China a major economic and security challenge to US: Senator

Senator John Cornyn from Texas said in his remarks at Washington-based think tank The Heritage Foundation that China has continuously under-reported its defence spending and has reinforced its territorial ambitions by making renewed claims in the South China Sea and Arunachal Pradesh.

However, for the US the biggest concern remains China's ownership of a huge percentage of American debt amounting to USD 1.1 trillion of US securities.
"Just as our national debt is a huge challenge regardless of the Chinese connection, we know that China represents a challenge to our country above and beyond its investment in our debt.

"Many of China's neighbours remain concerned about its military build-up and its territorial ambitions," he said.

Cornyn, who also co-chairs the Senate India Caucus, said that China's official press agency reported in March that the country would increase its military budget this year by more than 12 per cent, an increase of 7 1/2 per cent.

However, he pointed out that the official Chinese estimates were "wrong".
"The Chinese repeatedly underestimate the extent of their defense spending. The Pentagon estimates the Chinese official budget of some USD 90 billion is far less than the USD 150 billion that they will actually spend. So it's off by USD 60 billion, the Pentagon estimates," he said. Referring to the huge military build up, Cornyn said the list of nations being intimidated by this is on the rise.

"Last year, the Chinese claimed the South China Sea as a core interest that unsettled their neighbours in Vietnam, the Philippines, Indonesia and a lot of other nations.
"China renewed a long-running dispute with India over the borders of the Arunachal Pradesh region. China continues to be an enabler, as we know, of the regime in North Korea," he said.

He also recalled that Google publicly reported this month that a Chinese entity had been targeting the personal email accounts of US and South Korean government employees.
The Senator said Pakistan's defense minister has publicly discussed the possibility of China building a naval base at Gwadar in his country, which is already home to a new, strategically important port at the mouth of the Gulf of Oman.

Yet the activity that draws the most attention to China is its ownership of huge percentage of our national debt, he said.

"The Treasury Department reported a few weeks ago that China now owns about USD 1.1 trillion of US securities, which makes it the largest single holder of our publicly held debt," he said.

"In fact, China holds more than a third of all the foreign holdings of US publicly held debt. Some folks say, no cause for alarm, nothing to look at here, just keep walking.

"Still, it's clear that many voices in China want the United States to be nervous about what it might do with its investment portfolio. Last year, for example, a retired Chinese general publicly suggested that dumping US bonds could be one way that China could retaliate for policies that the Chinese government didn't like," he said.

Cornyn said some of this talk from Chinese officials has already influenced US national security policy.

"During the development of the 2010 Quadrennial Defense Review is one example. According to one report within the Pentagon, Obama administration officials, quote, deleted several passages and softened others about Chinese -- China's military build-up, close quote," he said.