U.S. Policy Toward China: Deputy Secretary Biegun’s Remarks to the Senate Foreign Relations Committee

Stephen Biegun, Deputy Secretary of State

Senate Foreign Relations Committee

As Prepared

Mr. Chairman, Ranking Member Menendez, Members of the Committee, thank you for the opportunity to testify today. This is an important moment in the U.S.-China relationship, and the Secretary and I appreciate the serious focus that your Committee is taking to shape a bipartisan approach to this vital policy matter. We recognize that to be successful, U.S. policy towards the PRC must be grounded in consensus across our governing institutions and society. Mr. Chairman, for this reason, we welcome the legislation you introduced today — designed to frame the U.S. strategic approach to the PRC. This, along with other recent legislation passed by Congress, is crucial to address the challenges we face.

Across multiple administrations the United States has supported China’s entry into the rules-based international order in hopes that China would be a partner in upholding international law, norms, and institutions and that the United States and China could develop a friendly relationship with reciprocal benefit. Over more than three decades, U.S. policies towards the PRC have advanced that goal through a massive outpouring of international assistance and lending, foreign investment, facilitation of Chinese membership in global institutions, and the education of millions of China’s brightest scholars at our best schools.

Where this Administration diverges from previous Administrations is in the will to face the uncomfortable truth in the U.S.-China relationship that the policies of the past three decades have simply not produced the outcome for which so many had hoped, and that the United States must and take decisive action to counter the PRC. As stated in the 2017 National Security Strategy, despite the huge dividends to the PRC in terms of prosperity, trade, and global influence that United States support and engagement has delivered, Beijing has instead chosen to take increasingly hardline and aggressive actions, both at home and abroad; and China has emerged as a strategic competitor to the United States, and to the rules-based global order.

We find the U.S.-China relationship today weighed down by a growing number of disputes, including commercial espionage and intellectual property theft from American companies; unequal treatment of our diplomats, businesses, NGOs, and journalists by Chinese authorities; and abuse of the United States’ academic freedom and welcoming posture toward international students to steal sensitive technology and research from our universities in order to advance the PRC’s military. It is these factors which led the President to direct a number of actions in response, including yesterday’s notification to the PRC that we have withdrawn our consent for the PRC to operate its consulate in Houston, Texas.

There is also growing alarm around the world about the dismantling of Hong Kong’s autonomy, liberty, and democratic institutions; the arbitrary mass detentions and other human rights abuses in Xinjiang; efforts to eliminate Tibetan identity; military pressure against Taiwan; and the assertion of unfounded maritime claims in the South China Sea.

Other areas of concern include China’s increasingly assertive use against partners and allies of military and economic coercion and state-sponsored disinformation campaigns, including, among others, India, Australia, Canada, the UK, ASEAN Members, the European Union, and several other European countries.

At the Department of State, both Secretary Pompeo and I are involved day-to-day in the full range of policy matters related to the PRC, an issue that touches upon every dimension of the Department of State’s work. The Department has launched a number of diplomatic and economic initiatives described in my written testimony to uphold and defend our interests and those of our friends and allies in areas such as global infrastructure development, market access, and telecommunications security. Much of what we are doing would serve our global interests under any circumstances, but the unfortunate trends we see in China make our actions all the more urgent.

We have organized internally through the leadership of the Assistant Secretary of State for East Asia and the Pacific, along with the Directors of Policy Planning and our Global Engagement Center, to align internal policy making in virtually every single bureau and office in the Department. We are likewise organizing our diplomats to focus on competition with China around the world.

As part of a comprehensive approach, we are engaged with allies and partners in the G7, the G20, and NATO to highlight the threat that the PRC poses not just to U.S. interests but also to the interests of our allies and partners. We are broadening partnerships across the Transatlantic, the Indo-Pacific, the Middle East, Africa, and the Western Hemisphere.

Across the Indo-Pacific region, the United States is deepening relationships with the countries that share our values and interest in a free and open Indo-Pacific. Last September, we held the first ministerial-level meeting of the United States, Australia, India, and Japan, marking a new milestone in our diplomatic engagement in the region. We are enhancing our alliances with Australia, Japan, the Republic of Korea, the Philippines, and Thailand, which have helped sustain peace and security for generations, and we are furthering our engagement with ASEAN, an organization central to a free and open Indo-Pacific. Our security assistance to South China Sea claimant states and our recent rejection of the PRC’s maritime claims helps partners protect their autonomy and maritime resources. We are working with the Mekong countries to ensure sustainable development and energy security, and we have doubled development assistance to our Pacific Island partners through the Pacific Pledge.

On the other side of the world, China has increasingly become a topic in transatlantic and FVEY discussions. The Secretary recently announced the United States accepted the EU’s proposal to create an U.S.-EU Dialogue on China to discuss the transatlantic community’s common concerns about the threat the PRC poses to our shared democratic values. Similarly, the PRC is a core component of our security dialogues with the United Kingdom, Australia, New Zealand, and Canada.

In our own Hemisphere, the United States is working with its neighbors to reaffirm the region’s longstanding dedication to free societies and free markets. We are working on improving the investment climate for all types of infrastructure including energy, airports, ports, roads, telecom, and digital networks. In addition to USAID development and humanitarian assistance, we expect the U.S. International Development Finance Corporation to deploy $12 billion in the Western Hemisphere toward this effort and we have made a priority promoting transparency and privacy in the digital economy.

Though the PRC has made extensive inroads across Africa over the past decade,encouragingly, some African governments have begun to monitor Chinese projects, require Chinese firms to hire more African laborers,and demand protection of Africa’s fragile ecosystems.Our diplomatic engagement on the continent will continue to highlight the pitfalls of opaque and unsustainable PRC lending.

In the Middle East we have successfully engaged partners to recognize the costs that come with certain commercial engagements with the PRC – especially telecommunications infrastructure.

And finally, we are working with allies and partners to prevent the PRC from undermining international organizations through unchecked influence.

Mr. Chairman, consistent with the priorities in your legislation, I should underscore that engagement between the United States and China remains of central importance in managing tensions and exploring areas of mutual interest where efforts might align. But we will only make a difference if our engagement produces real progress on the many issues that I have enumerated today.

Last month, I joined Secretary Pompeo in Hawaii to meet with our Chinese counterparts. In the two-day discussion the Secretary stressed that deeds, not words, were the pathway to achieve mutual respect and reciprocity between our two countries across commercial, security, diplomatic,and people-to-people interactions. He made clear our determination to push back against Beijing’s efforts to undermine democratic norms, challenge the sovereignty of our friends and allies, and engage in unfair trade practices, but at the same time, he also outlined areas where the United States and the PRC could cooperate to solve global challenges.

Among the issues that we could start with are strategic stability around nuclear capabilities and doctrine; coordinated efforts to identify the origins and spread of COVID-19; a denuclearized North Korea that ensures peace and stability on the Peninsula; peace building in Afghanistan; international narcotics production and trafficking; and, as evidenced by the Phase 1 trade deal agreed earlier this year, balanced and reciprocal economic policies. The United States welcomes people-to-people exchanges, including hosting of each other’s students, provided that they are exclusively for purposes of study.

We would also welcome members of Congress from both sides of the Capitol to not only work in partnership with the Executive Branch but to also extend your own engagement to better understand the aspirations of the Chinese people. Of course this includes meeting with your Chinese government counterparts, but it must also include reaching out to the many voices of China that are found outside China; those not free to be heard at home and therefore requiring our assistance to be heard.

Let me be clear: the United States supports the aspirations of those Chinese people who seek to live in peace, prosperity and freedom. Secretary Pompeo has met with pro-democracy leaders from Hong Kong, Chinese dissidents and survivors of repression in Xinjiang, and last month I was honored to present the International Women of Courage Award to the Mothers of Tiananmen. The bravery of the many Chinese people who seek to advance human rights and universal freedoms inspires all of us in our work.

Mr. Chairman, we are urgently taking the necessary steps to defend the United States. As we seek to correct the imbalance in our relations with China we must address today’s realities while at the same time leaving open tomorrow’s possibilities. With our friends and allies we are standing up for universal rights and the rules-based international system that have provided for the world’s collective peace, security, and prosperity for generations to the benefit of the United States, the Peoples Republic of China, and entire world.

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    In U.S GAO News
    What GAO Found The Protecting Access to Medicare Act of 2014 (PAMA) established the Certified Community Behavioral Health Clinics (CCBHC) demonstration and tasked the Department of Health and Human Services (HHS) with its implementation. CCBHCs aim to improve the behavioral health services they provide, particularly for Medicaid beneficiaries. Initially established for a 2-year period, the demonstration has been extended by law a number of times; most recently, it was extended to September 2023. States participating in the demonstration can receive Medicaid payments, consistent with federal requirements, for CCBHC services provided to beneficiaries. PAMA also required HHS to assess the effect of the demonstration on service access, costs, and quality. HHS's preliminary assessments of the demonstration in eight states, with 66 participating CCBHCs, found the following: Access. CCBHCs commonly added services related to mental and behavioral health, such as medication-assisted treatment, and took actions to provide services outside the clinic setting, such as through telehealth. Costs. States' average payments to CCBHCs typically exceeded CCBHC costs for the first 2 years of the demonstration. CCBHC payments and costs were more closely aligned in the second year for most states, better reflecting the payment methods prescribed under the demonstration. Quality. States and CCBHCs took steps, such as implementing electronic health records systems, to report performance on 21 quality measures. GAO found data limitations complicated—and will continue to affect—HHS's efforts to assess the effectiveness of the demonstration. For example: Lack of baseline data. PAMA requires HHS to assess the quality of services provided by CCBHCs compared with non-participating areas or states. The demonstration marked the first time these clinics reported performance on quality measures, so no historical baseline data exist. HHS officials noted that with time, additional data may provide insight on the quality of services. Lack of comparison groups. PAMA requires HHS to compare CCBHCs' efforts to increase access and improve quality with non-participating clinics and states. HHS was unable to identify comparable clinics or states due to significant differences among the communities. Lack of detail on Medicaid encounters. PAMA requires HHS to assess the effect of the demonstration on federal and state costs and on Medicaid beneficiaries' access to services. HHS plans to use Medicaid claims and encounter data to assess such changes. However, GAO has previously identified concerns with the accuracy and completeness of Medicaid data and has made numerous recommendations aimed at improving their quality. HHS's decisions in implementing the demonstration also complicated its assessment efforts. HHS allowed states to identify different program goals and target populations, and to cover different services. HHS also did not require states to use standard billing codes and billing code modifiers it developed. The lack of standardization across states limited HHS's ability to assess changes in a uniform way. Why GAO Did This Study Behavioral health conditions—mental health issues and substance use disorders—affect millions of people. HHS estimates that 61 million adults had at least one behavioral health condition in 2019—41 million of whom did not receive any related treatment in the prior year. Many individuals with behavioral health conditions rely on community mental health centers for treatment, but the scope and quality of these services vary. To improve community-based behavioral health services, PAMA created the CCBHC demonstration and provided HHS with $25 million to support its implementation. PAMA directed HHS to assess the demonstration and to provide recommendations for its continuation, modification, or termination. To date, HHS has issued three annual reports assessing the initial demonstration period, which ran from 2017 to 2019. HHS plans to issue a fourth annual report and a final report by December 2021. This report describes HHS's assessment of the demonstration regarding access, costs, and quality. Under the CARES Act, GAO is to issue another report on states' experiences by September 2021. GAO reviewed federal laws and regulations; HHS guidance; and HHS's assessments of the demonstration, including three issued reports, interim reports, and the analysis plan for future reports. GAO also interviewed HHS officials and officials from organizations familiar with community health clinics. HHS provided technical comments, which GAO incorporated as appropriate. For more information, contact Carolyn L. Yocom (202) 512-7114 or yocomc@gao.gov.
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    In U.S GAO News
    GAO's 19th annual assessment of the Department of Defense's (DOD) weapon programs comes at a time of significant internal changes to the department's acquisition process. Specifically, DOD began implementing its new acquisition framework intended to, among other things, deliver solutions to the end user in a timely manner. However, GAO found that many programs have planned acquisition approaches that, unless properly managed and overseen, could result in cost and schedule challenges similar to those GAO has reported on for nearly the past 2 decades. DOD's new acquisition framework allows program managers to use one or more of six acquisition pathways—including the major capability acquisition and middle-tier acquisition (MTA) pathways used by the programs GAO reviewed. Each pathway is governed by separate policies for milestones, cost and schedule goals, and reporting. Program managers can tailor, combine, and transition between pathways based on program goals and risks associated with the weapon system being acquired (see figure). Notional Use of Multiple Efforts and Multiple Pathways DOD's framework also introduces new considerations to program oversight. In particular, DOD has yet to develop an overarching data collection and reporting strategy for programs transitioning between acquisition pathways or conducting multiple efforts using the same pathway to deliver the intended capability. The lack of a strategy not only limits DOD's visibility into these programs but also hinders the quality of its congressional reporting and makes the full cost and schedule of the eventual weapon system more difficult to ascertain. DOD Plans to Invest Over $1.79 Trillion in Its Costliest Weapon Programs, but Not All Costs Are Reported DOD's reported costs primarily reflect major defense acquisition program (MDAP) investments (see table). However, DOD is increasingly using the MTA pathway to acquire weapon programs . The totals do not include all expected costs because, among other things, MTA estimates do not reflect any potential investments after the current MTA effort, and cost figures do not include programs that have yet to formally select a pathway or are classified or sensitive. Department of Defense Total Investments in Selected Weapon Programs GAO Reviewed (fiscal year 2021 dollars in billions)   Procurement reductions in DOD's costliest program—the F-35—drove an MDAP portfolio cost decrease since GAO's last annual report (see figure). Excluding this program, quantity changes and other factors such as schedule delays contributed to one-year portfolio cost growth. Sixteen MDAPs also showed schedule delays since GAO's 2020 report. Such delays are due, in part, to delivery or test delays and poor system performance. Major Defense Acquisition Program One-Year Cost Change Including and Excluding the F-35 Program (fiscal year 2021 dollars in billions) F-35 reported an overall procurement cost decrease of $23.9 billion in fiscal year 2020, primarily due to lower prime and subcontractor labor rates. As GAO found last year, DOD continues to expand its portfolio of the costliest MTA programs, expecting to spend $30.5 billion on current efforts. Due to inconsistent cost reporting by MTA programs, GAO could not assess cost trends across the MTA portfolio. However, GAO observed examples of cost changes on certain MTA programs compared with last year. Weapon Programs Do Not Consistently Plan to Attain Knowledge That Could Limit Cost Growth and Deliver Weapon Systems Faster Most MDAPs continue to forgo opportunities to improve cost and schedule outcomes by not adhering to leading practices for weapon system acquisitions. Some MTA programs also reported planning to acquire only limited product knowledge during program execution, leading to added risks to planned follow-on efforts. Further, while both MDAPs and MTA programs increasingly reported using modern software approaches and cybersecurity measures, they inconsistently implemented leading practices, such as frequently delivering software to users and conducting certain types of cybersecurity assessments during development. Why GAO Did This Study Title 10, section 2229b of the U.S. Code contains a provision for GAO to review DOD's weapon programs. This report assesses the following aspects of DOD's costliest weapon programs: their characteristics and performance, planned or actual implementation of knowledge-based acquisition practices, and implementation of selected software and cybersecurity practices. The report also assesses oversight implications of DOD's changes to its foundational acquisition guidance. GAO identified programs for review based on cost and acquisition status; reviewed relevant legislation, policy, guidance, and DOD reports; collected program office data; and interviewed DOD officials .
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    In U.S GAO News
    States and the federal government share in financing Medicaid, a health care program for low-income and medically needy individuals. States finance the nonfederal share with state general funds and other sources, such as taxes on health care providers and funds from local governments. GAO's analysis showed a change in how states finance their Medicaid programs. In particular, states relied on provider taxes and local government funds for about 28 percent, or $63 billion, of the estimated $224 billion total nonfederal share of Medicaid payments in state fiscal year 2018—7 percentage points more than state fiscal year 2008. Nonfederal Share of Medicaid Payments from Provider Taxes and Local Government Funds, State Fiscal Years 2008 and 2018 Note: Percentages do not add up due to rounding. Furthermore, GAO estimated that states' reliance on provider taxes and local government funds decreased states' share of net Medicaid payments (total state and federal payments) and effectively increased the federal share of net Medicaid payments by 5 percentage points in state fiscal year 2018. It also resulted in smaller net payments to some providers after the taxes and local government funds they contribute to their payments are taken into account. While net payments are smaller, the federal government's contribution does not change. This effectively shifts responsibility for a larger portion of Medicaid payments to the federal government and away from states. The Centers for Medicare & Medicaid Services (CMS)—which oversees Medicaid—collects some information on states' sources of funds and payments, but it is not complete, consistent, or sufficiently documented, which hinders the agency's oversight. For example, CMS does not require states to report on the source of the nonfederal share for all payments. Absent complete, consistent, and sufficiently documented information about all Medicaid payments, CMS cannot adequately determine whether payments are consistent with statutory requirements for economy and efficiency, and with permissible financing, such as the categories of services on which provider taxes may be imposed. Medicaid cost $668 billion in fiscal year 2019. GAO has previously reported on concerns about states' use of various funding sources for the nonfederal share. Although such financing arrangements are allowed under certain conditions, they can also result in increasing the share of net costs paid by the federal government and decreasing reliance on state general funds. GAO was asked to review the sources of funds states used for Medicaid and the types of payments made to providers. This report describes states' reliance on provider and local government funds for these arrangements; the estimated effect of these arrangements on the federal share of net Medicaid payments; and the extent to which CMS collects information on these arrangements. To do this work, GAO reviewed CMS information; administered a questionnaire to all state Medicaid agencies; analyzed the estimated effects of reliance on provider and local government funds; and interviewed CMS officials, as well as Medicaid officials in 11 states selected, in part, on Medicaid spending and geographic diversity. The Administrator of CMS should collect and document complete and consistent information about the sources of funding for the nonfederal share of payments to providers. CMS neither agreed nor disagreed with GAO's recommendation, but acknowledged the need for additional financing and payment data for Medicaid oversight. For more information, contact Carolyn L. Yocom at (202) 512-7114 or yocomc@gao.gov.
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    In U.S GAO News
    Since 2015, Congress has not changed parts of the U.S. Bankruptcy Code (Code) related to financial companies or the Orderly Liquidation Authority (OLA). However, the Federal Deposit Insurance Corporation (FDIC) and the Board of Governors of the Federal Reserve System (Federal Reserve) have updated the resolution planning process to better match resolution planning requirements to the risks of companies. OLA is a regulatory alternative to bankruptcy for resolving failed, systemically important financial institutions, and resolution plans describe how a financial company may be resolved in an orderly manner if it fails. In November 2019, FDIC and the Federal Reserve finalized amendments to the Resolution Plans Required rule, establishing different filing cycles and content requirements for resolution plans based on the asset size and risk profile of companies. Regulators also finalized other rules related to OLA and resolution planning and proposed several additional rules. The 2007–2009 financial crisis and the failures of large, complex financial companies led some financial and legal experts to question the adequacy of the U.S. Bankruptcy Code for effectively reorganizing or liquidating these companies. These experts, government officials, and members of Congress responded by proposing changes to the Code and the supervisory process leading to a bankruptcy filing. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) established OLA as a regulatory alternative to bankruptcy. Under OLA, the Secretary of the Treasury may appoint FDIC as a receiver to resolve systemically important financial institutions. In addition to OLA, the Dodd-Frank Act requires financial companies to file periodic resolution plans with the Financial Stability Oversight Council, Federal Reserve and FDIC describing how they could be resolved in an orderly manner in the event of material financial distress or failure. The Dodd-Frank Act also includes a provision for GAO to study, at specified intervals, the effectiveness of the Code in facilitating the orderly liquidation or reorganization of financial companies and ways to make the orderly liquidation process under the Code more effective. This report examines (1) proposed or enacted changes to the Code related to financial companies and OLA since 2015, and (2) regulatory actions related to resolution planning and OLA. GAO reviewed proposed legislation, regulations, prior GAO reports, and agency reports and presentations on financial company bankruptcies, OLA, and resolution planning. GAO also reviewed comment letters to the 2019 proposed Resolution Plans Required rulemaking. GAO interviewed officials from the Administrative Office of the United States Courts, FDIC, and the Federal Reserve. GAO also interviewed six industry stakeholders, including academics, a consumer group, industry associations, and former regulatory officials, about the 2019 Resolution Plans Required Rule. For more information, contact Michael Clements at (202) 512-8678 or ClementsM@gao.gov.
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    What GAO Found The National Nuclear Security Administration's (NNSA) analysis of alternatives (AOA) process for its $600 million El Capitan HPC acquisition did not fully follow agency policy that states that AOA processes should be consistent with GAO best practices, where possible, and any deviations must be justified and documented. According to GAO best practices, a reliable AOA process should meet four characteristics: it should be comprehensive, well documented, unbiased, and credible. As seen in the table, the AOA process for El Capitan partially met one of these characteristics and minimally met the other three. NNSA did not justify or document the deviations from these best practices, as required by NNSA policy. GAO also found that the AOA process was conducted by the contractor that manages the El Capitan acquisition program, contrary to agency policy and guidance stating that AOAs should be conducted by an independent entity. Without following AOA best practices where possible; justifying and documenting any deviations; and ensuring AOA processes are conducted by an independent entity, as required, NNSA cannot be assured of a reliable assessment of options for meeting critical mission needs. Extent to Which the National Nuclear Security Administration (NNSA) Met the Characteristics of a Reliable Analysis of Alternatives (AOA) Process AOA characteristic GAO assessment Example of deviation Comprehensive Partially met Cost estimates are incomplete and did not follow best practices. Well documented Minimally met The alternatives' descriptions are not detailed enough for a robust analysis. Unbiased Minimally met NNSA had a predetermined solution, acquiring an HPC system, before performing the AOA process. Credible Minimally met The selection criteria appear to have been written for the preferred alternative. Source: GAO analysis of NNSA information. | GAO-21-194 GAO found that, in the second year of the El Capitan acquisition program's 5-year acquisition life cycle, NNSA has fully implemented selected key practices related to program monitoring and control. However, NNSA has only partially implemented key practices related to requirements management. Specifically, El Capitan program officials did not update and maintain acquisition program documents to include current requirements. NNSA officials stated that once the program developed its program plan early in the program's life cycle, they did not require the program to update and maintain that program plan. However, NNSA's own program management policy requires programs to update program documents throughout the duration of the program. Without updating and maintaining El Capitan program documents to include current requirements, NNSA officials may be limited in their ability to ensure that all mission requirements are met. Why GAO Did This Study NNSA is responsible for maintaining the nation's nuclear stockpile. To analyze the performance, safety, and reliability of nuclear weapons, it acquires high-performance computing (HPC) systems to conduct simulations. The latest system, El Capitan, is expected to be fully deployed by March 2024. The committee report accompanying the Energy and Water Development and Related Agencies Appropriations Act, 2019, includes a provision for GAO to review NNSA's management of its Advanced Simulation and Computing program. This report examines, among other things, (1) the extent to which NNSA's AOA process for the El Capitan acquisition met best practices and followed agency policy and guidance and (2) the extent to which NNSA is implementing selected acquisition best practices in carrying out the El Capitan acquisition program. GAO reviewed documents and interviewed NNSA officials and laboratory representatives involved in carrying out the AOA and acquisition processes.
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