>> on this vote the yeas are 60, the nays are 39, three-fifths of the senators having voted in the affirmative, the motion is agreed to. >> with that vote, the senate moves its health care bill to the floor. starting today and through december, follow the entire debate and how the bill would affect health care, abortion and taxes live here on c-span2.

>> at an international conference last week, a team of scientists presented new findings on the potential health impact b from the reduction of greenhouse gas emissions. here's the opening session that featured comments by u.s. and world leaders including world health organization directer margaret chan and kathleen sebelius. this was hosted by the national institute of environmental health sciences. >> good afternoon. and i hope you can see us in washington, but welcome to, we're having just had a low-carbon lunch, and we gather you've had your breakfast. so welcome to all of you. it's an important day. we've had a very good morning session, and we, of course, are talking about the public health

impacts of climate change, of climate change mitigation. and i'm very much looking forward to this session. so we're delighted to be able to link to you in washington. and this is the opportunity to announce the findings of a key series of studies which have been funded from both sides of the atlantic. and, of course, as everyone will remember, al gore described climate change as an inconvenient truth. but the study findings today are actually a more convenient truth because we've got the opportunity to improve public health while at the same time mitigating the worst effects of climate change. and i think the other nice thing about having the meeting in this way is that it shows we can have international events without a huge carbon be footprint. and so we haven't put too much money into the airline business to have this meeting. so welcome to you all. chris, are you there?

>> yes, we're here. welcome to you, sir willford. we're looking forward to the discussions today. we're sorry we missed your earlier discussions, but 3 in the morning was a bit early even for me. we've had our low-carbon breakfast, hopefully, and gotten here by low-carbon transport on the metro. with that, i think i will just turn it over to you. i've made opening comments here, and i'll let you get us started. thank you very much. >> okay, thank you very much. thank you very much, indeed. and i'm going to start by introducing three messages that have been recorded for us. first we're going to hear from ban ki-moon, the united nations secretary general, and then straight after that we're going to hear from the honorable kathleen sebelius, and then after that we're going to hear from margaret chan who's the directer general of the world health organization.

and then after that it'll be my pleasure to introduce to you andy burnham who's our secretary of state for health. so over to the videos. >> honorable u.k. secretary of state for health, andy burnham, honorable u.s. secretary of health and human services kathleen sebelius, distinguished partners and medical professionals, ladies and gentlemen, it is a pleasure to join all those who have gathered in london and washington, d.c. for this event. i congratulate the researchers who have worked with each other and with the world health organization to produce this important study on the links between climate change mitigation and global public health. in just two weeks, governments from around the world will meet in copenhagen to forge a

response to one of the most fundamental challenges of our time. copenhagen can and must be a turning point in the world's efforts to reduce emissions and protect people and the planet. we need an agreement in copenhagen that charts a path to healthier, cleaner, more prosperous future for all. climate change affects every aspect of our lives. it can pose one of this century's greatest risks to public health. rising temperatures mean more mosquitoes, increasing the spread of diseases like malaria. changing weather patterns will affect food production and water supplies. a result could be more malnutrition in the worlds of poorest countries. but good news is that solutions

to claimant change are also good for our health. in developing countries cleaner households can reduce respiratory infections and avoid millions of premature deaths. greater use of public transportation and bicycles means cleaner air and fewer respiratory problems. it also means that people will be more fit. and experts say that eating less meat will also minimize our impact on the environment and help reduce greenhouse gas emissions. the message is clear, climate change is about our health and the health of our planet. we are all in this together. i call on every citizen and every government to make copenhagen a success. i urge everyone to add his or her voice to the chorus being

heard around the world pulling for climate action and for a safer, healthier future for us all. thank you. >> good morning. i wish i could be with you today, but i'm home in kansas visiting my family. to everyone else who will be enjoying stuffing and mashed potatoeses tomorrow, i want to wish you a happy thanksgiving. i also want to acknowledge our ore speakers this morning, speck tear general moon who you just heard from and directer general chan. the more we learn about the climate threat, the more we understand that this is a problem that no country or organization can solve on its own. it doesn't matter who puts the greenhouse gases into the sky, we all face the consequences. so this is one problem on which

we have no choice but to work together. that's why gatherings like this one and the copenhagen meeting a few weeks from now are so important if we're going to build a clean energy future that benefits all the people in the world, we need to share what we've learned, listen to each other's good ideas and work together. that's our only chance to meet this challenge. and let me be clear, this isn't just about dairming for our planet. fill -- danger for our planet. filling the sky with carbon dioxide has national security consequences, it has economic consequences, and as we continue to learn, it has health consequences too. relying on fossil fuels leads to unhealthy lifestyles, increases our chances of getting sick, and in some cases takes years off our lives. that's the message the study we're talking about today and our research team that conducted

the study and all the funders, including the national institute of environmental health sciences, because you've called attention to the connection that we sometimes have been too slow to see. we know that depending on coal-powered plants that spew greenhouse gases is bad for our planet, but it's also bad for our health. it increases the prevalence of diseases like asthma and cancer. we know that the growing share of meat in our diet is bad for our planet, but it also can be bad for our health if it means we don't eat balanced meals. we know that depending on gas-guzzling cars is bad for our planet, but it's also bad for our health since it can lead us to get less exercise and increase our risk for cardiovascular disease. we're seeing more and more studies that show these connections. the same results are showing up in countries around the world. when greenhouse gas emissions go down, so do deaths from respiratory and cardiovascular

diseases. this is not a small effect. a recent study by our national academy of sciences found that here in the united states burning fossil fuels leads to almost 120 billion dollars in health costs a year. most of those costs are premature deaths, and we know that the cost in human lives can be even higher in countries we merging economies that have fewer resources to improve air quality. for all of these reasons, president obama and i understand that we cannot wait any longer to act. president obama has made it clear that he's committed to passing comprehensive energy and climate legislation that will create millions of new jobs and secure clean energy sources that are made in america and work for america. but in the meantime, we're looking for ways that we can start reducing this threat right now. last friday i saw some of you at a white house stakeholder

briefing i hosted with lisa jackson, the administrator of our environmental protection agency. at that briefing we talked about many of the steps my department is taking in this area from funding research on the health costs of greenhouse gas emissions to investing in communities to help them respond to climate-related disease to slashing greenhouse gas emissions in our own buildings. this is not an afterthought from my department. this is a key part of our broader public health strategy. more and more we understand that health is not something that happens just in doctors' offices. whether you're healthy or not depends on what you eat and drink, what you breathe, how you get around and where you live. a world that's heating up and powered by coal-fired plants that fill the sky with harmful greenhouse gas is going to have fewer healthy people than a world that runs on clean, renewable energy. that's why even if our planet

was not in jeopardy, even if energy independence was not crucial to our national security, and even if clean energy was not a huge economic opportunity, reducing greenhouse gas emissions would still be an urgent priority for us. it's a key to building a healthier country and a healthier world. and we know that the kinds of changes we need to make won't be easy. there are a lot of entrenched industries that profit from the status quo, and we have a lot to learn about the best ways to reduce these harmful effects, especially when it comes to health. but we can't afford to delay action. this is not a distant, abstract problem. this is the jobs of tomorrow and the health of our children today. we need to get to work. thank you.

>> greetings from the world health organization in geneva. the effects of climate change are already being felt. evidence of the harm to human health continues to mount. climate change will aggravate health problems that are already huge. largely concentrated in the developing world and difficult to combat. no one can doubt this anymore. already nearly one billion people live on the margins of survival. it does not take much to push them over the brink. food insecurity, water scarcity, storms, floods, droughts, population displacements and polluted air, all of these events have a well-documented impact on health. sadly, policymakers have been

slow to realize that the real bottom line of climate change is a threat to human health. although the situation is improving, i have personally attended high-level conferences on climate change where health was treated as the peripheral issue. this must change. health concerns need to be at the center of the debate. the impact on human health is the most significant measure of the harm done by climate change. this reality should add to the urgency of negotiations taking place next month in copenhagen. policies for mitigating the impact of climate change must align with policies for protecting public health. the studies being launched today take this argument a step further, and the news is good. as the studies show, strategies

from tackling climate change can actually be beneficial for health if they are wisely chosen. in my view, what makes these studies so important is their contribution of new evidence and arguments that can guide the assessment of alternative strategies for mitigation. motivate wise choices and bring value-added benefits. these studies make a strong case, a strong case for linking the climate and health agendas. in many cases a wise choice of mitigation strategies brings substantial benefits. good choices help address some of the biggest and fastest-growing global health challenges like acute respiratory infections, cardiovascular disease, obesity,

cancer and diabetes. moreover, the health benefits are immediate and local making them attractive for politicians and the public alike. the recommendations coming out of these studies are extremely reasonable and make good sense. they bring clarity to issues often fraught with confusion and disagreement. especially when questions of costs and responsibilities enter the debate. by selecting mitigation measures that bring benefits for health, policymakers seize an important social opportunity and insure a broader return on their investment. i congratulate the authors of these studies, the institutions and agencies who supported them, and the lancet for its record on

publication of the findings. it is my sincere wish that the arguments set out in these studies will shape discussions during the copenhagen conference. your efforts today are giving this work a most appropriate high-level profile. thank you. [applause] >> so those were three splendid presentations, and it's now my enormous pleasure and privilege to introduce live and in person andy burnham who is the secretary of state for health. andy's had a very distinguished career in politics, and actually the range of departments you've been through is quite breathtaking, so you actually know all of the issues about government cross-coordination and all of the issues from different departments' perspectives around climate change. and i think that we're delighted that you've agreed to address us all this afternoon.

so, andy, over to you. >> thank you. thank you very much, indeed, mark, for that kind introduction, and it's great for me to be here with colleagues in london and also our friends in washington. while any health minister has to deal with the daily cut and thrust of health policy, i am clear that there is no more important event or meeting that i will attend this year than this one. so i want to thank everybody here in london and in washington for giving their time to be here today, and i'd also like to thank all of the organizations on both sides of the atlantic that have made it possible. i want to start by endorsing the words of secretary sebelius, margaret chan and ban ki-moon. this is a crunch year for climate change. when the world comes together in copenhagen in just a couple of weeks time, it will be essential that we strike a deal that is

equal to the challenge we face and which the speakers before me have outlined. climate change poses a huge threat to global prosperity, security and development. but for many people it can seem abstract, remote, not urgent even. it's when we think of the impact on people's health, the terrible cost of inaction becomes clear. this human cost of climate change has had relatively little attention in the international debate, so we are shining a light upon it today. and i, too, congratulate the lancet on this accomplishment. temperature changes of just a few degrees can have huge consequences for health. the 2003 heat wave here in britain led to over 2,000 excess deaths, and yet average temperatures that year were just two degrees higher than normal.

although we can't attribute individual events to climate change, we can expect extreme weather like we're seeing in couple by ya at the moment to increase with frequency in global warming. in fact, projections suggest if temperatures increase by two degrees, the wettest day of autumn could see around 25% more rainfall in my home region, the northwest. and if temperatures increase by four degrees, we could see around 35% more. the health implications of flooding, drought and heat waves are clear and, indeed, being felt now. and i know that sully davis set them out in some detail this morning. and as is so often the case, it is the poorest and those least responsible for causing the problem who are likely to suffer first and suffer most. the average somali is about 100 times more likely to die as a result of climate change than the average american despite

emitting roughly 16,000 times less carbon. in kenya, colleagues in the ministry of health have told us that malaria is moving upland. the decide decide -- disease is being found in areas previously too cold. it could spread in new and unpredictable ways, and in haiti environmental degradation and climate change have come together with terrible consequences. almost 90% of children are chronically infected with parasites from the dirty water they have no choice but to drink. as you all know, and i'm sure this is true in the u.s. too, politicians are fond of quoting statistics. they sometimes trip off the tongue without us giving enough thought to their meaning, but if nothing else, i would ask any fellow health minister around the world to bring the following statistics that i'm about to quote to the attention of their president or prime minister in advance of copenhagen, and they

are these: by 2080 climate change could mean an extra 600 million people worldwide are affected by malnutrition, an extra 400 million people could be exposed to ma hair ya, and an extra 1.8 billion people could be living without enough water. this could be the the human face of climate change if we fail to act, suffering, human suffering on an unimaginable scale. but we will act as prime minister gordon brown has made clear, and that is why the united kingdom is pushing so hard for an ambitious global deal at copenhagen, a deal that works not just for us, but also for the world's poorest people. together we must work to highlight the clear and present danger that global warming poses to the health of our community, and we must work to design effective climate change policies that bring real

benefits for health. indeed, many of the steps we need to take to tackle climate change will help us lead longer and healthier lives as secretary sebelius said. changes to low-carbon transport could reduce air pollution and encourage physical activity, a big increase in walking and cycling would reduce pollution and improve health, and our change for life campaign in the u.k. is making a big difference in getting people more act i have. more than 370,000 families have already signed up. better housing insulation could reduce illness in winter and keep people cool in summer. and in poor countries cleaner energy could reduce the need to burn solid fuel indoors with a potentially significant impact to people's health. in the u.k. the climate change act means that everyone has a role to play in cutting carbon emissions under our carbon budget. hospitals will have to reduce the co2 they produce just like every other sector. we all need to be part of the

solution, and today i want to call on the health community here to set an example and be advocates for change to demand the action we need. so this week i have written to my fellow health ministers in 69 countries around the world to tell them about this new research that we're gathered here today to launch. i want to encourage them to work with me through the world health organization, the e.u., and bilaterally to insure that health is at the heart of our fight against climate change. the chance to reduce the spread of infectious diseases, safeguard supplies of food and clean water and create a healthier environment is the prize of a global deal. and it's a prize that we have to win. the future of global health depends upon it. thanks very much for listening this afternoon, and thank you for being here, and let's all go out and play our part in making it happen. [applause]

>> okay, thank you very much, indeed, secretary of state. i think that the messages that we're hearing today are absolutely crucial, and, of course, what we've now got to do is to act on them. and i think, andy, you've agreed to answer a couple of questions from the audience, so let's start with andy hayden who is, in fact, the senior author of some of the work we're hearing today. andy. [laughter] there's a microphone -- [inaudible] >> well, thank you very much. that's a very, very or good talk, but i want to ask you building on your experience of other government departments how we can really achieve joined-up thinking across the government on this issue? we heard from secretary sebelius that inevitably there'll be resistance to some of the policies we're proposing should be introduced. how do you think we can really help to overcome some of that resistance? >> okay. well, it's a very important question, andy, and i think

we've done, we've gone some way to achieving what you want, but have we gone far enough? no, i'm sure there's much more we can do, and part of it is about not having government pulling in different directions, it's about identifying the things we can do where we achieve a range of objectives. change for life, actually, is an interesting idea here where it is a campaign that the department of health has launched to tackle obesity and encourage people to lead healthier lifestyles. clearly, it has huge environmental benefits, too, and the potential to help people reduce their carbon footprint. if we make a real appreciable impact on physical activity, for instance, then we can as a country make a major step towards delivering our commitment. britain is somewhere in the relegation places of the world table of physical activity. for me there's no reason for

that. and it actually doesn't cost any public money to lift britain from its current place closer to the levels of physical activity in the netherlands, in germany, in scandinavia. so that, for me, where the interest of my department lie absolutely four square with the interests of ed miliband's department. there is no differentiation here, there's no conflicting incentives, and it's really starting to align government and really using all of its weight around those same objectives where they can both make the system flow more quickly, we can get people healthier, and then we can encourage people to reduce their carbon, and government's got to get a bit more focused on how it's doing it. we've just launched a cycle to work scheme, but we all came together, and it's been the combined power of government departments, the three together. you really can begin to make significant change and lead some behavior change, but it does need that kind of concerted

action. i take on in the past perhaps we've not done enough, but if there's a year to make a change, then it clearly is now. >> a lot of hands went up. >> thank you very much. andy, thank you very much. it's clear from everything we've heard that we need to put climate change, i'm sorry, health right at the front of the climate change negotiations. looking at the european union position paper for copen copenhn which is a 13-page document, health appears only once on page 6. i wonder if you could comment on this, and i wonder if you could also tell us what, in your view, will happen if there is no international agreement at copenhagen? >> thank you very much, ty krone that. well, i began by saying there is no more important meeting i'll attend this year. before i actually said it, i hesitated and thought, do i really mean that? and i thought of all the other meetings i'll be having in the next couple of days. [laughter] but, in fact, i do. and i think that is part of the

problem here. perhaps health, politics and ministers around the world are very absorbed on their own problems, but we don't rivet our heads -- lift our heads enough to look at the bigger challenge that's coming and the devastating effects for public health around the world if we don't, if we don't act. i think inevitably that, then, is manifested in if health ministers aren't making this a priority, then it doesn't reflect in the documents that come out of both governments and out of multilateral organizations. and i think this is an area where you can begin to connect climate change with the very real concerns of the public. we've had, we've done fantastic work in this country in raising awareness of poverty in africa, but actually these are the same issues. that policy will be deepened and

intensified if we don't take action on climate change. so perhaps it is about refreshing our message, making it more impactful when we speak to the public, and i think it does remove -- when you talk about the examples that i did, when you talk about how it can have a very human face, this suffering, and in a very real time, i think it begins to remove it from the abstract and into the direct and the human, and that's probably what we need to do more. but i am acknowledging that as health ministers, this needs to be on our agenda more often than it is. i have many bilateral meetings, hand on heart, key say climate change is always on the heart? no, i can't. but should it be? yes. ..

you know, perhaps i can get on the phone to people. no kathleen sebelius no other health ministers around in the world. it's important to get their voice up in the debate. i think that's what's so important about today. if we can get that voice up in the debate around the world, i

think you can start to make people listen who perhaps were not listening before. and, you know, i certainly resolved to play my part in doing that. i would always be open to suggestions about how you think you could do more. i think what i can also do is make the nhs an exemplar in this regard. is it doing enough to promote physical activity for its staff, for promoting the most sustainable lifestyle and then making the connection with health. i don't think it is actually. i think we can do more. i have to look in my own backyard. i got to do more here but at the same time then take those examples and speak with confidence on the world stage. so i will happily receive suggestions from here from what i should do more. but, you know, let's get this on the agenda of health organizations and health ministers around the world because being frank i don't think it's high in the agenda.

>> and one of the wonderful things about this this morning was the passion from everyone in the audience at different stages in their health professions and a recognition when we had a talk from the country's he world physicians the most important role for a physician is look at public health and be a powerful advocate. i think there are lots of voices behind you. and knowing how busy you are in the health service and indeed on a rather arcane point that in spite of a slightly misleading article in the "times" this morning that you have reaffirmed that the budget is about a billion pounds. [laughter] >> we wish you well in all your tasks. in the health. -- in the health service. [laughter] >> and thank you very much indeed for coming on today. andy, thank you very much. [applause]

>> a live picture from the brookings institution here in the nation's capitol. some foreign policy analysts will today look at china emerging role in the world stage. they'll examine the nation's transformation in a global leader in areas such as international economic policy, energy and climate change. and how the status has impacted u.s. china relations. again this live forum being cohosted by the brookings's china center and australia national university. it should get underway momentarily.

[inaudible conversations] [inaudible conversations] >> good morning. the mic is working. it's monday after thanksgiving so we're a little slow in getting started this morning. thank you for your patience. i'm ted. i'm a senior and deputy director here at the brookings institution. welcome. on behalf of the foreign policy program here to brookings.

this morning's event is part of a series of joint research and periodic updates on developments in china. sponsored by the australian national university, the chinese academy of social sciences, and the john l. thornton china center here at brookings. it is particularly timely in light of the high level presidential level diplomacy taking place these days involving all three countries. the abc countries we call them. president obama has recently returned from his first state visit to china. the prime minister of australia is in washington today to discuss preparations for the copenhagen climate change summit and premier wen jiabao are slated to travel to copenhagen next week to personally convey their discuss their personal commitments for carbon emissions.

it's fitting we take up two of the most important issues facing china. first the issue of clean energy and climate change. as you know, the u.s. and china are the most important countries in the world in terms of carbon emissions. and during president obama's visit to china, the leaders signed no less than seven agreements on u.s.-china cooperation in clean energy and made some notable statements about u.s. and chinese approaches to copenhagen. both countries this past week have made pledges in cuts to carbon emissions though how significant these are, are really up to our panelists to help us interpret. the panel will help provide context on what has transpired recently in the u.s.-china relationship and what we should expect looking ahead to copenhagen but also more generally. the second issue is how china is coping with the global economic crisis. how is china faring?

what changes are occurring in its own economy. and how will these affect and be affected by the country's international economic behavior? that will be the second panel this morning. and i'm very pleased that we have panelists here from australia and china to join our group. and i thank them for traveling so far to participate in today's event. thank you again to anu and china academy of social sciences for their support of the meetings and i'm delighted that brookings can host this event and i'm going to ask the first panel and charlie the director of our energy and security initiative to come up and get going. thank you. >> thank you, ted. ladies and gentlemen, we're delighted to have you here today.

as ted was suggesting, these are indeed momentous days as we look towards the opening at copenhagen in a little more than a week away. and we hope that china and the united states will play dynamic roles obviously at that forum because without us both stepping up to the table i think it's highly unlikely we'll see more than a process for further negotiations put forward. that may be what we have to live with, but we'll hope that there's still time to have more. we have a very distinguished panel this morning. and let me just briefly introduce them and then we'll get underway. our first panelist will be ross garnaut, who's a vice chancellor fellow and professionalial fellow in economics at thesf5j as a distinguished professor at

the australian national university. he is currently chairman of a number of international companies and research organizations including the international food policy institute in washington. and the new guinea sustainment in singapore. he's the director of okay teddy mining in new guinea and a several institutes including the laurie for international in sydney the center for strategic and international studies in jakarta and the china center for economic research at beijing university. he is the author of numerous books which i won't go into. but he also has had a long and distinguished record as a policy advisor, a diplomat and a businessman. he was the senior economic advisor to australian prime minister hawk from 1983 to 1985. and subsequently served as the

australian ambassador toggd ch from 1985 to 1988. in september, 2008, professor garnaut presented the garnaut climate change institute to the professor. this has been highly noted and was commissioned by the australian government and examining the impact of climate change on the australian economy and provides potential medium to long-term policies to ameliorate these challenges. our second panelist will be ellio elliott derringer. he oversees the doctor's analysis of the international challenges posed by climate change and strategies for meeting them. he also directs the center's outreach to key governments and actors.

he came to the pew center from the white house where he was deputy assistant to the president and deputy press secretary. in this capacity he served as a principal spokesman for president clinton and advised senior white house staff on press and communication strategy. he previously served as a senior policy advisor and as director of communications at the council of environmental quality where he helped to develop major policy initiatives. before joining the white house, he was a veteran environmental journalist as a reporter and editor at the san francisco control. he covered the 1992 earth summit in rio and authored several award-winning environmental series. mr. diringer holds a degree from haverford college and in 1995 and '96 he served as a neiman fellow at harvard university.

our third panelist barbara is with the -- is the founder and director of the climate change program at the natural resources defense council. she leads an rdc's 25 member staff in beijing to promote innovative policy development, capacity-building and market transformation in china with a focus on climate change. critical components of energy efficiencies, green buildings, advanced energy technologies, environmental law and a number of other activities. she has had nearly 30 years of experience in environmental law and energy policy with a focus on china for nearly two decades. she has worked in the nuclear nonproliferation program at the departments of justice and interior and for the united nations development program and the center for environmental law. she has served as president and chair of the professional association for china's environment, pace, and as the

cofounder and president of the china-united states efficiency alliance, a nonprofit affiliation. so without further ado, let's get ross garnaut up to the podium. >> it's good to be with you again. in the abc meeting on china. the brookings and china -- and the brookings version of that book will be out soon which is not on you for the occasion. this year. we're meeting at an unusually

interesting time in china's place in the world and in china-u.s. relations they're always interesting but a number of things are coming together right now. most importantly, the two issues we're discussing today. the after math of the great crash of 2008 which left a legacy continued growth moment numb and confidence in china. and concerns about the growth outlook in the united states economy. a very difficult budget situation far into the future as we can see. so one of the things that the great crash has done is accelerated a tectonic shift that we've all been aware of for a long time. a shift in the increasing weight in world affairs of the big

asian developing countries, first of all, china but also india and indonesia. and the relative decline in weight in world affairs of the old industrial countries of the north atlantic. the acceleration of the shift could not have been more dramatic. and the panel will be addressing that in the next session. the great crash and the great recession had important effects on the climate change discuss. globally, it temporally slowed down the growth of greenhouse gas emissions, but not by much. and certainly not by enough to significantly change the rapid

movement of the world towards high risks of dangerous climate change. this give us a couple of years of breathing space if we take as our measure the levels of global emissions. but from some time in the future, like in 2030, if we're plotting emissions growth over time, the effect will have only have been to shift back a couple of years, the attainment of various levels of annual emissions and down to business as usual. and even in the depth of the recession emissions were still so large that concentration in the atmosphere were still growing. quite rapidly. the second effect of the crash on climate change was that it increased public investment in all spheres.

and part of the stimulus programs of most countries including china and the united states included investment in emissions-reducing technologies. though, it's quite significant. and in the case of china, the period of huge fiscal and monetary expansion has been associated with quite large investments in emissions-reducing activities and that's increased confidence in china that it can seriously change the relationship between economic growth and emissions. and help to give the confidence that led to the statement by the chinese government late last week. and the third change -- the third effect of the crash on the climate change outlook is it made the political economy of

taking action more difficult in all countries, but especially in the countries -- the western countries most affected by the recession. i think we'll be living with the outlie of that difficulty for some time. just looking at three countries in particular, australia because it matters so much on the world scene but because quite an interesting example of management of climate change issues in the aftermath of the crash with much in common with the united states. the united states itself and china, i'd highlight a few points. in australia we're going through a rather dramatic period. like the u.s., we have a house of representatives and a senate

and the government's position is stronger in the house of representatives than the senate. like the u.s., we had a government until where quite recently that it at first contested the science of climate change and then was seeking to slow down international movement on doing something about it. that all changed in australia a year before the united states in november, 2007, with the election of the labour government which had campaigned strongly on the need to change climate change policy. it was probably the second main election issue in 2007, the biggest being industrial relations policies. and that preceded by a year a similarly year turn-around approach to climate change in the united states.

the australian and the united states' positions influence each other under the bush administrations and continue to influence choesh. -- influence each other. prime minister rudd is in washington to discuss the approach to copenhagen with the president. eastern time tuesday on australian time we'll probably see a change in the leadership of the opposition in the australian parliament over the climate change issues so we've not only had our first climate change election. we're about to have our first climate change, a change of high-level political leadership. and all of this is rather dramatic in the politics of australia.

and the history of it is the difficulties of the opposition parties, the conservative parties are coming to grips with the changes that have occurred under the rudd government. rudd came to power, committed to introducing an emissions trading scheme and having australia play an active role in international discussions on mitigation. this wasn't all that easy politically in australia as in the united states. where both economies have an abundance of fossil fuels and we developed patents of consumption and investment premised on the availability of cheap fossil fuels. australia, the united states and canada stand out as the three developed countries with far higher emissions per capita so there are plenty of interests that are threatened by changing policy.

the government doesn't control the numbers in the senate. and the green party which is quite strong in the senate and once very strong action on climate change didn't think the government was doing enough and the party wasn't giving enough power to higher emitting industries so mr. rudd said it was held up in the senate. he finally made some concessions in the form of giving up more free permits to oversubsidized heavy emitting industries and reached agreement on those lines with the leader of the opposition. and the opposition parties are probably in the process of getting rid of him for accommodating the opposition -- the government's legislation. in the united states, you're much closer to that than i am. and i look forward to learning more about that today.

the announcements last week were, i think, historic. the president committing himself to a version of the bills which have passed through the house but not the senate that must increase the chances of something like that becoming law. i'll say a few more words about that later. and in china, we also had announcements last week not accidentally in the immediate wake of the american announcements. china was always going to show its hand more clearly than the united states had. it has committed itself to 40 to 45% reductions in the emissions intensity of production between 2005 and 2020.

there's been a fair bit of commentary here about how that's not really much of a change because china had been reducing emissions intensely at something like that right anyway. and also it's not an absolute reduction in emissions. i think it's a very big change. in the first half dozen years of this century, china's emissions were growing about as fast as g.d.p. the energy intensity of output wasn't falling. the huge falls of the '90s which were the product of introducing pricing for energy and moving away from some of the processes of central planning had brought down energy use per unit per g.d.p. -- that process had come to an end by 2000. energy use had continued to grow more or less in line with g.d.p.

earlier this century. the emissions intensity of energy use was high because of the dependence on coal and it was actually a change in policy that led over the last two years to substantial reductions in the emissions intensity of g.d.p. i don't think the fact that china had already succeeded in getting itself onto a new path diminishes the significance of committing itself to continue on that path to 2020. for what it's worth, in my climate change review, it's published by cambridge university press last year and it's on the web. i did some careful calculations of what each country would have to contribute if the world was

to achieve the 450 part per million concentrations goal that the europeans have for some time accepted as the reasonable objective of policy in which australia and the u.s. are heading towards. and what china is doing is substantially more than their part in the arithmetic that i presented in that review. the united states on the other hand with the 17% reduction from 2005 by 2020 is not doing as much as developed countries will need to do. my own view is that the rest of the world has to accept that as a reality. the most important thing is that the rest of the developed world, our country included doesn't start to see the united states' position as a norm because we won't get strong global mitigation if it becomes the normal, we have to see it as an

exception that the u.s. for its own political reasons at this moment in history can't do much more than that. and we have to see this as an exception not something that we all have to weaken our own positions to move into line with. and i think that strong global mitigation is feasible within that context as long as we see clearly the position of the u.s. in the u.s. as in china, confidence in starting to make movement towards reduced emissions in china's case first as ratio to g.d.p. and later on absolutely confidence in progress will make it politically possible to do more. the mitigation of climate change has a cost. i estimated in my review after the most elaborate set of

long-term modeling of the australian global economies i think and has been done anywhere that the cost to the middle of this century to australia participating, playing its full proportionate part in a strong mitigation regime is 450 parts per million would take something approaching -- about something two percentage points of g.d.p. growth per annum off the total. it would delay by a few years australia reaching the average per capita level -- income level that would otherwise attain in 2050. and that all become part of the australian debate and people were prepared to accept those costs. but we're probably making the costs a good deal higher than that and higher than they need to be. by the way we're going about

supporting high emissions industries as a result of the political process that's gone on. this is happening in all countries. all of them are subsidizing trade exposed emissions intensive industries because each country fears that its trade exposed intensive industries will become less competitive because others aren't doing as much on climate change as it is. and the net effect of this everywhere is to increase greatly the costs of mitigation in all countries. we need to use the reality of an emerging global agreement for all of us to get rid of this highly distorting stuff. it's important in budget matters the u.s.-australia -- every country face as dreadful credit crisis. being able to auction permits

rather than giving them out free to high emissions industries would have a material effect on budget process. so how we handle this issue is not only important for managing the big effort that's required on climate change but it's going to have a significant effect on hour capacity to bring budgets back into shape in the aftermath of the great crash. the u.s. and china announcements last week i took as being very helpful in the approach to copenhagen. we would like both to have been stronger but both do represent big shifts in position from a couple of years ago. the whole world needs china and the u.s. to be taking strong positions if we're going to get a strong global agreement.

and i don't think we should use disappointment that the u.s. or for that matter china is doing enough to -- as an excuse for the rest of us becoming less ambitious because there's too much at stake. thank you. [applause] >> good morning. my thanks to brookings and anu for the opportunity to share some thoughts with you this morning. as the theme for my remarks, i want to pick up on a word that professor used in his remarks and that word is "confidence" because i've come to believe that the ultimate objective of climate diplomacy, whether we're talking about bilateral summitry or multilateral negotiations is

to build and maintain confidence between and among nations. that's because i believe countries will ultimately deliver their strongest possible efforts only if they are confidence that others -- their counterparts, their competitors are also delivering their strongest possible efforts. we all need confidence that others have the ability to act and are intending to act. and once they've committed to a set of actions, we need confidence that, in fact, they are fulfilling those commitments. and this is something of a virtuous circle. we need greater confidence to get to us agreements and then hopefully good agreements deliver greater confidence in turn. and i think it's reasonable to argue that one of the greatest obstacles to achieving global progress on the issue of climate change has been a lack of confidence. in particular between these two countries, the united states and china. as we all know in washington, there has been long-standing concern here in this town certainly going back to the days

of the kyoto negotiations that china could not be counted on to do its part and many have argued on that basis that the u.s. should hold off on enacting mandatory greenhouse gas controls here. for its part, the united states has probably provided plenty of reason for a lack of confidence in our efforts. first the u.s. having walked away from the kyoto protocol. second, still not to date having enacted any mandatory controls on our greenhouse gas emissions. and within the bilateral context, there's long history of the u.s. helping to launch but then abandoning joint initiatives. and i think this has periodically eroded whatever trust had begun to be built between the united states and china on these issues. at this point, though, i think we can point to a number of very promising signs. that, in fact, we are seeing confidence being built. and i would start with the

recent summit in beijing. climate change in the context of this summit was a point of agreement rather than disagreement. it was one of the points of the agreements highlighted by the leaders. many of the concrete outcomes of the summit were energy and climate related. the joint statement from the two leaders contain some very important language on the issue. both countries resolve to take strong mitigation actions. and the two sides said that they resolved to stand behind these commitments. important words, i think, coming from the leaders of the world's two largest greenhouse gas emitters. together they launched a series of joint initiatives on clean energy, electric vehicles, efficiency coal, other areas of clean energy and i think we can look to those to be producing clean results in time that will better enable both countries to tackle these issues.

but importantly i think they provide opportunities to continue to build and strengthen confidence. in areas such as technology-sharing which are probably more practically approached than the context of specific initiatives rather than in a broad, complicated negotiation. and i would point in particular to a memorandum of understanding achieved between the u.s. epa and ndrc with the goal of strengthening capacity for greenhouse gas emission inventories. of all the initiatives launched at the summit i think that is the one that probably speaks most directly to the issues in the global negotiations. so i think the bottom line on the summit is that while it may not have achieved any fundamental breakthroughs of confidence-building it was a success. the summit, of course, has been overshadowed by what came next. the two countries putting numbers on the table. something the u.s. has not done since the kyoto negotiations and

something china, frankly, has never done. in the case of the u.s., president obama has proposed a provisional target in the range of 17% below 2005 by 2020. in the case of china, what we have heard is a voluntary goal to reduce carbon intensity 40 to 45% in the same time frame. now, each is saying that the other's offer is not enough. many others have expressed disappointment in both but i think the fact that the two largest emitters now have numbers on the table is in fact the sign of greater confidence on both sides and is a major step forward and i think it should give us greater confidence because a global agreement, frankly, is only possible with these two participating and numbers on the table is a critical step in that direction. but ultimately i think the real test is what we can achieve multilaterally. ultimately what we need are binding commitments from all the major economies.

and i think the question for copenhagen is how far it can move us toward that objective. i would foresee the outcome in copenhagen in two broad dimensions. the first being a set of political commitments. these are individual commitments from the major countries on the types of mitigation actions they intend to undertake. and these are also financial commitments from the developed countries to provide some prompt start supports. some upfront support to developing countries both on climate mitigation and on climate adaptation. but again, i want to be careful to characterize these as political commitments. the second major dimension of what i hope to see in copenhagen would be a start on the architecture of a future treaty. because we are -- what we are seeing now is basically a two-step process. we are seeing a political

agreement in copenhagen that hopefully sets the stage for a legal agreement to achieve -- to be achieved next year and if we're going to get to that second step, that legal agreement, it's important that parties in copenhagen make some real progress on beginning to lay down the architecture. how our commitments are going to be defined in this treaty. what is the longer term financial architecture to provide sustained reliable support to developing countries. and importantly, how our country's commitments are going to be verified. and that's important to instilling commitments to parties and in the agreement itself. the question is, how confident can a country be that others will do and are doing what it is they've promised? now, the bally action plan which was adopted by governments in 2007 and framed the current negotiations contained an important phrase. measurable, reportable and verifiable.

this was a new construct adopted in the negotiations and parties agreed at that point that their mitigation negotiations are to be verifiable. that, i think, holds the potential to provide the kind of confidence we need. but as we get closer to copenhagen we see that many parties are -- to one degree or another retreating from this concept of verification. china last week reiterated its view that verification should apply only to actions that are supported by the international community, not to actions that a country like china takes on its own. and, of course, in the case of china, most of the actions that we would expect to see would be taken on its own, not supported by the international community. the united states for its part doesn't use the word "verification" in its proposal on mrv, mrv being the lingo we've developed for measurable reportable and verifiable. so the u.s. has tabled an mrc

table that manages to avoid using the word "verification." the proposal has a number of very important features. it would require annual greenhouse gas inventories from all the major emitting countries. it would require that they submit regular reports on their implementation of the actions that they've agreed to. it would require that both the inventories and these implementation reports be subject to expert review with the international level. all of these are important steps towards greater transparency. but the u.s. proposal only goes so far as requiring a peer review process. so at the end of this review process, in an open plenary of all parties, the party concerned makes a presentation on what it's doing, how it's implementing its actions. and other parties have the opportunity to comment or ask questions on that. again, a step toward transparency but one could easily see this evolving into a very polite ritual in which

countries tacitly agree not to be too harsh with one another and at best what you get is an inconclusive debate that the party is complying that it's in full compliance and other parties disagreeing. this effectively leads the question of compliance to domestic compliance regimes. and my sense is that many in congress would be quite confident of domestic compliance regimes here in the united states. but perhaps not as confident of domestic compliance regimes in other countries including china. so what you wind up with is an asymmetry or a perceived asymmetry that doesn't go far enough to provide the kind of confidence we need. from our perspective, an agreement would need to establish some means to independently determine if a country is complying with its commitments. this could be done through some type of implementation committee appointed by the parties to look at the reports from the expert review panels and any submissions from parties and render a judgment.

is a country complying with its commitments? we need not suggest that this be a punitive approach. one involving penalties necessarily. i think that's something that many countries including china and quite possibly the united states would not accept. rather, we would suggest what is termed a facilitative approach and to overcome obstacles for implementation so countries that are not in compliance can be helped be brought back into compliance. there's a well-established school of thought in international law that naming and shaming may well be the most powerful incentive for compliance. that the potential -- the potential threat of international censure and the reputation it would entail is the most powerful force of the community to encourage parties

to fulfill their commitments. but for effective shaming you need effective naming, which is why we think that you do need some mechanism in an agreement to actually reach that clear determination of compliance or noncompliance. so in sum, let me just say that i think we are seeing some very, very encouraging signs of progress. even if the numbers put forward by the u.s. and china fall short of what many had hoped or expected, they are, in fact, major steps forward. and they open the way toward building an effective multilateral climate regime. i think we should be watching in copenhagen to see just how far we get toward building a solid architecture so that copenhagen isn't simply a conference but moves us closer to a full agreement that gives parties a real confidence by providing clarity on commitments and on compliance. thank you. [applause]

>> good morning. thank you to the brookings institute for inviting me to speak today. we're coming off an exciting few weeks of u.s.-china negotiations. and discussions on climate change. and i want to spend my time here today covering a little more detail of what's happened in the last couple of weeks. the significance of the partnerships and commitments that have been announced. and what we can look for from the u.s. and china in the copenhagen negotiations and afterwards. one of the key achievements of president obama's asia trip was that it advanced the discussions on climate and collaboration and clean energy with china. and it laid the foundation for future concrete and meaningful cooperation that hopefully will build trust between the

countries and accelerate the development of clean energy deployment. the key principle here is engagement and partnership. no country can address the challenge of climate change alone. and it's especially necessary for the major emitting countries, particularly, the u.s. and china, the world's two largest emitters to find ways to cooperate on the policy and technology developments that are required to shift to a low carbon economy. reducing emissions from fossil fuels will require the development and deployment of clean energy technologies on a very large scale. and the u.s. and china both have strengths, complementary strengths in innovation, design and manufacturing that will be vital to building this new energy economy. you heard that in china, presidents president obama and hu in the key areas that are

developing the technological solutions for reducing emissions. and they're mutually beneficial for both countries and they can speed the transition to a clean energy economy. so i'd just like to highlight in a little more detail some of these initiatives and comment on their substance. the first is the energy efficiency action plan, which we believe is key to achieving the levels of carbon intensity reduction and absolute carbon emissions that the two countries have recently pledged. and they have pledged to work together on some of the areas of greatest potential, reductions through energy efficiency including developing building efficiency codes and building energy rating and labelling systems, benchmarking energy efficiency and harmonizing the test procedures and the performance metrics for energy efficient consumer products. exchanging best practices and demonstrating these design and energy practices.

there will also be an annual u.s.-china energy efficiency forum and a mayors sustainable city program and where local officials can visit each other's cities to share experience and best practices. we believe and many, many analyses have shown that energy efficiency which means getting more work done from the same amount of energy is key, a vital part of mitigating emissions. and it's the cheapest, cleanest, fw!z+y to reduce any country's emissions, while saving money. from the u.s. side, over the past several decades, california has become a leader in energy efficiency. and has -- its experience has shown that every dollar invested in energy efficiency leads to $3 in energy savings. but still there's enormous potential for energy efficiency in both countries. these energy efficiency measures

alone in china are capable of reducing china's carbon emissions by 728 million tons by 2020. more than any of the other abatement sources combined. yet, investment in energy efficiency in china is only 5% of the investment that it's making in supply side energy resources. so the high energy consuming sectors account for over 75 -- 70% of china's industrial energy use but they only contribute 20% to the value added. so, therefore, these agreements, this energy efficiency action plan is going to be a vital step in moving forward in increasing investments in energy efficiency and, therefore, reductions in both countries. second, the two countries agreed to a renewable energy partnership. they're going to develop and implement policies to adopt -- advance renewableuws energy deployment in both countries through renewable energy

roadmaping, advanced r & d, and public/private engagement. the u.s. and china were the two countries in the world who invested the most in renewable energy last year. and they're the world's leaders in the design, the manufacture, and the installation of various technologies in renewable energy. this cooperation is going to scale up that investment, that r & d to the level necessary to take advantage of their competitive advantages in a way that benefits both countries. it will also be an advanced grid working group to bring together u.s. and china policymakers and regulators, leaders and civil society to develop strategies for grid modernization. this is key to enable renewable energy to enter the grid in both countries. there's a u.s.-china electric vehicle initiative. this is of particular interest to the leaders in both the

department of energy and the ministry of science and technology. this is going to accelerate electric vehicle development through joint product and testing standards. development of a roadmap to identify the r & d needs, and barriers to widespread use of electric vehicles which still exist in both countries. this is important because china and the u.s. are the world's largest consumers and manufacturers of vehicles. electric vehicles are a key way for both countries to reduce their reliance on oil. china's projected to increase the number of cars by ten times from its current level by 2025. while the u.s. transport sector is responsible for a third of all c02 emissions. this could not be more important. and finally, the and you say china agreed to cooperate on 21st century coal initiative which includes several measures designed to further the rapid commercialization of carbon capture and sequestration.

and to develop cooperation on shale gas initiative. and finally, as was mentioned earlier, we believe it's key that both the u.s. and china -- the epa and the ndrc, china's most powerful government agency, agree to cooperate on development of greenhouse gas inventories.çh this is the first time that high speed has partnered with the ndrc which is responsible for all climate change activities. and it's going to help develop cooperation on the key issue of monitoring reporting and verification. so while china has not agreed to allow international verification of its emissions, this kind of cooperation gets us is step closer to that goal. china has already developed an inventory of its greenhouse gas emissions back in 2004. it's developing its second one right now. and it's made it clear that it's going to include its carbon intensity target as part of its

climate policy, part of its medium to long-term social and economic development plans. and they're going to probably allocate this carbon intensity target down to the provincial and local level. so again, active engagement between the u.s. and china here. on the details of its greenhouse gas inventory design. it's going to be key to enhancing the confidence between both countries. so what are the expectations that we see for both china and the u.s. as they go to copenhagen? you've heard the announcements -- everyone has heard the targets that both countries have recently adopted. but i think it's important to note that china's new carbon intensity announcement is significant not only because of the actual number of the target but because of the national monitoring framework that will accompany the -- it at the domestic level.

china has already announced that it will establish a national -- a greenhouse database system and we expect this to follow, in essence, the framework that it's already developed over the last five-year plan for monitoring, reporting and verifying its progress in meeting its energy intensity target. this includes things like in september, 2008, the establishment of a national bureau of energy statistics -- a department of energy statistics within the national bureau of statistics, which is creating a nationwide system for monitoring and verifying its energy statistics in determining compliance with its very important target. and that is not just at the he national level but the local governments have also improved their institutional arrangements for monitoring and verifying their energy intensity compliance and their staffing to do so. and on the climate -- carbon

intensity target, china has already required every province to develop its own climate change action plan and to set up a climate change leading group led by the governor of each province or the mayor of provincial level cities such as beijing and shanghai. this is going to be key in determining compliance with these targets and enabling them to take place. you need leadership at both the national level and the local government level. china just yesterday announced -- issued a progress report on how well it has been meeting its commitments in its climate change action plan. in its 100 page it's quite comprehensive and it's clear to me from reading this progress report that china's climate change efforts have been going on for some time.

and have been quite comprehensive in everything from fire station to energy efficiency and reables. and neither country is going to be entirely satisfied with the commitments made by the other but both should realize and i think our earlier speakers agreed that they represent a significant commitment given the particular situation in each country. china would like to see the u.s. and other developed countries commit to a reduction of 40% from -- by 2020 from 1990 levels. the u.s. commitment of a 17% -- in the range of 17% from 2005 levels is equivalent to only a 4% reduction from 1990 levels but it does represent -- or there are plans in the waxman markey bill to accelerate that as the -- as the years go by.

on the u.s. side, they would like to see china set a slightly higher target for reducing its carbon intensity so that china's absolute emissions can begin to slow and peak as soon as possible. preferably by something around 2025. but we need to remember that china is both a developing country and a rapidly growing economy. and so as it constructs the infrastructure and buildings to house its increasingly urban population that is by its very nature going to increase its carbon emissions but china should be given credit for the significant actions that it has already taken to -- in the current 5-year plan to improve its energy intensity. as you may recall, the commitment was to reduce its energy use per unit of g.d.p. by 20% between 2005 and 2010. and it's already at the end of 2008 gotten halfway to that goal, reduced its energy

intensity by 10%. which corresponds to absolute emission -- carbon emission reduction of 670 million tons. and if it does achieve its target by 2010 -- and i should say that this past year it was over the average of 4% so its efforts are accelerating, we would expect to see a reduction in c02 emissions from this one measure of something along the lines of 1 billion tons of c02 emissions. so it's important as our earlier speakers have said to recognize the actions that china has already taken that are quite significant. with regard to the copenhagen summit as a whole, i believe it's possible to come to a meaningful framework agreement. sometimes called an operational accord that will include the commitments of each of the major emitting countries with respect to their mitigation actions and

how they will contribute to addressing their emissions. and there will also likely be -- all of the other key elements that we believe are necessary to make that framework meaningful including agreements on the funding needed to assist the most vulnerable least-developed countries in adapting to climate change and to strengthen forestion around the world. so the declaration by president obama and other world leaders at the apec meeting recently in singapore that they did not believe it would be possible to come to a fully binding legal agreement in copenhagen in december but that they would strive to achieve a meaningful operational agreement with all the major components of an agreement laid out was a realistic assessment of the current situation. ...

>> happy to get us started. it certainly has been an issue in the negotiation, the developing country block calling for measures such come -- licensing. it's coming from the united states.

>> given how far apart, it's not something that can come to agreement on in copenhagen. it's necessarily something that needs to be addressed at this stage in a climate agreement. i think that if we look at the types of technology transfer that are needed, and the types that technology that are taking place already. >> and we do have established forum or addressing issues of problem when that's necessary. i think it's more appropriate to leave the issue in the wto for now, unless there's a demonstrated need to take it up within the climate context.

i think a new funding mechanism to help transfer. something that will help transfer exiting technologies. many of things that are on the shelf now. and we can do that without having to renegotiate. >> i would agree with that. it's probably a wto issue, not than wnfcc issue. and it's being handled elaborately within the framework. there is a need as part of the set of agreements that we need to reach on climate change to have a commitment for high-income countries for commercialization of new technologies and columbia has

suggested to the prime minister there can be a way of handling the issue of historical responsibility. that developing countries have a lot of important information. and we need a loot of innovation very quickly to lower the cost of transportation that has to be made. there are researched development and commercialization of new technologies. and it needs to be public resources in it. and high-income countries that should be committing to make sure that they are putting adequate resources into research, development, and commercialization. there's a made at the search end that has to be a public good, and weapon generate private property.

the international commitment to expenditure on commercialization could include a come pat tent for paying for the legalization of privately developed technology in developing countries. >> okay. the floor is open. would you please before asking your question identify yourself and your organization. thanks. any questions from the floor? yes, sir. there are mics coming if you'll wait just a minute. >> i'm from the institution of foreign policy. you certainly made me feel encouraged. i was in common just before the obama visit. i was disappointed to see there was so many critical presidential reports. maybe things did happen. i was thinking and scribbled out a few things that i've seen u.s.

cooperation on north korea, the climate, the global economic crisis, the situation. yes, there are a lot of other unanswered questions and human rights and battle off for a minute. but it seems to me the way we're handling things is one of the most important things you may have said this morning. how china and the united states are coming along in the century. i'm wondering if you are thinking i'm being too grand. q. i would definitely agree with you. there were a lot of issues on the table for the summit. but it was clear to me. i was there for some meanings. that was the partnership agreements that i've described between the two countries on clean energy and energy efficiency, what right -- but and do indicate the potential for enormous mutual benefit, both countries recognized. they are moving forward on that.

with the clean energy round table, with two u.s. secretaries, commerce, and energy as their counterparts in the ministry of science and technology in the national energy administration. there were about 100 experts in the room. a lot from private industry. we are buying with each other to show how fast they were moving ahead. things like electric vehicle development, the excitement in that room was real. and i do believe we're going to see through! ation of these agreements enormous progress that may then move over to hopefully to other areas of u.s.-china engagement. >> question?

>> thank you for your presentation. i am from the chinese embassy in washington, d.c. i'm the first secretary. i would like to ask a question. we appreciated the visit of president obama to china and achieved a good result. and as you point out that we have formed partnership and cooperation of energy, with i think this is beneficial for the economy and also the security. i would want to ask whether you have any specific suggestions or ideas to deepen the cooperation in in regard.

as, you know, now we have fed up energy efficiency center -- set up energy efficiency center, and also we have ten-year framework cooperation document. so how do you deepen the cooperation and achieve concrete results from these corporations is very important. thank you. >> i can give three suggestions. thank you for asking. one would be funding of the u.s. china clean energy research center. when secretary chu came to china, it was insufficient to fund the whole center. it was announced that the

increase in the funding to $150 million total. but the money had to be found. and i think both countries are looking to the private sector for a lot of help on that. but really the more funding that can be put into the agreements, the more productive they will be. secondly, the epa/ndrc is still in work. i believe it's very promising. there's a lot of exchange that's got on between epa and the add ministry of the environmental protection over the year for conventional pollutants. there's a lot of expertise that could be applied further to co2, and other greenhouse gas emissions. just like the mou which was much of a framework. and these agreements provide more detail. i think the next step would be to provide some sort of annex

for partnership that put the meat on the bone. third, in order to really keep and accelerate the cooperation, we believe that it's very important to make each of these agreements a public-private partnership. to utilize the expertise that exist in the private sector, the business community, but also at the state level in the u.s. which has led the way for many years on efficiency and renewables. also to take into account research institutes, uted and ngos. -- utilities and ngos. to utilize it at all level, and not to make the government to government one, the more productive it will be. >> i would agree with all of those points. i would adjust one more. which is continued engagement at the highest levels. particularly, between copenhagen and mexico city for 2010 if that's the deadline that's set

for the climate agreement. i think we'll see some important progress in copenhagen. if the objective is the final legal agreement, there are some is difficult issues that need to be worked through. i think it will be important for the ongoing engagement at the leader level, in order to deliver a successful conclusion to the second round of negotiations. >> i think what the discussion of the u.s. and china are doing seems to be brought more explicitly into the contributions that each make within global framework for a greater concentrations of greenhouse gases that adds up to a solution. that adds up to the avoidance of the climate change. when you put things in that

framework, you start to ask how to question about how much needs to be done. so i'd like the bilateral discussion of these things to be put more explicitly into a global framework with integrity. >> yes, sir? >> i'm mark with the atlantic council. i have a two-part question. it's very encouraging to listen to the progress in process. when i add up where it might go just touching on the last comments, i don't yet see us getting past what are potential tipping points and real serious changes in the global environmental situation. as a father with young child, i'm happy to have standards and

verification. but consequences are also an important part of the process. i'm not particularly encouraged about the long-term prospects. so i just want to -- am i overly pessimistic in saying, hey, we're not getting there. the second one is okay, if we're not, what's plan b? because there's been a few mentions of add adaptation and the enormous cost of adaptation. which means what happened if they do slide and many parts of the world go into water. how do we organization the response for that. my two-part question is one, are we getting there? and the second is if it doesn't look like it, which the is picture that i get, what's plan b? >> well, plan b is so far inferior to plan a that focusing

on it is not very encouraging. the main of the expectations from the mainstream science that the abscess will have consequences will probably be catastrophic, with involving disruption of the human civilization that goes beyond anything that we've had before. there's uncertainty about the science. but the uncertainties points to it chances of it being worse. so the uncertainty adds urgency to the case for case a. we are already too late to avoid the consequences of climate change. the main scientific opinion says we're feeling some of that

rather painfully. and the concentrations in the at -- atmosphere through the standard lag. we need big effort to deal with the need for adaptation even under plan a. even with brilliance -- to work better in a very wide range. it's the failure of markets and part of the problem of climate change for adaptation. i think the markets can take a long way for example with food trade. doing to have to be rapid changes of patent in food. and the current global work

trading for agriculture just can't handle it. that's just one that needs to be a huge increase in public investment in agricultural, and other matters related to adaptation. it's something that markets can't handle. during the food crisis of the top left you had talked about doubling global public on here. lip service bit g8. but nothing much has happened. the job on plan a. because if there is a melting of the greenland, and the ten laters and the thai bet tan platter, then the consequences

are truly horrific. and i think we should recognize that we're not yet on trajectories that lead to a satisfactory plan. but good outcomes are not out of the question. the changes in the last couple of years, including in china or in the united states are historic importance. the changes in trajectory that still need to be made are large. but the fact that we've made such changes in the last couple of years give some hope that we'll be able to make the changes. we'll go back to the arithmetic that talked about the type of global deal that might add up to holding concentration to 450 parts per million. that was strongly influenced by the state of play in the

international discussion which suggests it would be difficult for developing countries to find a commitment for 2020. that would have great, real, and kyoto confirmed it in bali. i concluded that there was no prospect than staying there. if we didn't shift on that and suggest that 10% reduction below business as usual in the developing countries as part of a global deal. what china is doing adds up to 5% on emission intensity. and 30% and 45% reduction of emissions intensity.

so china's announcement will do more than any arithmetic. the u.s. is doing less as barbara mentioned. in 2005 is a very small reduction from 1990. other developed countries have committed to much more japan, europe, australia, new zealand, australia, but nevertheless, that announcement is huge shift in trajectory through the united states, and get the the legislation through the senate, making it work i think is the first step. and then as confidence grows that you can do that without knocking this out of the united states economy. and then greater ambitions can come into focus. i wouldn't give up on a good

plan a. partly because there's no plan b that's any good at all. >> i'd like to just, you know, follow up on that with a different take on what plan b might be. the clean air act amendments that established the acted cap-and-trade program. we worked for so years to get those. the reason why it took so long is because the cost of compliance would be far beyond what we had established. what we saw happened was shortly after the amendments were passed and the trading program went into effect. they noticed that it was far less. so again we believe you may seen that same -- we will see the same kind of transportation in the debate. once the climate change legislation is just passed. that the cost on compliance will not only be much less than many in the industry or some

industries, not all anymore, are claiming. but also in this case, the development of new jobs, clean energy industry that is are going to bring a benefit as well a reduction across and so forth. i think we shall see the same type of transformation in china, once this carbon intensity target is put into the plans and actions and governors and mayors are rated in their job performance on how well they achieve it, i think china is also going to see with help in building capacities that this is a benefit. and it could and will move towards more ambitious efforts. just a day after china announced the reduction target, that children is soon going to announce a new renewable energy target opinion in the last four years, they've had to revise the

renewable target upward. that would be my plan b. get the framework and incentives in place that's going to develop the new green energy economy. and we're going to see higher targets on both sides. >> i think we had one right here. gentleman? >> my name is ben, i'm a graduate student. one the questions that i have, since the economies grow, they tend to shift often from are very industry heavy gdps that gdps that consistent of much more. 40% seems like a huge number. i'm kind of curious, how much did it result in china economy maturing or potential industries that are less solution producing. how much is the becoming more efficient, and polluting less? >> it's hard to tease out what percentage of the target will be met through efficiency, increase

the proficiency, but also in building. how much will be achieved by renewable energy targets. and how much through other methods. but i do agree with you that another area, in fact, one the biggest airs ya that going to result in decreased carbon intensity in china will be the tran formation of the industrial structure, away from the high-polluting industries toward s tushy economy. this isn't china's long-term overall planning. it has through the medium long-term plans, the ability to carry out the planning. it's already doing so in many respects. things like tariffs. reducing or increasing them in order to vote development of certain industries and promote the development of others. this is going to be a key aspect. it's already happening. but the extent to which china

can accelerate, something that it wants to do for orr other reasons, it's going to help reduce the co2 emissions. >> yes, sir? >> thank you for your presentations. is it realistic to expect the u.s. to in fact meet these improvement goals without a serious return and swift return to building nuclear power plants. >> i think that one can certainly expect that nuclear will refrain an important component of our energy mix. and that we may well see us moving forward for first time many many decades. i think one the keys to getting a bill through the senate will be the nuclear provisions. over time, congress has certainly afforded the nuclear

city all manner of support and subsidies to help get the industry kick started once again. what more can be done? i'm not sure. it's not the particular area of expertise for me. but i know it's an area that will be closely focused on within with the senate. i do expect there will be some additional provisions in the final bill. i think we can expect to see some growth of the nuclear sector in the decades. but there are many other options to us. including many that will be discussed to us in the china context in terms of efficiency and renewables and developing alternative sources. >> yes, ma'am? >> i'm march from -- margaret from the university of maryland.

i'm like to go back for the treaty for a moment. we've heard a lot about the importance of u.s. and china and the move toward copenhagen. prime minister rudd is here today. i'm wondering if the panelist could give us a lay of the land of what the coalitional behaviors are emerging as we with move toward copenhagen. who is bringing who along? are there any surprises waiting for us. what they may belikely to do helpful or perhaps not so helpful. >> i think we notice too little how much is happening and being contributed by some large developing countries other than china. i think the developments in

china are very important and very positive. but as the president and the cabinet and assisting bali has taken the issue very seriously, it's a difficult political issue in the young democracy. but i kept a strong focus on the issue. the reason included funding for new technologies in the energy sector, and the development. of course in a number of the developing countries the big issue is deforestation. and part of that issue has at least become the center of national policy focus in indonesia. and brazil and south africa too, it is the important development. and introducing an pass.

that wasn't anticipated kyoto and bali agreement. so india is a very important player. and india carries a bit of of -- say not very hellful baggage in discussions, tending to emphasis more of the responsibility of developing countries. even there in response to movement during the world there's been some change of focus recently. so i'm hopeful that india too will play a positive role. amongst the developed countries they will be waiting for the u.s. well, waiting for the u.s. commitment had been made. but everyone has been recognizing the u.s. is the big

piece of the jigsaw sitting in the middle without which you can't come together. : >> urge us all to cut our emissions of fossil fuels. as we look to helping the

emerging-market countries with ameliorating their problems we should also remember that there are 2 billion people in the world to have no access to commercial fuels as we know them here used dung and agricultural residues and wood. we should not lose sight in copenhagen that if the people have any hope for a vibrant future we have to find a way to bring them energy that will allow their societies to grow and develop in a way commensurate with the rest of the world. thank you all very much for coming. [applauding] [inaudible conversations] [inaudible conversations]

>> when the brookings discussion continues to look at china's policy. this is being co-hosted by the brookings institution's china >> drew armstrong of cq, as the senate begins general deliberations on health care what can we expect to see? >> i think the big focus of the debate in the next several weeks, and it is going to last

at least several weeks, is a continuing quest to get the 60 votes in the senate over and over and over again. every time democrats get the 60 votes they are going to have to restart that process as the bill changes slightly and make modifications to get 60 senators to support the bill and keep it moving forward. >> before the thanksgiving break a number of democratic senators say they have approved the vote to keep the debate alive, but that might not vote for the health-care bill itself. what is it going to take to get the support? >> over the next several weeks we will looking at compromises and a number of areas as the senate led by harry reid tries to get there and keep these handful of senators on board. the biggest area and where they stand to lose the most votes of the democratic caucus comes from that public plan.

a handful of senators, nebraska, joe lieberman from connecticut, and a few others all have issues with this. there are going to need to be changes, according to their current ultimatums, will for the bill is going to be able to go forward. >> are any compromises on those issues emerging? >> yeah, i think there are a few ways that this could go. on one end it is taking out the public plan entirely, which does seem likely because liberal senators really would have an issue with that. you might run into the same problem on the left. a more likely idea is finding a way to scale back what is in the bill already. right now we have an opt out provision where states can choose not to participate in the public plan. might be that we head toward a proposals which is something that one of the republicans has been pushing for that would allow states to have the public plan if they set up economic indicators like insurance premiums not going down fast enough because of the of the

reforms. that is one way that this could be done. the other idea is an opt-in public plan instead of an opt-out allowing states to choose to participate in the public plan if they wanted to instead of choose to exempt. >> you mentioned senator snowe from maine. are there any moderate republicans that might step forward? >> the only other small possibility is probably the other senator from maine, senator collins. i think you will see senator snow join the bill before you see senator collins do so. they have worked together and join together on issues like this in the past. they're both moderate republicans. so a lot of times their interests are pretty closely aligned. you know, i think we are going to see a lot of points of debates, but a lot of it is right to be in disagreement or

or rejection. so far, you know, one of the biggest priorities for republicans have been trying to do something about medical malpractice. the problem is that even with a lot of the changes that republicans might want to get in this bill it doesn't necessarily mean that they support it. you have to see almost entirely different product from what we have right now before there is any republican support. they have been urging to start over or rewrite this bill. through the whole thing out. i don't really see any way that republicans are going to end up supporting this think. >> we will majority leader read be able to wrangle the votes to get get this passed? >> i think so eventually. i think it depends on what the bill looks like. it is all going to come back to this continuing and multifaceted quest to find 60 votes, and you are going to have to do it over and over and over again. when the margin is the small one senator's opinion matters immensely.

you lose one vote, and it's over. you have to keep 60 people happy. so every single little change has the potential to upset one of them or fail to win their support. so i think you need to look at this as not just, you know, one case that is getting the 60 votes, but getting 60 votes over and over and over again. >> drew armstrong. we thank you for your time. >> for more on the health care debate go to c-span's health care hub. you will find information about the legislation as well as the of briefings about the bill. we are waiting for the brookings institution on china to continue in just a few moments. our live coverage here on c-span 2 continues at 1:00 eastern with prince albert of monaco at the national press club to talk to reporters about the environment and climate change. at 2:30 eastern on c-span secretary of state clinton and health and human services

secretary sebelius discuss the obama administration policy on hiv and aids. and at 4:00 eastern freelance journalist and filmmaker uncovering iran's presidential election. held there in solitary confinement due to his election coverage. he talks about his experience, and we will have live coverage on c-span. >> regulating the internet, one of the topics tonight with meredith attwell baker, the newest republican commissioner. on the communicators on the c-span 2. >> and now back live to foreign policy discussion looking at china's emerging role on the world stage. analysts aren't examining the nation's transformation as a global leader in areas such as economic policy and how the status as impacted u.s.

this live form is being co-hosted by the brookings institution and the australian national university. [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] [inaudible conversations]

>> we are waiting for the brookings discussion to continue on the look at china's growth policy. here is an update on the senate. the senate will begin debate on its health-care bill later today here on c-span 2 live coverage before the thanksgiving recess. some evening and weekend sessions. the debate is expected to last week's due to numerous amendments to legislation. the senate gavels in today at 2:00 p.m. for an hour of morning speeches and then the health-care debate getting under way at 3:00 p.m. eastern time. >> c-span's 2010 student cam contest this year. $50,000 in prizes. top prize $5,000. just create a 5-8 minute video on one of our country's greatest

strengths or challenges. it must incorporate c-span programming and show varying points of view. deadline january 28th. winning entries will be shown on c-span. grab a camera and get started. go to student cam dot org for contest rules and info. >> we are back live with the brookings institution discussion on china expected to get underway in just a few minutes. coming up next a look at china's growth policy. live coverage here on c-span 2.

[inaudible conversations]

[inaudible conversations] >> we are waiting for the brookings institution discussion on china to get underway in just a few minutes. our live coverage will continue on c-span this afternoon at 1:00 eastern with prince albert of monaco. he will be at the national press club to talk to reporters about the environment and climate change. and then at 2:30 eastern on c-span secretary of state clinton and health and human services secretary sebelius will discuss the obama administration policy on hiv and aids. and at 4:00 eastern a freelance journalist and documentary

filmmaker uncovering iran's presidential election. he was held there in solitary confinement for three weeks due to his election coverage. he talks about his experience, and we will have live coverage on c-span. [inaudible conversations] [inaudible conversations] >> shall we? okay. good morning. good to be here at the brookings

institution for the this collaborative undertaking between the institution and amu. it is my honor to moderate the next panel. following on the very specifically focus session we just did looking at the global climate agenda with china and the united states, we are now going to turn to the broader topic of china's macro economy and in particular the panel is going to explore the extensive way which it is changing, evolving, and in what directions. in existing -- oh, i need to introduce myself. i'm dan rosen. a visiting fellow at across the street, and i am also the principal of the rhodium group, which is a new york-based. let me just say that the existing macro economy of china

upon which to build our perspective of china's commitments and carbon and other issues as well, environment, trade policy, development, economic considerations, all of this starts from our understanding of what makes the chinese macro economy tick, how we understand it, how we think it is evolving and changing, where it is going in the world today. and how it operates is going to determine the traditional and non-traditional outcomes and policy challenges that we have to confront in the future. it is always a moving target. china has not stood still, certainly in the time 15 or 16 years i have been watching it, and not really in the whole 10,000 days or 30 years since reforms began at the end of the 1970's. so we are constantly readjusting what we think is going on and

where we think it's taking us. the current moment particularly volatile time in trying to gauge what is going on in the economy and what is going to happen next. i think about a question that was raised by a gentleman here in the previous panel concerning how much of china's carbon pledged would be achieved simply from the natural maturation of the economy as it moves through the industrial and intense phase of its economic development to an era where tertiary sectors of the economy play a bigger role in terms of share of total economic activity. that time will absolutely. once china finally gets there china, like the united states, we will see a% of its carbon news related to consumer activity rather than industrial activity. basically the inverse of where it is right now. to the extent to which chinese

policy choice and policy intervention can change that mix today or in the medium-term or coming years just because heavy carbon intensive material is not made in china does not mean it is not made for china. china will need all the buildings. it will need all the petrochemical processing capacity. it does not necessarily have to be in china that all that capacity takes place. carbon is going to be committed somewhere, even if it is not in china, to meet the needs of a rapidly urbanizing population. a very dynamic equation that does not just concerned what is made in china. it concerns what needs to be made for china in the years ahead. today the questions we are going to focus in on in terms of the macro economy as i describe it is the direction of policy reform changing. we've worked comfortably -- welcoming most of us, i think, on this panel for a decade down, the we don't like everything

that issues forth from chinese economic policy by and large we are moving in a market-oriented direction over time. that has been a fairly comfortable assumption. people are now debating that to a greater extent than previous to my previous memory. whether we are still living in the direction we are comfortable in moving and. yes, their is a change taking place. is it for the better or the worst? for better but mean rebalancing toward a more efficient mix mixf economic activity in sidesaddle. we're going to get into what that would mean in some detail. or are we changing in a market direction with the state clawing back to a more active role for itself. was this precipitated by the global financial crisis or was this on track to happen anyway and was just coincidental to the crisis that brought the u.s.

down a peg, if you will, and made china look like suddenly its industrial policies were much more effective at generating growth than it would have otherwise. is it essentially domestically driven policy changes that are taking place or is it essentially international? is china having the reactive, the new absence of external consumer demand for its product that forces an internal change back into the domestic economy? and finally, how should we or can we react to these changes if we decide that there is some significant changes taking place in china that might affect our interest? to explore all these things we have three terrific panelists here. first wen jaibao right next to me. well done. not residents. professor of economics at

uc-davis, i originally from malaysia, yale and harvard degrees in economics. extensive live long track record of contribution on issues that deal with china, economic development. i don't even have time in this entire panel to go through with you. next week, from a in you, associate professor at the school of of economics and govet and director of china economy and business program at amu. last but not least somebody who is very well known and loved by everybody here in the washington community. he directs and runs the brookings center in beijing. almost all of us have enjoyed his hospitality in beijing providing us a place to get together to discuss the critical issues with everybody who is important in chinese government, chinese academia, much of the private sector as well, plays an extraordinary role and has an

extra very track record of work. so we have got the record of people, and i hope we picked the right topic to talk about as well. and going to ask you test start offer to in a 12 minutes. we will go through and then come back for q&a. >> questions. reflect a development in the press about concern about native developments in the direction of chinese domestic economic policy and of concern about changes about changes of drastic actions by china on the international economic front. i want to raise three points for discussion during q&a.

my first point is that it is too early to say that there has been a reversal in the direction of china's economic reform leading to a resurgence of the state sector at the expense of the private sector. the second point i would like to raise is that the chinese high level of activity on signing free trade treaties with all of its neighbors and investing heavily in africa does not represent an intention to eds the u.s. out of its traditional fields of influence. the third point i want to raise is that i see the current

stimulus package in china as one that would lead to great difficulties in the near future and that unless the competition of the macro stimulus package is changed in the next year onward i fear it could lead to a slowdown in the long-term growth of the chinese economy. on the first point, has there been a change in the direction of domestic economic policy? "the new york times", the "wall street journal," and "the financial times" all point out that there has been a large extent expansion of the state sector. look at the growth of investments. has been mainly the united states sector. i think in order to understand why it is happening one

recognizes that the sector has the most convenient proof for macro stimulus that is available. largely because how you get from to unlatch its production when demand is falling. how do you get a bank to increase lending when domestic demand is falling and international situation is so weak. clearly the states own companies are reeling to undertake the expansion without a clear increase in demand apart, and the state-owned banks, since it is not their money they're playing with a perfectly happy to make small loans to their friends and relatives, and to

everybody else they will not be held responsible. so the expansion of the state sector is more by default than by design. the implication is that when the negative consequences of this action is recognized and will be quite readily reversed. largely because the state has not decided to expand this sector at the expense of the private sector. of course this is often said that the communist party of china is committed to maintaining a significant presence of the state-owned sector, especially in a role as the pioneers -- as instruments of industrial policy by pushing into new areas of industrial activities. that role is there, but i do not

see. a think it is too early to think that the state wants to expand that role. the second points that i wish to talk about was whether the proliferation of free trade treaties with asian is affecting the united states. one thing is for sure. china sees the u.s. both as a strategic competitor and a strategic partner. strategic competitive in the economic sphere especially, and a strategic partner in the cohesion of global, for example on issues like climate change. so both aspects are present.

the emphasis has been on the strategic competitor aspect. it is to china's benefit if the united states would leave the pacific economies alone. largely because china is concerned about the reaction of japan if the u.s. intervened and the possible rise in influence with the u.s. so it is not china's intention for economic or political interests to edge the u.s. out of asia. the proliferation, this is largely the result of stock for the last five years. all of east asia wishes to

increase its degree of integration in the global economy and enhance their economic development. and since could not move forward they have decided to move ahead among like-minded countries. all of southeast asia wants to go further. and so at the same time they also want greater access to the chinese market. so this proliferation of free trade treaties is quite natural the last six meetings with singapore when obama has clearly shown that the u.s. has no intention of leaving that part of the world either. and this is certainly not

something which worries the chinese. so i see the development in free-trade areas as pretty much a development of continual growth, globalization of economic activities. how about u.s. chinese investments in africa back chinese investments in africa reflects very much the continuation of china's industrialization. the chinese has been lending money to u.s. consumers to continue buying chinese goods. since the u.s. consumer is unlikely to be spending the same as before thanks to our imprudent supervision of our financial system that has destroyed so much of our wealth the u.s. economy is not going to bounce back. after all, the federal reserve

has projected that unemployment in the u.s. will remain over 8% until after 2012. so given the fact that the u.s. consumer will not be spending as much as before it is quite natural that china and western africa and is willing to lend africa the money so that africa could buy capital goods from china to industrialize and develop themselves. so instead of lending only to the u.s., which shows a decreased capacity they have now switched to lending to africa. so this is not a new strategy. it is a continuation have financing strategies in export-led industrialization in china. and the third point which i wish to raise has to do with the

potential pitfalls in the current competition of the chinese macro stimulus package. the first pitfall is that the chinese stimulus package has taken into consideration the growing sentiments in the world. i think that in position of tariffs on chinese buyers by the obama administration will be the beginning of the imposition of tariffs on chinese goods in the european union. what the chinese need to do is to be aware that the reasons

behind it, and all of it has to do with the fact that economic growth in e.u. and the united states is going to be slower the next two or three years. so what the chinese really need to do is to greatly increase its imports as a way to reduce its current-account surplus. the idea of china cutting its exports in order to reduce its surplus is certainly inferior to maintaining its exports, but increasing its imports. this is something that is well within china's ability to do. for example, when the usual comment from the chinese delegation is that what else would we buy from the united states? so make a stricken we can buy.

technology. advanced scientific equipment. i feel that is really missing the point. china can import of a lot more n non-traditional areas. for example, importing education is something that china could greatly expand on. sending students abroad and beefing up its own education system by hiring the newly graduated ph.d. s of 2010 that have difficulties finding jobs in the united states. this is certainly a great transfer of humans. that would certainly strengthen basic capacity to grow. so that would be part of it.

and the other thing that china should do is to resume the process of exchange-rate appreciation. not that i believe that exchange-rate appreciation would reduce the u.s. deficit. it would only reduce the u.s.-china deficit. i said this from the experience of the u.s. beating down on japan to make japan appreciate its exchange rate of 250 yen. if you look at that what you do see is a shrinkage of supply in trade and balance. the u.s. over run. why? expensive. so we bought more from the rest of asia to make up for what we

did not buy from japan. the service the u.s. so the appreciation would certainly show that the chinese are sharing their share of the pain. and that is something which i should mention. protectionism is something that not only china should be concerned about, but also the united states. there are many things that we can do one of which is to strengthen our social safety nets. the social safety net of the g-20 countries. i think that in case of globalization is much more frequent than before. the strong social safety net is very important to maintain

domestic contentness. so the protection of the world trade system on china and the united states. this second pitfall in the current chinese marco stimulus package is that it is creating a trade-up between full utilization of existing capacity against the generation of a high sustainable and long-term program. what are the instruments of marco stimulus? investment by state-owned companies and loans by state-owned banks. a lot of this is used to generate activities that are not particularly in labor-intensive

for example, $1 billion will employ less people than a billion dollars worth of manufacturing. so what china needs to do for these migrant workers who have been laid off is to set up conditions to enable them to start their own business. and this is where the chinese system is ready. nurturing small and medium enterprises by entrepreneurs. this setting up of small and medium banks would be a very difficult if the rural sector is not able to provide some form of collateral at the beginning in order to get the process of financial intermediation going. this is where land

privatization. land privatization has to come to china to produce the collateral to the migrant workers to pick up additional loads. and with the acceleration of urbanization which is a fundamental of china's economic growth will accelerate the privatization of land and the ending of the household registration system which ties to the land. the third point i want to talk about is that there is too much complacency of our situation in china. people like at the west and see the same amount increase in high-powered money, but the absence in the united states and e.u. if you look at the increase in high-powered money in china and the united states they are on the same order of magnitude. but given the difference in

circumstance this is not an explosion of high-power. it is not inflationary, but it is inflationary in china. why is it not inflationary in the u.s.? it is because what the u.s. banks are experiencing is a massive loss of bank capital which makes them unable to meet the capital adequacy ratio. so in order to meet the capital adequacy ratio they have to dump their loan portfolio and move on to cash. and what the federal reserve operations has been is essentially to allow the conversion of those loans to cash at the bank. and so this cannot lead to additional loans by banks because it is on the balance

sheet. in china the balance sheets were already around 2004. so this additional stimilus would actually create additional an aggregate demand which is why you see this burst of revival in the stock market and a revival in housing. so i think that it is for china to avoid these three potential pitfalls of talked-about and it would require a change in the composition of its macro stimulus package. thank you. >> i think i am hearing the first vote for not an intentional change in a production. an unintentional movement of convenience that will have unintended consequences that

will tend to make this choice redirection somewhat short-lived and not a long-term trend. we will come back and hear all the details. dr. xiao. >> thank you with the opportunity. the answer is yes. some opportunities for china, but at the same time there are also constraints. in the past 30 years the growth is nearly 10%. china is right now the third by just economy in the world. this year china will replace the united states and become the largest manufacturing powerhouse in the world and also the largest trading nation and the world. so it seems to be going so well. the reason why is the problem is because the growth model is basically driven by three factors, investment, planned export, and consumption. consumption is very much an

important role. so the growth of china this year and by the investment and further export dependency. why china is so obsessed about exports in the way that you have the past 30 years cyanate is converting are transforming more than 200 million people from rural and urban areas. actually being absorbed in the most dynamic sector. so the factor plays an important role in internal transformation of china. that is why the government is very adamant in terms of adjusting, because it affects the ballet is a people in that tournament sector. they are shedding the migrant worker. therefore even though the export sector plays an important role in that regard. the second is overcapacity.

kind of a very strong motive. also powered by the local government. so be -- not all the issues is about investment and balance. but this has a very good position in terms of generating the investment. again, the ratio also related to the overcapacity and goes hand in hand. give you an example about the steel industry. next year the steel capacity will reach about 700 million pounds. the domestic demand for steel product is roughly about 500 million. so you can see a huge gap there. again, in san you can see everywhere the steel mill are still being built. so this issue is also highlighting because of the importance of exporting the

manufacturing products. in recent years we can see that it is about three years ago china's imports of steel products. sense to does a seven china has become that net exports. that is another reason. so the imbalances is to shift the expenditures. however, in case of china is still have some difficulties. our best of four or five factors. number one is about income. right now it is about 300,000 for china, but in terms, if you can look at most of the developed countries china by 2008 is just about 13 percent in terms of reaching the frontier. in terms of urbanization china right now is about 45%. again, it is below the world average. there is continued rumford china

to grow. number three is about investment. the investment ratio to gdp is about 38%. this is very high in terms of the international comparison. however, in terms of the investment the chinese are very much lower. much lower than the average. in 1978 it was about 2%. in 2007 it is only 10%. so too much capital. so china needs to invest more in terms of capital. so that is the kind of paradox that we will see. in terms of intensity. again, it is a similar situation. this is the background in which china is required to adjust the domestic economy in terms of reducing the share of investment and increasing the share of consumption in total gdp. here in the booth we make a

distinction about orientation and export. just this simple chart. taking a country of the share of the total against a share of export. so the path goes along the 45-degree line. here in this case make it kind of a comparison. in the united states it is actually in the 19th century the united states is very much open economy in terms of trade and investment. however u.s. take a very defensive kind of shift in terms of strategy and lowering debt ratio increasing the domestic amount. that strategy actually becomes very important. you can see very clearly it lies above the 45-degree line. that is coming down.

by example. the other example is japan. it is very much a kind of rut to balance. however, moving very rapidly towards export dependence. that means it goes beyond the 45-degree light. so that nextel economy, china is below the 45-degree line. ever, it is rapidly approaching. the export dependence ratio for china is 45%. so in the way china needs following the strategies of the united states about a hundred years ago nestling examples of korea and japan. so in case of adjustments it is not just the issue of is directed policy. a thing of the people think that is the key issue. it is important that the financial factor reform, the capital market, and the relationship between our

government. all the money is collected and the profit is retained as well as handing over to the honor which is the government. so therefore the enterprise has plenty of money to reinvest. again, it is a local government. so on the low carbon gross there are about the discussions in the previous panel. i just want to emphasize the one issue on regional dimension. you cannot treat china as a single country because there is a vast regional growth difference in income difference. the richest province and the poorest province, the income gap is about nine. so therefore according to this curve you talk about the carbon and the emission reduction is

against. their priorities can be very different. so that can result in difficulties for china to comply. so under sei we already mentioned briefly i think there is a important hypothesis associated with china. the number one is about thinking and number two is about efficient and third is about regional thinking over the acquisition of traditional assets. we focus on the final one which is the strategy and also the very important. in the course of readjusting the growth strategy therefore exporting has become so important. therefore try to lead sei from china.

and therefore internally we can see the driver. i think important the market in production because of the imperfection the investors' demand from china they can be made available at a lower market rate because the capture imperfection. a tremendous advantage for the investors from china. the second advantage is the state ownership. this, of course, is well-known. the third one is about institutional factors which is the government in china, also in a way that is promoting the investment. so on the part of international science i think two issues are important. so both governments are playing important roles influencing the behavior of investors from

china. finally i think we already touched upon this issue of rising protectionist in china. so to conclude in the way, what is the path toward a global adjustment? two scenarios. one is that it is a current the united states in half. the other is more or less this situation. their projections which showed that the global growth rate is more or less remain the same, roughly about three and 3.5% as global growth, which is not bad. however, there is uncertainty. what happens to china and what happened to the adjustment. so uncertainty of growth path in the next four or five years. so whether we can actually achieve a quick result in terms of the resulting imbalance is

seems to be a bit of an unknown. so in the way that -- let me just emphasize, not just the single issue. there are a lot of other issue internally. it is domestic reform, the regional dimension of growth in china, and also important issue about the trajectory of economic structural changes to both the high value and toward the service sector of the economy. and also the importance was emphasized and international corporations in that we allow technology introduced into china to have kind of a leapfrogging, rather follow the traditional pattern of growth. however, the wider regional disparities we can see it is just so complicated.

so we can for the of foreseeable future the structure of investments in china, the growth has a wider range of spectrum. you can see a high level, high tech industry. at the same time they can take over at the lower end. so that is a complication in confronting the global adjustment and also confronting the commission reduction in the package. so the failure of china's adjustment will not only have impact on china, but also on the public economy. >> okay. so i hear a few of the chinese economy is having diminishing marginal efficiency of business as usual. the model we know is generating more and more disappointing results, but i don't get the sense that beyond diagnosing the

problem there is a dramatic policy inflection that has started. still talking about what it will take to get the kind of changes we need to see underway. geng xiao. >> actually, i think that during the last few years the chinese policy makers have come to realize that the chinese growth margin really wanted to fix it. but the trouble is that it is not that easy to fix or change the model. while i have spent almost three years in beijing agree time i met with senior officials the question always, someone from embassy raise the question this morning asked me that, do you have any good way to fix this, to fix that? that kind of attitude is

amazing. they really want to fix the problem. but the problems are very, very serious. i think that there are three problems. number one, the wage of chinese workers are so low, especially compared to united states wage. average migrant worker earns only 120 $150 a month. how to increase their income. the second challenge is the price for energy, for land, for natural resources are so low, partly because the local government, they are competing for foreign direct investment. so they are giving land freely to, you know, exports, to produce exports. so and also the price of

electricity, water, all of those are very low because traditionally the government has set prices, usually very low. so that is very difficult, how we raise the price of energy, of resources, of land so they will not be wasted. for example, overcapacity steel mills. and the third challenge is actually similar to what we see here in the united states. plenty of money available in china, especially now. just last few months there are so many foreign investors coming to china that invest in china in the way some of them short term,

some of them actually long-term. looking around the world there are other places to invest. other countries have an active growth rate. if you actually visit china you will see those growths are actually real. so that is really the challenges which china is faced with. ..

so how to fix these problems. i think fundamentally we need china to grow, to invest more, to increase income. but we need china to invest in efficient projects, not overcapacity. a project which will increase chinese consumption in the future if not at the present. saving is for the consumption in the future. nothing wrong with saving. the problem is chinese peop!i' want to consume in the future

but how do we view the future. there is a misunderstanding that chinese investment is too high. it's not too high and if you look in the situation in china when china views these high-rise buildings you have to put all the concrete and steel, you know, on the land in three months. and then the building will last for 100 years, even 200 years. and this is something very different from the kind of investment in the economy. and i think the16 last questio want to mention briefly is that about exchange rate because some of the panelists mentioned it. the chinese policymakers realize that china needs to change its export-oriented growth model. but it faces serious difficulties. for example, if china start to

appreciate it is currency like it did during 2005 and 2007, and 2008 -- when you have a sure bet that the currency is going to increase in value, you have massive speculative investment from overseas chinese. and that becomes the trouble, you know, creates bubble in property market and the stock market. and when the government tried to -- if they want to raise interest rate to dearcf with th bubble, you also attract massive influence of capital. and how to deal with these problems. and the policymakers right now are so much concerned about what we call a carry trait on the dollar and now we have carry trait on yen. if you borrow u.s. dollar and

then go to china to invest or just simply deposit in the banks, you get a very high return. and how to deal with these problems, you know, the chinese financial sector is still not developed. so the oldest serious challenges and that the government realize for whatever reasons, for the short run and even for the medium run the objective is to increase consumption and also increase investment to make sure the economy will grow and even at the risk of some bubbles in property market and the stock market. the government actually is spending a lot of effort in targeting speculation, you know, enforcing the regulation. for example, the bank capital adequacy requirement during the last few years was enforced very

rigorously and actually is beyond 8%. and also in the stock market, tremendous effort put into how to deal with the insider training and make the market more transparent. so i would say that especially after the global financial crisis, the chinese government realized that it needs to deal with some of the substantive challenges. but, unfortunately, the time and efforts of the policymakers actually distracted by a lot of macroissues, exchange rate, trade protection, which i think is unfortunate because if chinese government can focus more on reforms, for example, privatized -- the effective market price, lender reform and many other financial reform --

financial reform the government actually decided after the global financial crisis, the chinese authorities decided to build shanghai by a financial center by 2020 basically set a timeline for the liberalization of the capital account. and i think that shows the determination of the government to really reform its financial sector because if you want to view the international financial sector basically you decide to open the market to the international community. so in that sense we can see -- i saw a very dramatic change in the policy directions, you know, away from the past 30 years. i'll stop here. thank you. >> excellent. terrific. that gets us into our discussion here. let me start by observing that, all three panelists put the behavior of china's financial system right at the heart of the

matter in terms of what needs to change without so much intentionality that the banking system should be giving all of the lending and wherewithal in the country to the heavy industrial sector. that's what the financial system has intended to do for a variety of complex reasons. and the heavy industrial sectors that gets all this money, the big five of them together nationwide employ nearly 14 million people in a labor pool of 780 million. there are more service sector jobs in with numbering up a all the chemicals online. you don't create any jobs by doing this. we have huge amounts of missing economic activity that should be given comparative advantage taking place in china but which are not taking place. if i'm hearing all the panelists right, and i'm pretty sure i am, it's not enough to say the

financial system should provide more access to capital to small and medium-sized labor intensive companies offering them equal access is not going to do it. separate but equal will be inherently inequal. we need affirmative action for the private sector in china. is that what it's going to take to break through the political economy that puts all the resources at the disposal of the soes instead of these other higher potential industrys? dr. song, you want to start with that? >> i'll give you an example right now. it's about the relationship between state-owned and a nonstate actor. and in the second half of the 1990s there's massive privatization going on. in terms of g.d.p., the economy is more than 60%.

however, if you look at the structure and the -- it's less than 20% or something like that from the official or the formal financial sector. this mismatch highlighting the importance existing of the banking sector reform. and in the middle of this is a crisis. we know the government is the largest stimulus package put in place and because of the slowing down of the growth of export and the majority of the money is put in the infrastructure and people there's are worried if there's a crowding out of the -- there's a lack of the investment in real economy because of the slowing down of export, et cetera. put in the state and nonstate sector into the real estate sector. this is the problem. so, therefore, changing depends on many issues and probably

where it takes time but we know in theory and in the past 30 years the reform experience tell us, it's actually moving towards a nonstate sector. moving towards a more market-driven economic activities where it will be more efficient and in the long run. so china is actually kind of a juncture there. the crisis makes it more complicated because the government-driven investment behaviors. but, however, government issued quickly -- changed that strategy towards how to generate how to help the private sector to invest more to keep that balance. the fundamental again is back to the banking and the financial system reform and also the reform of the relationship between the government and a state-owned enterprises. >> it's probably not just going to be offering additional money to the private sector. it's going to mean taking money away from somebody to make it more accessible to somebody else. somebody who's paying 5% for

money now compared to a private sector paying 15 to 20%. they're going to meet in the middle and there will be less for the soes so it's going to be painful. it's not going to be a painless process of adjusting who gets the resources for growth. in your remarks, you talked about a shift to the state sector not making resources more accessible to these new growth areas but kind of going the other way and this leads to some of the pitfalls you see. is that just a temporary phenomenon that will naturally correct itself back in the right direction? or does there need to be a really painful big bang of a shift in the financial structure here to start moving hundreds of billions of dollars to other industries? >> i think that would have to be the correction. for the simple fact that these

channeling of funds from the state banks to the state enterprises is resulting in a large amount of overcapacity. but are they going to do something about it? my prediction is that, it is unlikely that a government will do much about it much for two reasons. one, it's the feeling of political vulnerability that this government has about its political legitimacy. so it sees the full utilization of existing capacity as very important to its political survival. second reason, is that we have now entered into the dark period of the hu jintao administration. his high point, if you had to do anything would have been in the

last two years. but now he's at the end of his regime. and he's faced with a collapsing world economy. so he's more concerned about capacity utilization right now than about putting the country on the road to a higher sustainable growth rate. look at what some of the measures. one of them would be providing a level playing field for the private sector. and that would inevitably mean a shrinkage of the state-owned sector. and the problem with the state enterprises is not just that they are inefficient. they are also indispensable instruments of political patronage.

basically, it's education and different families have different sectors. and when you talk about reform in this case, industrial sector, you are talking about whose ox there? and we look at the question of land reform. land reform actually threatens the very fundamental basis of control of the countryside. how can the party maintain such great control over the countryside? it is true there is distribution of land. if you don't listen to me now, well, when it comes to redistributing land, you'll get the one next to the hill rather than the one next to the water. so land privatization threatens some very key institutions of control. and when we talk about

unleashing the private sector of growth, i think that is something that they know. but, however, it's not the politically expedient thing to do unless there is quite a serious systemic crisis. so it in a way stumbling of the system is what -- that could lead to the movement to its better economic policies. and i see that this stumble would not come about internally at least for the next 18 months. but what could provide the stimulus is the protectionist reactions in the west. >> okay. >> and that, however, could lead to a backlash that could be adverse to market reforms. >> it doesn't sound to me like this is an orderly process of rebalancing in the right direction in your point of view then?

you're a little more optimistic that policymakers have a clear diagnose and prognosis for how to move us ahead? >> well, i think we have to put this into perspective. in the last 30 years the chinese economy has been privatized from 100%-owned state -- state-owned to now only about 30% g.d.p. from a state sector. so that trend is continuing with the foreign investors in china competing fiercely. but the problem is, you know, they are about 150 really big state-owned enterprises. which are making profit because they are in the monopolizes sector and the so-called strategic sector. and those companies, just like some we discussed, they could increase capacity and sometimes, you know, nobody can control

them. so i think it's right that we should push china towards reform towards those sectors, those companies. and if you look at it from the -- my talk with the officials, they actually want to reform it. if you talk to the state asset supervision commission they want to list oldest companies. they want to privatize oldest companies but the process takes time. china listed the old major banks, they are 70 to 80% owned by the state. it's a long time for china to go to reform but i would also say that the market force in china are much, much stronger than what we discussed here about the state control today. if you look at the market in china, it's a fiercely competitive excepting a few sectors.

and as china continued to open with pressures from the international community, i'm pretty confident in a few years time, you know, 5, 10 years time we will see dramatic changes even in this strategic sector. >> so there are market forces at work that were not present in previous resurgent moments of the state that should help get us back to a balance. let me turn to you now. we've got 15 minutes. please keep your questions as short as possible. let us know who you are. and who would like to go first. sir, right here in the middle. >> pardon me. eric from the institute of foreign policy analysis. this may be a naive question with respect to the questions, u.s. and chinese stimulus packages. but i wonder if there has been or if there should be coordination or -- maybe not synchronization, but some sort of consultation about

implementing them. what i mean by that is that, for example, the stimulus packages could involve u.s. investment in green technology in china or u.s. and chinese investment in north korea that might have a spinoff for northeast china or something of that sort. is that too naive to hope for? >> one comment on that. whether there's some low hanging fruit to coordinate stimulus better on our two sides. who wants to take a crack at it? >> well, there was an attempt at coordination to prevent the rise of protection jivenl. -- protectionism. this was part of the 2008 summit in d.c. and by the time they gained in 2009, what has happened, 17 out of the 20 countries had implemented protectionist policies. >> but is that -- what about stimulus?

in terms of government -- >> stimulus, i think when it was done it should have been certainly done simultaneously because sequential stimulation would not be sustainable individually. largely because it costs current account deficits at least that are unsustainable. but right now we are not in the face of too much simultaneous stimulus because the country conditions are quite different. for example, the australians are in the midst of pulling back. and the europeans have seen the economy improving so europeans are not part of the stimulus and the obama administration, given what that is projected for the healthcare reform, for it to talk about further stimulus i think it's a very difficult task to do politically. the chance for simultaneous fiscal stimulus has come and

gone. >> probably now the most important thing is coordinating our exit from stimulus to make sure that we don't game each other to try to maximize our own interest there. there's a question toward the back. the gentleman with the blue shirt. go ahead. you with the glasses and mustache. yep. yeah. >> i'm with american university. just on the possibility for reform and what the parties are able to achieve in china. the parties are increasingly concerned for some time is about corruption especially at the local level and in the provinces. and i'm just wondering whether that gives them that concern with corruption and gives them an easy segue into addressing some of these reform issues especially on land and such. >> i think the communist party

has always been trying very hard to fight corruption. and there's actually some progress if you look at the high profile, high level people get fired and sentenced. but the issue is more institutional in the sense if you have state-owned enterprise even though you are going to get someone trying, you know, put some money in their own pocket, so i think it's a long-term effort, yeah. >> i'm here with the china center. thank you for the excellent panel and discussion. and my question is about the land reform since wing talked about a few times but i also welcome others to comment. as we know that two years ago particularly in the -- i mean, in 2007 and the first part of 2008, the chinese leadership talk a lot about land reform. it was the seam of the major meeting.

it sounds like hu jintao wants to put his legacy on that issue area. now, the question is, whether as we know that the land reform is largely on hold, my question is, whether it's related with the global financial crisis that made chinese leaders very nervous to pursue or related with the internal fightings. and no matter what, do you think that the china, chinese leadership will return to the policy in the near future because most people believe that unless china adopt a real land reform, chinese will never have the real economy but the challenge is overwhelming. so what's your assessment -- are the china is going to deal with land reform in the next year or two? >> i think -- i think it would be politically very astute for

this leadership to raise land reform as a stimulus measure. because for one, it would allow the development but it cannot be done in isolation. the things that need to be done to promote it as a stimulus matter. one is to allow the establishment of private and medium banks and the cohesion of public housing in urban areas. the big housing bubble that we see in china -- a lot of it is for low cost housing. but that's a lot of vacancy in the low cost housing because it's too expensive for people who come from the countryside. what china should be doing is the way that singapore and hong kong started at the very beginning. which is you rent out the public

housing for 10 years and after that, sell it to the rest of the people who occupied it. so in order to get people to move readily out from the countryside, land privatization and the end of the the household registration system and this would unleash accelerated urbanization, which is a big up-demand. things like decoration of homes is extremely labor-intensive. much more labor-intensive than building a bridge or a road. >> dr. song, do you want to add on this? >> the land management system in china is very much a focus on the issue of underpricing of land. because the land is very much undervalued and causing a problem. number one it is about the real estate and et cetera. because of the local government and together with the developers acquired the land very cheaply

so, therefore -- it's not the market prices when you purchase it. so, therefore, you can sell it as a high profit. there's the justification of the government to do that because they need that money as a source of their revenues. the second issue because the land value is undervalued so farmers are actually don't care much about the fluidity of the land for a long time. so the damage to the land in the past 20 years is actually much worse, are hurt compared to the thousands of years of land cultivation. because of the market is not there. the third is about undervalued land is actually related to the income distribution issue. farmers income is part of the reason is kind of a low consumption in china because they don't have the kind of excess -- so, therefore, the highlighting importance of reform in the land system in china.

>> an example, this is an example the reality it's not for want of attractive policy options that china hasn't shifted the model for dramatically. there are lots of very high return reforms that could be undertaken that would be effective. it has to do with winners and losers, political economy issues that we haven't seen more folsum form today. a question here. yes. >> thank you very much for your discussion and i'm very honored to be here. i'm a graduate from sophia university. my question depends on the chinese stimulus package. as we all know it was the decreasing of exporting in china whether or not china can pass this economic crisis and mainly depend on the domestic expansion -- the expansion of domestic consumption and just few days ago, at an economic

economy -- 2009 economy conference, the government pointed out a new idea for next year that is to focus on expending the consumption ability of lower-level households and individuals. and i would like to have your opinion here. ? and do you think it's practical or are you positive about this strategy or not. >> that's probably the last question so if everyone wants to take a minute and pull it together on that note. >> yes. i think it could be done. but it would not be the easiest thing politically for a simple reason. it takes us directly to the state construction lobby. if you build schools you build hospitals but it's very hard to generate rents to them if you send many more qualified

teachers and many trained doctors that are there. in other words, investment generate rents for members of the elites. where a software investments which some people term consumption -- i do not see better education, better healthcare as consumption. i see it as investments. and those do not generate the same kickback to the entrenched interest. >> building on low cost housing is a part of the strategy is controversial. and many people -- many scholars point out that is distortionary even though on a social and the welfare and it's justifying and the housing market and causing benefit and et cetera. it's not that simple. it's just building a house and people can