US News & World Report 7/23/01 CHINA How big a threat? Inside the bitter fight over assessing China's intentions By Richard J. Newman and Kevin Whitelaw It was originally created by the U.S. Air Force and is now entrusted with some of the U.S. government's most sensitive and secretive national security studies. So executives at Rand, a think tank based in Santa Monica, Calif., were stunned when intelligence officials called on June 8 to say they were firing Rand from a classified project ordered by Congress to assess China's future military capabilities. The National Intelligence Council (NIC), a group that reports directly to CIA chief George Tenet, concluded that Rand was failing to do its job adequately and decided it needed to hire another contractor. But there is another side to the story. As Rand held conferences with experts and conducted its analysis, it seemed that the eventual report would depict China as a growing military powerbut as no match for the United States in the near future. The NICitself under pressure from Republican hawks in Congressappeared to be looking for a different, more alarming conclusion. At one point, for instance, the NIC pressured Rand to add several specific China hard-liners to its conference roster, U.S. News has learned. "They want China to be 10 feet tall," complains one analyst familiar with the project. "They're cooking the books." Faced with resistance from Rand, according to some sources, the NIC decided to seek a more compliant contractor. A senior intelligence official denies that the NIC was shopping for a predetermined result. Either way, the controversy provides a window into the battle underway in Washington over how great a threat China poses in the next decade or soa debate that has intensified since the arrival of the Bush administration with its agenda to increase military spending and build a missile defense system. In this instance, the full storylike the initial work performed by Randis hidden from public view by government secrecy. The outcome of the larger debate, however, will have huge ramifications for the future security posture of the United States and billions of dollars in defense spending. "Panda huggers." China looms as the biggest factor in U.S. defense policy since the demise of the Soviet Union. A militarily aggressive China would give defense planners a useful foil: an identifiable enemy. That's just what a self-styled "Blue Team" of conservatives foreseesa China intent on annexing Taiwan, by force if necessary, and dominating Japan and South Korea. That would put China on a collision course with the United States, thereby justifying a surge of U.S. spending on weapons ranging from Stealth bombers to the national missile shield. A docile and more democratic China, on the other hand, would undercut calls for higher defense spending. With a Communist government once again in the cross hairs, passions are ramping up to a Cold War pitch. Blue Teamers label those who disagree with them "panda huggers." Blue Teamers, in turn, have been derided as "the storm troopers." At meetings for the Rand study during the spring, project managers had to establish rules forbidding personal insults. Shouting erupted at several meetings, according to people who were present. Blue Team participants complained later of feeling ignored during conference sessions. Says one: "It was clear that they were just going through the motions." The raw emotions stem from more than personal disagreements. Over the past decade, many more members of Congress and their staffers have received access to the Central Intelligence Agency's classified intelligence. The GOP-controlled Congress, deeply distrustful of the Clinton administration's handling of defense and foreign policy, began asking for alternative assessments. "In recent years, there has been a lot of second-guessing of the CIA's analyses," says Steven Aftergood of the Federation of American Scientists. Congress's 1999 intelligence bill, for example, suggested that the China- Taiwan Issues Group in the CIA's Directorate of Intelligence was prone to "group think" and directed the CIA to expose its China analysts to "contrary thinking" to challenge their suppositions. Republican Sen. Richard Shelby of Alabama, vice chairman of the Senate Intelligence Committee, says the intelligence community "was not rigorous in its analysis" of the future potential China threat. An external commission established by last year's intelligence bill, and chaired by retired Army Gen. John Tilelli, accused the CIA of an "institutional predisposition" to play down the China threat, in a classified report delivered to Congress last week. But intelligence analysts view Congress's new activism as an alarming effort to bully the CIA into producing analyses consistent with conservative ideology. "If you're on the inside, you feel like you're being pilloried," says a former intelligence official. "It's very McCarthyesque," adds another. A number of analysts involved with the scotched Rand report believe that this fiasco represents a rare instance when motives to generate evidence in support of predetermined conclusions were laid bare. "Coming from this Congress, it did worry me [from the beginning] that there was an intent on getting a specific answer," says one close observer. What makes China especially controversial is that Western intelligence agencies know so little about it. "We knew way more about the Soviet Union than we do about China," says one Pentagon official who has worked on several China studies. Influential Pentagon strategist Andrew Marshalla key adviser to Defense Secretary Donald Rumsfeldhas long argued that Pentagon planners need to focus more on Asia. No common ground. So little hard information leaves wide room for interpretation among analysts trying to puzzle out the enigmatic Asian nation. "No one disputes the basic fact of China's military buildup," says Arthur Waldron of the University of Pennsylvania. "The argument is about its significance." Hawks see a massive military buildup at a time when China has no discernible enemywhich can only mean its arsenal is directed at the United States. Others see a second-rate military power struggling to modernize a force with outdated tactics and ancient equipment. The rancor stemming from ideological differences seems to have hardened positions. "The middle ground is sparsely populated," observes one analyst. On paper, there seems to be a lot to worry about. The Pentagon estimates that China could build as many as 1,000 ballistic missiles per year over the next decade. Most of those would be designed to strike airfields, aircraft carriers, ports, and other key facilities in the event of a war over Taiwan. As many as 650 of those may be deployed near the coast opposite Taiwan and targeted directly at the renegade province. China is building space reconnaissance satellites that would be able to track U.S. aircraft carriers and other forces during a conflict. It will soon have a cruise missile like the U.S. Tomahawk. Participants at the Rand conferences raised other intriguing concerns. Several suggested that Chinese agents have penetrated U.S. bases in Okinawa, Japan, and perhaps elsewhere in the Pacific. That could help China gain key intelligence during a conflict and even conduct sabotage or terrorism. But China, with a decrepit industrial base and a risk-averse socialist bureaucracy, faces even more difficulty than advanced nations in developing high-tech weaponry. And China's leaders face handicaps other nations don't. For starters, Beijing's Communist leadership appears far more concerned about threats from inside China than about extending its military reach. China's People's Liberation Army includes 10 divisionsthe total number in the active-duty U.S. Armydedicated solely to maintaining internal order. China also faces a mounting financial crunch. While its economy is growing rapidly, the Chinese government still supports numerous Soviet-style, state- run businesses, which mostly lose money. "Just floating all these state- owned enterprises is almost driving them bankrupt," says Richard Dunn, a retired Army colonel and China specialist at defense contractor SAIC. Meanwhile, Chinese troops appear to be minor leaguers compared with their American counterparts. Many U.S. experts blamed the April collision between an EP-3 surveillance plane and a Chinese fighter jet on poor skills by the Chinese pilot. Chinese leaders are aware of their military limitations. That's why Chinese defense planners stress "asymmetrical" warfare rather than attempt to match the U.S. jet for jet and ship for ship. China's asymmetrical approach is to develop weapons and strategies that would most effectively counter U.S. strengths: lasers or jammers to disrupt U.S. satellites and other "eyes and ears"; submarines that might be able to sink a large U.S. ship and produce a disconcerting list of casualties; and, of course, hundreds of missiles that would be hard to shoot down and would force American forces to operate without access to many of the ports and airfields they typically rely on. But this capability does not yet exist. "Not only can't we predict which way they're going to go," says Dunn, "I think they can't predict which way they're going to go." Infighting. A much safer forecast is that the China slugfest will continue to rage among U.S. strategists and probably intensify. Armed with a critical Tilelli reportand perhaps a second damning report from whomever the CIA selects to replace RandCapitol Hill Republicans could call for a "Team B" reassessment of the China threat. That's what happened in the 1970s, when Congress appointed a second team of outsiders to re-examine the Soviet threat. That assessment portrayed a much more serious military buildup than previously thought, which triggered Ronald Reagan's huge boosts in defense spending in the 1980s. And in 1998 a commission headed by Rumsfeld reported that the ballistic missile threat to the United States was more serious than the CIA had been reporting. The CIA, in response, heightened its own estimate of the threat. Republicans hoping for a similar outcome on China may even find help from across the political aisle, where liberals decry China's labor and human- rights practices. Democratic Sen. Robert Byrd of West Virginia last year helped create the U.S.-China Security Review Commission, whose job is to gauge whether China's trade relationship is influencing U.S. national security decisions. The committee has $3 million for its work over the next several years. By then, perhaps it will be clearer whether China is public enemy No. 1 or just a public-relations ploy.