important horse pulling the cart and china was the next most. we're looking at china as the most important contributor to global growth going forward. three seems to consider as we work through the topic of china in our lives and polity here today. the first is china as a consumer. my colleague at the peters institute has suggested china might eclipse the united states within a decade. if we were to measure china in purchasing power parity terms we see a few years from now we can start talking about china crossing the united states in global waste but consider china is currently 9% or 10% headline gross domestic product growth. that is growth in mostly industrial economy. not a consumer economy. we'll look at china and the united states as consumer shares

we have until 2025 or 2035 for china to become as large a chunk of global consumption as the united states is in the world. depending which part of economic activity we're looking at we may have a longer wait to crown china as the new master in any given component. on the production side of what firms do in the world economy china -- made in china as david pointed out has been the most exciting story of global production of the past three decades but let's remember what china does is in the middle of the production chain. what is described by that red line is what china does. it manufactures stuff. in a modern economy the lion's share of the value isn't in the manufacturing process. we anticipate our consumer needs

will be different tomorrow than they are today. innovation in order to meet those future demands in an increasingly carbon constrained world has to be about transforming our energy system and how we manufacture things anyway which china is not a heavy weight on. we will talk about intellectual property in many ways. likewise on the other side of the factory downstream much of the value isn't the manufacturing and assembly that went into it but the brand value. i see intel and windows and the latitude name on this machine. this is where most of the value in this machine is created. this is downstream of what china inc. does today. will do it tomorrow but won't do it overnight and increasingly it is going to do it by going out and investing in companies where china is not well represented.

so the third thing i want to put on the table is china's outbound direct investment taking off from an extremely small base. we have chinese investment in north america in green and europe in blue. both are small numbers compared to the total value of foreign investment but clearly going through an inflection. we are living at the moment in which chinese firms are no longer just shipping across the pacific but ready to come across and the stakeholders in our communities. that brings extraordinary opportunity and challenges that politicians and our firms are working to meet today. not just in one or two industries getting cherry pick but manufacturing and services, high-tech and low tech. one of the most active areas is

electric utility which duke is in the center of this story of extraordinary surprise in chinese readiness to be an investor in an industry like that in the united states today. this is where outbound direct investments look like in the u.s. in 2003. handful of states. too many people in washington think this is where the story is today. this is where it was by 2007 and this is where it is today. over 300 -- $6 billion of yields being done growing at 130% a year. that says something about us, that we are open. something about china inc. that there's not enough money to be made in china. you want to put money at work at risk across the pacific ocean and the united states and the kind of market you never invested in before? something different is happening that we need to understand and make sense of. today will make a good down

payment on that conversation. thank you very much. [applause] >> let's go to liz economy. >> i was tasked with outlying of the social and political downside of 30 years of largely unfettered economic growth in china. what i would like to do is to highlight what i see as a side trend in social political dimensions. it will spur economic development and growth in china over 20 or 30 years but may be an infection point and transforming into obstacles on the chinese economy and will require chinese policymakers to rethink the balance between opportunities and challengess of

the trends that may present. i will run quickly through what i think our five overarching trends that will help set the stage a little bit for the panel for the end of the day to touched on those issues. for the first thing on would highlight is demographics and i am sure you heard a lot about this but i thought i would flesh it out a little bit. up until now china has been the beneficiary of the bed a graphic -- demographic dividend with more entering the labour force with high savings rates. it has been able to use these for fuel for economic growth in the last 20 or 30 years. because of the one child policy the demographic picture will change dramatically in the next 20 years. to give a few numbers by 2013 the number of people in their

20s will drop by 30% while 50 or 60 will increase by 60% and those over 65 will jump by 100%. what does this mean? the truth is the younger workers are generally the best educated who are the most technologically proficient and the most able to adapt to the rapid pace of economic change particularly in this globalized world. will face increased pressure on the health care system which as of now are ill equipped to deal with that. in an interesting point that nick made -- one of the great demographers who works on china -- what we are witnessing as a result of this one child policy is the transformation of the kinship structure in china.

we think of it as one child, two parents and four grandparents. no siblings. but it means no cousins and snow ands and uncles so the kinship of extended family that has defined chinese economic life for thousands of years is being revolutionized and we have to think about the implications of that. the upshot of the demographic challenge is you will have fewer people entering the workforce who will be able to drive the economy at the same time as increasing need to support the elderly. it has become in common parlance china will be the first country to the old before it is rich. the second trend i see as helping to fuel economic growth in the past and posing a challenge of the iron rice bowl

but the failure to develop a compensating social welfare net, it the out side of reform three decades ago the government of beijing believed state run enterprises and others of their economic burden of social welfare provide housing and education and general welfare for their workers. that was a boon to those enterprises allowing them to mfg. at much lower cost but at the same time the government forgot to replace the social welfare system with anything else. it has been part of the platform, harmonious society is no lot about directing these imbalances and developing special welfare nets but i would argue they have not made progress today but only in the past two years or so has started to invest in a way that might

make a difference and put out policy initiatives that might make a difference but the jury is still out. some discussions surround the fact that workers contribute half of their wages to pay into the pension and insurance fees and this suggests this could be burdensome. this is still in many respects in the development stage. what i find interesting is the issue of social welfare in the shoulders of china's wealthiest as well. they surveyed 20,000 people who made $1 million and more in assets and found 27,000 of those chinese had emigrated and additional 47% were considering

emigrati emigration. the most successful people in china today cited the same reasons for people are so concerned. they cited the health care system and education and want to have more children and clean air and are concerned about food safety. all of these kinds of issues. so the failure to develop an adequate self -- social welfare is difficulty achieving the rebalancing of the economy that the chinese leadership is focused on but also losing talent. the third trend i would like to point out is the issue of environmental degradation and pollution. it is clear that in the past few years this extraordinary economic growth has occurred on

the back of the environment so there has been very poor implementation of environmental regulations and laws. it has contributed to china being the low-cost manufacturing center of the world. you don't freeze your waste water but the bidding to the river next to the factory is less expensive. in the end what we are seeing over the past few years is the environment is beginning to fight back into the chinese economy and the chinese have done a lot of their own work on this issue and numbers are all over the place but in this environment the cost to the gdp of china from environmental degradation and pollution is roughly 10%. difficult to measure. no one knows if that is accurate but it at least means it is on their minds as a serious concern and there are public health concerns and social unrest.

you can barely open a newspaper in the united states without reading about another environmental protest weather in the rule areas or urban areas in china. and there is reputation. anybody who goes to beijing, the first thing you talk about is the pollution. it is constantly on the minds of people who go to china. 5 to pick the most serious thing when it comes to the environmental degradation it would be water scarcity and land degradation. if you don't have enough water to power your factories or water your crops you are facing hard constraints on economic growth. the fourth trend is the most overarching and critical and that is the limited nature of political reform. if we try to think of how this

fueled economic growth in two different ways, lack of transparency and official accountability and lack of rule of law allows for illegal land grabs and violation of internal and -- intellectual property rights for for product quality and all of these permit low-cost rapid development. not a be counterintuitive but china has benefited from these opaque and corrupt nature of its political system. the top-down nature of china's system has been beneficial as it has been for -- like japan and taiwan and south korea in the early days. because you have the ability to

allocate capital to target the developing infrastructure. china and to be in the innovation economy and maybe they, accomplish -- you were suggesting that part of the way china has done this is accessing technology and companies and other things that are abroad. it is clear from their innovation push they want to do that at home too that this demands openness and transparency, quality products and the rule of law to enforce intellectual property. in a survey of an entrepreneurs in china they believe corruption has only gotten worse over the past year and is very detrimental to the entrepreneur real spirit and economic activity. in the worst case the chinese

political system contributes to scandals or the crane accident or the loss of life in chinese construction. that is another issue chinese leadership has to grapple with more directly than it has to date. the last point is the rise of the internet. i think this is pretty exciting but internally china is one of the most exciting areas of change within the country and the hotbed of economic activity. how about -- i was reading a piece recently that was describing what was going on. it has eight hundred million products for say will and 48,000 products permanent, three seventy million registered users. really extraordinary what has happened in just a few years in terms of ecommerce. at the same time the internet is

transforming into a political system and bringing to the chinese people everything that it can't get from the real political system which is to say transparency, official accountability and the rule of law. i know i have gone over my time. i will simply conclude -- >> it has been well worth it. >> i will simply conclude by saying i highlight these trends because they have contributed to chinese economic growth but they may be at a point where they act as constraints to the chinese leadership to provoke a pretty serious rethink on issues as fundamental as the one child policy and system of government and distribution of investment of hard to soft infrastructure if they want to maintain its

growth. [applause] >> thank you very much. i want to probe a few areas and ask the audience to question you. can we start with this question of whether or not the official pronouncement of the five year plan or ideas being laid out represent continuity for the last week and or 15 years or represent a shift? you have written about the continuity the current five your plan repeats a lot of targets of previous ones and say this about the dynamic within china and explain the balance of continuity and change towards welfare, domestically towards quality of growth as meaningful or not. >> the jury is still out. this five your plan represents

an index -- intense fixation on the five your plan. there is an emphasis more this time around but i am one who looks around. i am less interested in what the targets are and what the promises are and more interested in the results of what he merges during the five years. that is why i say the jury is out. it goes down to the local level and it may play out differently from the targets. surge in leave the effort to improve the environment has been ongoing. the level of investment has not changed. it is 92% of gdp which places it in middle or low areas of developing countries. look at the investments and factor out the corruption that

will make that investment go to the wrong place and try to decide if you will see fundamental changes in the direction of the five your plan. >> there's a lot of continuity in the rhetoric in terms of what the party is about and what we are going to do next. you see a lot of the same themes with a change in emphasis on harmonious development. more emphasis on urgency and a whole list of things. where there is less continuity is more advanced parts of china recognizing there at the inflection point. growth as we know it has turned into diminishing marginal utility. you cannot any longer ring the same high quality and high rate

growth out of an economy when did get to $12 per capita. it is at lowest those cd levels. you cannot do it that way any further. in tangible intellectual property has to make a bigger chunk of growth once you get to that point because there is no more process of production savings to be found by cutting off all those other things china has done so we are at the inflexion point and we see the readiness of firms to deal with difficulties of investing and new assets abroad. in no small part because margins are starting to be not so exciting back home. we have continuity in terms of rhetoric and reality. we are already into inflexion territory and in the discourse in china there is some confusion

and divisiveness between left and right in terms of china doing what it needs to do to manage the transitional period. >> we have some chinese businesses in the u. s and you put up striking figures of chinese investments in the u. s. i know best in the launch of your report secretary lock said it is great we have chinese business investing in the states but there is an imbalance. we look for the day when the chinese open up to them. what is your reading of what he said? do you buy that argument? is there an imbalance? >> ambassador lock has tremendous experience with this issue. you could say because americans are multinational and ready to invest in china 50 years before china opened to foreign investment many of them were

born in shanghai in the 20s stalin was not a new story for america inc. when the 80s rolled around. is now $50 billion of direct assets in china. may be more. there's only maybe $14 billion of chinese assets in america. who is more open? it is an issue we can debate but what ambassador locke meant was the process is more straightforward on the u.s. side. much attention is given to the committee on foreign investment in the united states but compared to any other regime the system that the u.s. maintains is straightforward looking for national security issues 99% of the time. that 0.02 matters a lot but investing in china is not straightforward. it is much less predictable.

the interesting sing about this question is now the chinese firms in significant numbers are investing in america people will look at how the chinese regime works in a new way asking if there they parity between the way we treat companies between doing business. >> you wrote the world needs to ensure china represents the interests of others as it seeks to meet its own needs. how? >> in the context? i could have said that about so many things. >> you were talking about china's economic move overseas and how companies were globalizing. you were making good point about

multilateral system is. >> can i make one point on the previous issue? one of the difficult things in china is it is in the process of investing and developing rules and regulations and trying to figure out the studies and standards and that can make it more difficult for foreign investors so it will put out a kind of rule or policy announcement and innovation or whatever it might be. when the international pherae descends in response they will mutate and morph and things are applied differently from one locale to the next so part of the challenge in investing that china has to do with the fact that it is still in a period of transition as it figures out how to develop its own economy and that is not something -- looking forward. to date it hasn't.

in terms of chinese companies going out and living up to what they demand of others what i meant is we see chinese companies go into latin america and everett and asia, in many respects they are not bringing best practices about environmental standards and labor and safety standards you find a lot of these -- a lot of other chinese enterprises are bringing their own practices in this regard. hard to expect these companies will behave better abroad that home and yet that is what the chinese government asks of multinationals that they maintain the highest standards. not to say they always do but the chinese capacity is a little higher than the other developing

countries and initially they have a lot of leeway but more and more people in these countries are protesting this kind of chinese corporate labor and environmental practices. that was what i was referring to. >> the suggestion of how the chinese approach can be changed or influenced, you think it should be through a political level or business to business level? >> there are a lot of things china could do in terms of signing on to transparency initiatives and best practices but they are not ready to do that. it has to be both the political

commitment but also firm to firm commitment and perhaps things will change as chinese firms break into markets in europe and the united states where political capacity is much stronger and will demand higher standards. that may be another way in which companies attain higher standards and bring those standards to developing markets. >> one of the side-effects of china getting so much done in the last 30 years is in the commercial space one says chinese companies -- what it means is if you look deep enough into any chinese registered for new confined some regulatory corners that will cut and licenses and environmental impact assessment that was done by the mayor's brother and did not consider what we do.

it is one thing in china where the chinese network of relationships and political considerations provide predictability. whether they will be shut down by regulatory problems as soon as they leave that environment, as soon as they leave planet krypton and come stewart is a different set of rules. not necessarily the government will use that against them but short-sellers that will use the fact that they misstated what their assets are back home as a way to attack the trading of value of their equities. this is not something the chinese government can negotiate. you can say we will make sure none of our firm's of hundreds of thousands of firms have these irregularities embedded in their

corporate balance sheets. it is not something that can be handed over. has to be done by steadily improving the regulatory environment and standards in china over time. the only way to do that is not by some edict or slogan but by enforcement. giving courts the job of making firms obey their own rules and regulations and that is sincerely implemented. >> whether leadership comes forward. before we ask what is coming i wonder if we can't address an implicit idea because there is an implicit rivalry in the title of this session. we were talking about the book by professor seinfeld, playing our game, his argument is the model of chinese-american

rivalry is wrong. his argument is china is powering innovation in the united states and therefore a positive force in the new export market and a new partnership and his argument is based on the integrated nature of global production across boundaries. why don't you both say something about this issue of seeing threats or opportunity in the changes that are underway? >> it is depending on the beijing consensus, the alternative game that would explain why china has developed so quickly over a short period of time. i always found it to be silly. when i look at china i sought tariff levels dropped to 4%. i saw barriers to foreign investment that went from a mile high to the most open developing country in the world. there's no one$.5 trillion of

direct investment coming back to how we think about what ambassador locke said. it was a fairly i am a friendly approach to go go capitalism without learning the lessons of the left that the world learned hard way over 100 years. you do have to respect worker rights and the environment. these things will come back and those are bills that have to be paid over time. it is a very different conclusion one draws if you start with that in mind. >> it is problematic to pit the united states and china as economic rivals and the media in particular does a rush job on clean technology overtaking the

united states and get the president and congress all riled up. innovation will occur here and it will occur there and it will occur as to rod is discussed in partnership. enumclaw global challenges need to be addressed that it is the only way forward. it is the wrong way to frame the future of the united states and china and the rest of the world. >> we have ten minutes for questions and comments. do we have a microphone or do people just shout? tell us who you are and repeat the question if it is not loud enough. [inaudible] [inaudible]

[inaudible] >> bringing some of that capital back to our shores. >> a little more about -- let's go forward. increased fbi from china. >> $14 billion in chinese investment we have seen so far. compared to $2.4 trillion is nothing. it is nothing. that is not the bad news. that is the good news. that tells us we had extraordinary story right ahead of us if things stay on the track they have shown themselves

locked into. given where china is as a global investor total outward investment around the world is $300 billion. to 2020 given where china's gdp is going we have seen $1.2 trillion of additional chinese acquisition and greenfield investment by 2020 around world. how much could come to the united states? traditionally about 15% coming to america. whether america will be as attractive in 2020 as it has been in the past is up to us to decide in this country. you could have direct investors to the buyers' sale and buyer assets that can no longer be used productively or because this is the best economy in the world to be part of. which of those two narratives describe $300 billion of opportunity for the u.s. is up to our congress and leadership

and businesses to figure out how to get maximum american opportunity back on track. >> microphone coming to you. >> a bobble wholesale impact of china. forget the beijing consensus. the retail -- my economy is better than your economy. when does china translate its economic power as it escalates into the clout for how the global economy is going to work? where did they register those views and influence as they may bailout europeans what the conditions of the global economy imply for them to turn their interest from domestic to global? >> they have already started to do that. they made their voices known in the imf beginning in 2008 when they started talking about the

potential of no longer having global borrow economies but also making the international currency. it is forward. they started to shake the dialogue in any case. there is discussion going on between the united states and china on the international -- i wouldn't call it training but discussions and capacity building on this issue. shaping the global economy enormously. from all of their foreign direct investments throughout the developing world they are exerting it profoundly on the way that business is being done. exporting their labor. we may put transparency and good governance conditions abroad

that chinese put labor demands abroad. you have hundreds of thousands of chinese working in africa for example. there are lots of ways in which china is shaping the global economy. i could go across the board. china and australia, resource rich countries being fuelled. these are moribund economies and only china's economic growth that they have come back to life. it is the enormous. >> i agree with that. i would only add the ways in which china is impacting all of our economy is and markets comes quite a bit before china's willingness to take responsibility for how it is impacting those markets. it is one thing to say that without beijing accepting

international currency matters participation in china in a plaza accord or international alignment of currency or willingness to say that 4% of gdp accounts is too much, that was too much to ask of china but a soft commitment given where china is in terms of impact internationally. they are having this impact by virtue of private and state-owned company and impact on the world but as an official matter they're not there in terms of accepting international responsibility for themselves. there are two minds as to whether it is in their self-interest to accept those obligations as a major player. >> let me add this from a diplomatic perspective. two important divisions. there are reactive powers and proactive powers in the world. in traditional foreign policy outside its own region china has

been a reactive power and will remain such. the question is on the economic question whether it will go for a reactive to proactive power. the second question is the move from the a veto point to and action point. china has been on the security council but doesn't like using it alone. having confidence to use your veto is not the same as taking action. this is -- the new leadership has to embrace a serious way. because although there is no such word as stakeholder, irresponsible stakeholder has difficulty in translation but is responsible. i talked about the notion of responsible policy. one has to recognize the importance of political identity

but that notion of international responsibility existing for what you doing your own border that affect the international system is key. the dialog i had with chinese leaders suggested willingness on the economic terrain because of the nature of interdependence but we will see. one more question. who wants to come in? >> if you take the premise that diversity is as broad as it is good and a homogeneous nature of china and you think of africa and other areas where they need to go and particularly the united states as a melting pot how do you think you will impact their ability to be more of a world power beyond economic?

>> interesting question. the organization department launched its global 1,000 talent program to look at the borders of china to bring in the best minds particularly in the sciences but also around the world. i had a conversation last night. i don't think it has been successful yet. they haven't developed a soft infrastructure that makes it appealing for a lot of non chinese scholars and great thinkers to locate themselves more permanently in china to do their research but talking to somebody involved in the technology field. creative force who says it won't work because non chinese cannot understand china or the political culture. they are not chinese. i was taken aback.

there are two different minds in china about how much they want to accept from the outside world. has always been the case and how much they want to retain that is unique about the country and the same will hold true in terms of how they interact with people coming in to the country and how open they want to be to people in a globalized world and great for their country and being open and taking advantage of the best the world has to offer. >> china is arguably 94% -- japan is 99% japanese and there are 700,000 americans working for japanese affiliated companies in the united states. billions of dollars of r&d happening here and around the world. so i don't think the mere fact of being in china determines our

international reminded the chinese nation can be. there have for thousands of years been ethnicities and cultures represented in the greater china. some would argue 50% of china's territory is not classically chinese but more international baseline than many of us think. but i do think the power of chinese culture is so strong that it has taken time to get across the notion that other cultures in the world really need to be seen on a level playing field has things to be understood but not just relationships to be bought or built. chinese firms and coming into europe who say tell me who i need to partner with and talk to to get this done. not one relationship going to do it. not some relationship consultant

but understand what it means to employee and manager americans working in america. it will take decades or more to do that and you have to do it in brazil and england and anywhere else you want to operate. there are no easy answers. you have all the things you need to do with is underlying competitiveness which the world is interested in. you have to do the hard stuff which is not so easy even after 30 years. >> let me abuse the position of the chair. picking up this point i spent a lot of time teaching in business school and was released truck in the m.b.a. program at and the ph.d. program, determination of the chinese government and firms to sponsor chinese students to study abroad and repeat the experience in the uk. 80,000 students in the uk alone

which is an extraordinary commitment to understanding. it is important to understand china better. that taught us the value of learning mandarin. at a lot of deeper questions of what it means to understand history and culture and mores of the country. .. >> it's about more than a singular relationship of two or ten or twenty leaders at the very top of the society.

and that notion of a networked relationship between china and the u.s., preferably not to the exclusion of the rest of the world, is something i think is a really important theme of this conference. look, i think we've had a great start from the two of you, really grateful, and i think now we're going to have a coffee break. [applause] >> a very big thank you to this panel. dan rosen, to borrow a phrase from you with, that was a sizable down payment on the conversation. and, david miliband, you can tell all the time you spend on the international stage. your point will be well remembered. thank you so much. thank you. [applause] we're going to take a 15-minute break and meet back here at 10:00 for the next part of our conversation about china. [inaudible conversations]

[inaudible conversations] >> daylong live coverage of a summit on china's growth and influence in the world economy continues shortly. coming up next, remarks from american and chinese business leaders. all this taking place at the u.s. institute of peace here in washington. and we have more on china now yesterday at the u.n. general assembly, china's foreign be ministers told members he supported the palestinians' bid for membership and said the six-party talks on north korea's nuclear program were the most effective way toss retain -- ways to retain peace and

security. we will show you more on this forum when it continuesment -- continues. >> translator: mr. president, i wish to begin the current session of the general assembly. i am confident with his outstanding ability and rich experience he will fulfill this lofty mission. i wish to thank mr. dice for his contribution as president of the last session. i also wish to take this opportunity to extend warm congratulations to the republic of south sudan on joining the united nations at its 193 -- as its 193rd member. mr. president, ladies and gentlemen, the first decade of the 21st century is now behind us. during this decade the trend towards economic globalization gained momentum. countries became increasingly

interdependent. revolution in science and technology brought about profound transformation of the human society. on the other hand, various traditional and nontraditional security threats and global challenges were intertwined, and the world was far from a peaceful place. as the second decade of the new century begins, the world has entered an extraordinary historical stage in its pursuit of peace and development, and it continues to undergo profound and complex changes. facts to haves of -- factors are increasing despite the generally peaceful international environment. development is becoming an increasingly serious issue and promoting common development has become a more important and pressing task than ever before. global development is now at a new critical juncture. global recovery remains fragile.

international financial markets are volatile, and the pursuit of sustainable development faces daunting challenges. the world economy, therefore, has to meet the crucial tests of maintaining both. some countries in west asia and north africa are in continual political turmoil. terrorist threats are spreading, and global challenges are growing. the international community faces a critical test of haven taping stability -- maintaining stability. the gap in development between the south and the north is as wide as ever. the population living in absolute poverty has increased by 64 million due to the international financial crisis, and nearly one billion people suffer from starvation. meeting the u.n. millennium development goals calls for urgent actions. it is imperative to step up international cooperation to help the least developed countries meet the test of insuring basic living needs of their people n. the face of these challenges, we share an

important mission to achieve common development, and we also have rare new opportunities. economic globalization has made the interests of countries more closely interconnected insuring security through cooperation and promoting development through stability has become our shared desire. countries are addressing development challenges in innovative ways. to overcome crisis, developed countries have taken steps to improve their fiscal conditions, adopt stimulus measures and accelerated economic structural adjustment. developing countries as a whole have maintained good momentum of growth. in particular the rapid growth in some emerging economies has driven the growth of the world economy. progress has been head in the reform of the global economic governance structure, and various regional cooperation mechanisms are growing.

efforts to accelerate development of green economy and explore new modes of sustainable growth have created new momentum and space for common development. faced with both new opportunities and challenged, we should work as a team to overcome difficulties and pursue mutual benefit and common development. this is the responsibility and the mission that history bestows upon all of us. and to fulfill our mission, we need to take the following steps. we should foster sound momentum for global economic recovery. the underlying impact of the international financial crisis has yet to dissipate, and economic recovery is still fragile and uneven. we should intensify consultation and coordination and send a strong message of solidarity and win/win cooperation so as to strengthen international confidence in global recovery and growth.

we should work for a fair, just, inclusive and be orderly international monetary and financial system and increase the voice and representation of the emerging markets and developing countries. china supports the transition of the g20 from a short-term crisis response mechanism to a long-term mechanism of economic governance. the g20 should play a bigger role in global economic governance and in promoting the full recovery and growth of the world economy. we support the efforts of the emerging markets to explore new modes of international economic cooperation. we strongly oppose protectionism in all its forms and call for strengthening the multilateral trading regime. the concerns of the least developed countries should be addressed, and efforts should be

made to make the doha round achieve its development objective. we should lay the political foundation for cooperative development. all countries, big with -- big or small, strong or weak, rich or poor are equal members of the international community, and their equal right to development should be protected. mutual respect and equality are the basic norms governing international relations and constitute the important guarantee for common development. in the current context, it is of particular and practically importance to adhere to the purposes and principles of the charter of the united nations to uphold the authority and role of the united nations, to observe in good faith the principle of noninterference in each other's internal affairs and to promote democracy in international relations. we should respect the sovereignty and territorial integrity of all countries and the internal affairs of a country should be decided by it own people.

we oppose interference in other countries' internal affairs by whatever means and whatever pretext. diversity of the world is a valuable asset for the development of human society. it should be seen as a positive factor for countries to learn from each other, and it should not be used as an excuse for the small or the rich to ride roughshod over the poor. international relations, we should respect the right of each country to pursue the development path of its choice and respect its diversity of civilizations. and we should seek common progress by drawing on each other's strength within an open and inclusive mind and in the spirit of seeking common ground while reserving differences. we should foster a security environment conducive to stability and development. history has repeatedly shown that stability and development go hand in hand. without stability there can be no development, and without development there can be no

stability. in keeping with the requirement of the purposes and principles of the u.n. charter, we should always use peaceful means to settle international kiss piewts -- disputes and hot spot issues, oppose willful use or threat of force, oppose terrorism, separatism and extremism in all their forms and uphold the common security of mankind. china respects the independent choice of the people of sudan and south sudan and hopes that the newborn country of south sudan will enjoy stability and development. the international community should continue to give support to and encourage sudan and south sudan to properly resolve their outstanding issues through a dialogue on consultation, pursue amicable relations and common development and uphold regional peace and stability. china has encouraged sudan and

south sudan to solve their dispute through peaceful negotiations and has worked hard to advance the peace process between them, and we support the proper settlement of the issue. we will continue to work with the international community and their constructive role in pushing forward regional peace, stability and development. china consistently supports the just cause of establishing an independent palestinian state and supports palestine's membership in the uniteddations. we support efforts to achieve the two-state solution through political negotiation, first, to establish on the basis of the 1967 borders an independent palestinian state that enjoys full sovereignty with east jerusalem as its capital. we believe that progress should be made in parallel in the peace talks between syria and israel and between lebanon and israel with a view to eventually achieving comprehensive, just and durable peace in the middle east and peaceful coexistence between the arab countries and israel.

we hope that the international community and parties concerned will headache unremitting efforts -- will make unremitting efforts towards this end and sustain the middle east peace process. china is greatly concerned about the turbulence in west asia and north africa. we stand for the principle of noninterference, we support countries in the region in independently handling their internal affairs, and we respect the aspirations of the people in the region. we hope that the parties concerned in the countries of the region will resolve their differences through political dialogue and specifically restore stability and order in their respective countries. libya has now entered into a critical transitional stage from war and turmoil to national reconstruction. china respects the choice of the libyan people and recognizes the national transitional council as the governing authorities of libya and the representative of

its people. we hope that under ntc's leadership the parties will set in motion an inclusive ross of political transition, maintain ethnic harmony and national unity, restore stability as soon as possible and begin economic reconstruction. china supports the united nations in playing a leading role in libya's postconflict reconstruction and supports the united nations' support mission in libya in starting its mission as quickly as possible. china is also greatly concerned about the developments in many syria. we hope that parties in syria will exercise restraint, avoid any form of violence or more bloodshed and conflict and act quickly to ease tensions. we believe that a syria-led inclusive political process aimed at promoting reform and advanced through dialogue and

consultation is the right way to resolve the current crisis in syria. the international community should respect the sovereignty, independence and territorial integrity of syria and handle the syrian issue in a prudent way so as to prevent further turbulence in syria and its repercussions on regional peace. china welcomes the positive developments on the korean peninsula. we believe that dialogue and consultation are the only effective way to address the issues of the korean peninsula, and the six-party talks are an effective mechanism to advance the denuclearization of the korean peninsula and uphold peace and stability both on the peninsula and in northeast asia. china has been working hard to promote peace through dialogue and has play adieu anemic role in easing tension in maintaining peace and security on the korean

peninsula. china welcomes the recent resumption of dialogue between the dprk and the u.s. we hope that the parties concerned will seize the opportunity, remain engaged in die hog and work for an -- dialogue and work for an early resumption of the six-party talks. we should promote balanced development between the south and the north. the uneven development between the south and the north is the biggest imbalance in the global economy. without balanced development there can hardly be sustainable development. unless underdeveloped countries shake off poverty and grow their economy, there can be no common prosperity of the world. to attain the millennium development goals on the global level on schedule is an urgent and arduous task. developed countries should honor their commitment on official development assistance, open markets, reduce and cancel debt

and step up financial and be technological support to developing countries. international financial institutions should use their resources to help developing countries and particularly the odcs on the priority basis. developing countries on their part should explore growth models conducive to development and poverty alleviation in order to achieve development at the higher level. food security has emerged as a major challenge. the horn of africa is suffering from massive famine triggered by the most severe drought in 60 years. the international community should scale up assistance, stabilize the prices of food and other commodities and help developing countries enhance capacity for self-development so that all countries and regions can enjoy the benefits of common development. mr. president, the world witnessed major development,

major transformation and major adjustments in the first decade of the 21st century. during this decade china enjoyed sustained and fast development, and its relations with the outside world underwent profound changes. china's development achievements and its future course have become a focus of international attention. during the past decade, china's economygrew further, and people's living standards grew markedly thanks to the hard work of the chinese people. >> those remarks from yesterday at the u.n. you can see it in its entirety in the c-span video library. going back live, now, to the coverage of a summit on china's growth and influence on the world economy. up next, a focus on china's growing economic impact. we expect to hear remarks from chinese and american business leaders. and this is live on c-span2. >> we have a whole online audience watching us, and welcome to them. i encourage them to tweet us at

hash tag global china. i have my ipad, and i'll be asking some of the panelists some of the online questions too. now, let's just dive into our next discussion. um, there's a marvelous chinese expression, same bed, different dreams. [laughter] and it's been used many times to describe the u.s./chinese relations. so even in the most successful u.s./chinese business partnerships where they are in bed together, so to speak, there are disconnects between partners from two countries with very different cultures and very different languages. and as more and more chinese and american companies join together to do businesses, partnerships from the first and second biggest economies in the world, we hear more and more tales from the boardroom, from the airport

lounge, and we want to talk about some of those today. um, what's it like for an american to do business in china? and what's it like for those here on the panel who are chinese and doing business in america? what are the challenges? the u.s. is in great need of capital and new jobs, and are they doing enough to attract all the investment that was talked about this morning? so these, um, we have an amazing panel here to talk about these things, and i'm going to start right here with ambassador charlene bar shelf sky. she's the senior international partner at willmer hale in washington, d.c. where she advises firms on their investments and acquisition strategies. she served, as everyone knows, as president clinton's cabinet as the u.s. trade representative from 1997 to 2001. and among her many accomplishments she was the architect and negotiator of

china's wto agreement opening china's economy as a worldwide market. next to her is lixin cheng, president of zte cooperation. zte is one of the leading global providers of telecommunications equipment and devices. it has 85,000 employees and is booming. he is also the ceo of zte usa and has lived in america now for ten years. zhihang chi is vice president north america for air china. air china is the world's largest carrier by market capitalization with a net worth of $20 billion. born in china, he's a naturalized u.s. citizen and holds a u.s. pass port, and be i found this interesting that he is the only top-level executive at any chinese carrier to be considered a foreigner.

[laughter] john russell is managing director of northhead, a strategic communications and public affairs consultancy with a china focus. he helps foreign companies facing challenges of working in china as well as chinese companies working abroad. and he has lived in beijing now for six years. ming sung is chief representative for asia pacific, and he, too, has just arrived from beijing. the task force is a nonprofit dedicated to reducing atmospheric pollution. he has facilitated clean energy joint ventures with chinese and american companies and worked if formany of the world's leading energy companies. thank you all for coming. we're going to begin with charlene having some opening remarks and then just jump in and talk about, we have chinese executives working in america, we have a view from the ground from beijing, so you're in for a

treat. charlene? >> thank you. it's a great pleasure to be here today. i thought i would just pick up on the last panel and talk briefly about china's innovation policies and what that might mean for business operating in china. there are a number of challenges to doing business in any developing country, particularly as you're moving toward middle market development country status. there's typically fierce internal competition, a lack of transparency, idiosyncratic government decision making, corruption, state meddling, red tape, so on and so forth. each of these generic challenges is magnified in china because of its size and its importance to business generally. but if you add to those generic challenges a specific series of interventionist actions by the chinese government, particularly for businesses that have a lot

of intellectual property or a lot of technology, these challenges become maghame tied -- magnified. it isn't that there aren't extraordinary opportunities and many win/win chances in china, of course there is, but it's a much higher risk. as a policy backdrop, and this is, i think, very important for business to appreciate, policy in developing country matters. it often spells the difference between a successful venture and an unsuccessful venture whether you're competing against a state favorite or whether you actually have an even chance in the market. china has as a core national objective, as we heard this morning, to become an innovation economy. why is that? because it accelerates domestic growth, it provides china the value added that's missing in their chain right now as dan

rosen pointed out. they're a manufacturer, but manufacturing is not where the money is made. it's made on the front end, and it's made on the back end. it will lead to sustainable improvement in living standards and, in the view of the chinese, of course, help secure national security. but accelerated development in china is also critical to stability. china creates every year net 10-13 million new jobs. in the roaring decade of the '90s in the united states we created net 22 million new jobs, and that's over a decade. imagine the burden of 10-13 million net new jobs every single year just to absorb the labor force. but at the same time as that challenge exists, six million college grads are emerging from china, in china with no intention of working in factories for a living,

particularly when you think of a one-child policy and the pressures on those kids to succeed. and you add to that the importance of china moving up the value chain not only because low-end manufacturing has become more expensive, but also because if you're going to move to a consumption-based model of growth, people have to earn more money so they can spend. how do you earn more money? by increasing productivity. how do you increase productivity? innovation, innovation, innovation. so innovation is a core national objective. multi-nationals have been key to china's growth thus far. they're the single largest contributor to china's gdp even today. they still export 60% of everything produce inside china, 80% in the text space, and they -- in the tech space, and they provide managerial expertise and so on. but what china sees now is the

levers of wealth, the levers of value added are held by multi-nationals, not held indigenously in china or by chinese firms typically. potentially retarding -- and this is a common complaint in developing countries -- retarding indigenous innovation of technology and capability and, therefore, keeping a less developed country less developed. china's innovation policies have, thus, been clear for many, many years now. different scientific plans, bottom line is china wants to lead the second industrial revolution. it wants to be what america was in the first industrial revolution, and that is first outside the box. this is extremely ambitious and, certainly, merited in the case of china. but there are execution challenges. china is not fundamentally a

highly innovative first out of the box science country. it'll become that. it had been that up to 600 years ago, but it will -- and it will become that again, i believe, but it isn't right now. so there is a significant gap between china's aspirations and what it can indigenously produce inside fast enough with respect to innovation so as not to slow economic growth as this transition is happening. and what does that mean? who fills the gap on innovation, on technology, on intellectual property? the multi-nationals who hold it. and so what you see in addition to a robust going-out strategy to try and purchase technologies, branding those higher value-added components is a china that has imposed a series of domestic policy measures that make it much more challenging to do business.

mandatory standards, coerced technology transfer, very -- certainly, well, improving, but still relatively speaking weak intellectual property protection. aty of measures -- a variety of measures, including their indigenous innovation program which is shorthand for what's mine is mine and what's yours is mine purveyed for those sectors that have a lot of intellectual property content and a lot of technology content. and what does that mean for foreign businesses operating in china? it means not that you shouldn't do business in china, you most certainly should. not that you shouldn't find partner partners in china, of course you should. but you have to be smart, you have to understand the underlying political necessity, state necessity for bridging the

innovation divide and what that might mean for your business in the context of any particular deal you might do. >> well, thank you, charlene. i think when david miliband was talking about the tens of thousands of chinese ph.d. students at harvard and oxford, i think they're on their path to working towards innovation. i'd like to take advantage of the, um, fact that we have two chinese business leaders here who work in america to talk about tale on the road of working here. um, there's a lot of discussion about the challenges of working in china. how is it to work in america, and do you think that america's taking full advantage of the economic investments that could come our way? zhihang? >> air china, the company that i represent, has been in the united states for 30 years. we first flew to, um, jfk new

york in january of 1981, and in april of 1982 we started our service to los angeles. and back then it was either a weekly flight or maybe two or three times a week. today we have daily flights to jfk, daily flights to san francisco and double daily -- i just doubled it on september 1st. so that gives you an idea of how much we have grown in this country. i must say in the last 30 years or so, um, i wouldn't say that we have mastered, you know, the way of doing business here, but, you know, we have learned quite a bit through mistakes. and i think today in terms of navigating the regulatory

landscape, um, and the commercial landscape, operational landscape i think we are, we find this to be a very, shall we say, um, easy to do business place. we have our own challenges, and a lot of it is still about learning, especially on the marketing side, especially, um, some regulatory issues. >> what's the biggest challenge? >> biggest challenge for me, actually, is, our biggest problem is we don't have enough people. and by that i mean we don't have enough passengers. and that, actually, is not a, not a problem of our own making, and also it's not a problem of our partners here in the united states. but, actually, it's a problem with the united states

government. and to be exact, we don't have enough people who can travel from china to the united states. >> because? >> because of the visa problem. and to put it in perspective, i will give you some striking numbers. in 2010 we got about three-quarter million of chinese, in other words, 750,000 chinese who came to the united states to visit. in that same year, 1.1 million koreans came to this country. and, but if you put it into perspective, china's population is 27 times of korea's population. >> but the difference with the visa is it takes 120 days to get a visa in china, and in korea -- >> korean citizens don't need to get a visa to come to the united states. >> and they don't need a personal interview. >> of course.

>> this is a huge issue. >> it's huge. it's gigantic. and we're missing out. by we, i mean the u.s. since i am a u.s. citizen. [laughter] we're missing out big. congressman parker, ambassador locke's former department publishes this data every year. it produces two lists, just imagine two lists. the countries that produce the most visitor to the united states and the countries that, whose visitor spent the most money in the united states. when they visit. [laughter] on the number of visitors list, there is no china. by the way, korea is number eight. on the other list, spending, china is number seven. and you cannot find korea. [laughter]

>> [inaudible] >> what did i say? [laughter] >> you're blasting the u.s. government. [laughter] >> it's a business issue, actually. um, the -- because far and away the chinese visitor is the biggest spender. on average they spend about $6500 per-person, per trip followed by australians at about $4700 followed by the japanese at about $4500. so with about 750,000 visitor they pumped $5 billion into this economy. >> and we don't want them. >> we'll have to bring this up this afternoon with kurt there the state department. [laughter] >> i wanted to hear from you, what do you think is the biggest challenge? i mean, this visa issue, i'm glad you raised it, it's huge, but you've worked here now for a long time, and what do can you see as -- what makes it hard and

maybe even deters investment from china? >> the biggest challenge we have is that, you know, zte was founded 26 years ago with seven engineers. so now we have 85,000 employees worldwide doing business in 140 countries. and more than 50% of revenue actually comes this from outside of china. so it seems we have, now we have become multibillion, multi-national companies, and so my biggest challenge that, you know, it seems we've figured out during the past 26 years and how to be successful and effective competing in a global stage, and how we can also successful in this market, one of the largest, you know, telecom markets left in the world. so how can we bring our, you know, creative, comparative and

high quality product at a very low cost to the united states? so i think that's the biggest challenge i have. so zte has been doing business in the united states since '98. and until now we have spent about $10 billion u.s. dollars on american soil including four billion paying the u.s. technology companies including royalties for the rpr and high-tech chip -- [inaudible] so zte business mod mel -- >> and do you find it easy? i mean, do you find it easy to compete here? do you feel like america's welcoming to chinese investment? >> i will go back to dan rosen's report, you know, america open-door policy. and i feel like u.s. market particularly in the sector we are competing as telecom is more or closer than china.

>> more closed? >> more closed. >> uh-huh. >> so, for example, china you see the foreign vendors in the telecom sector, their accumulated market share for infrastructure is more than 60% still today. so for the 4g, foreign venn to haves -- vendors may have 90% market share. when you negotiate the wto agreement with china, you know, i think that is one area, you know, was focused, introducing cma to china. and for 3g foreign companies still have about 50% market share. so with that, and china benefit from this kind of competition. so now today china has 1.23 billion, 1.23 billion telephone users including wired and wireless in china, one of the biggest user base in china.

so, actually, we as zte, we have a model calls acw. a stands for america. we leverage our americans, so we pay technology and buy technology from the high-tech company like qualcomm, intel, microsoft and texas instrument. so c stand for china. so we leverage, also, chinese effective engineering, resources and low-cost manufacturing base. then we integrate this into w, worldwide market. so i think this is win/win/win situation. so, unfortunately, until recently we cannot bring this kind of product into the u.s. and serve also u.s. market. >> you can or you cannot? >> we cannot. >> and what is stopping it? what is the block? >> i think the key thing is this .2% as was mentioned is the

so-called national security. so i think there's a lot of media coverage about this very interesting project we're bidding on last year for sprint nextel. so we, if you go back to "wall street journal" last november, there is good article talking about that. >> or washington post? >> yeah. [laughter] washington post also. [laughter] and so i expect more positive news coming from washington post. [laughter] so i think that's typical example. i don't want to go into details, but zte was ranked in the evolution process, number one in technology, number one in commercial offer, number one in financing offer. but end up we couldn't get a project for different reasons. >> different reasons meaning what? political reasons? that it was a chinese company? >> yes. we understand, you know, the sensitivity of the chinese/u.s.

relationship impact on a business. but zte, you know, is a company public-traded on hong kong stock exchange, and we have no government influence on ours. so our ownership structure is on par with most companies. we have about 20% shares owned by european and u.s. institution investors such as fidelity, morgan standly. and we -- stanley. and we also, you know, have a board of directors including most of them independent and one u.s. citizen. timothy steiner also sit on our board. >> does anyone else want to jump in here about this issue? because this is a big one. i mean, there's this, on one hand, many states need foreign investment. on the other hand, you have politicians and others not wanting china to own too much of

america, very similar to the '80s when they were worried about japan buying up america, and that went away, and there was tens of billions of dollars worth of investment that followed. but any other thoughts about that? do you see it ebbing? do you see it -- >> i would say we've got more of it. i pick up on david point on investment because we work with dumping cases here, bress ls and -- brussels and in canberra, but also dealing with all the challenges of business there. and we have someone who had their factory close with the a week's notice a week ago. and, you know, there are challenges both ways. but the simple thing is it's pretty prickly here because chinese are moving into material markets where you have steady kind of state competitive situations, and they're literally upsetting the apple cart. and the united steelworkers and

all these groups just come out of the woodwork with the interest group politics to initiate drive. anti-dumping cases and countervailing cases. so it's tough both ways. and it's charting a course. and i think china will go through a lot more grief in trying to invest. to give you one factoid, despite all the, um, hype in the media china has less non-bond, non-equity investors -- less here than a comparison -- there is more chinese investment in real economic activity in australia with 21 million. it's a mid-level economy, it has as much of all of europe and 25%

more than the u.s. and, actually, china's not even in the top ten investors in australia. the brits, the americans, the japanese, the koreans and all this. so we're still seeing -- until china can produce jobs in this country as happened with the japanese, the koreans, there will be issues. >> that's very interesting. ming sung, what do you think of this? in today's financial times the ceo of coca-cola had an interview, and he said in many respects it's easier to do business in china which he likened to a well-managed company. easier than the states. he said you have a one-stop shop this terms of the chinese foreign investment and local governments there are fighting for the investment. does that surprise you? you have worked, you work and live in beijing now, you've worked for american companies, international companies. i mean, how do you see this

issue about -- >> that really doesn't surprise me because from my viewpoint that's a personal experience as well. anybody said it's an open, transparent process i would really beg to differ because it is not. from my experience. it's very difficult to understand how they think, and they don't have to justify -- >> this is the u.s. government process of approving direct investment? >> right. and for chinese investment into united states, many times as he's saying that he's not related to national defense, yet this plays in the committee. and that kind of thing is, it's very difficult for chinese to understand, very difficult for americans to understand. why is it that way? whereby in china even though many of the processes it's not

open to non-chinese, but if you have chinese employees, you have people that understand how the internal work -- >> that's a pretty big if, though, isn't it? >> it's not that difficult. >> [inaudible] [laughter] >> looking at here you have one sitting there, chinese citizen, and she can put a lot of insight. i myself as american, but i feel i understand quite a lot about chinese business. and a lot of times i put these business executives together, and one of the few that i happen to advise on both ends. so for u.s. company i advise their executives, and i serve also as adviser to chinese companies. >> perfect. okay, let's hear the advice. so what's the advice here? >> well -- >> okay, who are you going --

first tell us how you advise the americans. >> the first advice i will give to americans will be when you looking at china, their system is more to -- [inaudible] texas. back in texas 20, 30 years ago is shake hand, you understand forget about a lot of law. the legal system is still, it's only worth the piece of paper you written on. it's really that you trust the people you're dealing with across the table. so i normally advise american executives you sit down with your counterpart, you look them straight in the eye. if you can trust each other, you like each other, let's go. if you don't, go find another partner. be the second advice i would give is to choose those repute

bl -- reputable companies that you want to deal with. there's plenty of companies out there that you can work together. and those, those will be the beginning. and you do want to have somebody on the ground in china, if let's say american companies do business in china, you want somebody on the ground. because situation change very fast. so as in united states. >> right. >> if you're not on the ground, there's lots of changes. >> right. >> and you can't really react quick enough. >> so there's good and bad chinese partners that american companies should have. they should look them in the eyes and find ones they're more comfortable with. i presume transparent, there's a lot of talk about corruption this morning, but there's good actors and bad actors, is that what you're basically saying?

>> yeah. the laws in china is very straight, and you see in the news of them got caught and capital punishment. it's not -- >> like texas. [laughter] >> economic crime is not capital punishment. [laughter] you believe, you know, why you keep somebody lifetime in jail? get rid of him. [laughter] so that that's -- >> well, just briefly then and we'll move on to the panel, and your advice for chinese doing business here or doing business with americans. >> well, i also advise chinese companies working in united states. so i usually advise the senior leaders, be respectful for the u.s. business practices especially the legal system we

have set up. you can't go by these state legislatures and thinking everything will be hunky-dory. it's not going to be that way. you go to jail for that. so those are the things that i advise both ends, and they really need to understand how things are done. >> charlene, i just wanted to hear from you, like, if you could do one thing to take advantage, um, right now of chinese investment, what would you do? something that would, some fix, um, that would attract -- >> if i could do one thing generally for the u.s. it would be to change the visa system which is entirely irrational. [applause] somehow the united states has an aversion to smart people. [laughter] so if you go to school here -- >> and wealthy people. >> you get your ph.d. here and then we say, good-bye. it's an irrational system, an irrational that chinese business

people can't readily get business here, the chinese officials can't readily get visas here. i think we've taken a principle developed after the unfortunate events of 9/11 and expanded it to cover situations to which it should not pertain and does not pertain. i think if i could change one thing about doing business in china or doing, or chinese doing business here, chinese doing business here i think that the vast bulk of chinese investment in the u.s. is easy, it requires no approvals, no filings for national security. even those that are filed for that reason typically are approved. there are very few transactions that are turned down under the cfius process. less than 13 in the last five years. unfortunately, some of these have been chinese.

and i think the lesson for china is, first of all, start smaller, not huge. i think, second of all, to understand the regulatory process in the u.s. better. and i think most chinese companies do. i think, third, to be flexible to find solutions for investment problems which can be worked out with regulators and with the executive branch. and last, to partner more often with american companies which then help provide additional credibility to the chinese entity, but also some greater comfort with respect to national security. >> and do you think john is right that when the investment is followed by actual creation of jobs, that that would be a more welcoming political atmosphere here? >> i think that's always very, very important. and certainly as we invest abroad and create jobs abroad

so, too, when china invests abroad, it ought to be creating jobs abroad for those national workers. not for chinese workers as is often the case in africa and other places where china is at. i think if i could change one thing on the china side of investment, it would be further liberalization of its investment catalog. china classifies all investment opportunities in one of three ways; permitted, restricted -- which may mean maybe yes, maybe no -- and prohibited. the prohibited category has slunk shrunk over the years, the restricted category has shrunk over the years, but just as the u.s. has sensitivities with respect to certain areas, china has many sensitivities with respect to certain areas where your investment prospects are much more uncertain. and so a further liberalizing of

that regime, moving the rest of the restricted and prohibited toward the permitted category, would be very welcome. >> very interesting. i'd like to go back to this tales of the road idea about same bed, different dreams. when we were talking backstage, several of you were talking about how, you know, there are cultural differences, um, and i just wanted to hear from a couple of you who work so closely with americans, um, about what's it like and kind of do you have any little stories you can tell that kind of show how there is, there are challenges of these joint ventures that we'll be seeing more and more of? >> well, i will first follow up on your comment. that you quoted from the coke guy. >> right. >> and i will make a general comment that i think in general china is getting easier and

easier in terms of doing business. china has become more, more open for business. i think the u.s. has a tendency of becoming less and less open for business. you know, you will find -- >> in general or to china? >> in general. especially when you talk about chinese companies' experience. they will find, well, actually, you know, we came here, we thought this would be so easy, everybody would, you know, welcome us and when we invest money, everybody will welcome that. actually, they found that's not the case. i mean, there are so many regulations, there are so many hoops that you need to jump through. and there are all these, you know, non-business, non-commercial related issues. now, if you look at china 30

years ago when it was opened up, that was a very ideological society, that was a very ideological regime. today it's very practical. and getting back to the specific issue of getting a visa, 20 some years ago when i fist came to the united states -- first came to the united states, my challenge was to get a chinese passport. getting a u.s. visa was nothing. but today it's the opposite. getting a chinese passport is so easy, so easy. you file a piece of paper, you get it in two or three days. back then it took me two months to get my passport. and why? it's open for business. they're trying to make it easy to -- >> and you had said that even ten years ago there wouldn't be chinese panelists in a forum like this. >> no. >> things are changing quite rapidly in china -- >> very rapidly. if you think about it, i, i'm sitting here representing a state-owned enterprise, a national carrier.

big deal. we fly hu jintao around. and yet they put an american, you know, american guy in charge here in north america. of i mean, that says a lot about china, about chinese companies. >> about how things have changed. >> it really has changed quite a bit. in terms of creating jobs to your point, or to your point, ambassador, of course we create jobs. today we have 19 777 dreamliners on order. they're american-made airplanes. and we want to fly them to the united states if we can, if chinese folks can get visas. [laughter] and if boeing ever builds the dreamliner. and today the top dog, the top job in this country is -- [inaudible]

okay? and i bought a building in el she gun doe which is right by the airport of los angeles. i spent about five million. that's an investment. and with that i opened a reservation center for the entire north america. i added 30 people. >> americans? >> americans. so, yes, the writing is on the wall. >> i think talk about the jobs, you know, since i take this job about a year ago, so i have hired about 186 new employees to zte usa. and 83% of them are americans. so, of course, we have to send some expert from china, but i also have a kpi, you know? my bonus is tied into -- [inaudible] rate. i have to achieve above 70%,

otherwise i will not get bonus for my job. but i would like to share, you know, couple of stories regarding to the culture and also back to the coca-cola's recent comments about chinese government one-stop shopping whereas u.s. has too many different organization dealing with. and i think the key things also coming from culture. and in china all government levels from central to local they have a dedicated organization to focus on investment in those regions into china and different regions. for the chinese companies, they're used to that kind of government. in china when they come to the u.s., they get lost, right? because on one side they have nowhere to go. say someone come in to hold your hands, go through all the things, you know? there is no such things. so fundamentally, because of two

systems are different. good or bad, i don't know. probably china has to do less and u.s. has to do more. >> the business opportunity for someone to negotiate. >> yes. >> so i think that's very important. another aspect is also cultural difference and also different role and practice. for example, where i was moved, relocated there china to san diego, california, about ten years ago by our european country when i was working for them more than ten years in china. so when i come here, they gave me training. the first week i cannot go to office, but it is closed training session. once i still remember, remember, mr. cheng, you know, when you have a meeting with a female employee in your room, office room, you will never close your door, okay? so why? because there's a risk you put yourself and the company in a

risk of sexual harassment which is a big thing in the united states. right? now, of course, i understand it now, you know, after working, living in the united states for ten years. but that's big things. i mean, there is a lot of this kind of small big things in the united states which is different. [laughter] from china. and so, of course, you know, when -- how we going to, you know, adopt local practice. and that's very important. as our founder and the chairman of zte said, you know, for zte we have to think globally and act locally. i think that's very important. that is also my advice to many chinese company want be successful here. so i have talked about our challenge in united states, but the key things for me, i think, still on our side is communication. so we have to make sure, you know, the u.s. government,

business community, political community and everybody in the united states about our intention to come here, why we come here, you know? we as zte as company here, we come here for business, for market share, for making money, for create job, be part of the local community, part of local economy. >> and how do you think that communication could be better? i mean, is there a better message that could, should be coming out, and it should be coming out from the businesses or from the chinese government? is. >> if washington post can organize more meetings like this. [laughter] >> yeah. i think this is very good because why i make effort, you know, to come here. where often, you know, i meet new friends here, they always ask me where are you based? i say this is very complicated question for me because we are operating in nine states in the united states. fourteen offices. so i live at 30,000 feet. so my family is living, you know, san diego, california, but

i travel every day. so i think, i make effort to join this event, and because it's very important to convey message who we are, what we want and what we are doing here. i think that's very important. that is also my advice to the chinese companies when you come here. don't just complain to the united states government because they are doing nothing, right? compare with china government doing everything. so you have to do this by yourself in order to achieve that. so as i said, you know, since last year our business in the u.s. has been doubled, more than doubled. and we will continue this trend for this year and the couple of years come. as we speak, you know, if you go to best buy today, you will find the best price and the quality android smartphone come from zte. it's below $90. so who can do that? we will see this as we bring the value, gradually we're

recognized, although it's not fast enough. and another advice is that, you know, we should more focus on the state level, the local government in the united states rather than federal government because we are talking with them, they will be more business-oriented rather than federal government's more political-oriented. because we care about tax, about jobs more than d.c. so i think that's also advice, you know, i've given to the chinese company who come to me which is also our experience in the united states. >> that's really interesting. john wanted to say something here. >> i just wanted to raise the issue of, um, most of the discussions tend to be about the external challenges of american companies, the external markets, how the government manages and the touchpoints of companies, and same here. i'd like to just raise internal issues within a company.

because over the years of just working with various from resources, oil through technology and fast-moving consumer goods you tend to see what works and doesn't work. and the one, just -- and an old friend typified it is working in one of the large fast-moving consumer goods companies. in fact, i think they're the largest. and he'd worked in europe for many years, and he said, you know, it's -- the challenges of managing a company in china have their own points. the average age for our company in europe is 44, 45. the average age of time in the company is 14 years. i go to china -- because he was running asia pacific out of singapore -- the average age is 29, and the average time in the

company is less than two years. because they're growing at 30-40%. so those companies have, yes, they have the same vision, mission and values and all this, but they're very different organizations. there's much less glue. and they tend to be then more prone to crises, they have compliance issues, there's a whole range of issues. and then they're operating in a market which is rapidly changing labor, environment, activist industrial policy, and really if you look at the way the chinese government operates, it puts great pressure on companies on how to adapt and get the most out of the churn in the economy and the opportunities. just to give you an example, three years ago there were, there was in the food sector scandals over milk powder. there was 1700 dairy and dairy

food companies in china. they've closed down 600 in the last three years, and there's five companies now have 70% of the market share. so you're dealing with a whole different beast of how that market operates. and you should go through paper, steel, even the car companies we have 82 car companies producers in china. so that's come down this -- coming down in the next five to ten years of the government's plan to 10-12. then there's a big discussion. happy times are there, 18.65 million cars last year, 67% growth. but how will it wash out in the next ten years? so the challenges are internally and then dealing with the right of change which has its own

challenges which are not seen, certainly, this europe and even here, that pace and churn of change in the economy. >> i suppose that profit will trump everything, but, um, i'm very interested to talk about it's not just age differences when these companies get together that they have approach differences, and i forget who said this to me on the panel, but they were saying it all goes back to the pacifier, the baby's pacifier. that in america, you know, they make a big deal with a little baby, they slowly kind of say, oh, just one hour, and then put the baby to bed, and they go over many days to try to get rid of it. and in china -- >> we talk about that. >> who do they put on it in china? they just put something that tastes horrible, stick it in the mouth, and that's it. >> can yeah. [laughter] >> it's just a very different approach, and so these joint ventures, there's friction. and so there's age differences, there's approach differences, but i suppose in the end that if you're making a lot of money,

this is the future. >> that is not saying that chinese parents does not allow their child to -- [laughter] they get too much attention, right? one-child policy, you know, one child only gets six adults' attention. so, but i think, you know, when mary talk about this story because i, you know, i live both sides. i have this kind of comparisons, reflection in my mind every day for these kind of small things, you know? the pacifier is very clear. but the love to the child, it's different. in the united states and in china. right? so i think that's very important. it's come to that model, i feel, of how are you going to deal with someone come from different cultural background, a cane from different -- a company from different cultural background or in your home country i call it the float and anchor model. so when you're looking at, on the sea surface, there is a float, you know?

a red and white. so the float is going to go to different direction, follow the wind. and blowing over the sea's surface. a lot of people didn't see that under the sea level you actually have a rope connecting the float with the anchor which is sitting on the floor of the sea. right? so, and i see the float is a behavior of the individual or a company or a country. and the rope connecting the float and the anchor is really the attitude and the openness of a individual, a company or country. the anchor is really the belief or the culture in deep of a individual j. so are we an -- >> so are we anchored forever? mign sung, are we anchored forever in these cultures? >> my feeling is we are emphasizing the differences, but

we really need to look at what's in common. really the parental love is universal. now, our behavior may be a little bit different and our various system may be a little bit different. same as businesses. if you look at, okay, we are in it together, let's go make money, that is universal. and then how do we behave a certain market? i used to work for a company operating in 130 countries. and that -- in the united states everybody feel that's american company. it's not. and, but they behave such that they abide all the laws as local, and you just don't think -- >> who, the international company you worked for? is. >> shell oil company. >> it's royal dutch shell. it's not american, but in united states most people think shell is as american as any.

and for those companies doing business together whether it's two countries together or multiple countries together, just behave, you know, you have the same goal, but behave locally. everything will work. you respect -- don't try to change a country. it isn't going to happen anytime in that person's lifetime. >> and so what do we have in common, would you say? >> what is in common that, you know, if you look at let's work together, this is what the strengths of these two companies added together and usually added is more than the sum of the two. >> right. >> and you go get a business either in individual marketplace or global marketplace. and that, look for win/win/win solutions. and that is usually the best way to get things.

i've been profit when i first came to china, they always look at, gee, how do you make money? i'm a nonprofit, i'm not here to make money. so it takes a while to overcome that kind of barrier, but in united states, you know, common wisdom says china is going to steal our technology, steal our jobs, steal our money. for that conventional wisdom is not true. there are many companies i've put together. for example, i keep going back to duke and working with the german -- [inaudible] providing microbiology, micro-algae technology taking chinese micro-algae eating some of the pollutants that goes to

the air, one is co2, and it's a win/win on both ends. retaking that technology, if it works well, we broadcast that technology, conquer the world with it. that is good for the world. i think that kind of thing that we ought to put more together, make it work, and we're here to accelerate our organization to help accelerate these clean technology. and a lot of people in the world feel that clean technology competition is a zero-sum game. it's not. the market is so large, there's so much you can get. let's work together and multiply these technologies to be used. the whole world will be better off -- >> right. right. >> and it's not that if i get this, you lose, that's not the case. >> um, i'm going to ask the

audience if they have any questions, they can go to the mics or raise their hands, and we're getting a lot of interesting comments and tweets online, and i'll just share a few with you. some of the people are talking about some good examples of joint ventures and some ways that one plus one' qualls -- equals seven, just what you were saying about, there's a lot to be said about unite -- but also several people have brought up the point that when they do business in china, they're very worried about surveillance, digital surveillance. in fact, there is a story on the front page of the paper today that talks about, um, how many business leaders actually don't even bring their laptops or blackberries to china because electronic snooping is so ripe. they're, apparently, particularly good in china about somehow stealing your context, e-mails and information right off your ipad and phones, and they quoted a senate aide as saying the constant fear of electronics snooping is corrosive. we go over there trying to establish a working relationship, but the kind of

paranoia you have to go in with and the things you have to worry about, it poisons this relationship that we're trying to establish. any thought abouts about that? >> i think this is a very difficult issue. i think it's very difficult to handle in china, and i think it's very difficult for the u.s. government to handle. i think there is a very high degree of paranoia with respect to digital surveillance. ..

you've got is very definite sensitive, running alongside that parallel is an incredible,

vibrant free and easy media seen that is tough at the business level to get a grip on and handle, particularly when you're dealing with social media, and it's, i typify it has been, working with an envelope. if you at the edge and you want to write issues of human rights, tibet, taiwan, then be very careful. you're going to the difficulties. but if you are operating in the sense, and its normal business, and the nature of immediate is there, they are strapped for money. the government has cut other subsidies at all the different levels, and then you've got these guys and immediate is coming down. steel huge -- steel huge, two

and a half thousand tvs and such. that they are desperate for money. so content with advertising revenues, and you also get this trend wherein they, if you are in the center and a you're a journalist who gets coffee and so on, and if you can't write about all those, you can't criticize the vice minister and so on. then fair game at the multinational who are operating in there, so you have to have a very sensitive and a well-oiled machine to deal with reputation issues in china at this point in time. >> that sounds like it's changing, too. okay, we're going to take some questions from the audience.

>> hello. my name is jane. i'm from the johns hopkins university. i think elizabeth, economy pointed out in the previous panel there has been a lack of willingness from the chinese company to bring practices when they go overseas. i wanted to ask mr. cheng and also potentially the other panelists what your thoughts on this. i know ct is influential in africa and some of the other emerging markets. internally does zte sort of have a universal approach to overseas markets, or in terms of law by any and all that? or is it very much dependent on the specific markets you're talking about? thank you. >> yes. as i said, zte as -- [inaudible] globally and act locally. i think this fundamental right

in principle are doing business in united states also. so, actually i hire locally here. i have lived in united states for more than 10 years, and i just joined zte about a year ago. so that is effort, and trying to do differently in united states. but if you're looking a global basis most of different country manager for zte is coming from headquarter. still today, majority of the chinese company going overseas is similar way. so this is -- [inaudible] you know, to hire a local people to run a local business here. as i said, the intention is good, but not necessary guarantee that all practices local. because it goes long way. i talk about challenges, which

has come to occasion to market site, to the community, outside. also challenge we have to communicate internally, you know, to make sure the guys in headquarters and who supporting you also understand that. so this kind of practice will go into the overall process, you know, the way of walking, the way of indicating internally. for example, since i joined zte i said the walking language in the united states is english, not chinese. okay? so it's very hard to implement it, but now it's going better. and also is good impact back in headquarter. headquarters -- >> are there penalties if you didn't speaking chinese? >> but we were -- you know, very interesting. mary, you sound like you read

our inside e-mail. [laughter] we do have some, you know, ways that if there is an e-mail, or is american does not man drink and he or she received e-mail, only in mandarin chinese, he or she can complete. so then the guy generates it, you know, has to improve that next time. so i think that's good things. we also have at headquarters, all the documentations, english is much. i think that's a good way, you know. doing it the first step. but in general speaking, yes, there's a long way for the chinese company to go, to do that. but there's no difference compare chinese company or european companies. because where i joined in european company in 1982, and most of the language is not even

english, right? so different language which i don't understand, i happened to the only guy sitting a management team, but i am fast learner. very soon i can join the conversation. >> i can tell. i want to take a couple quick questions and then we'll head into a brick. does anyone have a quick question? >> my name is mark with homeland security. so mine might be more narrow, but broader. the whole nature of this panel and this seminar is about economic development and technology, as opposed to something in the alternative, looking at issues. so being very micro, issues like private public partnerships in security, not along the lines of what the panel was talking about, but response to natural disasters, aviation security,

things that you -- not just on best practices but go to the issues of lessons learned. candy be an exchange between what the united states is going through, or what china has gone through, with regard to border or aviation or natural disasters? these mudslides of a few years ago when first responders were killed in china didn't learn from what we went through in 9/11 with the first responders having died, in terms of communications. we focus on the key of i.t. and not the eye, the information. can there be lessons learned between the two countries to form and different alternative way of looking at investment and involvement between the two countries? >> i think that's an extremely amount of dialogue between the u.s. government and the chinese government, and between state governments and their counterpart chinese governments. and there's extraordinary amount of information exchanged, working groups, including things like natural disasters, disaster

response, things where cooperation makes sense, lessons learned, makes sense. that's ongoing work. actually uss many countries around the world and many countries have with each other, some of which is to the u.n. and other international organizations, some of which is bilateral or plurilateral among groups of countries. so what you're talking about, there are lessons learned that are exchanged. they may not be followed, which may be what we saw in china, fortunately. or in the u.s., in the reverse. katrina is a good example. but that kind of information exchange occurs. >> one more question. >> with china news agency. this year also marks the 10th year anniversary for china's entry into the wto. so my question is, what are

gains for china lacks the united states? and u.s.-china businesses over the past decade? thank you. >> i think just look at the growth rate of china and juicy and immediate gain, wto accelerate that rate of growth, broad and it deepened it, and the beneficiaries of that growth have not only been the chinese people with respect to living standards generally, but the businesses that you see here and around the world. you see much higher degrees of intraregional trade now with china's wto, that's a good thing when you consider the concentration risks that was always faced by asia on undo all lines, on the u.s. market at the market of last resort. that reliance has diminished somewhat, given the state of the u.s. economy, that's a good thing for global growth, not a bad thing for global growth.

i think you see a china that has become far wealthier certainly at national level, 3 trillion plus in foreign exchange reserves which is a third of the global total, which is an indication, extraordinary transfers of wealth from the west to the east. so i think that for china this has been very positive. i think for global growth it's been very positive. i think as a backstop in recessionary times, we all receive the importance china plays as a stabilizing force. i think the challenges are many, including a country that is rooted now in a global system but rooted also in a system that is much more china focused, less globally focus in terms of overall responsibility, and agenda setting. and you see that in issues like

the exchange rate and so on. but i think there can be no question but that china's succession has been a very substantial net positive for all the parties involved. >> i just want to in now with asking each of you very briefly, looked 10 years from now, just want you to describe you think the u.s.-chinese economic relationship is going to be like. very briefly. is it going to be very different from now? isn't going to be better? isn't going to be worst? >> i would say it's probably increased collaboration, and shortly we will make more money. -- jointly we will make more money. i think we have got to learn more from each other and become really a global company together. >> so china and america inc.? >> yes.

>> i would put an aspirational aspect on it. i think actually there is good policymakers both sides of the pacific. but it moves to a much more integrated relationship. at the moment the trade deficit is too high on one side, our trade -- >> by 10 years from now will it be better? >> i think if it opens up in the right way, compared to the european relationship where each employs about the same number of jobs in each part, they have a push-pull effect on each other, or have until the latest downturn. there is a kind of comfort factor with both sides as far as investing, operating. obviously, everyone has national interest to both both national interest kind of narrow down. you can get that integration of

investment, trade, and jobs more imbalance. because they are not imbalance at the moment. >> but they will be in 10 years? >> it will take that long. >> i am entirely opposite. i think 10 years from now the u.s.-china relationship will be better, much better. and i say that because fundamentally i think the people now generally get along. america's -- americans and chinese jenin like each other if you think about it. we never miss out on an opportunity to sit down and have a meal and have a drink. we both care. we both care for our family. we both worked very hard. we both want to get things done yesterday. and, you know, we all want, we want education. we have a lot in common. so i am very, very optimistic. >> i agree. we are very optimistic about the

future, u.s. and china relationship. and also the business between the two great countries. and i will savor zte, our market share in the united states will be a part in other part of world. and i also expecting more and more companies are adopting this model, america china, worldwide. and i believe that will be a win-win-win situation for the u.s., for china and also for worldwide economy. >> last word? >> i think that at national level both governments will continue to do what they do now, which is managed each others' expectations and manage tension. i think it's important for china to increase transparency, particularly on security issues and to let its intention be more transparently known. i think when it comes to

business they will be intensified competition as china moves up the value chain. and that means they'll be intensified friction. you would expect that. the trading relationship is very large now and it's going to be much larger 10 years from now. and i think that chinese and americans will continue to share one common feature, and that is being pragmatic, bring extremely practical, and that will hopefully form a foundation for a strong underlying relationship as these serious tensions are managed. >> well, thank you very much. [applause] >> there's obvious a lot more to say here, and we'll pick up the thread of this conversation in this afternoons. henry kissinger will be here talking at lunch. the bulk of his time will be spent taking questions from the audience. then at 2:00 we of the former treasury secretary bob rubin. 3:00 we have managing director of the world bank, and all of

that is coming up. we will have a 15 minute break now. be back at 11:30. thank you. [inaudible conversations] [inaudible conversations] [inaudible conversations] spent a long live coverage of a summit on china's growth and influence on the world economy from the u.s. institute of peace. coming up after this 15 minute break, there will be a panel on business partnerships in china. along the same global economic life, live coverage of "new york

times" journalist thomas friedman later this afternoon. he cowrote a book with michael mandelbaum, look at the message role in the world called that used to be us. the others will be at an event hosted by johns hopkins university school of advanced international studies and you can see that live online starting at 5:30 p.m. eastern today at booktv.org. while we wait for this event to resume here's a portion from earlier looking at china's place in the global economy. this is about 15 minutes. >> let's go straight on to economy. >> as suggested, i was tasked with outlining some of the sociopolitical downsides of 30 years of largely unfettered go-go economic growth in china. i thought what i might do is add a twist to that and highlight what i see as five trends in

sort of social political dimension that i think is actually acted to spur economic growth and growth in china over the past one-30 years but now may be an inflection point, and may be transform into obstacles or drags on the chinese economy. and i think we required chinese policymakers to rethink some of the balance between opportunities and challenges that these trends may present. so i will run fairly quickly through what i think are the five overarching trends. i think they will also help to the stage a little bit to the panel that will have towards the end of the day, touch on some of these same issues. so the first trend i would highlight is demographics. and i'm sure you've heard a lot about this that i thought i would flush it out a bit. you know, up until now china has really been the beneficiary of a demographics dividends with more people entering the labor force

every year, coupled with high savings rate. it's been able to use these to to sort of fuel its economic growth over the past 20-30 years. because of the one child policy, the demographic picture in china is going to change quite dramatically in the next 20 years. just to give you a few numbers, i 2030 the number of people and their cohort in the 20 is going to drop by 35%. while the number aged 55-60 will increase by 60% and those over 65 is going to jump by 100%. so what does this mean? the truth is that it's the younger workers who are generally the best educated, who are the most technologically proficient, and usually the most able to adapt to sort of the rapid economic change, in particular in these kind of

globalized world. it's going to place increased pressure on the health care system which as of now are quite ill-equipped to deal with that. and in an interesting point that nick may, one of the really great demographers who works on china, he said really what we are witnessing as a result of this one child policy is the entire transformation of the kinship structure in china. we tend to think of it simply as one child, to parents, four grandparents, sort of a difficult challenge. no siblings. but in actuality it means no cousins and now and and uncles. and so this kinship is extended family that has defined china's life in many respects for thousands of years is now being revolutionized. and i think what you think about the implications of that. so the upshot i think for the demographics, the challenge china is facing is they'll have fewer people entering the workforce who will be able to drive the economy.

at the same time you are willing to the increasing need for them to be able to support the elderly, in what has become china will be the first country to be old before it is rich. the second trend that i see as having helped to fuel economic growth in the past, but maybe perhaps no posing more of a challenge, was the cracking of the iron rice bowl but now the failure really do sort of develop a compensating social welfare net. of course, at the outset of reform three decades ago, the government beijing related the state owned enterprises and other of the economic burden of social welfare net, providing the housing and education, the general welfare for their workers. certainly that was a boon to those enterprises. clearly allowed them to manufacture at much lower cost. but at the same time the

government kind of forgot to replace the social welfare system with anything else. and it has been part of the platform, the harmonious society is a lot about redressing these imbalances in developing social welfare net. but i would argue they haven't really made any progress to date, and don't in the past two years or so have started to invest in a way that might make a difference and to sort of put a policy initiatives that also might make a difference. but i would say the jury is still out, and some of the discussions around the fact that it looks as though workers may have to contribute half of their wages in order to pay in to the pension scheme, insurance scheme and the medical care scheme, suggest this could be burdensome. but again i think this is still in many respects in the development stage. what i also found interesting is the issue of social welfare

rests heavily on the shoulder of china's wealthiest as well. perhaps a number of you saw the study that was done by china merchant bank in may, and they surveyed about 20,000 people who made more than a million, and million and a half u.s. dollars, not made, but more than a million and a half and assets. and found that 27% of the chinese had emigrated and and as usual 47% are considering emigration. i think this was also published in the "washington post." why is this the case quick some of the most successful people in china today. they cited the exam exact reasons that poor people, they cited the health care system, cited education. they want to have more children. and they want clean air and their concerns about food safety. so all of these sort of social welfare public goods kinds of issues. so the upshot of the failure to develop an adequate social welfare net is first, you're

going to have difficulty achieving the kind of rebalancing of the economy, they are quite focused on right now. but you are also losing talent because of it. okay, the third dreamed i would like to point out is one that was mentioned by david, and that's the issue of environmental degradation and pollution. i think it's clear in the past 30 years the extra ordinary economic growth in china has occurred on the back of the environment. so there's been very poor and limitation of environmental regulations and laws. very lax oversight. and again it's allowed to china, or contribute to china been able to become sort of a low-cost manufacturing center of the world. if you don't have to treat your wastewater, you just dump it in the river next to you factor, it's a lot less expensive. by any and i think what we're seeing we have seen over the past five or six years the entire is being hit back into the chinese economy and the

chinese have done a lot of work on this issue. the numbers are all over the place but in this issue, if i'm at a protection agency said the cost from environmental degradation and pollution is roughly 10%. are difficult to measure the now been knows whether that is accurate, but if the chinese ministry is putting it out there it means it is on the minds this is a serious concern. and, of course, there are public health concerns, the issue of social unrest that you can barely open a newspaper even here in the united states today without reading about another environmental protest, whether in the rural areas or in the urban areas in china. and there's the issue of reputation. anybody who goes to beijing these days one of the first things you always talk about is oh, how is the pollution? it's constantly in the minds of people who go to china. if i were to pick the things that most serious though for the chinese leadership when it comes to the transit of environmental degradation it would really be water scarcity and land

degradation. if you don't have enough water to power your factories, run their factories or water your crop, you really are facing very hard constraints on economic growth. ... >> it's not maybe

counterintuitive but i think chinese benefit has growth due to it's opaque political system. and i think the top-down of china's political system has been beneficial as it has for many ketchup economies like japan and taiwan and south korea in the early days. that's because you have the ability, hopefully, to allocate capital to target -- to develop infrastructure et cetera. china wants to be an innovation economy and maybe they can accomplish this by simply building out. i think you were suggesting part of the way that china is going to do this is by accessing technology and companies and other things that are abroad. but i think it's clear from their whole indigenous push they want to be able to do that home too but developing an innovation economy demands a different kind of political system. it demands openness. it demands transparency.

it demands quality of projects and rule of law to protect its intellectual property. in a survey of entrepreneurs they believe corruption has only gotten worse over the past years. and it's very detrimental to entrepreneurial spirit and economic activity. and in the worst case, of course, the chinese political system contributes to things like the melamine scandal or the train accident or i think the loss of life from the shoddy construction. i think that's another issue that chinese leadership is going to have to grapple with more directly than it has perhaps today. and the last point i'll make is really the rise of the internet. i think this is -- dan's presentation is pretty exciting but china is one of the most exciting areas of change in the country and it's a hot bed of economic activity.

and i was reading a piece recently that was describing sort of what was going on. this platform it has 800 million products for sale. it has sold 46,000 products a minute and has 370 million registered users. i mean, it's really extraordinary what has happened in just the two years in terms of ecommerce in china. at the same time, of course, the internet is transforming into a virtual political system and bringing to the chinese people in many respects everything that it can't get from -- they can't get from the real political system which is to say that transparency, official accountability and the rule of law. i know i've gone over my time so i will -- you're not supposed to nod, but i will simply conclude -- [inaudible] >> i will simply concluded by saying i highlight these trends because again i think they have contributed to fuel chinese

economic growth but they may be a point now where they may act as constraints and for the chinese leadership may provoke a rethink, a pretty serious rethink on issues as fundamental as, you know, the one-child policy, the system of governance and kind of the balance or distribution from hard to soft infrastructure if they want to maintain this kind of growth. [applause] >> thank you very much, liz. that the really, really excellent. i want to probe three or four areas and then i'll have the audience to question you. can we start with the question of whether or not the official pronouncement of the five-year plan and the ideas that are being laid out represent continuity over the last 10 or 15 years or represent a shift? liz, you've written about the continuity that the five-year plan competes with a lot of the previous ones.

do you want to see how you see the policy dynamic and then dan coming on as well. explain the balance between continuity and change, whether this tips towards welfare domestically towards quality of growth is really meaningful or not and let's hear down on that? >> as i suggest in my remarks, i think the jury is till out and i think it's part of the previous five-year plan. yes, there's an emphasis, more of an emphasis this time around, but i'm somebody who looks to see what are the results on the ground. so i'm less interested in what the targets are and what the promises are and much more interested in the results and what emerges after or during the five years. so that's why i say the jury is still how the what beijing says often does not go at the local level.

and it may play out very differently from the target -- certainly the effort to improve the environment has been ongoing for the past five to ten years, the level of investment has not changed, right? it's still roughly 1.3% of gdp which places it somewhere in the middle or lower areas of developing countries. so, you know, look at the level of investment and then factor out the corruption that's going to make some of that investment go to the wrong places. and then try to decide whether or not you think you're going to see fundamental changes, you know, in the direction that the five-year plan seems to promise. >> okay. >> and that discussion from earlier in our day-long live coverage on this summit of china's growth and influence on the world economy. from the u.s. institute of peace. up next a panel on business partnerships with china. this is live coverage on c-span2. >> well deserved recognition in both the public and the private sectors.

currently, he serves as vice chair of the 11th national committee of the chinese peoples conference and is the founding chair of the china-u.s. exchange foundation which has founded many significant exchange programs to enhance u.s.-china relations. and prior to a reversion of hong kong to china, he served as a member of hong kong's executive council and for more than two decades he served as chairman of the orient overseas container, a major shipping company. and after that reversion from 1997 to 2005, he served with great distinction as the first chief executive of the hong kong special administrative region winning election to that post by a very wide margin. and he's no stranger to the united states. he served -- he has served as a

member of the board of overseers at the hoover institution, at stanford university, a senior fellow of harvard university's asia center as an international scholar at csis and a member of the international advisory board, the council of foreign relations. born in shanghai, he studied in hong kong and in britain. graduating from the university of liverpool with a bachelor of science degree. he's received many honors from -- including hong kong's highest award, and the honorary degree from the university of liverpool and from hong kong's university of science and technology. and he is much in demand when he comes to the united states, so we are very, very fortunate to have him with us today. as confucius is reported to have said, when friends visit from

distant quarters, is that not delightful? and it is indeed delightful for me to welcome a very old friend and a man of extraordinary talent and achievement to the podium, the honorable c.h toom. >> friends, ladies and gentlemen, we have about 25 minutes and i would like to leave -- as much time as possible for you to question both myself and to have a meaningful discussion together. and the title of the conference

today is about u.s.-china business partnership, what works, what doesn't work. and i was -- i would have much -- i would have preferred much more to talk about u.s.-china partnership, what works, what doesn't work. but since it is about economic partnership, maybe i start on that basis and then beyond that we can talk about the other aspects of it. i actually think the u.s.-china economic partnership is a great partnership. it is working. but there is a lot more work to be done so that its true potential can be realized. and why do i say it's working? i just want to read to you an op-ed which was published last

year in october by the president of proctor & gamble. of course, you know, he said, unfortunately, the basic reality has been lost in much of the political debate about china, which is fixiated on the false assumption that china's growth must come at america's expense. the fact is american job growth is increasingly linked to china's economic growth. we should be encouraged by this linkage. china has 1.3 billion, customers whose incomes are rising, whose demand for products and services is accelerating, and china is a country where american companies, large and small, want to do business. and we are the fastest growing major overseas market for u.s. exporters is china.

they also went on to say that a case about proctor & gamble is that we began marketing our brands in china and there are many of them, all very famous brands, household names in america. we started marketing them in 1988. today, proctor & gamble is the largest consumer product company there. the largest consumer company product in china. it's an american company. it's the largest consumer product company in china. with sales of up to $5 billion with a strong profit growth. none of this investment has come to the expense to american jobs. to the contrary, our china and other international business support the high skilled p & g

jobs, marketing finance, and logistics. 1 in 5 of our 40,000 based p & g businesses support beside. 40% of 15,000 employees in ohio work on international business. the simple fact is that success in the fast developing market in china leads to high wage jobs here at home. there's no question that doing business in china is challenging. we've had to deal with the counterfeiting and disputes with local business partners. but we found engagement with our chinese counterpart has generally resulted in fair treatment and positive results. we are committed to being and growing in china for generations

to come. to ensure that american companies like p & g can continue to succeed in china which would drive economic and job growth here in the u.s., we must maintain healthy and productive u.s. commerce relations. we need to step back and understand the full range of our economic relationship with china. we must resist the tendency to isolate particular issues such as currency valuation or trade balances from the broader and more complex interests that bind us together. it's a long op-ed. i just read some essence to it and it's important i read this. it's not just that i'm saying that the relationship is all right. it's going well. it is going well. and dr. campbell is just one of the examples.

i give you another example. you know, chinese people love to eat chicken and the way we cook chicken is a stew with soy sauce. it's really very delicious. but do you know what kentucky fried chicken beat the chinese soy sauce chicken and they have established 3,600 branches in china. huge business. and we don't worry about brand, whether it's american, whether it's chinese so long it taste good. it's fine. and i'll give you another example. wal-mart cannot get into -- cannot get into japan or germany very successfully. but they are in such a big way in wal-mart. we treat wal-mart as a chinese company in hong kong. so please remember, you know, for everything you read negative, there's lots of things going on -- really going on very well. in every big relationship just like husband and wife sometimes you get in arguments.

it's all right. we find ways out. we sort them out. we should not overblown extremely good relationship for potential. and for the years to come, you know, the relationship is going to blossom. china is moving ahead confidently into in building a modern nation and in the process of doing that, china look forward to working with all the countries around the world, particularly, with united states of america because you are the largest and strongest and most vigorous country economically in the world. and, no, we are going to be fine and we need all of us to be working very hard to make sure we can achieve the full potential and every one of you sitting here knows about this. and should put your weight behind it and help it come

through. i'm going to stop here and come back and sit down. and have some dialog with you. thank you very much. [applause] >> well, it's wonderful to start out this morning with such an optimistic tone. i have to share with you that i spent the weekend at the imf world bank meeting and i did not hear one optimistic word. that seemed to be a tremendous amount of concern about the global economy. and as you point out, the united states and china are truly leaders in economics. tell us, what would your proscription be for how we avoid the worst scenario that was discussed so deeply by those

visiting worldwide this weekend from another recession to a depression? talk about what -- this would be what would be right with a partnership? >> well, i think there is reason to worry. of course, therein lies the progress countries making. there's always -- there will always be ups and downs and the key question is that small business down, we know how it's happened. how can we bring it back up again? we have a plan, does the plan work and if it works why don't we get on with it, you know, one of the real difficulties sitting in asia where i sit, you know, i

see this in america, a country with enormous competitive advantages. the best of the brains want to come and live and work in the united states. the best universities, i hear. the science and technology superiority is way ahead of any other country. we have the availability of abundance -- or abundance of natural resources, for developed nations. you can't compare with any other nation on earth you're so far ahead. you're demographics. other nations aging, most of them are aging, but the united states, the population is getting younger. all the things that make america strong in the future, you have

it in your own hands. yes, for the time being there is a challenge about job creation, about economic recovery. yes, there's a problem about reducing deficits. but these are the issues that would be resolved, need to be resolved and the key is that we should -- we should have a plan, how to move ahead and the anxiety, i think, for everyone is that there doesn't seem to have a political consensus on how to move ahead. it's not that -- i think there are these options out there. the question is how to get on with it. make the decisions, get on with it and then the confidence will be restored and then you can move. europe is having huge challenges, probably the solution is more physical, more

challenging. it takes a similar type of critical responses. what are the problems we have? how do we manage it? how can we overcome these problems? and what is our vision of the future? now, if i understand where europe is going, how are we going to get there? you know? confidence will then come back to you. it's going to be very difficult. i know all the nation's parliament have to approve whatever decision is making made. it's not going to be easy. but there are answers to these very difficult challenges. so for america, i think especially to resolve the

province, it's serious. nothing is insurmountable. it's a political question. in europe it's more difficult, i think. but again, it takes a lot of political will to get it done. and so far as asia is concerned, our worry -- in asia, all of the countries we put aside japan because they develop -- all the other countries in asia, if you look at these countries, their fiscal management has been rather conservative. we have all the problems we had, you know, in the later part of last century. we're in the real economy, the economy are making things.

exporting things. and spending is slowly going up. but the big worry is about inflation in asian countries. the additional commodity costs, it worries great deal and worries other nations a great deal. i'd be happy to talk separately about it because i could go on forever. but asia -- even though asia is doing reasonably well, but asia alone cannot take the world forward. it needs the others to become healthy again and there's a reason to be worried. united states' one challenge

which i think is a question of political resolve. europe has a bigger challenge but i would hope we find some way through this. >> well, i totally agree that we live in a globalized world and it's impossible for any region to think they can decouple because the partnership becomes more important rather than less. i'd love to hear your views about your prospects for the g20 that is scheduled in november. now, the g20 -- this will be its sixth meeting and it has had a number of pronouncement business fixing the global economy, rebalancing the imbalances, no more protection, finishing the doha round, and i worry that if they convene on france and continue to make statements without action, that it will become an irrelevant institution that we sorely need in the

international arena. and talking about the u.s.-china partnership, what's right. do you envision that we could as a partnership really push the g20 to make a difference? >> i think at this moment, if we look back, the example -- the best example of g20 assesses and very much push forward, i think the united states and very much responded by china with what happened immediately after the 2008 crisis. it was through the g20 that actions were galvanized together about expansion, fiscal expansion to get the economy moving again. ..

>> about europe, about united states, about asia. how can we make, how can we together, you know, move the world economy again. and i think that would be the priority of, i think it would be very sad if we lose sight of the immediate to push doha -- need to push doha round because opened market, it is the global train which also drives the

economy forward, creates new jobs. and because of these existing crisis which is more financially related, we tend to forget the importance of these issues. it will be very sad day, actually, for us because another year will have gone by, nothing will have happened. so i sincerely hope all of us will be wise enough to make sure that the agenda include items which are relevant to the things we're trying to do today. not just to put out the immediate fire as it is. >> met me go to -- let me go the audience and ask you the give your name if you have a question and pose a question to mr. tung. the lights are here, so i'm -- so do i see a hand? down here?

dan? question? >> hi, carla. >> right here. >> thank you. dan rosen, william group. so the fundamental factors that are causing concerns about the united states and europe are very much our domestic political processes. i think everybody would agree with that. but there are some policy positions in china which are obligations for wealthier countries wouldn't have been expected of china when it was at a lower development level. and some of the concern about the ability of the united states and europe to sustain their growth has to do with whether china's ready to join that sort of higher income level of policy commitments. and i think currency policy is one of them. yesterday joe char tran made clear that china was planning to stay the course in terms of the moderate level of appreciation

that's been taking place. there were great questions of whether china was going to stop even the 6% nominal presentation against dollar. do you agree that there is sort of in a new era some new expectations about what china contributes to the international economic scene in terms of its domestic economic policies? >> please. >> carla, can i, first of all, say this to you; that, firstly, in america i have some really good friends, and some of you would ring me and say, you know, you guys are really too smart. you deliberately keep the currency low, you know, to, you know, so that you can get away with it and accumulate massive amount of u.s. dollars and so on.