Presenter: Michael Schiffer, Deputy Assistant Secretary of Defense for East Asia August 24, 2011

DOD Press Briefing on the 2011 Annual Report to Congress: Military and Developments Involving the People's Republic of China Go to http://www.defense.gov/pubs/pdfs/2011_CMPR_Final.pdf to view the 2011 Report to Congress on the Military and Security Developments Involving the People's Republic of China MICHAEL SCHIFFER:� Good afternoon, everybody.  For those of you that I haven't had a chance to introduce myself yet to, I'm Michael Schiffer, the deputy assistant secretary of defense for East Asia. And I'm here this afternoon to talk to you all about the "Report to Congress on Military and Security Developments Involving the People's Republic of China" that we delivered up to Capitol Hill today. I'll offer a few broad thoughts on the report, a couple of -- couple of points about the administration's overall approach to China and then walk you through in some degree of detail -- hopefully, not too painful -- what's in the report this year, and then we'll have time for whatever questions you may have. The report, as many of you know, is a report from the secretary of defense transmitted to Congress, but it is a report that we coordinate broadly across the -- across the interagency and across the entire U.S. Government, so that even though it is a DOD report, it does reflect the views and perspectives that are held broadly by the U.S. Government. We very much intend this report to be something that is factual, objective and analytical to provide inputs and information for policymakers both in the legislative and the executive branch to consider as they contemplate the development of U.S. policy and the bilateral relationship between the United States and China. This year's report contains new information on a number of topics, including new sections on China's evolving maritime strategy and its growing military involvement and engagement with other countries. Let me first, as I said, offer a couple of general comments on U.S.-China relations and then the overview of the report itself. As you know from statements that numerous senior U.S. Government officials have made, the United States welcomes a strong, prosperous and successful China that contributes to international rules and norms and enhances security and peace both in the Asia-Pacific Region and around the globe. The United States is pursuing a positive, cooperative, and comprehensive relationship with China capable of addressing common global challenges and advancing our shared interests. China's expanding military capabilities have enabled it to contribute to the delivery of international public goods, from peacekeeping and counter-piracy to humanitarian assistance and disaster relief.  However, the pace and scope of China's sustained military investments have allowed China to pursue capabilities that we believe are potentially destabilizing to regional military balances, increase the risk of misunderstanding and miscalculation, and may contribute to regional tensions and anxieties. Such capabilities could increase Beijing's options for using military force to gain diplomatic advantage, advance its interests or resolve military disputes -- resolve disputes in its -- in its favor. And this very much speaks to the -- to the logic that we see for sustained and reliable military-to-military dialogue and military security dialogue between the United States and China so that we are able to gain the sort of transparency and strategic understanding that's necessary to forge that positive, cooperative, and comprehensive relationship. And in fact, in many ways I might suggest that the report can best be read not simply as a piece of analysis but really as the sets of questions and issues that we would like to be able to engage in dialogue and discussion with our Chinese counterparts about.� These are the questions and the issues that we think that it's important for us to be able to understand; we know our Chinese friends have questions for and about us; and that's the sort of dialogue and discussion that we welcome and that we think contributes to regional and global security and stability. Over the next decade from 2011 to 2020, we believe that there will be a number of critical elements in play as we look at Chinese military modernization as the PLA attempts to integrate a number of new and complex platforms that they've developed and to adopt modern operational concepts, including joint operations and network-centric warfare. Indeed, as the report discusses, there are a number of new Chinese platforms and weapons systems that have reached maturity in recent years and others that we believe will soon become operational.  And these are -- these are new systems that are on par with or exceed global standards. But these efforts to integrate across systems and platforms will be a key -- a key marker in China's continued military modernization efforts going forward. We believe that the PLA continues to be on track to achieve its goal of building a modern, regionally focused military by 2020. However, China's ability to sustain military power at a distance today remains limited. As many of you know, as many of you reported, on August 10th of this year, China commenced sea trials with the Kuznetsov-class aircraft carrier that it purchased from the Ukraine in 1998.   Our report, which was written and coordinated before this development, conveyed our expectation that sea trials would commence this year. The aircraft carrier could become operationally available to China's navy by the end of 2012, we assess, but without aircraft.  It will take a number of additional years for an air group to achieve the sort of minimal level of combat capability aboard the carrier that will be necessary for them to start to operate from the carrier itself. China continues to invest heavily in undersea warfare with a mixture of nuclear and conventionally powered submarines. This is complemented by China's investment in new surface combatants designed to improve the PLA navy's capabilities for anti-surface and anti-air warfare. The PLA has now completed construction of a major naval base on Hainan Island. And this base, we assess, is large enough to accommodate a mix of ballistic missiles, submarines and large surface combatants, including aircraft carriers. China also continues to invest heavily in air capabilities, including modern aircraft and long-range advanced surface-to-air missile systems. This past January -- again, as many of you reported -- China conducted a flight test of the next-generation fighter prototype, the J-20, which highlighted China's ambition to produce a fighter aircraft that incorporates stealth attributes, advanced avionics, and supercruise-capable engines. China's also investing heavily in an array of space programs. China conducted a national record of 15 space launches in 2010, which includes both civilian and military systems. Turning away from force development and to another issue that I know is of interest to you all, and that's cross-strait relations, as the report assesses, in the political, diplomatic, economic and cultural field, cross-strait relations have continued to improve over the past couple of years. But despite this political warning -- warming, China's military shows no signs of slowing its effort to prepare for a cross-strait contingency. In addition to planning for Taiwan contingencies, China places a high priority on asserting and strengthening its maritime territorial claims. An increased PLA naval presence in the region, including surface, subsurface and airborne platforms and possibly one or more of China's future aircraft carriers, would provide the PLA with an enhanced extended-range power projection capability, with all the implications for regional rivalries and power dynamics that that implies. The PLA has also in recent years demonstrated the capability to conduct limited peacetime deployments of modern forces outside Asia. This includes multiple counterpiracy deployments to the Gulf of Aden and increasing participation in international humanitarian and disaster release -- relief efforts. Investments in large amphibious ships, a new hospital ship, long-range transport aircraft and improved logistics have made these sorts of missions a practical reality. These types of peacetime operations provide the PLA with a valuable operational experience and also serve PRC diplomatic objectives. China's comprehensive military modernization efforts are supported by robust increases in government funding. On March 4th of this year Beijing announced a 12.7 percent increase in its military budget, and that continues more than two decades of sustained budgetary growth. The PLA has also made some modest but incremental improvements in transparency in recent years, but there are a number of uncertainties that remain. We will continue, and we do continue, to encourage China to improve transparency and openness, to act in ways that support and strengthen common political, economic and diplomatic interests of the -- of the region and of the international community. The complexity of the global security environment as well as the advances in China's military capabilities and its expanding military operations and missions calls for continuous military-to-military dialogue between our two defense and security establishments. This is a dialogue that we believe can help us to expand practical cooperation where our national interests converge and also provide us the ability and the opportunity to discuss candidly those areas where we may have disagreements. Such dialogue, such engagements we believe is especially important during periods of friction and turbulence in the -- in the bilateral relationship. During their January 2011 summit, President Obama and PRC President Hu Jintao jointly affirmed that a healthy, stable, and reliable military-to-military relationship is an essential part of the shared vision for a positive, cooperative, and comprehensive U.S.-China relationship. We believe -- and we will continue to use military engagement with China as one of several means to demonstrate U.S. commitment to the security of the Asia-Pacific region, to encourage China to play a constructive role in the region and to press China to partner with the United States and our Asian allies and partners in addressing common security challenges. So let me just wrap up by offering that we hope that the report, which we think has a lot of very interesting and useful -- we hope has a lot of very interesting and useful information and analysis in it, will contribute in a responsible fashion to the many debates that are ongoing with respect to the military dimension of China's military modernization. And with that, let me turn to your -- turn to your questions. Q: You said at the beginning that the Chinese military buildup was destabilizing, and then you went through a whole long list of what the Chinese have done. Can you specifically say which part of that buildup is -- you consider destabilizing, which aspects that you referred to? MR. SCHIFFER:� I think I said that it was potentially destabilizing. And that speaks, again, to the importance of being able to have, not just between the United States and China but between China and the other countries of the region, deep, sustained, continuous and reliable discussions and engagement between our military and security establishments so that we can better understand China's intentions, China's thinking and approach, and so that they can better understand ours. I think absent that, and given the lack of transparency that -- even with the improvements that I cited, that still persists, that's where you have the potential to run into situations where there may be misunderstandings or miscalculations, where you would have the potential for anxiety driving a destabilizing dynamic. Q: So just -- so it's not the actual buildup of the stealth fighter or the aircraft carrier, it's the fact that the Chinese -- the potentially destabilizing aspect of this is the Chinese are not transparent enough and talking enough. (Off mic.) MR. SCHIFFER: Well, I think it's a -- it's a -- it's a combination of that lack of -- the lack of understanding that's coming out -- that has been created by the opacity of their system. But I mean, it is also because there are very real questions, given the overall trends and trajectory in the scope and the scale of China's military modernization efforts. I wouldn't put -- I wouldn't put it on any one particular platform or any one particular system. There's nothing particularly magical about any one particular item. But when you put together the entirety of what we've witnessed over the past several decades and, you know, we see these trend lines continuing off into the future, that raises -- that raises questions. And as I said, again, that's why we think that it's important to be able to have the sorts of dialogues and discussions that will allow us to understand each other better and will help to contribute to regional stability. Q: I mean, for years the report has addressed the same trend in the Taiwan Strait, that the military balance has shifted to China's favor.In this report, is there, you know, a tipping point that we are anticipating, like in 2020 Taiwan will lose its superiority or the, you know, quality advantage? And the second question is that when General Chen Bingde is here -- was here in Washington, he mentioned that there was no missile pointing at China across -- according to Taiwan, across the strait. I don't know from this report, you know, what's U.S. -- you know, estimate or evaluation. MR. SCHIFFER: I would offer that I don't think there is a -- there's not a particular tipping point, which I know may come as something of a disappointment as one thinks about how to construct the perfect newspaper headline. But there are trends, as the report points to, that continue to be -- you know, that continue to point to a very challenging military and security environment across the strait. That is a set of issues that we're committed to working with -- working with Taiwan to address, committed to meeting our commitments under the -- under the Taiwan Relations Act, in the context of the one-China policy and the three joint communiqu�to assure that Taiwan has the self-defense capabilities that it needs. And that is something that obviously continues to be a concern of the -- of the Department of Defense and, indeed, the entire U.S. Government. I will let General Chen try to clarify or characterize his own comments and what he intended and what he meant. Please. Q: You mentioned -- from Reuters -- you mentioned aircraft carriers in your spoken presentation as well. And it's touched on in the report. There have been reports since the period (of the compilation that China has indeed begun building its own indigenous carriers. Can you comment on those reports at all? MR. SCHIFFER: We do think that China is undertaking an effort to build its own indigenous aircraft carriers. And our expectations -- and again, this is addressed in the report -- are that we will see Chinese indigenous aircraft carriers. I won't speculate on the number, but likely more than one being developed in the -- in the future. Yes. Q: Did you share this report with the Chinese government or embassy?  And if so, what was your message to them? And did the Pakistanis show the helicopter tail that was left behind during the bin Laden raid to the Chinese?  Did they -- were they able to obtain any information about stealth technology from that? MR. SCHIFFER:  So far the report has been briefed to Congress, and now, of course, our second-most -- possibly most important audience, which is you all. We have a number of engagements with a range of people in the diplomatic community both here in the United States and overseas planned over the next several days to provide briefings on the report. You'll excuse me if I will take a pass on going into any details on any of the messages that we'll be delivering in any of those -- in any of those discussions. I will also take a pass because -- for all the reasons that you know and not comment on the Pakistan issue and the helicopter tail. Yeah, Tony. Q: On the F-16s -- you know, it's a hot-button issue -- is there anything in this report that you feel, as a professional political-military student of Chinese capability, buttresses the case for additional non-stealthy F-16s to Taiwan? MR. SCHIFFER: Luckily, I'm not a professional military student of Chinese capabilities, so, you know, that gives me a pass on your question. Q: (Off mic.) MR. SCHIFFER: (Chuckles.) Look, you know, there's no question -- I don't think it's a secret to anybody -- that it is a very challenging security environment across the strait. But I would point out that it is a very challenging security environment across the strait -- and the report discuses this in some level of detail -- across a number of different dimensions. And we are working very, very closely with Taiwan, as we have for many, many years now across administrations of both political parties, to make sure that they have the self-defense capabilities that they need. And we will continue to do so. Q: Can I ask you one quick one? Has the Pentagon rejected a new sale of F-16s? Have they -- have you recommended rejecting a sale of new F-16s? There's been reports out of the region to that effect. MR. SCHIFFER: I know that there have been reports out of the region to that effect, yes. Q:� Can you answer the -- whether -- the status of the issue? Have you made a recommendation to the White House saying, we don't -- we don't recommend a new sale? MR. SCHIFFER: I will simply offer that there have been no decisions that have been made on arms sales to Taiwan. But as I said before, I mean, this is an issue that we continue to work -- in my office, we work with this question on a daily basis. And consistent with our obligations under the Taiwan Relations Act, the United States will provide to Taiwan the self-defense capabilities that it requires. Q: Would you -- would you see a possible contradiction should the -- your department or the U.S. Government decide later on that F- 16C/Ds would not be sold to Taiwan on one hand; on the other hand, the report has -- you know, it's featured in the report that the military balance across the Taiwan Strait is, you know, continuing to move in -- to the advantage of China?� Do you see a potential contradiction there? Are you concerned? MR. SCHIFFER: As I said earlier, there -- this is a challenging security environment. It's a challenging security environment across a number of different dimensions, not just one and not just a security environment where -- to take the tipping point question and turn it around, where there is some, you know, silver bullet that will all of a sudden change everything. We are committed to working, consistent with the Taiwan Relations Act, with Taiwan, and consistent with the one-China policy and the three joint communiqu� to make sure that Taiwan has the self-defense capabilities that it needs across a range of -- a range of dimensions. Kevin, I can -- Q: Mike, can you -- can you detail, beyond the visits by Gates and Mullen, any military exchanges going on between the U.S. and China in the interest of transparency? And in the case of the aircraft carrier sea trials, will -- was there any type of notification or action between the two -- your two sides for that, you know, first high-profile event since these big visits have, you know, made those pledges to be more transparent? MR. SCHIFFER:� We -- I mean, we've engaged with the PLA in a number of working-level discussions and meetings over the -- over the course of the year, and I'd be happy to make sure that we can provide you or anybody else that's interested with the full list. But since Secretary Gates went in January of this year, we had defense policy coordination talks, which are held at my level. We've had a working group meeting of the Military Maritime Consultative Agreement. Just last week there were a number of people from my team here in the Pentagon and the Joint Staff that were in Beijing having working-level discussions about transparency and a number of other related issues. So there has been a fair amount of stuff that's been -- that's been going on at the -- at the working level even as we've also had these senior-level contacts. The one other thing that I would point to is that, as many of you may know, we had established at the Strategic and Economic Dialogue this year a new joint civil-military dialogue, something that Secretary Gates had called for when he was in China in January, to allow us to discuss sensitive security issues, those things that might be most troubling for stability in the bilateral relationship in a setting that brings together both civilian and military leaders on both sides at a -- at a fairly senior level. That's not strictly a mil-mil engagement, but that does speak to our efforts to institutionalize and regularize and deepen these sorts of dialogues and discussions with the People's Republic of China. Yeah. Q: Where does cyber capability fit into the matrix of China's developing capabilities that you call potentially destabilizing? MR. SCHIFFER: We have some analysis of where we think the Chinese are going in the cyber realm and -- in the report, and I guess I should do the commercial here that says that, you know, this is really a report -- and I say this with all sincerity -- that we really do like to allow to speak for itself, because there's a lot of -- a lot of very good stuff in here. And so, I'd recommend that you sort of dive into the report to pull out some of that analysis. But you know, it's no secret, again, that, you know, cyber is a realm where deeper engagement between the United States and China, so that we can work on common rules of the road and a common way forward, is necessary. You know, we have -- we have some concerns about some of the things that we've seen, and we want to be able to work through that with China. Yeah. Q: (Inaudible) -- this is a report that's subject to a lengthy interagency review, but it was also due in March. Could you give us any more insight as to why it took so many months to actually produce this? Were there any sticking points in the internal discussions about this? MR. SCHIFFER: There were no -- you know, I realize a good conspiracy is, you know, a lot more fun than just sort the simple banal truth of bureaucracies grinding away on a -- on a daily basis. You know, this is a very, very complex and important set of issues, as I -- as I know you all appreciate.ï To turn out a good product, and to turn out a good product that we were able to coordinate across the U.S. Government, because we think that it benefits greatly from that sort of coordination, simply -- simply took time. I, you know, wish that it didn't, wish we had been able to turn it out -- to turn it out quicker, but I think the results, when you have the chance to read through the report, speak to -- speak to the benefits of taking that time to really -- to really turn out a product that -- that I think -- and I don't just say this because I'm paid to say it -- but that I think really has a lot of very, very good, cogent content and analysis. In the back. Q: I didn't see any discussion of China's holding of American debt. And I'm curious how you see these fiscal issues play into the larger security picture between the U.S. and China. MR. SCHIFFER: That -- those sorts of issues aren't included in this report because that is, at least as our current congressional mandate -- reads a little bit outside the scope of the report and, frankly, outside the scope or the expertise of the Department of Defense.� I mean, I'll simply say that this is obviously an extraordinarily complex economic relationship that -- that we have with China and an extraordinarily complex relationship that -- that creates challenges on both sides. And I know that that's receiving a lot of extraordinarily high-level attention from both our leadership, including Vice President Biden on his -- on his trip the other week, and from China's leadership. Q:� You mentioned some of the humanitarian and disaster-relief kind of work the Chinese navy is engaged in. How great of an emphasis do you see them placing on those sort of operations? Do you see it as a -- as almost as great of an emphasis as the U.S. has placed on it, or do you see it just kind of staying as a side mission for them? MR. SCHIFFER: China's still, you know, in the relatively early stages of engaging fully in the region and with the international community as a provider of those sorts of goods and services. But as I said, I mean, this is something that we view as a -- as a positive development. And we want to encourage China to join with -- to join with the United States and our other allies and partners in the region and around the globe in providing those sorts of capabilities and those sorts of assets. I mean, a China that helps to respond to the threats of piracy, a China that helps to respond to humanitarian assistance and disaster relief needs, and that is playing that sort of positive and constructive role in global affairs. I mean, that's -- that's a very good thing for the United States, that's a very good thing for the region, that's a very good thing for the world. Q: And to follow up, is -- are they interested in kind of the same regions that the U.S. are? Is there some divergence there? MR. SCHIFFER: There -- I mean, this is a question, frankly, that, you know, you should address to -- you know, address to folks on the Chinese side to get a better sense of their current thinking.But they're -- you know, they're still, as I said, in the relatively early stages of developing their own thinking as to how they're going out into the world and conduct these operations. Although, I would point out that I think they have something like close to 18,000 folks that have participated in peacekeeping operations, you know, in recent years, which is a sizeable contribution and that's -- you know, and a number of different peacekeeping missions. Yeah, in the very back row there. Q: The aircraft carrier, just coming back to that: How big a deal is that? And can that development be seen in a positive light -- (inaudible)? MR. SCHIFFER: You know, I think this is something that as I -- as I said, doesn't come as any surprise to us. I mean, this was a development that the Chinese have been -- have been working on for -- for a number of years, and it's not at all, you know, out of character or, you know, out of -- out of the norm of the sorts of development given -- you know, given the trajectory of China's military modernization efforts over the past -- over the past couple decades.� Whether or not this proves to be a -- you know, a net plus for the region or for the globe or proves to be something that has destabilizing effects and raises blood pressure in various regional capitals I think remains to be seen; and again, not to sound like a broken record, but underscores the importance of being able to have those dialogues that allow us to reach greater strategic understanding and aim for a -- for a degree of strategic trust, not just between the United States and China, but China and its other neighbors as well. COL LAPAN: (Off mic) We have time for one or two more. MR. SCHIFFER: OK. Q: You've been -- there's been a lot of discussion of the carrier, but the report also talks a great deal about the other naval capabilities the Chinese have been developing. What kind of capabilities in here do you find most noteworthy or most troubling or most of concern? MR. SCHIFFER: Again, you know, there's no single capability that I find to be, you know, either most noteworthy or most troubling or most of concern. It is the overall trajectory of China's military modernization efforts and the fact that they are, you know, working across a number of different dimensions of power in the maritime domain that is -- that is something that I think we need to keep an eye on, need to assure that we in turn have the -- have the capabilities in place to safeguard our national security interests, need to work with our allies and partners on their -- on their capacities and their capabilities and, again, need to engage with China so that we can have a better and deeper understanding of how we're both -- how we're each approaching issues in the naval and in the maritime domain. We can have one last question. Q: If past years are any guide, China will generally react angrily to the release of this report. It seems like they resent the enterprise itself, let alone the contents. Is China mistaken in thinking of this report as a hostile act towards China? And in your own mil-mil dealings, have you ever received more nuanced feedback from Chinese counterparts on this report? MR. SCHIFFER: My expectations, like yours, is that, you know, our Chinese friends will very likely have some critical comments to say about the issuance of this report. As we've tried to explain to them in our military-to-military engagements, I mean, the report can be read, and I hope that they do look at it as, an encapsulation of the sorts of questions and the sorts of issues that we have questions about, that we would like to be able to engage in discussion and dialogue with them on; and that it's our sense that if we are able to have that sort of robust, reliable, continuous military-to-military dialogue, that that will lead to a more positive relationship between the United States and China and will help contribute to regional stability and security. So thank you all very much. I hope that was -- hope that was helpful.