Opening Statement

Ranking Member Dan Burton

Subcommittee on the Western Hemisphere

Committee on Foreign Affairs

June 11^th, 2008

The New Challenge: China in the Western Hemisphere

To begin, I would like to thank the Chairman for holding today’s hearing on the complex issue of China’s ambitions within the Western Hemisphere. I look forward to discussing the influence of those ambitions on U.S. strategic interests as well as the growing impact on our neighbors.

I chaired a hearing on this topic back in April of 2005, and it seems to me that many of the same concerns are still valid today. The foreign and military relations China is pursuing around the globe are still very troubling in nature. China continues to further ties with Iran, supports the brutal military rulers of Burma and has become the largest weapons supplier to the government of Sudan. It appears that China is more than willing to turn a blind eye to these brutal regimes in order to feed its ravenous energy appetite.

China’s aggressive move into our Hemisphere has proven to be equally as blind. This purely economic motive pursued by China has resulted in the deepening of relations with rogue states such as Cuba and Venezuela. China is appealing to the developing world as an alternative model for ending poverty, and Latin America is eating it up as the region has seen billions of dollars of Chinese money earmarked for infrastructure, transport, energy and defense projects.

The countries that make up the Western Hemisphere continue to face considerable challenges to their still maturing democracies. Persistent poverty, violent guerrilla conflicts, drug trafficking, corruption, terrorist infiltration and non-democratic leaders flush with petro dollars are making it difficult for many in the region to fully embrace and develop strong democracies.

Countries where transparency, accountability and strong institutional structures are still developing provide fertile ground for Beijing’s agenda and China’s leaders are definitely exploiting this opening.

Latin America is an attractive destination for China due to its rich mineral resources, commodities and particularly energy sources. As the second-largest consumer of oil, China is a leading competitor of the United States in the search for oil, gas and minerals across the globe.

According to statistics released in April of this year by the China Petroleum and Chemical Industry Association (CPCIA), China's consumption of oil products composed of gasoline, diesel and kerosene has risen by 16.5 percent to 52.73 million tons in the first three months, and crude oil, rose by 8 percent to 91.8 million tons. These numbers show unprecedented growth in the first quarter of 2008.

As we all know, oil is a finite resource and the competition to exploit it is a zero-sum game. The more global oil the Chinese gobble up, the less oil available to flow into American power plants, commercial trucks and home heating systems. Given that we are unable to use the oil resources within our own country- which in my opinion is a huge mistake- our future progress and security relies on access to oil in outside countries.

Recent developments are compounding these concerns that I have addressed in the past. First, China’s growing influence can be seen in the shift away from support for Taiwan that is being fueled through China’s “dollar diplomacy”. Three countries (Dominica, Grenada and Costa Rica) shifted their allegiance since 2004, and if the President Elect of Paraguay follows through with his promises, the last South American country with ties to Taiwan may shift as well.

Second, I have strongly promoted free trade agreements with our allies in Latin America in an effort to secure long term trade and investment among our countries. If we do not pursue these markets they will be lost to a country that cares little for the well-being of our hemisphere in favor of the communist model of success. The failure to pass the U.S.-Colombia FTA provides an open door for China’s encroaching influence and is a direct threat to our national security.

Third, China is also exerting itself into the Hemisphere through the Manta Airbase located in Ecuador that has served as a U.S. Military Forward Operating Location for 10 years. In 2006 alone aircrews flew more than 1,200 missions from Manta and helped seize more than 258 tons of illegal drugs with an estimated street value of $5.2 billion. China’s take over of this airbase is a huge blow to the regional efforts to fight drugs as the Chinese will most likely use the renovated airbase for cargo transit in trade and not to fight the detrimental trafficking of drugs throughout the region. This new agreement between Ecuador and China, if it moves forward as planned in 2009 when the U.S. contract expires, will also work to secure Chinese capital for fulfilling Manta's future role as one of the largest Sino-Latin American trade trans-shipment hubs.

Finally, the trade imbalance and poor business practices that follow China’s investment in a region continue to be a growing area of concern for Latin America. The United States has the most dynamic and powerful economy in the world and yet even our economy and industries are being staggered by the massive trade imbalance with China. It is not hard to imagine the impact this unlevel playing field, as well as the long term costs of poor business practices on developing economies, is having on the economies of smaller countries in Latin America.

As you can tell, I am very concerned with the rise of influence China is pursuing in our Hemisphere and I believe it is important that the United States grasps the economic, social and national security implications of a Latin America under the thumb of China. Once China is able to move in and expand control, it will be difficult to turn the tide.

I look forward to hearing from our distinguished panelists on these and other topics China’s interest and growing influence in Latin America.