throughout all of china, including liu xiaobo and his wife were under house arrest, the jailer of liuiaobo is getting a steak dinner.

these are not nuances. these are profound issues that are raised here. so if you could perhaps, some of you, might want to speak to the issue. let also say that the distinguished chairman of mentioned a moment ago, these are some the greatest advice human rights defenders, and their loved ones. one was abducted out of vietnam right as president, the president took over in 2002. they have ot seen their father. they try to get in tosee them. he was abducted out of vietnam back to china when he is now spending a horrif ordeal. going to do is here today, she made a 2000 track to thailan with her two children after her older daughter was so despondent, perhaps even suicidal, because he was being

so mistry. what we often forget it's not so much the dissidents, what is their families who share in the cruelty. she made it, thankfully. and her children. but again, it raises questions about how can a man who is responsible, and i was a director responsible, he gets a steak dinner. when frank wolf and i made several trips to the prc, we met with the premier. i believe we do have meetings like that. we had a list oppressoroppressors. with issues dealing with forced abortion, religious persecution. we laid it all out. he wasn't happened in receipt of all that but it was a very, very real conversation. and i wonder if, you know, when the toast are made later on tonight and there's all of this group law around a steak dinner, that all that kind of in the background and what message have we s. also if you speak to this and i will yield, the bad governance,

i cheered and what chaired the committee years ago, three hearings on what china is doing in africa, people like by shared in zimbabwe, so many others, who are dictators, by the chinese model of control a secret police. and i'm very, very worried about the infuence of their bad governance model and bad human rights model is having, unless we really speak loud and clear. and i would again make my appeal to the president, to the press corps, t public. don't walk on egg shells. speak boldly about specially prison obama about his fellow peace prize winner, as he won it last year. this year, who is like wishing in prison and his wife under house arrest. >> congressman. i am personally upset about the honors that hu jintao is

receiving. so it's not a matter of whether to meet our receive hu jintao. it is have to agree withou i agree with you totally. and giving hu jintao this on a will send two messages to china. one is to china's government and the others to china's people. that can be described as we can get away. they put nobel peace pre when they're in j-lo. we can get away standing for human rights. the message to the people, that if u.s. may not be that sincere about human rights issues in china. and i want to emphasize that china is very practical, very rational play. china's legitimacy is performance-based. namely, the only thought of

legitimate for this regime to continue its rule in china is economic growth. so we have to much impose the fear onour self, thinking that if we take a stronger position on human rights issue, that will jeopardize our economic relationship with china. why should we fear? these are the persons we should -- it is then that we should fear, you know, any jeopardizes economic relations with the u.s. and the rest of the world. because the slow economic growth will be there all t problems we have been aumulating in the past years, that will cost the government to collapse. >> thank you very much, mr. reno, for giving the time to mr. smith. and now batting cleanup, one of our committee superstars,

recognized a five minute. >> thank you, madam chairwoman. i was going to ask a question here. i think this is an issue that maybe everybody who is has represented in the business community, who does business in china should be thinking about. there was an article on extortion in the harvard business review in december. d the subject is china versus the world, whose technology is at? an exhaustive study of the actual consequences for u.s. businesses in china, let me just read you, larry, one of the conclusions that the authors wrote. chinese officials have learned to tackle multinational companies, including u.s. companies, often forcing them to form joint ventures with its national champions, and transfer the latest technology in

exchange for current and future business opportunities there companies that resist are simply excluded from projects. the chinese government uses the restrictions to drive wedges between foreign rivals vying to land big projects in the country, and hindus each of them to transfer the technology that state owned enterprises need to catch up. it is extortion. and we all know numerous exples. we have heard witnesses i think two years ago, we heard from nancy weinstein, nancy's lifestyles opened a business in beijing, only to have it stolen out from under her. how she was in shanghai. that was a shanghai example. but since that hearing i have probably heard from a half-dozen businesses that said, we don't want to go public, but this is their modus operandi. now it appears in the harvard business review laying out the case that this is the modus

operandi. for the chinese government. but i had your thoughts on that? >> mr. royce, it is the modus operandi. now, i have to say that american companies that are induced to do that, do that o their own volition, because they hope that based on the ability to enter the marketplace, you're going to earn a lot of money. sandhu, some don't. >> very, the next chapter is once the technology is stolen, that company had better be prepared for a pretty qick exit out of china. because its contracts are often about to change. it's workforce doesn't show up the next morning. it's in vlation of any number of new rules here its leases are terminated. we've heard the stories over and over again. >> i would only suggest, a

legislative strategy to remedy it. >> yes. >> and that's if a company can legitimately demonstrate that its products or its technology was stolen, then prohibit the sale of sf and the united states. >> that's a good remedy. that's a good remedy. but an from the experience that we've had going to bat with our constituents out in california, and nanc weinstein would be an example, we have not been able through the court system in china to have any success, and to my knowledge i don't know if any success. i wondered if you would agree with one of the points made in this report, and the authors conclude, it might be useful for the u.s. to dispense with a premise that it could have been economically compatible relationship with china.

in other words, knowing going in that these are two radically different systems, and china has failed to bring their system into compliance with any of the international norms for commercial activity, or for rule of law. >> i don't know why you would choose to do business with a documented thief. >> student, did you say documented these? >> gas. >> my hope would be there are many other countries in asia don't have an interest in closer -- we see this in the polling all the time. and i think a key aspect of managing china's rise will be our alliances with china's neighbors across the asia and south asia. and i think that getting reassurance to our friends and placing a check on may be china's regional ambitions will be necessary.

but what more shall we be doing with these countries to encourage trade investment? and what more should we do to lethe u.s. business community now their return on instment is a negative e in terms of china? that gets out occasion in the journal, but not often enough. >> thank you. the gentleman side has expired. and now virtually our last question and answer five minute will be fro nebraska. >> thank you, madam chair, for the time and thank you, gentlemen for appearing before us today. i have a fairly lofty sense for me. basically says i want to stress the importance of managing our complex relationship with china in a manner that honors the transcendent principles that define our national purpose and identity. but let me stop there. as a look out in the audience here, i e a number of yong people. and i think it's important to get your mind around this. many of you are perhaps newly

married or hope to be married in the future. let's suppose you were in china and the authorities come by and say, how many children do you have? we have one. we have one on the way. that is one too many. come with us. can you imagine that in the united states? we can't even get ourmind arou these concepts, and yet this is present who gentiles china of today. now, i sincerely hope that as the president meets, as president obama meets with president who matter, that human rights issues are going to figure most prominently in these discussions and the white house has indicated some direction in that regard. but since i've been serving in congress minutes of both sides of the aisle have boldly challenged beijing on the ruthless treatment and their families, internet freedom activists, religious minorities d women and families victimized by a callous policy of the worst abortion.

let's turn to economic appears full estimate is we all but $2 tllion to china, and had a bilateral trade deficit approaching 300 billion. of course, this poses waiting concerned. where appropriate i believe we must challenge china. to abandon its unbridled marketers -- which manifested itself in massivsubsidies and other practices that contribute to this staggering imbalance. i think also we must look ourselves in the i in the united states, antake action to get our fiscal house in order, to revive our stagnant manufacturing industries, refurbish our industrial base, and take responsibly for economic future. the reality is we buy their stuff, and they buy our debt. and this is a truly dysfunctional marriage. so i think we have an obligation to forthright the address the sources of tension with china,

and our commitment to me to respect, should never entice us to ignore these very serious concerns. and i hope that the administration will echo these concerns i in the meetings today with chinese leadership. my question to the panel is this. that chinese gift cover to the north koreans. the chinese do business with iran. the chinese do not respect human rights. what type of world does china envision? what is the endgame? a nationalistic surge underwritten by a new capitalistic communist model never before seen in the history of the world, can you comment on that, please? >> i would be very happy to comment. i i think the chinese objective is very ch focused on the here and now. mr. yang emphasized they have a legitimacy deficit, and their

legitimacy rests on economic performance. and to do that they need stability. and to do that they have to interact with the wold on a lot of different ways and a lot of giveaways with economic development being the primary. and so to confront the united states in a major way something i think is not fundamental what they're about right now. their long-term plans are very vague. they've got a very big agenda for the short term. and it's going to keep them busy for a long time. >> so does raising the concerns that i raise as well as many others today help address, give rise to more legitimacy concerns as they further distance themselves from what we would consider to be the international candidate of responsible nations? the idea that we should address all the issues that you have mentioned in aorthright way is very clear. we should do that. no question. but i think your idea that somehow the chinese have this plan for domination and control

of the world, i think about images that china is a bit of scrambling, trying to keep legitimacy, trying to keep control of a very vibrant economic and social situation. it's under good control in many respects. >> is raising the issues i just raised hinder their request for this legitimacy? >> i think it could. it could. i do not care because economics trumps everything. >> no, economics does not trump everything. it's that prestige is as important as well. the position is as important as well. >> the gentleman's time has expired. it is a testament to the great interests of this topic has, that members keep coming, coming back so pleased to recognize mr. deutsch, my floridian colleague for five minutes. >> thank you, madam chair. i appreciate your leadership of this committee. ..

their intellect is being stolen on a regular basis in china. it's being stolen by illegal downloads, by pirated d.v.d.'s, being stolen by seizing, again, the intellectual property of our nation. what can we do to increase the pressure on the chinese government to be more serious in enforcing and protecting the intellectual properties rights of our citizens? >> i think the one thing we can do if we really are serious about it is start adding tariffs for goods of countries that do engage in willful theft of intellectual property.

it's about the only way to do it. there are a number of other strategies. one thing the obama administration has done is it has gone after these indigenous innovation rules that president huh jintao -- hu jintao has sponsored. so that's one thing. but when it comes to the actual theft, which is another issue, i believe that the only way to deal with this is sanctions of some sort, penalties of some sort. . head. >> i agree. i mean, we have to avail ourselves of the available world trade organization remedies. we are not always doingthat. there are more limited things that we might like, but we must avail ourselves of them, and we have to work, particularly with our european allies as friends

so that when a case is brought it is not just by one country. i think that helps. countervailing duties is another potential remedy that i think would be useful. >> i would like to broaden the discussion to the implications of the theft of intellectual property back to the links between stealing intellectual property and the funding of terrorist organizations. a mority of the counterfeit goods originate in china and wind up in places like t troubled region of south america were millns of dollars in direct contributions have been provided to hezbollah. one such note special entity provided a lump-sum payment of three and a half million dollars to hezbollah. is there a way, even moving beyond the important nature of intellectual property rights on its ow,