class possibly to Akula class nuclear powered subs. That would really make our navy think.

They may also be getting submarine launch cruise missiles and the air launched cruise missiles which are very effective missiles. We believe this is happening but I do not know the extent of it. On the missile side, as I pointed out, they are building the solidfueled, SRBMs and are significantly building up this force opposite Taiwan. They shot the solid-fueled DF-21 off Taiwan in 1996. I think it was Admiral Blair who said, this is the first time I have ever gone into a meeting with an interlocutor who says the deployment of their missiles is their sovereign right, and the deployment of our missiles is their sovereign right. So it is a little hard to get a dialogue going under these conditions.

But my own sense is, we can talk strategy with the Chinese on military matters because we hold a lot of very good cards.

Mr. SASSER. Senator Hatch, if I could just comment on this for a moment. One, I think there is a tendency in this country in some quarters to enormously over-estimate Chinese military capability.

I do not think that you can spend much time around China or in China and watch just what is on the surface you can see of that military and come away from it with a sense that they are in any way a threat to the United States.

In quoting a very distinguished scholar, Michael Mendelbaum, who was commenting on the Chinese and the Chinese capability, he was asked about the Chinese ability to dominate Asia. His answer was, it lacks the power, the ideology, and the will. I think that is perfectly clear.

I mean, we talk about this Chinese weaponry. To my knowledge, they have something—and this has been in the newspapers, so I think we can talk about it—like 15 ICMBs, liquid fueled. It takes maybe 24 hours to fuel these things up. They are targeted not just at us, but at others.

My sense is, the Chinese are more afraid of the Japanese, and they are more worried about the Russians, and they are more worried about the Indians, than they are the United States.

Now, with regard to their ability to generate all this so-called high-tech weaponry, they have been trying to build a jet fighter for the past 15 years that would be a match for our first generation F-16, and they have not gotten that thing moving yet.

So they have moved in the direction now of buying Soviet fighters, and they have bought, I think, 60 to 90 of them. That does not sound to me as if that is a very significant threat. They are having enormous difficulty maintaining them. They cannot keep the engines running on them because they do not have the maintenance capability.

They bought two Russian submarines. Both of them, the last time I heard, were not operating because they did not have the maintenance capability to maintain the generators on them. I mean, this is not a threatening military.

It has been characterized by some of our experts in the Pentagon as the world's largest collection of military antiques. It is large, it is defensive in nature, and it is largely still bogged down in the technology of the 1950's and 1960's. They have got an enormous

way to go. Their inventory of modern weaponry today is less than the Netherlands', to give you some frame of reference.

The CHAIRMAN. Well, I want to thank the panel for the excellence of their testimony. This is probably the most critical vote that we will face this year.

Senator MOYNIHAN. This decade, Mr. Chairman.

The CHAIRMAN. This decade. Absolutely. So your insights and information are extremely helpful, and we urge you to keep in contact with us as we move forward on the legislation. Thank you very much for being here.

We will now call forward the next panel. We have a vote going on, but I think we will try to start, if we can.

Our second panel, like the first, is made up of a number of outstanding witnesses. We are very pleased to have with us John Sweeney, who of course is the president of the AFL-CIO; Mr. Michael Santoro, who is a professor of Rutgers Business School; Harry Wu, who is the executive director of The Laogai Research Foundation; Merle Goldman, who is a professor at the Fairbanks Center of Harvard University; and finally, Nelson Graham is the president of East Gates Ministries International.

Gentlemen, as I mentioned, we do have a vote, but I think we have time to hear the first witness. I would like to call on Mr. Sweeney.

STATEMENT OF JOHN SWEENEY, PRESIDENT, AFL-CIO,

WASHINGTON, DC

Mr. SWEENEY. Thank you very much, Mr. Chairman. I am delighted to have an opportunity to appear before this committee on behalf of the 13 million members of the AFL-CIO and our affiliated unions.

As you know, Congress will soon be asked to grant permanent normal trade relations to the People's Republic of China. You should not. An affirmative vote would reward the Chinese Government at a time when there has been significant deterioration in its abysmal human rights record and would significant reduce our ability to insist upon improvement in the future.

It would also dramatically weaken our ability to insist that China live up to trade agreements that it has already signed and that it routinely violates.

The record is clear. China routinely tramples human rights and religious liberty. It is a massive user of prison labor, and according to the Laogai Research Foundation, operates over one thousand forced labor camps, many of which produce commercial goods.

China routinely tramples human rights and religious liberty. The Chinese Government does not allow workers to join free and independent trade unions and imprisons those who try to exercise this fundamental right to freedom of association and to organize.

Tens of thousands of Chinese citizens have been detained for daring to express their religious views. For instance, Amnesty International reports that over 200 Roman Catholics were arrested when they tried to celebrate mass in 1997.

Both the U.S. State Department and the United Nations have concluded that China's human rights record is deteriorating, not improving. The State Department finds that China's active human

rights dialogues with a large number of countries have not produced significant improvements in the government's human rights practices.

As you know, Mr. Chairman, I could go on and on with examples of the Chinese Government's outrageous repression of human rights. The question that will be before this committee and the Senate is, in effect, will the United States make it easier for the Chinese Government to go on repressing its citizens and violating every norm of international conduct?

We believe that a grant of permanent normal trade relations will have exactly that effect. It will signal to the Chinese Government that the international community will continue to turn a blind eye and welcome China to a seat at the table.

Not only will that send the wrong message to China, but China will use its seat at the table to obstruct the efforts of the U.S. Government and other countries to insist that those who wish to gain benefits from the world trading system must meet international standards with respect to core workers' rights and environmental standards.

President Clinton was correct when he told the World Trade Organization that labor and environmental standards ought to be incorporated in the rules governing the trading system. China's unchecked accession to the WTO will work against those goals directly and indirectly.

First, it will, perversely, give the world's biggest law breaker a voice in writing the rules. Second, it will signal to others that we do not mean what we say and that they can continue to repress their citizens and violate international standards without any fear that they will be called to account.

On those grounds alone, Mr. Chairman and members of this committee, you should refuse to grant China a blank check by voting no on permanent normal trade relations. But the story does not

end here.

China also routinely violates existing trade agreements and highranking Chinese officials have made it clear that they have no intention of living up to the deal negotiated with the United States in Beijing last fall.

Since 1992, the United States and China have entered into four bilateral agreements. The Chinese Government has failed to live up to its obligation in all four cases. The violations are blatant, widespread, and continuing.

If past behavior were not bad enough to raise questions about Chinese intentions with respect to the latest agreement, we need only turn to the words of the Chinese leaders themselves.

Since November when the U.S. Government completed bilateral accession talks with China, high-ranking Chinese officials have repeatedly stated that they have no intention of living up to their WTO commitments.

We have examples of such statements covering insurance, wheat, beef, telecommunications, autos, and petroleum, and I refer you to my written testify for details.

The record is clear. China has not lived up to past commitments, has no intention of living up to its latest commitments, and if we grant permanent NTR we will have given up our ability to protect

our interests by using bilateral tools to respond when violations

occur.

Contrary to administration claims, granting permanent normal trade relations will effectively pardon China's past violations and give the government a blank check for the future.

Thank you.

[The prepared statement of Mr. Sweeney appears in the appendix.]

The CHAIRMAN. Thank you, Mr. Sweeney.

We have a vote. I think we are going to have to recess. We actually will have two votes, so we will recess temporarily. I apologize, and look forward to the testimony of the rest.

The CHAIRMAN. The committee is in recess.

[Whereupon, at 11:18 p.m., the hearing was recessed to reconvene at 11:45 a.m.]

The CHAIRMAN. Senator Moynihan will be returning soon, but I think we will start ahead. I again apologize to the witnesses for the delay.

We will call, next, on Professor Santoro.

STATEMENT OF PROFESSOR MICHAEL A. SANTORO, RUTGERS BUSINESS SCHOOL, NEWARK, NJ

Professor SANTORO. Thank you. Mr. Chairman, Senator Moynihan, members of the committee, thank you for the opportunity to testify today.

My name is Michael Santoro. I am an assistant professor at Rutgers, the State University of New Jersey, where I teach business ethics.

Over almost a decade, I have taken numerous trips to China to research how foreign corporations influence human rights. My book, Profits and Principles: Global Capitalism and Human Rights in China, will be published in April by Cornell University Press.

As are many Americans, I am deeply concerned about human rights conditions in China. Nonetheless, I urge your approval of PNTR because it is the most effective way to promote democracy and human rights in China.

American corporations are influencing four factors that are positively related to democracy and human rights: economic prosperity, merit-based hiring, information sharing, and leadership style. In my book, I call these four factors "human rights spin-off."

The recent Taiwan presidential election offers the best illustration of the first human rights spin-off. Following decades of strong economic development and the emergence of a middle class, the Taiwanese people demanded a greater role in the rule of their country and increasingly open and free elections. The presidential election this past weekend featured an astounding 82 percent voter turnout, further proof that democratization follows economic development.

A second human rights spin-off occurs because foreign corporations are helping to create a new meritocracy class that achieves wealth, status, and power in the private sector on the basis of merit.

The MBA has replaced Communist Party membership as the credential of choice among bright young students.

One member of this new meritocratic elite I met in China is "Tom." Tom is proud that his Ph.D. in theoretical physics was earned with honors. He touts his credentials to distinguish himself from his father, who became a factory manager as a reward for being a soldier in the People's Liberation Army. Tom, however, wants to be judged by his technical and business skills.

A third human rights spin-off is that American corporations are helping to redefine power relationships. "Louisa", a Shanghai-based consultant, told me that "relationships between colleagues and bosses are much better in American companies. Here I can really open up and act on my opinions." Another woman working for a European company in Shanghai told me that "we learn to speak out and say what we think."

A fourth, and final, human rights spin-off results from how American companies use information technology. Each day, it seems, the Internet is enabling thrilling new business paradigms, allowing information to be shared instantaneously and globally. Inevitably, those who work in foreign corporations will wonder why their government restricts the flow of political information.

How significant is human rights spin-off? Foreign enterprises, along with private companies, are the fastest-growing segment of Chinese society. As Figure 8 on page 7 of my written testimony illustrates, if present demographic trends continue the private sector will very soon outnumber the state-owned sector. Make no mistake about this: this is a sign of revolutionary social change and PNTR will help to make it happen.

Human rights spin-off is happening even in Chinese state-owned enterprises. Two years ago, "Chen," who worked for a state-owned enterprise, sought me out for career advice. He lamented that his Chinese counterpart at an American joint venture partner was making a lot more money than he was.

At the time, I was only able to tell Chen to be patient. Eventually, his SOE would have to pay for performance to retain top employees and compete with foreign-owned firms.

I thought this would take 5 to 6 years, maybe 10 years, but China's impending entry into the WTO has accelerated the pace of change. SOEs already have started to pay on the basis of performance. One Chinese company has even been drawing up a plan to issue stock options.

In conclusion, I want to reiterate that granting PNTR is the most effective way to promote America's interests in a stable Chinese democracy that respects the human rights of its citizens. The changes that PNTR will bring in China are profound and far-reaching.

Thank you for the opportunity to express my views. I will be happy to answer any questions you might have.

The CHAIRMAN. Thank you, Professor Santoro.

[The prepared statement of Professor Santoro appears in the appendix.]

The CHAIRMAN. Let me call, next, on you, Mr. Wu.

STATEMENT OF HARRY WU, EXECUTIVE DIRECTOR, THE LAOGAI RESEARCH FOUNDATION, WASHINGTON, DC

Mr. Wu. Thank you, Mr. Chairman.