[Congressional Record Volume 141, Number 135 (Friday, August 11, 1995)]
[Senate]
[Pages S12417-S12419]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                         ADDITIONAL STATEMENTS

                                 ______


                         CHINESE MISSILE TESTS

 Mr. PRESSLER. Mr. President, between July 21 and July 26 China 
conducted a series of ballistic missile test firings 85 miles from 
Taiwan. The missiles were all MTCR class four short range and two 
intermediate range. All were modern, mobile, nuclear-capable. No 
country has ever held this level of field tests for nuclear capable 
missiles before.
  The result was predictable--the stock market and the local currency 
in Taiwan fell precipitously.
  Mr. President, yesterday China announced that a new round of 
ballistic missile tests are due to begin next week. Again the test 
range is very near Taiwan. And again, the same result--the stock market 
in Taiwan plunged this morning to a 20-month low and the local currency 
dropped to the lowest level in 4 years.
  Mr. President, the United States is faced with three choices: First, 
we can do nothing. However, I believe that it is not in the national 
security interest of the United States to allow Asia to be dominated by 
a nondemocratic power.
  Second, at the other extreme, we could interpose the United States 
Pacific Fleet between the Chinese coast and the Asian democracies. 
President Truman did so in 1950 but I believe that should be considered 
only as a last resort.
  Finally, we can take what I believe is the wisest course. That is, 
the United States can provide the requisite material and political 
support so that the Asian democracies can resist aggression.
  Mr. President, when we return there will be a number of legislative 
opportunities to address this issue. I believe we should do so, 
hopefully with the administration's cooperation, but if necessary, 
without it.
  Mr. President, I ask that a number of wire service stories on this 
issue be printed in the Record at the conclusion of my remarks.
            Fears Widespread in Taiwan as China Renews Tests

                             (By Joyce Liu)

       Taipei, August 11.--Taiwan's financial markets plunged and 
     the dollar tumbled to a four-year low on Friday amid fears 
     roused by a second series of missile tests China is planning 
     near the island.
       Taiwanese officials tried to allay widespread concern over 
     the tests, with Huang Yao-yu, director-general of Taiwan's 
     ruling Nationalist Party's department of mainland operations, 
     saying they were not a direct military threat but were 
     politically motivated.
       They saw the tests as an attempt to create instability 
     before presidential elections next March.
       ``There should not be any situation which is out of 
     control. It has not yet reached the level of real military 
     actions,'' Huang said on state-funded television. ``It 
     (China) hopes our elections can meet its expectations.''
       China announced on Thursday it would hold the second round 
     of guided-missile tests in less than a month in the East 
     China Sea between August 15 and 25, just north of Taiwan.
       Financial markets reacted sharply to the tests. On Friday, 
     the stock market plunged 4.57 percent to 4,551.89, a 20-month 
     low, and the Taiwan dollar tumbled to the lowest level since 
     1991 against the U.S. dollar at midday.
       Taiwan has said it would hold a military exercise, 
     described as a routine military inspection, in southern 
     Taiwan before the island's National Day on October 10.
       ``Communist China holds exercises and Taiwan also wants to 
     hold exercises. What is the government doing and what should 
     we stock investors do?'' said an angry middle-aged housewife 
     at a Taipei brokerage.
       As well as creating instability in Taiwan, China's motive 
     is also seen by political analysts as cutting support for 
     Taiwan President Lee Teng-hui, who is widely expected to run 
     in the first presidential elections.
       Analysts said that if China could not intimidate Taiwan, it 
     might continue to increase tensions in the Taiwan Straits 
     before the island's December parliamentary elections and the 
     March presidential elections.
       ``It seems communist China wants to cross the middle line 
     and start to use force to incite Taiwan,'' said Hu Fo, 
     political science professor at National Taiwan University.
       China has considered Taiwan a revel province since the 
     Nationalists lost the civil war in 1949. Both say they want 
     eventual reunification but on very different terms.
       ``It will be very dangerous if communist China thinks it 
     can no longer solve the reunification issue with a peaceful 
     method. Taiwan should handle the issue very carefully now,'' 
     Hu said.
       President Lee's landmark visit to the United States in 
     June, although private, infuriated Beijing which interprets 
     Lee's moves to promote the island's international image as 
     advocating independence.
       Relations soured after Lee's U.S. trip and China's last 
     missile tests, between July 21 and 26 in the sea north of 
     Taiwan, triggered fear throughout Taiwan, forcing the stock 
     market and the dollar down.
       Taiwan cabinet's Mainland Affairs Council, which sets the 
     island's China policy, has blasted China over Thursday's 
     missile test announcement, saying the tests were unfriendly 
     and irresponsible.
                                                                    ____

                        China Military Exercise

                          (By Charlene L. Fu)

       Beijing.--China's decision to hole its second series of 
     missile tests in a month will have little military value but 
     is aimed at intimidating Taiwan, experts say.
       The planned test firings of guided missiles and live 
     artillery shells starting next week in the East China Sea 
     north of Taiwan are the latest in as summer-long series of 
     political and military tit-for-tats between China and the 
     island it views as a renegade province.
       Beijing has been wary of Taiwan President Lee Teng-hui's 
     efforts to gain greater international recognition for the 
     economic powerhouse and was alarmed when Washington allowed 
     him to make a private visit.
       China started a three-month military exercise on the coast 
     opposite Taiwan soon after Lee's June visit, then increased 
     the pressure with ballistic missile tests in mid-July.
       The announcement Thursday of the next planned tests, due to 
     start Tuesday and last for 10 days, came after Taiwan 
     scheduled army, navy and air force exercises in October.
       This series of exercises is meant to intimidate Taiwan,'' 
     said Eric Arnett, a military technology expert at the 
     Stockholm International Peace Research Institute.
       Though usually secretive about its military, Beijing 
     reported the latest planned tests the same way it announced 
     the previous ones: in a brief dispatch from the government 
     news agency and on the national TV news.
       ``The Chinese People's Liberation Army will conduct 
     exercises of guided missile and artillery live ammunition 
     firing,'' the official Xinhua News Agency said.
       Ships and airplanes were warned to stay out of the 
     designated waters and airspace in the target area, 60 miles 
     north of Taiwan.
       Experts say China tests missiles every year at this time, 
     but normally notification is given quietly through diplomatic 
     channels.
       They also noted that there is little military intelligence 
     to be gained by repeated firings of missiles. Six surface-to-
     surface ballistic missiles were fired in the last test.
       In addition, China's military normally tests missiles on 
     land--where greater secrecy can be maintained than in 
     international waters--so little need exists for the target 
     area to be so near Taiwan, the experts said.
       ``The East China Sea is a big ocean. They don't have to put 
     it 100 clicks (kilometers) off Taiwan,'' said Bob Karnio, 
     Asia-Pacific editor for Jane's Defense Weekly.
       China's military is believed to have played a greater role 
     in policy-making toward Taiwan and the United States since 
     the Foreign Ministry failed to prevent Lee's U.S. visit.
       Reports in the Hong Kong media, citing unnamed sources, 
     have said China's top leaders have decided to keep the 
     pressure on Lee and on Taiwan.
       Presidential elections are scheduled for next year, and 
     China worries that Lee or opposition leaders will win, 
     spurring calls for Taiwan to declare independence.
       Lee has moved his Nationalist Party away from its Cold War-
     era claim to sovereignty over all of China. The Nationalists 
     took refuge on Taiwan after losing a civil war to Communist 
     forces in 1949.
       Taiwan's stock and currency markets reeled today from the 
     announcement of the new tests. The stock market's main index 
     plunged 4.57 percent and the Taiwan dollar hit a four-year 
     low of 27.36 to the U.S. dollars.
                                                                    ____

           China To Hold More Missile Tests in East China Sea

                         (By Benjamin Kang Lim)

       Beijing, August 10.--China stepped up its intimidation of 
     rival Taiwan on Thursday, announcing a second round of rare 
     guided missile tests in less than a month in the East China 
     Sea, just north of the Nationalist-ruled island.
       The People's Liberation Army would hold the tests of guided 
     missiles and firing of live artillery in and over a sea area 
     off the coast of southeastern Zhejiang province from August 
     15 to 25, the Ministry of Communications said.
       The southernmost perimeter of the tests is just 150 km (90 
     miles) north of Taiwan, which Beijing considers a renegade 
     province ruled by rebel Nationalist foes.
       The test zone off Zhejiang is a few miles north of the area 
     where China's military test-fired six surface-to-surface 
     missiles from July 21 to 26, setting off panic in Taiwan as 
     the stock market plunged and the Taiwan dollar tumbled.

[[Page S 12418]]

       ``For the sake of safety, ships and airplanes of other 
     countries and regions are requested not to enter the said sea 
     area and airspace during the period,'' the announcement said.
       Diplomats said China's military was clearly eager to pursue 
     last month's show of strength with another display of 
     military might aimed at placing Lee Teng-hui, president of 
     arch-rival Taiwan, on the defensive.
       China has said repeatedly its three-million-strong 
     military, the world's biggest, cannot give up the threat of 
     force to recapture rival Taiwan if the island abandons its 
     avowed goal of reunification and declares independence.
       In Taiwan, the Defense Ministry played down the latest 
     tests, saying it would not raise or change combat readiness.
       Taiwan has said it would hold a military exercise before 
     its October 10 National Day and the Defense Ministry has 
     described the exercise as a routine military inspection.
       Taipei's Lee enraged Beijing in June after he boosted his 
     international image by edging open an effective U.S. ban on 
     all visits, even unofficial, by senior Taiwan officials when 
     he won Washington's permission to make a private trip.
       Beijing has since fired a relentless series of verbal 
     volleys at Lee, accusing him of advocating independence for 
     Taiwan and effectively ruling out the Taiwan president as a 
     partner for negotiations on reunification.
       China's communist rulers have considered Taiwan a rebel 
     province since the Nationalists lost the civil war in 1949. 
     Both say they want reunification but on very different terms.
       The previous missile tests, which did not include live 
     artillery fire, marked the first time China had announced 
     such exercises in advance.
       Diplomats saw the move as a warning to Taiwan, a virtual 
     diplomatic pariah, not to try to boost its international 
     status through more private visits overseas.
       Taiwan's stock market plunged 3.82 percent to a 20-month 
     low on Wednesday on nervousness over current military 
     exercises off Zhejiang.
       The East Sea 5 exercises along Zhejiang's coast have for 
     the first time included mountain and urban warfare training, 
     with paratroopers engaged in house-to-house combat, along 
     with the more regular amphibious landings and air support, 
     one military analyst said.
       ``This really worries me. Two missile tests in such a short 
     time,'' Hu Fo, political science professor at National Taiwan 
     University, told Reuters.
       ``It seems communist China's policy on Taiwan is turning 
     harder and harder and its trust in Taiwan is decreasing day 
     by day since President Lee visited the United States,'' Hu 
     said.
                                                                    ____

                        China-Military Exercise

                          (By Charlene L. Fu)

       Beijing.--China on Thursday announced its second set of 
     missile tests in a month--a move experts said was meant to 
     intimidate Taiwan.
       The planned test firings of guided missiles and live 
     artillery shells in the East China Sea 60 miles north of 
     Taiwan are the latest in a series of political and military 
     tit-for-tats this summer between China and the island it 
     views as a renegade province.
       Beijing has been wary of Taiwan President Lee Teng-hui's 
     efforts to garner greater international recognition for his 
     country, an economic powerhouse, and was alarmed when 
     Washington allowed him to visit the United States in June.
       China started a three-month military exercise on the coast 
     opposite Taiwan soon after Lee's U.S. visit and then tried to 
     ratchet up the pressure with ballistic missile tests in mid-
     July.
       The announcement of the next planned tests, due to start 
     Tuesday and last 10 days, came after Taiwan scheduled army, 
     navy and air force exercises of October. The announcement was 
     carried by the official news agency, Xinhua.
       ``This series of exercises is meant to intimidate Taiwan,'' 
     said Eric Arnett, a military technology expert at the 
     Stockholm International Peace Research Institute.
       Experts say China tests missiles every year at this time, 
     but normally notification is given quietly through diplomatic 
     channels--not broadcast to the nation and beyond.
       They also noted that little military intelligence was to be 
     gained by repeated firings of missiles. Six surface-to-
     surface ballistic missiles were fired in the last test.
       In addition, China's military normally tests missiles on 
     land, where greater secrecy can be maintained.
       ``The East China Sea is a big ocean. They don't have to put 
     it 100 clicks (100 kilometers or 62\1/2\ miles) off Taiwan,'' 
     said Bob Karniol, Asia-Pacific editor for Jane's Defense 
     Weekly.
       The Nationalists took refuge on Taiwan after losing a civil 
     war to Communist Party-led forces in 1949. Lee has moved his 
     Nationalist Party away from its Cold War-era claim to 
     sovereignty over all of China.
                                                                    ____

          China Missile Tests Signal More Pressure for Taiwan

                          (By Jane Macartney)

       Beijing, August 11.--If anyone thought China's first 
     missile tests off Taiwan were a coincidence which happened to 
     spark panic in Taipei, those doubts evaporated with the 
     announcement of more exercises, diplomats said on Friday.
       But that raises more questions, diplomats say. What does 
     China hope to achieve? Why the new aggressiveness? Will the 
     strategy backfire?
       Or do the manoeuvres reflect internal jockeying for 
     prestige between President and Communist Party chief Jiang 
     Zemin and the military of which he is the titular head?
       The official Communist Party mouthpiece the People's Daily 
     carried a front-page map clearly marking a diamond-shaped 
     test area just off a sliver of Chinese coast and above a 
     large outline of rival Taiwan occupying most of the map.
       ``We knew they were holding exercises from May to September 
     off the coast of Zhejiang, but now it is clear that these 
     tests as threats are not just media hype but a political 
     reality,'' a Senior Western diplomat said.
       China announced on Thursday a second round of guided 
     missile tests in less than a month in the East China Sea, 150 
     km (90 miles) north of Taiwan, but this time expanded them to 
     include firing of live artillery from August 15 to 25.
       ``We thought that they would stop after the first tests,'' 
     said another diplomat, referring to the July 21-26 exercises, 
     which were 10 km (six miles) nearer Taiwan. ``But clearly 
     they are gearing up again to put more heat on Taiwan.''
       Diplomats said China's message through its unprecedented 
     advance announcements of the tests was a warning to Taiwan--
     viewed by Beijing as a renegade province ruled by rebel 
     Nationalist foes--not to try to raise its world status.
       ``The point is Taiwan must not forget that China can use 
     the forceful option,'' the senior Western diplomat said.
       China has said repeatedly its three-million strong 
     military, the world's biggest, cannot give up the threat of 
     force to recapture rival Taiwan if the island abandons its 
     avowed goal of reunification and declares independence.
       China, and its powerful military, were enraged in June when 
     Taiwanese President Lee Teng-hui made a landmark private 
     visit to the United States.
       ``Lee has achieved something they have been unable to do,'' 
     the senior diplomat said. ``Jiang Zemin and (Premier) Li Peng 
     want to go to the U.S., so what we are seeing here is a 
     serious loss of face and that is terribly important to the 
     Chinese.''
       The new aggressiveness might stem from confusion among 
     China's communist leaders over how to deal with a new 
     generation of Taiwan leaders, diplomats said.
       ``They had a reliable relationship with the old-style 
     Nationalists of diehard adversaries. They had a solid basis 
     for misunderstanding based on a common goal of reunification. 
     Things are not so clear now,'' the senior diplomat said.
       He said he expected the use of military intimidation, which 
     has caused Taipei's stock market to plunge and the Taiwan 
     dollar to tumble, to be repeated until the coastal Zhejiang 
     exercises reach their scheduled end.
       Few expect China to carry through with its threat to invade 
     Taiwan, diplomats say.
       But Beijing is nervous that if Taiwan wriggles away from 
     reunification this could have ramifications for Beijing's 
     ties with Chinese communities in the rest of Asia. ``There 
     are long-term issues at stake,'' he said.
       Some diplomats said Beijing's strategy could trigger a rise 
     in support for Lee. Presidential polls are scheduled for next 
     March.
       ``Plus, it's not clear whose running the show,'' said one. 
     ``Is Jiang directing the military, or in fact does the 
     military have the final voice on such matters?''
                                                                    ____

           Taiwan Stock Market Plunges on China Missile Tests

                            (By James Peng)

       Taipei, August 11.--Taiwan's panic-striken stock market 
     plunged again on Friday after China announced a second series 
     of missile tests near the north of the island.
       Taipei's weighted index fell 217.96 points or 4.57 percent 
     to 4,551.89, a 20-month low, and securities analysts said 
     they expected the index to seek new lows during the tests, to 
     be held between August 15-25.
       They said however that strong support would emerge at 
     4,100, with resistance at 4,700. The index has fallen 36 
     percent since the end of 1994, with significant losses in the 
     past month.
       Taiwan stocks have been badly hit in the past month with 
     the unearthing of fraud in two financial institutions and an 
     earlier round of Chinese missile tests.
       The index was trading at around 5,400 points in mid-July, 
     and started plunging when China first announced missile tests 
     on July 19. The tests, were held, without incident, on July 
     21 and 26, but the stock market indicator resumed its 
     downward movement when the financial scandals came to light 
     this month.
       Trading on Friday reflected more of the past month's fears.
       ``Panic selling emerged right from the opening, although 
     many believed the impact of a second series of missile tests 
     should be smaller than the first,'' said George Hou, a fund 
     manager of Jardine Fleming Securities.
       After opening down 2.96 percent, the index slowed down its 
     fall for a while then resumed its decline.
       ``If the stock market continues to plunge and the ruling 
     party does not rescue it, I will put my money abroad,'' said 
     a stock investor at the Yungli stock brokerage in central 
     Taipei.

[[Page S 12419]]

       ``We can attribute the stock plunges in recent days in a 
     large part to rumours that several listed firms which have 
     been deeply involved in stock investments have reported 
     financial problems,'' said Ben Lee, senior analyst of Nomura 
     Securities.
       ``People are really worried over a chain reaction in 
     financial crises,'' Lee said.
       Last week, a T$7.9 billion (US$293 million) run on deposits 
     emerged at a credit union after reported allegations of 
     embezzlement by the union's general manager. Later that week 
     a bills finance firm reported a T$10 billion ($370 million) 
     fraud scandal.
       Analysts expected the selling to slow down in coming days.
       ``Sentiment should remain bearish for some time, and 
     investors are expecting the government to announce some 
     bullish news to boost the market,'' said Lin Long-hsien, 
     assistant vice-president of United Securities.
       But they did not expect any bullish news soon to be 
     released by the government to effectively stop the downtrend.
       ``The government will likely announce some bullish news to 
     boost the market soon, which may cause a small rebound, but 
     then the index will fall again to seek new support level,'' 
     Hou said.
       Analysts forecast that any further sabre-rattling by China 
     would have relatively less effect on the market.
     

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