General, thank you. I am honored and consider this a privilege to have this opportunity to speak to you and later hear from you and get a sense of, first, what's on your minds, what you think about not just the China-U.S. future, but in particular where we can build stronger and richer and deeper relations between our two countries, which will much determine how the 21st century turns out.
I first want to introduce a friend, a former Senate colleague, now our U.S. ambassador to China, Max Baucus. Many of you know Ambassador Baucus. We're very proud of his work here. He's working very hard to strengthen this very special friendship and relationship. So, Max, thank you for being here and taking time to be with me on my - on my trip.
And, again, thank you all for inviting me.
I want to also thank President Xi; Vice-Chairman General Fan; my old friend from Washington days, State Councilor Yang; and especially my host here in China, General Chang, who I've spent the morning with. I thank them all for their gracious hospitality and all that they have done to accommodate my visit here to China. We've had a very wide-ranging and constructive discussion today on many issues that reflect our growing cooperation.
I also want to thank our ambassador, as I said, in particular for his insightful understanding of this relationship. While he was in the Senate, he was chairman of the Senate Finance Committee, which many of you may know is the committee that oversees trade and exports and imports. So to have his knowledge here as our ambassador is particularly important to this relationship.
Preparing for my visit here to China, but in particular my visit to this prestigious institution, I was reminded that the first United States defense secretary to travel to China was my friend, Harold Brown, whom I see often. During that trip, which took place in January 1980, Secretary Brown spoke at one of this institution's predecessors, the PLA Military School.
What Brown said in his speech here 34 years ago bears repeating. And he said this: "There is no country, no matter how rich or how militarily powerful, no matter how numerous in population, no matter how great its potential in natural and human resources - there is no country so great that it does not need the help of friends."
All of us would be well-served all over the world to remember Secretary Brown's words, because of the tremendous opportunities that arise when nations partner together in the pursuit of common interests.
When Secretary Brown later hosted then-Chinese Vice-Premier Xu in Washington, he used a Chinese saying, also worth repeating, in setting expectations for the evolution of U.S.-China relations. It goes this way: "You don't grow fat on just one mouthful."
This prediction, that progress could be achieved in our relations through deliberate and painstaking work, has borne out in the course of time. We've had setbacks and disagreements, and we still have disagreements. And we will most likely have disagreements in the future. But, slowly - in small bites - we have also made tremendous, significant progress between our two nations, including the relationship between our defense establishments.
This progress is in both our nations' interests and in the interests of the broader region, and in the interests of the world. It must continue. And that is why I am spending three days in China and visiting with officers and enlisted personnel at every level. As a former sergeant in the United States Army, I'm looking forward to having lunch tomorrow with enlisted personnel, something I do on a monthly basis with U.S. enlisted servicemembers at the Pentagon.
Although this is my first visit here as defense secretary, I've had the privilege of visiting your country on several occasions over many years. My first trip to China was in January 1984, when I traveled here to market a new technology that no one knew at the time, that's caught on fairly well, called cellular telephony.
I saw the hutongs of Beijing, the old city in Tianjin, and the modern Pearl River port of Guangzhou, which then, as you know, was Canton. I saw the enormous diversity of culture and dialect woven throughout your country. I saw the forces driving China's path forward: on the one hand, the traditions of a rich and ancient culture, measured in millennia; and, on the other, the youth, the dynamism, the hunger of modern China on the move.
Today, China's status as a major power is already solidified, built on its growing economic ties across the globe, and particularly across the Asia-Pacific region. Last year, the trade in goods and services between the United States and China exceeded $500 billion. Trade between ASEAN members and China exceeded $400 billion last year. And [one-third of global trade] travels the South China Sea.
China's tremendous growth, coupled with the continued dynamism of the Asia-Pacific and America's increasing engagement in the region, offers an historic and strategic opportunity for all nations. As our economic interdependence grows, we have an opportunity to expand the prosperity this region has enjoyed for decades.
To preserve the stable regional security environment that has enabled this historic economic expansion, the United States and China have a very big responsibility to address new, enduring regional security challenges alongside all the partners of the Asia-Pacific. We face North Korea's continued dangerous provocations, its nuclear program, and its missile tests; ongoing land and maritime disputes; threats arising from climate change, natural disasters, and pandemic disease; the proliferation of dangerous weapons; and the growing threat of disruption in space and cyberspace.
The Asia-Pacific region is the most militarized in the world, and any one of these challenges could lead to a conflict, a deadly conflict. And as the PLA modernizes its capabilities and expands its presence in Asia and beyond, American and Chinese forces will be drawn into closer proximity, which increases the risks of an incident, an accident, or a miscalculation. But this reality also presents new opportunities for cooperation.
All of us want a future of peace and stability for this region, and the costs of conflict will rise as economic interdependence grows. But the high cost of conflict will not make peace and stability inevitable. History has made that very clear. So we must work together, and in partnership with all the nations of this region, we must work together to develop and build upon what President Xi and President Obama have called a "new model" of relations.
This model seeks to seize opportunities for cooperation between the U.S. and China, but also to enhance peace and security throughout the region. It seeks to manage competition, but avoid the traps of rivalry. And good China-U.S. relations will not come at the expense of our relations with others in the region or elsewhere, nor should it, for China or for the United States.
Realizing this vision will require continued commitment, effort, leadership, courage, and some new thinking for both the United States and China across all dimensions of our relationship, but especially between our militaries. That is what I would like to speak to you about today. In particular, I'd like to address how we can develop a "new model" of military-to-military relations that General Chang and I announced this morning.
Doing so will require a shared understanding, an understanding of the regional security order that we seek and the responsibilities we all have to uphold it. It will require bold leadership that seeks to deepen practical cooperation in areas of shared interest, while constructively managing differences through open dialogue, transparency, and candor.
In the spirit of openness and candor, I'd like to describe to you - the future leaders, you, the future leaders of the PLA - America's intentions.
Here in the Asia-Pacific and around the world, the United States believes in maintaining a stable, rules-based order built on free and open access to sea lanes and air space, and now, cyberspace; liberal trade and economic policies that foster widely-shared prosperity for all people; halting the proliferation of dangerous and destabilizing weapons of mass destruction; and clear, predictable, consistent, and peaceful methods of resolving disputes consistent with international law.
Since the Second World War, American and Asian investment in this rules-based order has produced extraordinary results, including here in China. For our part, the United States has helped to provide access to global markets, technology, and capital; underwritten the free flow of energy and natural resources through open seas; and maintained alliances that have helped keep the peace. We haven't done it alone. We've done it with partners.
America's rebalancing to the Asia-Pacific is about ensuring that America's presence and engagement - including our relationship with China - keeps pace with the Asia-Pacific's rapidly evolving economic, diplomatic, and security environment.
The rebalance also reaffirms America's longstanding bonds of history, commerce, and friendship throughout this region. This includes commitments to our treaty allies - Japan, Korea, Australia, Thailand, and the Philippines. And it includes our deepening ties with members of ASEAN. That is not - must not be, nor will be - at the exclusion of strengthening our relationship with China. That is why I just visited Japan, one of America's closest allies, and last week hosted an ASEAN defense ministers forum in the United States, the first time we've ever done so. In both settings, I not only emphasized America's interest in continuing to build a lasting and constructive relationship with China, I encouraged all of our allies, all of our allies and partners to build long, consistent, productive relationships with China.
All nations have the responsibility to pursue common interests with their neighbors and to settle disputes peacefully in accordance with international law and recognized norms. But as a nation's power and prosperity grows, so do its responsibilities. And whether the 21st century is one marked by progress, security, and prosperity will depend greatly on how China and other leading Asian Pacific powers meet their responsibilities to uphold a rules-based order.
Disputes in the South China and East China Seas must be resolved through international norms and laws. We must trust in those laws and those norms. The United States has been clear about the East and South China Sea disputes. We do not take a position on sovereignty claims, but we expect these disputes to be managed and resolved peacefully and diplomatically, and oppose the use of force or coercion. And our commitment to allies in the region is unwavering.
Great powers must resolve their disputes peacefully and responsibly. Strengthening the peace and avoiding conflict requires leadership. It requires courage. It requires understanding. It requires reaching out. And it requires cooperation. It also requires a careful management of differences, all of which are important parts of President Xi and President Obama's vision for China-U.S. relations.
Today, I had the opportunity to engage in productive discussions with General Chang. As I mentioned earlier, we spent most of the morning together. We spent a good part of the morning talking about our military-to-military relationship, how we can support the vision of President Xi and President Obama. We discussed the responsibility we have to reassure each other - and to reassure other nations throughout this region - reassure them about our capabilities and our intentions, because that is how we build trust.
We also discussed the need to take a long-term perspective, because both of our nations are, and will remain, Pacific powers, great powers. And in order to deepen mutual understanding, we cannot shy away from addressing difficult issues. We must deal straight up, honestly, directly with each other in confronting disagreements and difficult issues.
With these ideas in mind, I believe our "new model" of military-to-military relations should proceed on three tracks: first, maintaining sustained and substantive dialogue; second, forging concrete, practical cooperation where our interests converge; and, third, working to manage competition and differences through openness and communications.
The foundation for our military-to-military cooperation must be a sustained and substantive dialogue. The engine for this dialogue has been our high-level exchanges. We must continue and increase those exchanges. This in particular has been an area of notable progress.
Last year, China hosted General Dempsey, our senior military officer and Chairman of the Joint Chiefs, as well as our Air Force Chief of Staff and Vice Chief of Naval Operations. I was honored to host General Chang at the Pentagon last year. We also hosted Admiral Wu Shengli, your chief of naval operations.
You recently hosted General Odierno, our Army Chief of Staff. Later this month, our Chief of Naval Operations, Admiral Greenert, will visit China. And, next month, General Dempsey will host his counterpart in Washington, General Fang, for another exchange.
More bilateral exchanges and visits are planned, and earlier today General Chang and I agreed on two important new mechanisms: We will establish a high-level Asia-Pacific security dialogue, and we will create an Army-to-Army dialogue. This will deepen substantive military discussions and institutional understanding.
When they are substantive, these discussions are invaluable. They're invaluable because they help identify areas where we can and should pursue concrete, practical cooperation - the second track of our military-to-military relations, which is vitally important.
Already, we have identified non-traditional security missions as areas of clear mutual interests, including counter-piracy, humanitarian assistance and disaster relief, military medicine, and maritime safety. One example of our practical cooperation is these areas where we can do more, and specifically annual Disaster Management Exchanges held now between our militaries, and with representatives of the United States Federal Emergency Management Agency. Last November's exchange, held in Hawaii, included a first-ever exercise involving PLA troops on U.S. soil.
We are set to deepen this practical cooperation. In addition to welcoming China to this year's RIMPAC exercise, today I invited the PLA to participate in a military medical cooperation activity that will take place afterwards.
By building trust where we have common interests, practical cooperation and sustained dialogue will help us work through disagreements and more effectively manage competition, which is the third track of our military-to-military engagement.
Managing the competitive aspects of our relationship requires us to be more candid, more open, more transparent about our capabilities, our intentions, and, again, our disagreements, even on the most sensitive subjects. This openness is not only for our mutual benefit. It provides assurances to an increasingly anxious region unsure of our intentions.
The United States has taken significant steps to be more open with China about our capabilities, intentions, and disagreements. And we will continue to welcome initiatives by China to do the same, particularly as China undertakes significant military modernization efforts.
During my tour yesterday of the Liaoning aircraft carrier, I heard directly from the ship's sailors how important open military-to-military communication is. Last December, the Liaoning commander, Senior Captain Zhang Zheng, helped to avoid a near-catastrophe in which U.S. and Chinese vessels avoided a collision by only 46 yards. It turns out that, only three months before that incident, Senior Captain Zhang had accompanied Admiral Wu on a visit to the United States. When Senior Captain Zhang was confronted with a moment of crisis, his effort to de-escalate the situation was informed by having met members of the U.S. Navy and having developed an understanding of the U.S. Navy's intentions and operating procedures.
Greater openness has also enabled recent progress in establishing a notification mechanism for major military activities, and it will help us to expand the content of these notifications as we build greater trust.
Openness and two-way communication is especially important in the area of strategic and emerging capabilities, and in managing regional security challenges. It is why we seek to resume a U.S.-China nuclear policy and strategy dialogue. It is also why, through our Cyber Working Group, the United States has been forthright in our concerns about Chinese use of networks to perpetrate commercial espionage and intellectual property theft. We've also made efforts to be more open about our cyber capabilities, including our approach of restraint.
Those efforts recently took a major step forward when the Department of Defense, for the first time ever, provided to representatives of the Chinese government a briefing on DoD's doctrine governing the use of its cyber capabilities. We've urged China to do the same. It's in both of our interests to continue to follow this path.
We've asked China to work more closely with the United States and regional partners on another shared challenge where we have had some disagreement, responding to the dangerous destabilizing behavior of North Korea. In my meetings with Asia-Pacific leaders throughout this visit, we've discussed the threat North Korea poses to America, its allies, and to regional stability. The regime's nuclear program and its recent missile launches in violation of UN Security Council resolutions pose a continued and stark challenge and threat to the United States homeland.
America will continue to respond to North Korea's actions by reinforcing our allies and increasing our deterrence, including through my announcement this week that we will deploy two additional ballistic missile defense ships to Japan. This builds on other steps to bolster regional missile defense, including building a second radar site in Japan and expanding our ground-based interceptors in our country, in Alaska.
We look to China to play a constructive role in meeting this challenge, to help us, partner, cooperate with us, because of China's interests, its status as a leading power in Asia and the world, and because its largest trading partners are the nations being threatened by North Korea.
Continuing to support a regime that engages in these provocative and dangerous actions - and oppresses its own people - will only hurt China's international standing in this region. Instead, the United States and China, along with other nations in this region, must increase our cooperation to address the North Korean threat.
As we work through differences and find areas of common interest, my hope is that we heed what Harry Truman, a great American president, said many years ago. And he said this: "We do not believe that there are blind tides of history which sweep men one way or another" - because people "of courage and vision can ... determine their own destiny."
The United States and China can and will determine their own destiny. They must marshal that courage and vision that President Truman talked about. We must determine our own destiny, our own way together. That is our shared responsibility.
And in that effort, every military interaction matters. Every interaction matters. So in closing, I would share with you an event that gives me reason for great hope.
Last October, during the course of routine patrols in the East China Sea, the USS Curtis Wilbur, a U.S. Navy destroyer, was sailing within 25,000 yards of the Putian, a PLA Navy frigate. The 40-year-old captain of the Putian hailed the 41-year-old captain of the Curtis Wilbur over bridge-to-bridge communication, and, after exchanging pleasantries, they started talking.
They started with the weather and then complimented each other's ships. They went in more detail and went on to talk about their children, their families, and the Chinese captain offered to teach the American captain's son Mandarin. They talked about homesickness and what was for dinner - Mexican night on the Wilbur and "complicated" Chinese food on the Putian. In fact, they were having such a good time that, after a break for dinner, they resumed their conversation and chatted about typhoons. They talked about the songs "Hotel California" and "Country Road," basketball stars Yao Ming and Tracy McGrady, and the two captains proposed a warship-to-warship basketball game.
Over the course of their conversations, they discovered that the Chinese captain was from Taizhou, the birthplace of the PLA Navy, and that the American captain was from Beverly, Massachusetts, which is one of the birthplaces of the American Navy. And that was quite fitting, because each man was living up to the best traditions of their navies - and their militaries and their countries.
Each of you, in this way, will help shape our future and our countries' destinies. Each of you will be a part of this conversation and the molding and the shaping of where we all take the world. One by one - captain-to-captain, ensign-to-ensign, general-to-general, admiral-to-admiral - we must all do our part to build greater trust, confidence, and cooperation between our two militaries, our two countries, and among all the countries of the region of the world.
Thank you for this privilege. Thank you very much.
SECRETARY OF DEFENSE CHUCK HAGEL: I would be very happy to respond to questions.
QUESTION THROUGH TRANSLATOR: Hello, Mr. Secretary. I'm senior -- (inaudible) -- I'm from the (inaudible). My question is that I know that the government of United States has always been claiming that you don't take sides when it comes to issues concerning the South China Sea and East China Sea about the disputes of sovereignty between China and its neighboring countries. However, what we have found out recently is that you are apparently taking sides when it comes to South China Sea issue with Philippines. And when it comes to the East China Sea issue of the Diaoyu Islands, you're taking sides with Japan.
So what's happening, actually, is that you are not upholding what you have claimed to be just and fair when it comes to the issues. You're supporting those sides who are taking provocative actions. So I want to ask, does it mean that there is a change of American policy on these issues?
SEC. HAGEL: Thank you. Let me make it very clear, first, the United States has not changed its policy on disputes in the East or South China Sea.
We have not changed our position that we do not take a side on the disputes regarding the areas and the islands that are in question in either the South or East China Sea.
But what we do, do, as I have noted in my remarks here, we want the disputes to be settled peacefully, diplomatically, within international norms, within the framework of international law. And I have made that point very clear in my remarks.
Specifically on the Philippines and Japan, as I have noted in my remarks, the Philippines and Japan are long-time allies of the United States and we have treaty obligations with those two nations.
And we will honor our treaty obligations. But make no mistake that disputes need to be resolved peacefully, diplomatically, within the framework of the international order based on international law.
I hope that clears up any confusion. Thank you.
QUESTION THROUGH TRANSLATOR: Hello, Mr. Secretary. I'm a researcher engaged in strategic status. My question is concerned about the misgivings that is harbored by both China and the United States with each other. With the rapid development of China that this has surely caused the concerns, the worries from United States that one day that China will be too big a challenge for United States to cope with. Therefore, you're using such issues of Diaoyu Islands and the South China Sea issue to make trouble for China to hamper its development.
We also have scholars in the United States. They believe that with the rapid development of China, it would surely cause uncertainties in the region. So that is what we are worried. We are worried about such misgivings and misunderstandings between the two sides.
So our aspiration for your visit this time is that through such high-level visits you would be able to turn around such a situation. However, what happened in the past few days was quite disappointing, in the sense that we have read the report. I don't know whether they're verified or not. The reports show that the China has not been respecting -- and what you said is China has not been respecting its neighbors and China needs to learn to respect its neighbors.
And also we have similar remarks from undersecretary of defense, (inaudible), that such issues as South China Sea and East China Sea -- (inaudible) -- Diaoyu Islands is just like the issue of Crimea. So my question is, how do you think you would do to be able to effectively manage and reduce such misgivings? And what are the methods you're going to employ?
SEC. HAGEL: Thank you. And I'm glad you asked the question. It's an important question.
First, President Obama has said on a number of occasions that the United States of America, our policy, our desire, is for a prosperous, free, responsible, great nation in China. We encourage, we support, we have helped build through trade, through relationships a very strong and prosperous China. We want China to grow and prosper.
A prosperous, strong, responsible China is clearly in America's interests. A stable, secure, prosperous world is in everyone's interests. As I have said many times, and I said it with the ASEAN defense ministers, as I said it in Japan before I came here, the American rebalance to Asia Pacific, our strategic interests, is not to contain China. It is not to contain China. It never has been.
We have always been very clear on this point. America has been for a long time a Pacific power. We have many interests in this region of the world, and we'll continue to have interests in this region of the world. The three largest economies in the world are Pacific powers -- China, Japan and the United States. We must, all three, find ways to get along and deal with each other. It is just too important for each of us, as it is for the world.
As to your comments regarding my comments concerning respecting your neighbors, whether it's China or any nation, we must all respect our neighbors. Every nation deserves respect. Every nation should be treated the right way. Yes, I've said that. I've said that many times. This -- it's not aimed at China. It is for all nations to be aware of that, especially great powers. As I've said, great powers have great responsibilities, far greater responsibilities than small powers.
It's particularly important for great powers to let their intentions be known to small powers, to the world. It addresses the risk of needless tension and conflict and miscalculation.
QUESTION THROUGH TRANSLATOR: Hello, Mr. Secretary. We have noted recently that the U.S. Congress has passed an act promoting the sale of weapons to Taiwan and promised to continue to enact the Taiwan relations -- implement Taiwan Relations Act. You know that Taiwan issue concerns our core interests, and that issue, I think, has seriously disrupted China's security interests and the China-U.S. relationship.
So my question is, against the background that both sides of China-United States are committed to building a new model of major country relationship, what are the measures, the policies U.S. will take to avoid having Taiwan issue hampering the development of such a relationship?
SEC. HAGEL: Thank you. I am well aware that Taiwan is a difficult issue. Let me address your question in two parts. The United States of America has but one China policy. We have had but one China policy since 1979. That has not changed, nor do I believe it will change.
As everyone in this room knows the issue backward and forward, you all know very well that this one China policy that we established in 1979 that has been the governing relationship between the People's Republic of China and the United States and our relationship with Taiwan was based on three communiques.
As to your reference to the Congress of the United States. I know all of you understand our system of democratic government pretty well. As you all know, we have two houses of Congress, the House and the Senate. We have many, many committees and subcommittees in each the House and the Senate. I do not know the specifics of what one of the committees in the House of Representatives did yesterday or what's happened today. I don't know.
But here is the point. One committee or even one house of Congress does not alone make policy in the United States.
So without the exact knowledge and information of what happened in the House of Representatives yesterday, I don't want to comment any further than just say what I've said about action in the Congress.
But our policy remains as it has since 1979.
Thank you. Thank you very much.