china who tells me, you got to know better, you know? that, you know, you're holding all these u.s. dollar bonds and treasury notes, and the value's depreciating. you know, the americans are really clever, they schemed all this so you fall into their trap. and you haven't -- the truth of the matter is that none of us are that clever. and the other truth of the matter is that we're not really in the same boat and we're trying to find solutions. all these things happen. it happened because we were all trying to do the best for our country, and we thought the best for everybody else. and you get into this situation now. so that's the first point i want to make. no, in china there's not, we're not that smart in china to be able to create that sort of conspiracy. i don't think in america you can do that either. my second point is just that,

you know, on this currency issue i want to make these points to you. first point is that, you know, we -- if you, if you look at this, since 2005 we started this currency appreciation. altogether up until now there's 30% appreciation of the currency already. is it a small amount? you know, for china it is not possible to exceed to a call for a sudden quantum jump of the value, 20%, 30%. the orderly appreciation was promised, and it is being done now. does this currency have actual impact on trade? let me say this to you. during the first six months of this year, china lost a huge

market share in textiling, in shoes, in toys, in many of these commodities, okay? and to whom? to the likes of bangladesh, vietnam, indonesia. why? because the chinese currency appreciation, is that the reason? yes, it makes chinese goods more expensive. and also the chinese wages have been going up very rapidly. now, does that actually make america, america's current account deficit decrease? no, it did not. did american job, were american jobs created because china make less of these things? no. it's made up by other countries. so the point is that the currency is not the reason for america to have this -- chinese currency value is not the reason to have this, to have created

the jobs situation, to have created these difficulties. it's just the way the world trade organizationing entity divided the workload. so, in other words, developing nations get all the low end of the manufacturing job. that is the real issue. there are and i don't think america want -- and i don't think america want to go pack and make -- to go back to make shoes and toys and socks again. the other point i want to make to you is chinese exports from america has grew expanding amount from the year at 2001 to 19 billion, today the united states import to china was at $90 billion. in other words, four and a half times increase, 450% increase.

a huge increase in import by any standard. and china overtook japan as the third largest importing for american goods. and for every 1% it creates -- 1% increase, it creates about 8,000 jobs actually. and if you average that out every year, china's actually importing 30% more goods every year. and that actually translates to about 280,000 jobs. so 80,000 jobs. so it's a huge increase. china's importing such huge amounts from the united states, okay? so china doesn't have the impression, the intention to deliberately create surpluses. china want to see balanced situation come about. china is encouraging domestic spending.

china's encouraging imports from america. and i also want to tell you, many of you may go to this fair every autumn in wong tong, and this trade fair was always done to encourage export. but this year the trade fair is done to encourage imports from the united states. and a number of states' governors and their trade delegations are being invited to go to china. why? to sell american goods into china. so all these things are happening to create american imports into china. so china's doing its part to try to help with the balance, trying to work through it. china will continue its policy to gradually revalue the currency with the view that in time china will fully make the currency fully international.

and what if you revalue the currency 10, 15, 20%? you know? china will have to bear the consequences if there is difficulty with the market. but the thing is that if you take, take actions like this, and something happened with the chinese market, would america be happy to see us because they were -- [inaudible] american exports into china? so these are the real issues that through dialogue, through conference we try to solve these problems. the one thing i can promise you is, and i'm not making a propaganda, okay? but i want to promise you china's doing its very best on this particular issue, and i think it's just about the right balance. >> wouldn't you agree that it's less a question of currency appreciation and more a liberalization of the banking

system? my chinese friends tell me that the consumer depositor is actually getting below, below the inflation rate on their bank account. and if you want to stimulate consumption, that's a problem. and i know that governor joe appreciates that fact, but what do you think the time will be for china to permit market forces more than controlling the banking system that would give the consumers a break and actually put a lid on the inflation that is growing? >> carla, it is a very good question. i would say this: when would china do it? i think, you know, you have, you have trade account which is now being very rapidly liberalized.

you have account, personal accounts, people running be overseas, let's say come to america for -- >> hong kong? >> yeah. trip overseas to spend money. that's also very liberal now. but if capital account which is being very carefully watched, and the reason why this is the case is that 95% of foreign exchanges that goes out every day in the marketplace, 95% of it is unrelated to, to transactions of, of trade. it is, basically, if it -- you don't use the word "speculative," it is a trade about predicting the markets going up and down and so forth. and i think for a developing economy like china, developing so rapidly, what china cannot

afford is sudden surge of capital flow in and out of china. and for that matter, you know, in the course of the last six months of this year many of the countries in asia was worried about enormous amount of capital flow coming through from the united states of america into, into the asian economy. not with a view to invest in real business, but it's just to come and take advantage of the other side, in other words, the stock market and the property market and so on and so forth. so these are some of the real issues that needs to be addressed to address the concern of china and many other countries in the developing status who now face similar problems because there's just too much speck speculative moneg back and forth which creates the distortion of value. you know? so that really, really needs to

be, to be addressed. >> do i have a question from the audience? >> thank you. danny with chinese news agent is si. currently, euro zone banking and the foreign stress has caused market concerns about global economic recovery outlook. this has also cost last external export demand for countries like china. some say china and other countries can play a big role in stabilizing the euro zone crisis. so in your perspective, how china can bend it's attention to economic restructuring and its global responsibility? thank you. >> thank you for the question. i think, um, a vigorous global

economy is in the interest of china. be a -- a europe that is healthy is interest of china. so, certainly, china will want to see europe become healthy and vibrant. what role can china play? what role can anybody play? i always make the same point. firstly, we have to know what are the visions of europe, particularly in view of what has happened in the recent past? what are the problems that caused this enormous uncertainty? what are the plans of action to correct this uncertainty? what divisions do european leaders have for europe's

future? and once we know these basic, basic, very basic points i think it will be possible for china or, for that matter, for any other country who want top of assistance to move -- who want top of assistance always can't with its own ability. because as you said correctly, china has its own domestic needs which is also very, very challenge, a very tall order. but i think we got to know x then we can move -- and then we can move forward. >> yes, please. >> [inaudible] >> right here. >> i think -- yep. >> go ahead. >> okay, ma'am, thank you. maribella airs with white house consulting group. i'd like to ask you, mr. tung, a little bit to talk about environmental issues and the rate of progress and awareness,

um, during this rapid period of growth particularly in the power sector. um, i was just in london last week, and people there who are very active in the climate area were saying it's very possible that china before america would actually adopt some kind of a program for a low-carbon strategy with a focus on reduction in greenhouse gases. and, um, that's certainly one point of view. the other point of view we heard this morning from some of the panelists who alluded to the fact that there had not been sufficient environmental protection in manufacturing processes. but with those two different views, perhaps you could comment a little bit on what the prospects are in this area that will accompany dramatic growth.

>> carla, i'm sorry, i don't have around specific answer for you -- i don't have a specific answer for you, but what i would say to you is this, that china is very conscious about the sustainability of her development and that issues such as climate change, such as energy security, clean air, water, all these are issues that has the full attention at the central government level, at the senior leadership level. they certainly attach equal importance to these particular issues, the same importance as development, the sustained development part of it. so i want to assure you that as

i travel around different countries i feel that china put this agenda on the top of the list as much as any other country would. and also recognize that many of these rely on science and technology to achieve breakthroughs and, therefore, collaboration and research in science and technologies really, really important. one of my big worry is that for years now we've been talking about working together between united states and china on carbon capturing and sequestration. my friend sitting there. and i'm just concerned that, you know, we're really not finding the solution there at all. and, but we need to make these

breakthroughs. the other point i want to say is that if you have a chance when you visit beijing, go and visit the ching hwa center. they're looking at all sorts of thing. not just the science and technology breakthrough, but items involving way of life, what about the laws that's needed. and so china is quite forward looking in many of these aspects. but we still need science and technology breakthrough which, well, we have to be patient, i know, but i haven't seen anything definite in that one particular area. >> we have time for one short question. >> yes. it's a short and friendly question. ease she question. -- easy question. i'm with air tran limited.

and the question is, mr. tung, you said in many your opening remarks you think the economic partnership between the u.s. and china is working well. and what can we do, i mean, is it working well enough? what can we do to make it better? that's number one. number two, other than an economic partnership, is there any other partnership that the u.s. and china should forge together? >> it's not a short question. good question though. [laughter] i, you know, i like to answer in this way. the partnership is about, is about recognizing each other's strength and weaknesses, and be i've already defined to you what my view is about america's strengths. also to understand that at this moment america's top priority is to get job creation going, to get economy recovering again.

that's america's first priority. for china, china needs to move on with its five-year plan, a very good plan, a very sophisticated and very well-thoughtful plan for us to be successful at this. and that is despite the very complicated, difficult global challenges we face. but i think if you look through this and say, okay, how can we work together, you know, for instance, last year there was 820,000 tourists from china that visited america. and, you know, i have seen some numbers which talks about if an extra one million tourists come to america, they will create 200,000 new jobs. now, then you can argue whether it is 200,000 or 100,000, but anyway, it's a big number, okay? [laughter] yesterday i was in new york, and

they tell me new york has 50 million tourists, you know? it's a lot. it's a very successful city. but whatever. we only have 800,000 tourists coming from mainland china. and mainland china is a huge market. people want to go overseas, want to find out -- people particularly like to come to america, and, you know, there are lots of obstacles to it. and one of them is, actually, the visa problem. i keep on hearing -- [applause] and i just couldn't believe this. how can there be a visa problem? and this applies to people who want to come here. there's a visa problem for them to come over. and all i want to say is these are very simple issues. i know it's a need for homeland security, there are lots of new requirements. i understand that, i'm sympathetic to that. but i tell you, my hong kong experience is that the visitor from china actually really

helped hong kong in our most difficult time in 2003. so that's my first -- and there are lots of other areas where the two can work together to create win/win situation which is not happening yet. and one of the second -- what was the second question? >> i think he's -- [laughter] >> it's all right. >> [inaudible] okay. >> let me just say that -- >> it's just past the hour. >> you have lived up to your reputation. you brought hope and encouragement to the audience, and we're very grateful for your time. i know you all want to join me in thanking my good friend. [applause] >> i'm very glad that you didn't have a visa problem. [laughter] it was an honor that you came. thank you for coming all the way from hong kong, and thank you, carla.

not only always good to hear what you have to say, but i love your voice. it's fabulous. thank you both. and now, please, come down this way. i just wanted to encourage everyone, it's lunchtime, and i've been instructed to have everybody come down this way. you'll take a break from the discussion, we're going to hear from henry kissinger at lunch, and at 2:00 we have bob reuben and an all-star panel of officials from china and the united states talking about the economy. you won't want to miss that one. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations] [inaudible conversations] >> we will have more from this daylong conference on china and the global economy after a lunch break. our coverage will continue at about 2 eastern when former u.s. treasury secretary robert rubin will take part in a panel looking at chinese economic competitiveness. along the same lines, we will be live with new york times

journalist thomas friedman this afternoon who recently co-wrote a book looking at the united states' role in the world. the book is called "that used to be us," the event hosted by the johns to be cins university school of advanced international studies beginning at 5:30 eastern today at booktv.org. in keeping with the international theme, the united nations general assembly is meeting in new york city this week. during this break we will show you some of the speeches from earlier this week. first up, syria's u.n. representative followed by the ambassador from egypt and later libya's acting prime minister. these speeches altogether last about an hour. [speaking in native tongue]

[speaking in native tongue] >> translator: present at the 66th session, allow me to congratulate you as your actions as president of the general assembly. i wish you success in your endeavors to promote the interests of our international organization. i also pay tribute to your predecessor and express to him our appreciation for successfully presiding over last year's session. ladies and gentlemen, it's only normal for me to start by addressing the current situation in syria. our position in regard to the situation and to the sequence of events unfolding inside and outside our country. there is no doubt that the positions of states are uncondition my -- undeniably

governed by their constraintses and demand stemming therefrom. they are equally influenced by repercussions they endure, the stances they adopt and the price they pay, be that high or low for the their positions to these questions. suriname republic is located in the heart of the middle east region. this location determined the major role which syria played in politics in the arab world and region in general. for many decades syria faced major challenges and stood up family against attempts to curtail its role and divert the national course it harted for itself. course it charted for itself. it is no secret that syria stood

firm and upheld its international sovereignty and the position that has always been one of the primary pillars of the syrian foreign policy. ladies and gentlemen, syria spared no efforts in support of the legitimate struggle of the palestinian people and championed resistance movements. syria upheld its inalienable right to liberate the entire occupied syrian land to the line of june 4, 1967. at the same time, syria extended a happened of friendship to all states and built its international relations on mutual respect and mutual interests.

it's used its leverage to promote the centerpiece of syrian international prerogatives, namely to liberate the land and restore the right. following the occupation of iraq, syria was dragged into another bat. battle. it had to choose between enduring siege and isolation or submitting to tick tate. -- dictate. again, syria summoned all its, all its might to prevail despite the exorbitant price we had to pay at the expense of other priorities and domestic interests. we emerged from this battle having gained strength while preserving the independence of our decision and safeguarding our national prerogatives. ladies and gentlemen, there are two sides to the problem syria faces today. on the one hand, the country

needs the people driven political, economic and social beforms. -- reforms. the president already expressed a strong desire to accomplish be these reforms, but the force of the political circumstances to which i have briefly alluded earlier forced internal demands, important as they are, to take a back seat to other priorities. our overriding priority was facing the extended pressures which were at times tantamount to blatant conspiracies. on the other hand, popular demands and be claims have been manipulated to further objectives which are completely different from the interests and the expressed desires of the

syrian people. these demands were the steppingstone used by armed groups to show discord and sabotage our security. they became the new pretext for foreign interventions. syria exercised its responsibility to protect its citizens. it acted to guarantee the safety and stability, vigilance against the danger of foreign intervention that assumes a different form with every passing day and challenging. it does not mean underestimating popular demands. these demands have already been accommodated prior to the recent events. in our view these are needed reforms that have fallen due.

many of the elements have been already met. those reforms are a work in progress that will con through national dialogue and the sovereignty and independence. ladies and gentlemen, to shed more light on the situation, i will recall at this juncture the statement that president assad made on june 20 of this year.

delete certain articles to allow for political pluralism and democratic practices. it may even lead to framing a new constitution that would guarantee all of the above. the conestution is the backbone of the political, economic and social life of all states. this reform measure will definitely respond to the popular demands and needs. furthermore, the president left the door open to views and proposals on the reform efforts in general. in a television interview that followed the president announced a time frame to, a

time frame has been set to agree on and implement the proposed reforms in no more than six months. this is an extremely important position. it requires a serious, in depth national dialogue so that it can arrive at the desired mechanisms and results. a comprehensive dialogue began a couple weeks ago in different syrian governments that presented as various sectors of the syrian society including opposition figures joined the process to examine the comprehensive, political, economic and social components of the proposed reform package. ladies and gentlemen, we deeply regret the surge and

activities of armed groups in syria which have wanted, with have not waned, instead continued it spiral. this is the other side of the coin. we would have liked those countries that spoke in favor of reform to support the syrian official position instead of opting for incitement and defiance. in fact the more frowned we covered toward stability and reform, and the stronger of the foreign incitement. armed violence surges in tandem with multiple economic sanctions. by targeting the syrian economy with sanctions the united states and the european union jeopardized

the interests and the basic daily subsistence needs of the syrian people. this can not in any way be reconciled with pronouncements about concern for the interests, security and rights of the syrian people. it further runs counter the basic principles of human rights in the sets which these states their interference in our internal affairs. must we recall that the charge of our organization states that nothing contained in the present charter shall authorize the u.n. to intervene in matters which are essentially within the domestic jurisdiction of any state. ladies and gentlemen, syria

provided our region with a model of peaceful coexistence among the different components of the syrian people. a model which deserves to be emulated. it opted secularism to promote its national unity in view of the religious and ethnic diversity of the region to which it belongs. a region that was the cradle of divine religions and the best place of human civilization. any objective analysis of the events in and around syria will demonstrate clearly that the purpose of the unjust, anti-syria campaign currently underway is to attack this model of coexistence that has been a source of pride for our

people. otherwise, how can we otherwise explain media provocations, financing and armying religious extremism? what purpose could this serve other than total chaos that would dismember syria and consequently adversely effect its neighbors? what else could this course achieve other than spreading western hogemny over the countries of the mediterranean and serve israel's expansionist interests. i assure you, that our people are determined to reject all forms of foreign intervention in the internal affairs. we shall continue to pursue security and stability. we shall proceed in implementing the comprehensive program of

reform through national dialogue to turn syria within months into a model of political pluralism and an oasis for peaceful coexistence among the different components of its people. from this rostrum i call on states which have par taken in the unjust campaign against syria to reconsider their positions. to them i say, our people will not let you implement your plans and will foil your schemes. i also express our appreciation and thanks to the countries that stood by our people's side in this crisis, of any harm that could have befallen their interests and encouraged them to pursue their aspirations. ladies and gentlemen, for

years the international community has considered the two-state solution the basis for establishing peace between the israelis and palestinians. the negotiations between the two sides continued for years. they have failed though to achieve any progress towards a solution you due to israeli well-known positions and measures. therefore, the international community's pursuit of the recognition of palestinian statehood on the palestinian territories occupied in 1967 is legitimate. it is a positive step, indeed direction of restoring all the palestinian rights. syria calls on the international community to support this request. we also condemn the israeli

blockade of gaza and call upon the international community to shoulder its responsibility and force israel to lift this blockade. our position in declaring the middle east a nuclear weapon free zone is established and well-known. we continue to call for bringing pressure to bear on israel to implement international resolutions that have called on it to accede to the non-proliferation treaty and submit its nuclear facilities to the iaea safeguard regime. this measure is of extreme importance to the security and stability of our region. we have at the same time stress that all states have the right to acquire nuclear technologies for peaceful

purposes. this right is guaranteed by the npt. we renew the call to lift the embargo that has been enforced on cuba for decades. ladies and gentlemen, we aspire, we all aspire to a more just and secure world. this international organization has a major role to play in this regard. it can play this role more effectively if some powerful states gave up their attempts to further their own agendas. nevertheless, we still hope that the international community will be able to follow the right course to bring about a better world to which our people aspire. i thank you.

>> translator:,de mr. president, i hope that you will extend to his excellency, mr. ban ki-moon, our congratulations to the state of qatar for assumingto the presidency of the general assembly and to himself for his re-election for a second term. and i am confident that the wise leadership of qatar of our proceedings will contribute to the attainment and ambitions and aspirations we seek and i ame

confident that the re-election of mr. ban ki-moon enjoys our support as he tries to realize the purposes and principles of the charter. mr. president, i proudly stand before you today presenting egypt in a new era and with a novel face. egypt as it heads from an area whose features are emerging. egypt as it embarks on a knew phase as full of promises. the egyptian people came out in masses on the 25th of january, calling for democratic reforms and a strength and respect of human rights, fundamental freedoms and social justice. the egyptian masses wanted to emplant the seeds of aer brighter future in deep in the arid land for their sake and for the benefit of future generations of egyptians. the masses obtained what they sought and were able tose

impose their words and impose their will. they were backed by the understanding and support of the egyptian armed forces who truly exemplify general patriotism and unity with the people of our nation. the stance of our armed forces will be remembered by history. it is consistent with there core doctrine as guardians of the nation, not of a political regime. and in line with an institution that is first and foremost loyal to the people who rallied around their armed forces and expressed their appreciation. an ideal situation was made possible by circumstances that can rarely be repeated. these circumstances enabled egyptians to alter of face of their country in an historic and wonderful way. egyptians wanted to rapidly

catch up with other countries that had already made great strides inun achieving politicalin pluralism and the alteration of power in upholding and applying the rule of law and relentlessly fighting corruption in its variousof forms and in providing equal opportunities to allow thempo to realize their aspirations and ambitions of decent lives. i'm addressing you today while egypt moves forward, determined to complete the transition phase that arose from that remarkablee transformative change.ns it is witnessing over the past few months and since the revolution took lace -- place, new internal dynamics and a wide national debate involving all segments of w society and covering all issues on the national agenda, on top of which arel those related to the drafting of a new constitution and the organization of the upcoming legislative and presidential

elections. for us to increase the prospects ofe success of the transitional phase and initiate a solid political process that corresponds to the aspirations of the people and is commensurate with egypt's unique standing in the region and worldwide, a process that would culminate of handing ofdi power to a an elected civilian authority.e mr. president, egypt is o honored to assume theec chairmanship of the nonaligned movement since t july 2009. the start of this session of the general assembly coincides with theth commemoration held to mark 50 years since the firstid summit of the movement tookt place and to celebrate its significant contributions to the enforcement of our international efforts to preserve international peace and security and achieve development to the people's of the world. it happens in a changing international environment and in the face of multiple challenges.in this commemoration comes

after and series of important events organized by the movement to promote greater involvement of developing ies in the governance of international institutions and to insure a fair participation in theit process of international norm setting and decision making in the political, economic and social fields. on that basis and to that end the egyptian chairmanship of the movement has undertaken numerous activities to strengthen the movement's capacity to effectively respond to the new and continuous international changes. the movement has also played a vital role in coordinatingmo the positions of its member-states regarding the various issues comprisingem the international agenda including those related to disarmament, collective security, the reform of the united nations and the promotion of international ideas of democracy and the respect of human rights. during its chairmanship of movement egypt seeks to reinforce the joint coordinating committee of

the group of 77 and china. in light of an internationalha work agenda loaded with issues, ideas and initiatives we set to put back the issue of development with its various dimensions as the top priority of the unitedwi nations. and together, we adopted a number of important initiatives in the field of food security, the empowerment of women and the fight against human trafficking.ri we would pursue these efforts until we hand over the chairmanship of the movement to the country holding its next presidency in the summer of 2012. i reiterate here today the support ofe the non-aligned movement to the historicalal struggle of the brotherly palestinian people to regain legitimate rights as well as the movement's support togh the efforts exerted towardrt declaring the establishment of the independent state of palestine with east jerusalem jerusalem as its s cap capitol and the full a admission as a full member of united nations. m

i must call upon the countries that have not recognized the state of palestine to do so as a contribution to the efforts aimed at achieving a just, comprehensive settlement of the conflict in the middle east based on the two-state solution.co mr. president, the t nonaligned movement believes there is a pressing need foren a comprehensive andth substantial reform of the united nations. so as to strengthen its ability to postively respond to the international changes, to live up to the aspirations of the peoples and to cope with the radical changes that have altered the shape and composition of the international community.co so that the united nationsit can become a true reflection of the reality of today's world. such a reform will not be achieved unless the securitych council is reformed and is made more representative, more transparent, and more reflective of the democratican nature of multilateralism.re

inevitably major steps must be taken to end the monopoly by permanent members overe the decision-making processan in the council and to put an end tong the historical. injustice inflicted upon africa as a result of its nonrepresentation in the permanent membership category as well as its inadequate representative sentation in the nonpermanent category despite increasing support of the member-states of the african position. in the same context thete state members movement demand con wages of efforts aimed at revitalizing theua role of the general assemblyal and strengthening the rolehe of the economic and socialas council. the states of the nonalignedl movement affirm also the the need for the internationalal community to support efforts exerted by developing countries to implement their development plans aimed at achieving the millennium development goals through an enabling international environment that d bolsters the efforts for realizing

the comprehensive economic and social development and the fulfillment by all developed countries of their financing for developmenttr commitments as well as achieving more balanced international economicl relations and establishing a more just international system that takes into the account the development needs of the countries of the developing world. mr. president, we can only but feel deep sorrow every time we realize that historical injustice has been lifted, has been for decades inflicted on a people while the whole world has so far failed to lift it. the just question of palestine still remains after two full decades of fruitless negotiations without the desired settlements and the palestinian people remains to this day the pride of acquiring their legitimatepl, fundamental rights, on top of which is their right to acquire freedom andof establish their own

independent state on thean basis of the 1967 borders with east jerusalem as its capitol.ea this is the very state for which the palestinian president presented yesterday at a request for p membership in the unitedy nations after serious and just efforts towards a final settlement have totaled after the possibilities of achieving any significant process in the negotiating process had dwindled, especially since the other party insists on keeping thees negotiating process forever open. we have witnessed yesterday another failure by the quartet to come up with ard balanced vision to achieve the goal that we all know and approve of yet defer on how to realize it. it has become totally absurd to carry on talking about a peace process while israel continues with total conflict and complete disregard to the objections of the countries of the

world in constructing settlements on palestinian territories in the west bank,in altering of features of the occupied east jerusalem, o using violence against civilians and its blockade of gaza in violation of international legitimatecy and the provisions ofn international law.le regrettably anyone with a sense of fairness following this situation would see in israel's actions theio embodiment of its continuing evasion of admitting that the only way to achieve its security is through reaching a just settlement with the palestinians through serious negotiations based on parameters and a specific time frame. what is urgently required now is to intensify all our efforts in order to put an end to this conflict. egypt was and will remain committed to the goal of achieving just and comprehensive peace that it a had initiated in the middle east and will continue to actively support it.nd egypt will carry on its efforts to end israeli

occupation of the occupied palestinian territory and to reach a solution to all the final status issues in a specific, agreed upon, and internationally guaranteedif time frame. egypt will also sustain its efforts to capitalize on thesu successes realized in cairoit through the signing of the palestinian reconciliation agreement, thereby strengthening the unity of the palestinians and s consolidating efforts to achieve peace. mr. president, egyptor welcomes the presence of the republican of south sudan today. as a member state of the united nations. we hope that this nascent state will play a tangiblet role in preserving regional stability and will make steady progress on the road to development and institution-building. at the same time, we commend the sudan for its commitment b to implement the comprehensive peace agreement and respect the

will of the people of the south to have an independent state.i but even though last year with a significant. cooperation between the two sides, outstanding issueset remain unsettled. they should be resolveds within a framework oftt cooperation and goodwill which requires the formationoo of a genuine mile-an-hour to examine how -- participatione how to deal with these issues. no secret that sudan and south sudan are still expecting and looking forward to the support of the international communityth for their development and the construction efforts so that this the sudan can achieve stability andey development throughout its territory and within the context of its unity and territorial integrity and sote that south sudan can buildnt its state and institutions. it is on that basis i reiterate egypt's resolve to continue supporting both countries at all levels.

i would also like on behalf of egypt to pay a deserved tribute to the revolution of the sister the state of to nietzsch-- of la which participated in the arab spring. i express our solidarity and congratulate the tradition it -- transitional council and salute its efforts to restore stability and internal peace. i would like to express our readiness to provide any support that may contribute to the reconstruction efforts of the country and pass this critical period, and i salute the city state of tunisia. as for the brotherly state of yemen, egypt supports all efforts to ship feet -- achieved stability. if the status quo remains

unchanged, this will have great implications on the stability of the region. many egyptians follow apprehensively the series development taking place in a brotherly state of syria and a loss of life in door by our brothers and sisters there. i would like to reiterate today the position previously expressed by egypt that the only solution to the crisis lies in putting an end to violence and engaging in a serious dialogue amongst all parties in a climate of openness. on the other hand, i cannot overlook today referring to the arab gulf region. the security of people arab region are highly placed on the foreigny of egypt's policy on the basis of the deep historical, societal, cultural, political, and security ties that bind us with our brothers

and sisters in these countries. egypt will always strive to achieve the stability of this vital region of the world. mr. president, the issue of disarmament and nonproliferation remains of great importance to egypt. we will continue cooperation with our international partners to push for nuclear states to carry out their responsibilities as stipulated in the nuclear non-proliferation treaty in order to safeguard the credibility of this instrument and its ensuing, in devisable principles. furthermore, egypt will not spare any effort in pursuing the goal of realizing the universality of the non- proliferation treaty, especially in the middle east, where all countries have succeeded to the treaty with the exception of israel. thereby delaying the creation of a nuclear weapons-free zone in the region. that is why egypt advances --

attaches great importance to the implementation of the action plan adopted by the 2010 non- proliferation treaty review conference, especially the one relating to the middle east which endorsed the holding of the conference next year. in reality, we are concerned by the fact that a facility that has not yet been nominated and - country has not been selected. in that context, i reiterate egypt's position that the peaceful use of nuclear energy must be linked to full compliance with international commitments under the treaty. this entails the full cooperation of all member- states, with the international atomic energy agency, and avoiding any escalation in order to promote nonproliferation efforts in the region. mr. president, africa has always

held a privileged position and a unique status of the party agenda of the egyptian foreign policy. egypt was always an effective partner in the struggle of the peoples of this continent to gain their independence of the 1950's of the last century. this partnership continued during the reconstruction period that followed independence. egypt will increase in the work towards a deepening and activating its various cooperation mechanisms with other african countries and strive to propel them toward a new dawn, thereby contributing to the realization of the hopes and aspirations of all people for more development and increase prosperity. the tips expects the united nations to maintain -- egypt expects the united nations to continue to support and build the institutional capacity of the continent in the areas of conflict resolution, peacekeeping, and reconstruction, in addition to supporting the development aspirations of the african

countries and assisting their efforts to chief -- given the interlink is between peace, security, and development challenges and africa. egypt follows the ongoing deteriorating situation in somalia and calls for efforts to put an end to this ee sufferings endured by somalia. extern thenvites parties effort to refrain from intervening in the internal affairs. in this regard, egypt has contributed to the international efforts to tackle the problem of drought in the horn of africa and provide food to the affected population. egypt continues to that -- contributes to the fight to put an end to this phenomenon given

the strategic importance of the region and the arabian sea, especially in relation to national security and the safety of navigation and the suez canal. the ability of the united nations to undertake responsibilities depends on our collective will, one that is based on the robust determination to strengthen our joint international efforts to enable the organization to deal more effectively with various international and regional issues and problems we face. this requires at that we work together to reinforce the principles of democracy within multilateralism and promote dialogue and understanding as the only means to achieve our goals. thereby advancing the ideas of humanity and achieving the humanity and achieving the ambitions of our

general assembly meeting. this is 25 minutes. >> in the name of god, the compassionate, the merciful, thank you, mr. president. at the outset, allow me to express my sincerest thanks to the ambassador upon his election to the presidency of this session of the general assembly of the united nations. i also would like to express my thanks for this excellency ban ki moon for his re-election as

secretary-general. i stand today before you, excellencies, feeling sadness for the loss of more than 30,000 martryrs. they sacrificed their lives in my country. their sacred blood was shed to y for a new histor for th the new libya. by the same token, i bow to the mothers, who today know that their sons sacrifice was just and rightful. had events been repeated,

mothers, fathers, sons and daughters would have done the very same to write the same history. from this rostrum, let is a moot, all those martyrs whose blood was shed, all mothers and fathers and john kasich. i salute the wounded in hospitals inside and outside libya. mr. president, ladies and gentlemen, two years ago. in this very hall, in this very spot, moammar gaddafi stood before you tearing the charter of the united nations. in a pathetic, theatrical move,

one that flouts international values as if those rules that govern the work of international organizations can be judged in such a manner or treated in such a theatrical way, which is harmful to the people of libya, to the united nations, to the president of the general assembly, the entire organization. today, i stand before you, excellencies, to show the world that a new libya is coming to life. libya that looks forward. libya that has a view to

redevelop itself. libya that wants to heal its wounds. overcomet wants to its pain, to reach out to the entire world. it was to rebuild itself, to reform its history. the vision of new libya, s democracy world by a clear, unambiguous constitution setting forth rights and obligations that does not discriminate between male or female, one community or another, one political beliefs or another, east or west, whether by racial or ethnic justifications, all libyans are sons of this nation.

a nation that now is determined to heal its wounds and move on, following 42 years of -- from the international community, as a party that can help in building a human civilization. we do not claim that we have a magic wand as gaddafi claimed, when he looked at himself in the mirror and suddenly discovered that he is an almight prophet, with a solution to every problem on earth, except for libya's problems. for 42 years, libya now hwaas 15 of its people under poverty, an educational system that is the worst in the region, health services which are the very

worst in the region. the infrastructure is falling to pieces. unemployment is over 30% among youth. these are the solutions handed us by moammar gaddafi. libya itself is witness to that. the new libya that i am speaking of, mr. president, ladies and gentlemen, did not come from of the ca vacuum. it has been watered by the bloodshed since the 17th of february, when libyan youth decided to open a new page and libyan history. the entire libyan people, young and old, women and children paid the ultimate price.

all the sons and daughters of libya have written this page. nobody can claim to lead this revolution or own it, only the libyan people can. in the very first week of march this year, a parallel activity was launched, parallel to the backs of all revolutionary youth in libya. a group was acting day and night to provide political support to explain the actions of our libyan youth on libyan land, to explain the libyan vision, to explain the deprivation of any development for the past 42 years. friendlies sister states responded to that call.

they responded to our plea. they reached out to the hands reaching out to them. the world did help us to shed injustice. on my own behalf, on behalf of the libyan people from this rostrum, i thank all friendly states, all sister states, all regional organizations. the united nations for revolution -- resolutions 1970 and 1973. they were a determining factor in protecting civilians and preventing any further massacres by gaddafi. this continuing diplomatic effort i can say that today that victory was achieved. and now we have a neww

mission. let us make another attempt. let us reach out to those who want technical assistance now. let all funds be unfreezed so that the libyan people can rebuild, having got rid of the attorney. tyranny. mr. president, ladies and gentlemen, libya today is before -- expectations and a rifl ghtful dues. the facts can be summarized briefly. a land not fully liberated yet. there are get some friends to be

vanquished. it is our right inside libya to re-conquer our land. soon, god willing. there is an infrastructure -- many wounded orders imartrys iny cities. schools destroyed in my country, now number more than 63. there are more than 50,000 injured. amputees number more than 1700. they await help and succor so that they can once again contribute effectively to rebuilding their own country. the social fabric is in need of healing, having been torn by

gaddafi. he tried to turn some tribes against others and some regions against others. the economy is treading water. oil waits pumping and exporting. we believe production is being resumed. however, we do require more assistance in that regard. funds and assets are frozen. the announced the lifting of the freeze certainly does not rise to what is required in order to shore reconstructionist rehabilitation of the country. state institutions require rebuilding. they need to be reestablished and rebuilt. particularly in a country that has been deprived of any real institutions for over 42 years. a state that had no law or

institutions. there are social and political demands, not just for participation, but also for setting priorities. we first and foremost must agree on the rules of participation. let me add to this fact, as you know, ladies and gentlemen, that there are many expectations on us from our people with in an from you, members of the international community, without. as you caonsider how the transitional period is going to end, how the transitional government is going to be created. you're calling for respect of human rights. you are calling for respect of foreign workers and dealing with them in accordance with international norm.

you are calling for us to include oil. you are calling for us to build institutions at the required speed. you require us to achieve national reconciliation, to end the militarization of our streets and towns. you're asking us to maintain the unity of the homeland, and you want to join us in rebuilding. this is a lot by any standard. nevertheless, i do believe that our people, a people that all bet would not been able to bring its regime down, but people the faced political initiatives from all sides, believing that the situation was at a standstill, let me tell you, the

transitional national council has always rejected a compromise solution. the libyan people proved that those calculations were wrong by its will. that people proved that it can. and i have every conviction that it can, when the battle and the -- win the battle and the war, despite all of the doubts and problems i just listed before you. national unity . on national unity with the united land, without national reconciliation is a dream. achieving security and achieving national reconciliation is an important, urgent demand on any government, whether an inch from or are transitional government -- an i transitional

government. no participation is possible with our rules for the participation. therefore, a draft constitution to be put to referendum among the libyan people is of utmost importance. so we want the rules of participation to be just, to govern the dialogue, to give rights to all without discrimination to any individual or group. the assets freeze on our funds must be lifted as urgently as possible. let me appeal to you from this rostrum. let the security council soon take the historic resolution to lift the freeze. the regime has fallen, even

though we have not liberated it the entire homeland yet. we want the help of the united nations, the help of friends without condition. legitimateit's a right of all states to enjoy sovereignty. it is an undeniable right, whatever the nature or size of assistance that we seek. the libya we want, mr. president, ladies and gentlemen, is a state of law an, an oasis for human development and the middle east. and we believe that libya, through geography, history, and its geostrategic importance, is

a link between north-south, east-west. libya must resume that role once again. their role has been denied know for 40 years. i believe that development solutions that libya can propose in future may help find unprecedented solutions to the phenomenon of migration from the african continent to southern europe. we believe that the 21st century will be ruled by geography to a large extent. we believe that africa geographically and on human resources has the most capacity.

and we believe that hundreds of millions of young africans will seek to move northward. libya can be the gate to development and instead of being the obstacle of migration from south to north. african labor, the skills and competency is that satisfy the needs of the european economies i and many with me believe that african labor may contribute to european economic growth, particularly that in the next 30 years, europe will be facing a much smaller population. in 2050, the population will go

down by 27%. the afghan population will be over 2 billion. we believe that africa can contribute to economic well-being through an agreement between the libyan capital and european regulations . on the political front, libya must be a civilian state of democracy, giving full opportunities to its sons and daughters. women must have a major role in this state. women in libya, about 50% libyan society, women in libya enjoy the highest level of education. they continue their education

for the longest time following high school. we believe women have a genuine role that they must play in rebuilding and developing libya. as for foreign policy, we need a vision that radically reduce the foreign policy of moammar al-gaddafi, a policy of terrorizing, of sowing fear, of black male in many regions. -- blackmail in many regions. rare if the region of the world that escapes suffering from the practices and plots of moammar al-gaddafi in destabilization and terrorism.

the new foreign policy must be based on mutual respect. must be based on mutual interest. it must be based on non- intervention in the internal affairs of others just as we do not expect that -- expect others to intervene in hours. ours. international instruments, conventions and treaties, values must be respected. these are the terms of reference for all relations in our modern times. the rebuilding of libya, a state of democracy, is an important matter, not just for libya. it is, mr. president, ladies and gentlemen, it is of importance to the entire region. libya is able and has the opportunity of becoming a model

of democracy and successful development. separating politics from the economy has shown many negative examples in our region. the time has come for a vision of diplomacy that puts the youth and women at the very top of its priorities, not just because they make up 67% of the population of the arab world. it is because the future belongs to them. it is in them that began and will lead this revolution and other revolutions in the arab spring. therefore, a new vision that responds to the dreams of youth. the international community must support this edition. otherwise, the region will only be subjected to successive waves

of instability. supporting libya in this development paradigm is no less important than protecting innocent civilians. the international community, and we thank you, did so in implementation of resolution 1973. in this context, we have a clear initiative that may be called the building of the new libya, where brothers and friends contribute. however, the united nations must have a leading, pivotal role specialized agencies can provide expertise and assistance. we want those agencies to have a pivotal role in order to avoid

any possibility of corruption or lack of transparency. mr. president, ladies and gentlemen, we believe that roads are paved by the feet that walk them. the libyan people have begun their march to rewrite their history. we have the greatest hope that this international organization, that went hand in hand with us, there was a trust for the friend, the entire international community to put an end to an imminent massacre in my country by intervening at the correct time to save civilians in the calln nalizing

from the arab league. and we thank the arab league for that. we believe the international organization, just as it was a faithful friend then, can now be a trustworthy partner in rebuilding of my country. this is the major battle where we appeal for your help and assistance -- political, economic, financial, and technical. thank you very much for your kind >> coming up live this afternoon we will be live in new york with "new york times" journalist thomas friedman. you breezily cowrote a book with michael mandelbaum looking at the distasteful of the world called that used to be as. the authors will be at an event

hosted by johns hopkins school of advanced international studies here in washington. you can see that live online starting at 5:30 p.m. eastern today. at booktv.org. >> and in just over half an hour we will return to live coverage of a summit on china's growth and influence on the world economy. right now remarks on emergency disaster funding and at the which last the innocent on temporary federal spending. lasting into mid-november.conti >> host: ed o'keefe joins us with the "washington post." is a reporter and blogger. you may have seen his work. welcome. >> guest: thank you. what was de? guest: dropping funding for federal emergency management agency for the restfiscal runs thr

they will pick upou with picked 5 billion funding for fis12, about for the first few weeks of fiscal 2012. congressional republicans wanted to offset new disaster spending -- consistent with their call to cut spending, if you are going to create new spending. a house senate and democrats said, no, disaster spending has always been done no matter the cost, to get money quickly to disaster survivors and they generally of course take issue with the idea of cutting in order to spend. essentially over the weekend the federal emergency management agency discovered they had about $114 million left in what is called the disaster relief fund, the pot of money for presidentially declared disasters. individual assistance, public assistance, all of that is covered by this fund, as are

some operational costs. the teams that go out on the field, some are paid for through this fund. part of the reason we now believe we are able to stay solvent through friday and continue providing relief is over the weekend they were able to recoup about $40 million in unused disaster spending. you ask yourself how they were able to get money back. states and cities don't actually spend it all when they get it. they do return it. this happens pretty frequently. we just don't notice it because we are not sitting here all the time monitoring fema spending. that was part of the reason why they were able to say to congress, look, we were able -- enough to get as thursday, maybe friday. it depends whether there were major disasters this week and how many apply for assistance. there is no way of knowing but conceivably it looks like they will be able to get through the we just fine and picked up for fiscal 2012. host: what does this say specifically about the way fema funds the program?

caller: it says they probably need more money. find me a government program that does not in this town. but the argument is a year where we already spend $7 billion in disaster is in the -- there has to be a serious discussion about providing more money to an agency designed to get really fat faster. you can take whatever position you do on the way the weather is changing in this country, but there is no doubt this has been a severe weather year. a historic tornadoes and flooding and ice storms. you now have hurricane irene which caused a lot of destruction on the east coast. and every weather expert you talk to come every disaster expert says things are getting worse, and therefore more money will need to be spent. at a time states and cities do not have the money to spend themselves, the federal government will be needed. this is one of the basic areas where states and cities say we need federal assistance. it is when it comes to sound like this. host: ed o'keefe here to talk

about disaster funding, as congress came up with a deal. you can ask him questions and do so -- but to get a perspective on how states and specifically cities deal with the issue of disaster funding. joining us on the phone is thomas leighton, the president any delay in the federal and

state government really affects the lives of our people. it affects their ways of getting back to work in their real jobs. , have had devastation in the surrounding communities and aid is needed from washington. host:, as your city received investments as far as disaster funds? >> the city itself with the infrastructure we have about $3 million in damage, some of the walls along the creeks collapsed and other infrastructure problems. we had to evacuate 20,000 people. and the surroundingere. it is a matter of helping each other get backth will need the m

washington. guest: i just wanted to clarify, you had disasters essentially tied to of hurricane irene with the river flooding and then the remnants of what was tropical storm lee, right? >> that is correct. we got hit in a two-week period with irene and lee, just getting back to a normal way of life and then being hit with lee. guest:irene? >> yes. guest: how many roughly? give us aficials.

now it is just what is being done at the you went st: what ? >> we have to bring out private

contractors because we do not have the personnel. these contractors expect to get paid. and we need to stay on our elected officials to make sure the funding is received in a timely manner. host: how does your city stand right now if you do get more rain and flooding? >> the city is fine right now with the exception of the areas that got flooded. 15 states that sustained serious flood damage. they are getting back to normal ways of life. a lecture city has been turned back on. they are getting their heating but theying checked. are still affected because of the lack of funding that has not been received from them yet. host: talk about the political process, especially the going ba

he knows the situation and knows these people need to get back to their homes. guest: of washington were having a serious conversation about disaster $1,000 to repair the

hot water heater, they did not have the $15,000 to repair the electrical services. these senior citizens of the water heater would cost $200 or $300 and the workshop to get a bill for $800 to $1,200. these people do not have the money and they need to host: thank you for your time. guest: spend some time talking to folks like the mayor who are

being held up by this process -- the work force of $47 million worth of projects -- their work force of $47 million worth of projects the have to be suspended. you had all sorts of projects and all sorts of states dating back to hurricane katrina and the florida hurricanes. big road projects in north dakota. rebel the of electrical power lines in iowa -- rebuilding electrical power lines in iowa. people affected by irene and delee. it becomes a very tricky situation for these cities who have to put contractors on hold and maybe divert payments for

road projects. it becomes a real headache for these cities. host: we have a comment from twitter. guest: they do budget money. the white house said they will need $4 million. -- $4 billion. we'll see if democrats push for more money. they will increase in fema's spending. host: another comment from twitter. guest: i believe they would. it would not look good if you're keeping money for no good reason. fema does a good job of making sure the money is spent properly.

they had $40 million come back to them. they said this happens all the time. host: a phone call is available to you. the alliance will be on your screen -- the lines will be on your screen. caller: i want to say hello. in response to what the republicans are doing, they made sure there is no job created by money funded toward any city suffering from a disaster. this is a example of what a stimulus package would do. it jobs would be created. they do not want anybody to see how jobs are stimulated or how congress gets started.

these are corporate republicans. they're trying to make the economy standstill. if there is any money that is going to be spent, they want to make sure it is spent on stopping obama and making sure that unemployment stays high. guest: it is obviously an emotional debate between democrats and republicans appear on the hill, discussing these differences. both sides have valid arguments. i think there was a real sense that they did not want a third fight in just six months the might have held up government operations. >host: brooklyn, new york. caller: my eyes were glued to the screen watching the people suffer.

we did not get hit that hard in brooklyn. i am appalled at the republican party. this should have been reached two weeks ago. i hope the american people wake up and realize that it is mean- spirited. i will be voting for president obama in november. i'm fed up with republicans. host: we have seen other -- have we seen other times when funding for fema has been a political issue? guest: you have interesting timing with the hurricane in august just as funding was running out. use it runs out in august and september when the fiscal year runs out. perhaps there will be -- i am also happy that irene the not cost too much damage in brooklyn.

host: hurricane katrina comes in with $7.2 billion in 2005. guest: right. overall this year they've spent over $7 billion combined with these tornadoes and floods and hurricanes. erector-setting year -- a record-setting year. this shows you the expense with which fema is dealing with, not just the 50 states but re puerto rico. their resources are stretched. lawmakers called to talk to

constituents. they say fema has turned itself around from the disaster that was hurricane could trade up. there was much better response time. much better than what the mayors and governors need. fema can put people and resources in the field ahead of the storm, which is what you saw with hurricane irene. they went to the immediate needs funding in order to anticipate the costs of irene and lee. host: any sense it will lead to a consensus? guest: we have seen democrats over the past few days and other senators and members of the house whose states and districts have been affected by the weather in recent years.

the white house is saying give them at least $4 billion, which is double what congress wants to do. they have relied on the if you give them some now, we will get more later argument. host: sue on our independent line. caller: i wonder if all these home owners in these disasters have the foresight to of homeowners insurance, which is supposed to take care of their personal home. and if the states and local governments have taxes where they do here in columbus to take care of the roads that are damaged. this to me is not a federal problem. it's a local problem. i had a fire. i had homeowner's insurance. it took care of my home.

you watch what happens to the personal responsibility. guest: this is an argument that people make. individual assistance to those homeowners who need a federal aid. they are only, to fema after they have exhausted their own personal insurance accounts. fema is not necessarily used in place of that. they have exhausted all other options. a fire insurance policy will cover all this. i believe that fema only gives it up to about $25,000 in individual assistance. it's not like somebody will get a few million dollars to reconstruct a home. this argument is one that ron paul is arguing about, saying states and cities should be responsible for.

in the 1970 cost the states and cities came to the federal government and said we cannot do this on our own. this happened after katrina. more needs to be done. you have a good point, sue. just because your house is damage, it does not mean the government will pay for ait. host: there was a study from george mason university. what differences are there between how much the administration request and how much they get? guest: i think it depends on the year. some republicans have ordered for thatd of last have asked

for fiscal 2012. that is a good point. the white house went out and assumed that the money would come as necessary and there will not be an argument that you would have to cut somewhere else if you spend on fema. we have to find other ways to cut. you have seen them pulled back and say, we will pay for this. we may not put up as big a fight on cutting elsewhere. host: republican line, cheryl. caller: when i heard about this arguing over fema, it occurred to me that i have paid my fema flood insurance that was due in august 27. on friday, i e-mailed my

congressman and my state u.s. senator, mark rubio, and ask them who i can get my refund from. if they were going bankrupt, it seemed fraudulent they have taken my money that i needed to pay my comcast bill so i could continue to communicate with them, since that is the only way you can get messages through. i wanted to know who should i sue? we pay for fema. we pay premiums. i pay three and seven $9 every august for flood insurance -- i $379 every august. i wanted to know who to get my

money back from. guest: i think you called the right people. keep calling. host: raleigh, north carolina, democrat's line. caller: spending cuts -- george bush -- george bush was present -- [unintelligible] nobody was talking about spending cuts than. people were hurting. you cannot control. try to block funds. maybe they should not get a paycheck. host: has funding from work

changed drastically since katrina? guest: yes if only from the emergence of the tea party republicans who are pushing for this. it has refrained the spending overall, not just for fema. host: houston, texas. caller: please let me make my point. my reality in houston -- we were 15 days without electricity in our neighborhood after katrina. we pay our fema and flood deal policy and we don't have to cash in on that. you fast forward -- from katrina until ike wasn't

happen when somebody in the neighborhood on the committee to the homeowners' association, we had somebody the next block over that fema had paid all this time for these people to stay in a house, a rental house. people were not even there. the lady that was supposed to be there was not even there. with a living boyfriend elsewhere and nobody ever reported that. i was beyond appalled. to me is not any of the fraud and abuse. our federal government not doing their due diligence and taking care of the monies that are being dispersed to them.

guest: i think you're talking about katrina, rita, and id survivek vske survivors. fema is trying to get some of that money back. they did not realize there were not supposed to apply for multiple rounds of pay. let's say the house was hit by both katrina and rita. they may have accidently applied twice thinking that because there were displaced by both storms there were eligible both times. in fact, there were only eligible once. fema has come back to them and said, you need to give us back that money. there was a disagreement about whether or not they were told that. they had to return the money.

we don't hear about those things unless it has affected your neighbors. people taking relocation grants and not necessarily state more they were supposed to. those are the types of people that fema is trying to get money back from. judges have said the need a better job explaining to disaster survivors. if you get hit by multiple storms, you only get paid once. host: there is a story this morning talking about tropical storm irene. could they apply for fema loans? guest: i don't think so. that decision was made by the mayor. he was criticized for this. but it made sense.

it would be worth following up on. i think there may have to swallow hard. host: phil on our republican line. caller: i am appalled that the leaders have skipped over the budget process for years. they get caught up into this bickering. i think they should all lose their jobs. i say reelect no one. a reasonrformance is why government should stay out of some services. thank you. guest: they have kept out of it. we appeared to have enough money to stay alive through thursday and friday was a big sigh of relief for lawmakers.

host: why do not know that? guest: that is a good question. the agency said they would be able to get back $40 million. this was money that was it needed. they don't mind giving up more than necessary. better to be over prepared then to of a katrina-style response to a storm. it behooves reporters to keep tabs on them and make sure they do go back and get the money. host: how much will they get? guest: 2.6 $5 billion -- $2.65 billion.

host: is to talk about staggering the money -- is there talk about staggering money? guest: there will be snowstorms and ice storms of some kind in the fall and winter. then it starts to pick up with hurricane season in june. they start spending a lot of that money over the summer. host: jacksonville, good morning. caller: where can citizens get information from fema about who is not eligible for fema assistance? if you owe any taxes, for instance, you're not eligible for fema assistance, no matter how great or else mall is. there are other areas that you

would not qualify for food assistance -- no matter how great or small it is. they have your money, but you never are able to take a vantage of assistance in a disaster. but you still pay off your taxes -- you're not able to take advantage of assistance. that means they discriminated against you because you overtaxes but there will not wash those taxes from you. they say, you still owe the taxes. you paid into the system but you don't get anything out. guest: you can go to fema.gov to find links for assistance. they have a pretty good life out of the different types of

assistance that you might be eligible for. and it was homeowner a flood or not a flood. they have links to all the types of assistance you may be available for. the small businesses administration gives out money. money is given to the states for road reconstruction. money is given to farmers that are affected. when you see these disaster sites, you see the fema people and the other people because there are three primary agencies they give out money after big disasters. host: what about people that are not eligible? guest: i'm not as familiar with the issue of taxes. and how laid out there to do it.

host: lancaster, pennsylvania, nicholas. caller: republicans are trying to stop money from going to fema -- that's the wrong idea. towns nearby were hit hard by the storms. we have to figure how we are born to pay for it. we can't keep giving different groups money. i don't think republicans want to stop giving them money. they want to know how we're going to pay for it. guest: that is true. caller: i think they want to know how we're going to pay for it. the government has to do the same thing. guest: you make a good point. most years you'll see stand up when fema funding has

to get, you know, appropriated or when they come and ask for emergency supplementals and they will say -- i'm not voting for this because once again we're adding to the deficit and we're not going to find a way to cut somewhere else to pay for this well, nobody -- that argument didn't fly in previous years before you had several lawmakers elected to washington with the backing of fiscal conservatives who insisted that you had to have serious conversations about the way the government pays for things, and yes, nicholas, you make the point republicans have said we're not going to pay for this but we need to talk where we cut and spend the federal government's money. eric cantor whose district was not affected by irene and the earthquake. we will pay for this but we should talk about how we balance the books in the process. he got a little heat for that and he came back and he said let me be care we will pay for disaster relief funding but we should have a conversation about how the government pays for these things. >> host: how does fema determine

who get paid first? >> guest: it's essentially those immediate disasters and that's why you saw this delay of $447 million to these states all across the country. in the case of irene, for example, they knew there were going to be 12 states and puerto rico affected by this. they were going to need help fast. they were going to need, you know, money spent on rescues and money spent on shelters and so essentially they go to the most recent and then work their way back. and it depends, frankly, on how quickly a state gets its disaster requests in so the white house and how quickly the white house signs off on those and how quickly fema gets people in the field to start walking the streets and doing assessments with the local emergency management officials. and that's why increasingly you're seeing fema put people in state emergency management offices ahead of a storm so that they can be there and head out right away as soon as the situation is safe to start doing the paperwork and getting a sense of what's going to be needed. >> host: and the process also decides who doesn't get money for a short amount of time? >> guest: yeah, on the back end

they will sit here in washington and say, well, look, you know, we have all those projects, for example, in north dakota where we want to raise the grade of a bunch of roads because they've been washed out in the past. in an effort to mitigate future disasters we want to spend "x" amount of money raising these roads away from the river. well, okay, it's important it needs to be done but it's not an immediate need and they will sit here let's look at this list and what doesn't have to be done right away and what can wait a few months. they spend the money on the side and they eventually get their money. >> host: florida, democrats line. go ahead. >> caller: my question, i was flooded in '95 by opal and we had flood insurance and we had our regular insurance. so we had everything taken care of. fema came around and asked if we needed anything but we didn't. what i want to know is -- i'm not in a flood zone now but i still have flood insurance. does that money go to fema or is that another pot?

>> guest: that's a good question. i believe that's another pot. it's not as if fema is going to use your money that you're paying to go pay for somebody else in that disaster but don't necessarily quote me on that. and you're wise to still have flood insurance even if you're not in a floodplain and it sounds like you've done your homework and you're an example frankly of what fema wants everybody to be. to be insured as possible and thinking of this stuff especially when you live in states of florida that are prone to all sorts of natural disasters and bad weather. >> host: our guest is federal government reporter. he's always blogger for the federal eye. what is that? >> guest: federal eye is a blog that as we say keeps tabs on the government, everything from the postal service to the pentagon to fema this week to the flight of federal workers and federal retirees. and in this town, you know, government is the industry. it's like covering the auto industry in detroit or, you know, the movie industry in hollywood. this is what we cover. and when you have hundreds of thousands of area residents who

collect the government paycheck because they work for it, you know, it's important to us. >> host: you have a story in the paper today that deals with stamps. >> guest: well, you know, if it isn't fema it's the postal service and all other sorts of agencies and the postal service announced yesterday for the first time ever they're going to start honoring living legends instead of just dead ones. usually the rule has been that you have to be dead at least five years in order to apply to have a stamp in your honor. it's kind of like being a catholic saint, i guess, you have to be dead before you get the honor but, you know, in light of the slumping sales at the post office and the fact they're trying to gin up interest in mail generally why not open it up to living legends and allow people to vote. and they're asking people naturally to mail in their suggestion physical they'd like to headquarters here in washington or to use facebook and twitter to reach out to them and say, hey, give us five names. it could be bruce springsteen, it could be bill gates, it could, tiger woods, it could be

president obama, or george w. bush and inevitably the postal service will start putting people who are alive and breathing or recently dead on postage stamps. >> host: jacksonville, florida, jd on our republican line. >> caller: yes, i was just curious, you know, fema -- fema being government it would more than likely it's union run. and i just don't understand how the democrats is always crying that the republicans are the party of no. and all they're really wanting to do is just hold the democrats and hold the government responsible for the money they're spending to know where it's going. and -- i mean, the people being well, in a position -- it's our money, the people's money they're giving it out. they should be able to know and he should this be able to hold the government responsible for the money they're spending and know where it's going. i mean, it's just ridiculous

that they can say every time the republicans are saying no, all they're saying just simply let us know. we want to know where the money is going. >> host: we'll take one more call after that, fort myers, florida, the democrats line, barbara. >> caller: i feel fema should be included to the budget and it should not be tied to any other issues. if the republicans feel that you should pay for everything on the front end, then maybe they need to consider closing loopholes in taxes. it's not fair. anybody that lives in florida cannot risk not being considered for a fema grant because we have hurricanes all the time. and the other thing is, maybe they should look at some other sources of income. for example, taxing lobbyists

and not allowing businesses to consider -- >> you can see the segment in its entirety at the c-span video library. we're going back live now to an all-day summit on china's growth and influence in the world economy. up next former u.s. treasury secretary robert rubin is part of a discussion on whether the u.s. is prepared to compete with china's economic growth. this is live from the u.s. institute of peace here in washington. >> to talk about this today, we welcome robert rubin, former secretary of the u.s. treasury. he headed the treasury department from 1995 to 1999. he first joined the clinton administration as assistant to the president for economic policy and director of the newly created national economic council. he had his career in finance at goldman sachs and ultimately became its co-chairman. he's currently co-chairman of the council of foreign relations and also happens to be a

bestselling author. please welcome one of the most important figures on the american economic scene, mr. bob rubin. [applause] >> thank you. i'll be moderating this panel as you may have gathered. titled is the u.s. ready for the next phase for chinese competitiveness. the other members of the panel are david loevinger, coordinator of treasury, and former financial attache at our embassy in beijing. mr. libin part of the national development and reform. now chief economic officer of the chinese embassy in washington. david rubenstein, cofounder and managing director of the carlyle group and finally, mr. cheng li, fellow and director of research china center in the brooks

institute. let me start with a very brief view, if i may, of the u.s. economy because it kind of helps frame our discussions. these sorts of discussions -- when you have discussions about the united states and china, at least in this country they often have an aspect about them where you are feeling that china is in the process of becoming an economic goliath and then great concern about the future of the united states in what is a rapidly transforming global economy. let me briefly give you my own views. there's no question the united states is experiencing difficult conditions. at the present time we face enormously the powerful head winds and in my view at least recovery is highly likely to remain slow and difficult and unemployment stubbornly high for an extended time. having said that, i believe that the policy could make a material difference, both in the rate of growth during a slow recovery and in avoiding a double-dip.

and as to a double-dip let me just say most analysts think that's still relatively unlikely although i think analysts' concerns have increased somewhat lately. let me make one comment in terms of this shorter term outlook. we have a fiscal drag in 2012. and it seems to me imperative to put in place enough of a stimulus so that we can counter-balance or offset or make up for a cure, however you want to put it, that fiscal drag and what i'm about to say not a partisan comment whatever it takes is fine. the stimulus -- the 2012 portion of the president's proposed stimulus fills that fiscal gap and adds a bit beyond that and whether it takes on a form i i don't think it's important we have a fiscal stimulus. what we should do at the same time is to enact a serious long-term deficit reduction program which, however, though enacted now would go into effect in 2 or 3 years to give the

recovery a somewhat recovery to take hold and i think if we did that i think we could have a substantial positive impact on confidence which could be of enormous significance right now. however, realistically to do that, we could cross-constraints and also significant increases in revenues and obviously the politics around all this are very difficult and that would be my final comment on the economy. when all is said and done you can look at the challenges that i've just mentioned with respect to the shorter term and i'll touch on the long-term in one moment as well. but the ultimate and dispositive is longer term will. in the longer term i think the united states has flexible labor and capital markets, rule of law, demographics, natural resources and much else. i think in a rapidly changing global economy we are well positioned to succeed. but to realize that potential we have to establish a sound fiscal regime and we have to have

strong public investment and we have to have reform in many key areas of the economy, health care costs, immigration, energy and so much else. and so once again you come back to the same issue, which is the politics around this are all exceedingly difficult and ultimately the challenge and i believe this is a dispositive challenge the question of whether or not we will have the political will and whether our political system will be effective in doing what it needs to do. with that now let me start with the questions and i'm going to start with our two chinese friends. although i will point out that one of our chinese friends, though a student from china is doing it from the united states and is now an american citizen. what is the view in china, the view in china, with respect to the american economy particularly the longer term prospects? and with respect to the effectiveness of our political system? if either one of you could

start. >> thank you. and i'm happy to be here. and you're right, to have an identity -- having an identity crisis and following henry kissinger term is having a chinese mind. that mind has been americanized living in this country for 27 years. i try to be objective. and correct me if i'm missing china's positions. when china look at the current financial economic situation, particularly, u.s. economy, i should say they do not have a unitary and homogenous or monolithic and a rigid perspective the perspective is quite broad and divided and prolific in the dynamic. i can say that there are three perspectives with regard to u.s. economy and global financial

situation. one is that the view that is shared by some conservative leaders in the so-called the new left intellectuals believe the new financial crisis in the u.s. proves it's a latest sign of american decline which will affect the structure problem of the united states. so it's a long-term problem. and that also they re-enforce their perception that china is going in the right direction not only in terms of the state of monopoly but also the one-party rules of the system. that's one view and the second view is the long run. they see american decline and they see american trends and the competitiveness particularly the reason it's frequently used, it's the american dynamic in a mature private sector and a very strong global sector and both natural and human resources and american soft power is a

political system and they are also allowing this view some people worry that what happened in japan in 1990s the so-called lost decade may also be happening in china. so this is the second view. the third view in my view is a mainstream view. and regardless they think collaboration with united states is not a matter of choice but a necessity. and using the term in the same boat is probably even better. it's the two engines, united states and china, two engines in the aircraft of a weak economy. and the china and the u.s. market and china also wants u.s. technology and most importantly that the china concerns about the security of china's financial investment in the u.s. so this is the perspective, a chinese perspective quite diversified. >> that was a remarkably good summary of a lot of different

positions. libin would you like to add that. >> as a chinese-american in washington, d.c., i think i'm very optimistic about the u.s. economy. you see during the fourth quarter of last year it was something like 3.8% i think gdp in the u.s. and later it was 0.4 and then it was 1% here in the previous quarter. i think the trend is still upgoing. so we shouldn't be too pessimistic so this is our goal and, of course, on the scenario of the employment, i think, is a little bit pessimistic. there are in the u.s. about 14 million people who don't have jobs or who lose their jobs or who don't want to work for the jobs. and i think the other day when i met with some of my friends, they said about 40% of the adults in the united states don't work. at that time i was really surprised. i think the figure in china is certainly not this figure.

so from then i was also a little bit pessimistic. and for the other pictures for the u.s., i think it's for inflation is a little bit high but it's not that high. too high so as to cause problems. i'm thinking really -- i'm accustomed really thinking in terms of the chinese policy which is really fiscal. so the other two or three years ago you still remember that chinese used r & b to drive the economic growth and, of course, the investment from the central government was only more than 1 trillion and the other investment comes from the society or the local government or whatever sources. still, i think, you know, in the u.s., i think -- i'm thinking of fiscal measures, so the appearance really reminds me of the fiscal measures.

so but i think in the u.s., you're also talking about reduction of the deficits so this is really a contradiction. >> you really want -- i mean, the other year when china implemented a similar policy it worked and now it's 6%. why don't we in the u.s. also try something which is fiscal, right? if you don't have anything -- if you don't have any more things that you can do from the monetary side, or mr. bernanke can do why don't you do something fiscal? the other day when i visited friends he also said the administration would also like to do something fiscal. >> but i think the reconciliation -- china was in a somewhat fiscal situation when you were using stimulus what president obama has proposed but this is not a partisan comment. it was the same thing

erks & bowles and to try to get the economy going and even under those circumstances we'll still have a slow recovery and do the fiscal stimulus right now to try to give that as much impetus as possible and either david would like to respond? >> first i have an identity crisis as well because i grew up in the united states where we were the dominant economy in the world and we thought for at least my lifetime we would remain the dominant economy in the world. now, i and my fellow americans have to adjust to the reality that we're not going to be the dominant economy of the world for the rest of our lifetime. china by depending how you measure either 2016 or 2025 will probably become the largest economy in the world. united states for the longest time will be the second biggest economy in the world and we have to adjust to the realities of that. i don't think we've done a very good job of adjusting to those realities. a classic example of that is that the united states -- does not really, i think, welcome chinese investment in this

country. we make a lot of investments in china but china doesn't make a lot of investments here. last year in 2009, china invested 1.5 to $2 billion in the united states. a relatively modest amount in the foreign direct investment why is that? it's because we're not that welcoming of china. we've made it difficult for them to invest here so they find it easier to invest elsewhere. if we're going to deal with our economic problems appropriately we have to do many of the things you mentioned, bob, but also we have to be more welcoming of foreign investment particularly from china because that's one of the ways we can reduce their enormous surpluses. i think american business community has to recognize we have an obligation to talk our government about doing things that make it easier for the chinese to invest here and we have to work with chinese companies to make sure they understand they are more welcome than they might think. right now they don't feel very welcome. >> i would ask the two davids to respond. since david us taken us there, what do you think the politics

is or the politics are, i guess? what are the politics right now around chinese investment in the united states? and let me make one -- make it just slightly more specific. we have immense infrastructure needs. we do not have the governmental funds at any level to do what we need to do. on the other hand, if we were to do this on a privatized basis and welcome chinese capital that could be a very -- that could be significant both short term and long term strength to the united states economy and secondly, we have a lot of japanese transplants here now and they've been very successful in the auto industry. would we welcome equally chinese transplants? the politics and then as two examples the infrastructure and the transplants. >> okay. right what i would like to do is kind of address two issues. the first issue is this whole narrative of china thrives and the u.s. declines. and i think my former boss made some good points when you think about the u.s., you know, think about how many times in the past people have said the u.s. is on

the way out. and they've been proven wrong before. we're a resilient economy. bob mentioned a lot of the long-term fundamental strengths. and when you think about those fundamental strengths, you know, rule of law, innovation, a financial sector that can get capital to the most innovative sectors and firms, think about the challenges that china faces. so don't count the u.s. out. a lot of the head winds that bob talked about are u.s. households, u.s. states and municipalities and the u.s. federal government reducing our debt, increasing our savings. that's, you know, going to feel painful right now but it's going to put the u.s. economy in a position where it's going to grow and prosper again. you look at china, you know, trees don't grow to the sky.

and, you know, i know libin and his colleagues at the national development and reform commission are rightfully very focused on the medium-term finances that china faces. it has huge demographic challenges. it's facing decreasing returns from ever higher levels of investment. if you look at china's new five-year plan which i think mr. li and his colleagues have a very important role in putting together, there was a very clear recognition by china's leadership that they can't continue on this growth model of, you know, relying on exports, relying on investments and resource intensive pollution, intensive heavy industry. it needs to change if china is going to get to its next stage of development and just as you said, you know, the question is,

is the u.s. political system up to the challenges we face? you know, those are very real questions whether china's political system is up to the challenges that it face because just like in the u.s., everybody agrees, you know, we need to reduce our deficit over the long term except, you know, don't tax me. tax the guy behind the tree. in china as well, you know, there's very powerful vested interests that have a stake in china's development model and they're going to resist change very fiercely. >> i wouldn't say -- i'm counting out the united states. i'm not talking down the u.s. economy. u.s. will still be the second biggest economy in the world 20 years from now or 50 years from now. i think the second biggest has lots of virtues. it's a great place to live and for entrepreneurs and so forth and china has many challenges to get to be the largest economy in the world and it will have its ups and downs and i think we have to recognize the economic reality of the shift from let's say 1960 to today. 1960, we were 50% of the world's

gdp practically. today we're about 21 or 22%. and probably going down. but we're not as dominant in the global economy and we have to adjust the united states to that reality and i think the sooner we adjust to it i think our economy will be better off. on the fiscal situation, people, i think, don't understand fully exactly what we're talking about in terms of the debt reduction levels we need. we have $14.5 trillion of debt, federal debt. not counting fannie mae and freddie mac which is 5 trillion. >> 14. >> 14.5 of external debt. >> or external. >> 14.5 of external -- of total debt, total debt. >> internal and external debt of federal debt. >> counting fannie and freddie? >> not counting fannie and forehe freddie debt. >> and it's 10.5 -- >> if you count that debt and i think it's real debt you can say we owe it to ourselves. >> okay. >> but it's more or less debt.

14.5 trillion, 5 trillion of fannie mae and freddie mac which we pretend it's really not our debt but it really is. we're talking about projecting the 10 and 11 trillion of debt, additional, over the next 10 years and reducing that by 3 or 4 trillion. so at the end of that 10-year period of time we're only going to be an additional 8 trillion of debt added to the 14.5 trillion added to the 5 trillion of fannie mae and freddie mac but we still at the end of 10 years -- even if we cut 4 trillion still have about 95% of debt and gdp for the federal government. it's not as if we are going to solve all our problems by just solving the $4 trillion problem. and that is not easy to solve either. we have to go through massive changes in our entitlements programs and our tax policies in order to even get to the 4 trillion and i'm not sure that's going to be enough if we're going to be an economic power house for the next 10 years or so. >> i agree with david. this probably isn't the time to have a discussion about how to think about our debt. i guess i kind of think -- roughly 4 trillion that we owe

to ourselves to be in a slightly different category. >> take the 4 trillion out -- >> i have 70 -- >> reduce 10.5. >> we'll take it. >> all we're talking about when we talk of 4 trillion we're not reducing our debt. we're reducing a little bit the increase that was otherwise going to happen in the debt. >> where he stabilized the debt to gdp ratio. >> right. >> for the growth assumptions may be right and they're pretty rosy and your points are well-taken. let's turn back to chinese investment in the united states. what do you all think the politics would be around very substantial chinese investment in american infrastructure or chinese transplants in the united states. >> my own view is that there are three countries that when they want to invest significantly in the united states, there are political problems. one is russia for the reasons they were our cold war enemy for many years and while russia is now investing here, it does raise eyebrows when russia wants to invest here. i think for a lot of unfair reasons, the same is true of saudi arabia.

if saudi arabia wants to buy a lot of things here, there are going to be some issues. and i think the third country is china. because we see china as a major competitor in the global economic scene and other national security concerns, we raise our eyebrows much more when china wants to make a major acquisition here than when britain wants to make a major acquisition or japan and i think unless we change that atmosphere, china is not going to put much of its foreign direct investment in this country and that's not a good thing for us. >> david, you're with the united states treasury department. why don't you change the atmosphere? [laughter] >> yeah, i was fortunate to be able to accompany vice president biden when he went to china a few weeks ago. and this is an issue that he talked a lot about. both with chinese leadership and with the chinese media. and his message was very clear and very unambiguous. we welcome chinese investment in the united states. stop, done. that's our message to china.

we like china, like every other major economy, you know, have measures to ensure that we're protecting our national security. in the united states we have something that's called a committee on foreign investment in the united states. and, you know, we hear complaints from the chinese and others about how we run this process to protect our national security. but i think, you know, if you look at it, and i always encourage my chinese friends, you know, to roll up your sleeves and just jump in, it's not meant to block investment unless there's a very narrow national security concern. and lots of chinese companies, lots of chinese state-owned companies have gone through the process with no problems and the thing cfius if you call in and set up a new factory we call

that greenfield investment. cfius has no role over this. so i think our policy and our regulations are very clear but you asked about the politics and the politics is tricky. and i think -- and it's not just only in the u.s. you know, when you look other countries, europe, australia, you know, there are similar issues with china's investment. i think one is, you know, when you look at chinese policies towards foreign investment, you see broad specters where foreign investors are either prohibited from investing or forced to invest as a minority partner in a joint venture and forced to transfer their technology. you know, that perception -- that's when people think of foreign investment in china, a lot of them think about chinese policies. so as chinese companies increasingly come to invest in u.s. and if you look at the data

just in 2010, the stock of chinese investment in the united states more than doubled. so, you know, the trend is really on a very sharp upward path. >> for a very low base. but china is roughly investing 2 billion in the united states. roughly, 2 billion, would you say? >> last year it was -- it went from about 2.5 to about 6 billion. >> 6 billion. >> yeah >> and the united states is investing in china, roughly 20 billion a year? >> yeah. for those of you who work on china, everything in china starts off from a low base. everything grows very rapidly. and as you guys were saying all of a sudden china ends up being, you know, the biggest -- the second biggest in whatever it does in the world. so i'm very optimistic that we're going to see a wave of

investment coming out of china. i don't agree that if, you know -- they're not happy with the u.s., they're going to go somewhere else. look, if you want to be a leading global company, you have to be in two economies. you have to be in the u.s. and you have to be in china, the two biggest economies in the world. >> china is the second biggest economy in the world and they're hardly investing anything in the united states and they're able to survive. >> but like china -- china has a model that will get them from per capita gdp of 500 to 4,000. but i think libin's colleagues are very focused on how does china get to that next stage of development? and it's obvious they're going to do what china and taiwan and all the other asians that were able to break through the middle income trap -- they're going to follow their customers abroad and that's the united states. >> the sent with the general in

china, chinese leaders and the companies are really puzzled by and angry about the difficulties to accessing u.s. markets. and a midterm election ago and the presidential election next year still china will be target and blame some of their problems to china. and most of the blame is not fair. it's not about the white house or the state department but from the congressional branch et cetera. from the chinese perspective we lend you money. we lend you money. we also want to help create jobs through investments and also we want to help you infrastructure, transportation like obama said that we should learn from china in this area. but it's blocked. china should be a solution to your problem, not should be considered as a problem from our perspective. by just all these limitations i

think we are really self-defeating in my view, of course, i'm glad washington have this forum to listen to different perspectives, different views. of course, china has problems. we talk about china problems and there's a long list of china's economic problems and also work for international trade and investment. but that's our own problems. >> i would say in david's defense, not that he needs me to defend him but he's done more to promote chinese investment in the united states than virtually anybody i know and he's worked very hard it's just no one person can completely solve this problem. and right now you find the united states companies are investing much more in china than the chinese companies are investing in the united states. china is investing maybe 5 or 6% of their foreign direct investment in the united states, something like that, a very small percentage. most of it is going to asia but a lot more is going to latin america than is going here and more is going to brazil than is coming here and more is going to

india than more is coming here and i work with you trying to help but not that i did any help but you've done -- you've done a great job. [laughter] >> and it's just that you are working against a zeitgeist that's very difficult and it's going to take a while for american political system to accept the need for and chinese investment to come here and i think we've all got to work together because right now the system is not encouraging that. if anything, on capitol hill, you see more and more people that are saying things that are probably anti-china investing here more than pro-china investing here. so it's a lot of work that has to be done. >> i think that's right, david. steven, do you have any -- >> i think cheng li's comments on chinese perceptions of the problem are not totally related to reality. if i were there -- i know you've done a terrific job and i've heard people say that but why don't we set up a capacity within our federal government to really help chinese who want to

invest here work their way through? is it a very difficult political -- not so much the regulatory environment but the political environment. >> look at some of the figures i think -- during the past three years people say there is a great development of growth for chinese investment in the u.s. that you see in 2009, it was only 460 million u.s. dollars. or 2009 was only 900 million u.s. dollars. last year there was an increase but it was only 1.3 billion u.s. dollars and this year there was actually a decrease which is something like 460 million u.s. dollars again compared to the whole 2008. the whole year volume. so i think when we talk about this growth -- i mean, still compared with some of the other figures -- compare with our investments in the u.s., those three or four figures are still

very small. i heard another figure which says we have proof of total value of 3.4 billion u.s. dollars of foreign investment projects. i was very excited. but i don't know whether that's true or not because only the ndrc approval doesn't really mean the actual investment actually invested in the u.s. is there anything that has been, you know, stopped or disapproved by the relevant agencies? i also heard another figure which is the stock of the total investment in the u.s. is 4.8 billion u.s. dollars. that figure is a little bit biting but that's still far from the figures we wanted. >> chinese investors in the united states. and i thought of this when they had their problems. i think there was a political environment here that one needs to learn to navigate.

i agree with whoever said that china is really part to the solution of our problem, it's not our problem although i think there's a trade issue that contributes to the issues we have between our two countries and there i think you got an exchange rate issue that we can discuss endlessly and i could do both sides of the discussion because i've heard it often enough but i do think there's -- at some point china is going to have to face the reality they have an export-led strategy with a nonmarket based economy and it's creating distortions and an immense political problems but let's leave that aside for the moment. i think from the perspective on the chinese, i think we would benefit enormously from vastly increased chinese investment in this country and i think we should, david, trying to find ways to help chinese who want to invest here navigate our strange political and to some extent or whether or not i agree -- i don't think the regulatory is that much of a problem but our political environment. >> yes, so i agree. two things, first you have to

deal with the -- there's lies, damn lies and then there's statistics. >> there's what? >> there's lies, damn lies and then there's statistics. you look at china data and u.s. data on u.s. foreign investment, it will tell you a lot. if you look at chinese data and david said only about 6% come to the united states, most of chinese foreign investment goes to offshore financial centers or tax havens. now, either i'm missing all those chinese factories that are being built in the cayman islands or once it goes to the cayman islands, it's going somewhere else. so i think it tells you more about chinese tax policy and chinese rule of law than actually -- >> you think there's more investments here that are hidden -- >> no, no. it's going through offshore financial centers or tax havens

and then if you look at u.s. data -- >> do you think there's more chinese investment than we realize because it's going through -- >> no. you have to look at different data sets. so our commerce department reports foreign direct investment in two ways. one we look at who owns the factory. and you'll see that there's a lot of foreign investment again from like the cayman islands and the netherlands and antilles and commerce looks at another data set where they go through the commerce chain and they look at who owns the factory and if you use that data set you'll see that chinese investment is a lot bigger -- >> that's what i'm saying. i said that and you said no. >> sorry. >> there's less chinese investment in the united states than american investment in china. you agree with that, right? >> the u.s. has been investing in china for 30 years. >> i think we're all -- we all agree on the same thing. if you -- if our two chinese

friends could make any one change in the american environment for chinese investment in the united states, what would it be? >> you're talking about u.s. environment or china's own behaviors? >> well, i was thinking of the u.s. environment but you can -- >> well, i think -- i said i want to be fair but i want to also talk about china's problems. particularly, at this point the chinese state firms monopoly has really reached a peak in the past two years. i think with the state monopoly you do not have incentive for innovation. and also you use a term innovation. it's really the economic protectionism. and i think when the premier said very nicely, he said the full word of the china's economic it's unstable, unbalanced, uncoordinated and unsustainable. those are the four terms he used. so basically china is in a very difficult period or changing its

mode of development. exports, labor intensive, high energy costs, high environmental costs to innovation driven economy and with a strong domestic demand. innovation economy requires political openness. and the service sector environment is more in the rule of law as you mentioned several times. you're right. but you can see that these kind of problems become bottleneck. it's a political bottleneck for china's image. we talk about linkage of politics and insecurities. and on top of this china will have leadership next year. this is in my view it's a problem or difficult than nine years ago. that china domestic, you know, interest groups, china has a leaders trying have a public opinion may not always say the

same song. but also china has what i call the tea party movement as well. [laughter] >> something quite remarkable, you know, the political campaigns. this is a new game in many what's but as we know, 70% of leadership would change but as we face next year, our elections, china succession, so political rhetoric will be very strong. >> in china. >> in china as well. >> when do you see the rhetoric here? >> china is very, very strong because of this. the leaders are very cautious when they want to cut a deal with you. so i think at the moment we certainly hope that china will gradually open its political system and in terms of the real openness. >> i think you and i were together at build a burger. you used extraordinarily insightful and informative about the chinese political system but is that impeding chinese -- i understand the transition from

the export-led to demand investment and all that sort of thing. but is that impeding chinese investment in the united states? >> it could be a controversy. most of them think to go global perspective is the right one. but accommodating with the pressure into the currency change and also china's own domestic opening the markets is the currency issues and many other issues that will come to the fold and so they become a political issues because of the leadership tensions and these kind of policies may become political issues back in china. so again, you deal with the collective leadership, collective leadership sometimes face difficulties in reach a consensus and so that's the part of the -- >> but i understand that all the other dimensions of the many things, but let's say that we would somehow or other magically there was a more receptive environment in this country and chinese investment.

would the political issues that you just described impede investment in this country? >> well, it could be in terms of how much treasury bonds we should buy. >> not in terms of treasury bonds. fdi. >> well, this is more consensus in terms of investment in the u.s. >> i believe that what we need to do now is recognize that china, i think, ultimately needs to redeploy some of its reserves in the united states as it does in other parts of the world. but because we're the biggest economy in the world now, it needs to deploy a fair bit of it here. how do we encourage china to do it? and how do we make it more receptive here? one, i think we have to do a better job generally in letting members of congress know that chinese investment is not taking jobs away from american workers. it's going to create more jobs. secondly, we have to make the cfius process a little bit more less opaque and more clear as to how it works so people in china really understand it before they are ready to proceed with an

acquisition in the united states. third, we have to have american companies in the united states who invest in china or do business there work with their chinese partners to try to help them invest in the united states, learn more about it because if we don't let them invest more in the united states, ultimately the american companies investing in china are not going to be as welcomed. soreness american companies have to take on a responsibility of trying to get chinese partners of theirs to do more in the united states. and last, people who invest in private equity i my own industry in china, should work with chinese industrial companies to help them learn much more about how make these kind of investments in the united states and partner up again. nothing is going to happen overnight to change chinese attitudes in two, three or years and americans are less afraid of chinese investing here we're going to be in worse shape five years from now than we are today. >> david, you were in the white house at one time, albeit, quite a while ago. >> it was a long time.

>> david was in the carter white house. so you've had the experience from all these years from now until the present moment in dealing with congress and public opinion. how do you think we best go about trying to do what i think you very correctly said we need to do which is to get a different mindset in this country. >> i think it takes leadership. i think the president has many different things on his plate but to the extent he can spend some time talking about this issue i think it will be helpful. i think vice president biden was very helpful but i think more talking about this in the united states by the vice president and the president would be helpful. we also need leadership from the business community in the united states. the business community has to also do the job of explaining to people in the country and to congress exactly what the problem is. the problem is there's enormous foreign reserves over there. it's going to distort our economy and the chinese economy unless some of that money is reinvested in the united states and it will create jobs here. and as you mentioned, bob, our infrastructure is today not what it was when we were growing up. and, you know, if you go into new york city today, it's very difficult to realize it but

you're going in through tunnels or bridges that were built 70 years ago. if you're in china, you're in shanghai or beijing, you know, everything was built a year or two ago. so we need a lot of infrastructure. we don't have the resources right now to the extent that china can help us with some of these infrastructures investments, it will be good and it's not going to have a national security issues, i think, so we should do much more in getting chinese investment in our infrastructure. >> infrastructure, i think, is very important in the u.s. i think president obama also talked about it the other day when he attacked about his jobs plans and chinese have a lot of expectations on the rapid train and projects so that in this process china can also be involved because we have the technology and we also have the equipment. >> let me tell you something -- i know we have to open this -- we will open this up in just a moment to questions or comments to the audience but let me tell you what worries me very deeply and get responses from both

sides. i think that as economic conditions in this country are very difficult right now, and then you look to the longer term, i think there is a strong tendency in the political system to think of china as being the problem. i don't believe that. i believe the problem is us. if we get our own house in order with all the strengths that we have that david repeated i think we can be extraordinarily -- there's no reason in the world why we can't do it if our political system will do what it needs to do. politically right now there's a tendency to look elsewhere and particularly to look toward china. trade is absolutely central to that and from there i think there are some very legitimate concerns, exchange rates and subsidies and now i come to my question i think we're getting very close not only unsustainable and i think it's politically unsustainable and i don't know how close we are to that. but one question is do the american panelists agree with that and the second is, how

would the chinese -- our chinese friends react to that? i understand what you said, mr. li, about the politics in china around moving from an export-led strategy to a domestic-led strategy with all the dislocations and special interests. i totally relate to all of that. but we have a similar set of problems right here and it's right on our doorstep right now with 9% unemployment. >> i think two years ago or three years ago i think americans were saying well, a lot of our jobs are being shipped offshore and they're being shipped to china or maybe india and other plaza. i think americans now realize this is not their only problem or it wasn't a problem. we have so many endemic structural problems, economic problems that we have to look at ourselves and say really recognize that we are the enemy. we have spent too much. we have lived too high on the hog. we borrowed too much. and we have to change a bit. unless we make these changes, i don't think our economy is going to get much better. i think people are now not blaming the chinese as much as maybe they did a couple of years

ago. i think people recognize that we have our own internal problems we've got to solve and until we solve them, i don't think we're going to progress much further in terms of our economic growth. i don't think the chinese are blamed much for it right now but i don't think the chinese are seen as the solution either. in other words, people are not saying well, if only we let more chinese investment in the united states our country will be better so we better welcome the chinese more. i don't think they're saying that either. i think right now our focus in the united states has been mostly how to solve our debt problems and our unemployment problems. and as you suggested before, we're on a political gridlock situation. we get to these points occasionally and i have seen it when i was in the white house we're looking towards the next election and everything is frozen right now. so right now we're at a point well, the next election is in 14 months let's not do anything dramatic in terms of the economy for that 14 months and maybe we'll get a new president and our policies will change and a lot of business people are frozen in their willingness to invest in the united states and a lot of willingness to create new jobs and that's unfortunate. >> david, do you want to make any comment on it?

>> yeah. i would agree with what david said, you know, both countries are heading to a period where domestic political considerations are going to be paramount. we're going into our campaign election year. china is going into a year of very important political transition. and that's going to create challenges in managing the relationship but also i like what you said about, you know, this growth model that brought a lot of years of high growth to both the united states and china. it showed, you know, we're both going to have to find a different way of growing in the next 10 years than we did in the last 10 years. the u.s. is going to have to save more. china is going to have to consume more and move away from the independence on exports. that's the economics but that's also the politics. that, you know, when china was -- you know, had a lot of people but was a very small

economy, the impact on the rest of the world was much less. when chinese exports were growing 20 to 30% a year. now china is the biggest exporter in the world and the second largest economy. and, you know, again, even though china's growth in the aggregate benefits the u.s., huge opportunities for u.s. workers and investors, but there's a lot of dislocation when you get an economy that's growing so fast and integrating so quickly. the other thing is, you know, people be a system of global governance and they see things -- and, again, without getting into any details, things like the wto agreement on government procurement. things like the international agreement on export credits and what they see is now the largest exporter in the world. and, you know, a major player in

the provision of export credits. one of the world's biggest procurement markets is not a member, a full member of that system. and, you know, i don't think that's going to be sustainable. >> we could really go on for a long time 'cause i had a whole bunch of other questions and they relate to these but i think they are going to fire us now if we don't open it up to everybody else and we will be delighted -- everyone on the panel would be delighted to anything anybody would like to raise. i can't see because they china the glaring lights in my eyes. yes, ma'am. >> thank you. >> if you could, identify yourself and where you're from and some such things and keep the questions relatively brief so we can get as many as possible. >> two quick questions. i want to draw the subject back a little bit to the title of this session which is chinese economic competitiveness. to what extent do you see the chinese competitiveness are there and with regard to the

u.s. economy besides that china has the position of such a large reserve because the labor costs in china is going up and it's trying to invest in a developed market or actually quite a lot goes to high tech industries. so itself lack a certain level of indigenous innovation. and the second question is, david mentioned that any big business to have invest in u.s. and china. what about europe? in the foreign direct investment market, if you -- if we look at the recent statistics from chinese government, one of the fastest growing market is in europe. it's not in the u.s. to what extent do you think this is a safe assumption? thank you. >> who would like -- >> well, i think the chinese competitiveness occurs in several different aspects. with china's rapidly emerging middle class and with a huge domestic market. and also that china is a strong

state asset in the foreign reserve will help china as you already mentioned. there were other things. china's distinct entrepreneurship talking about no other -- they desperately want to make money and i don't know if it's true or not and there's also some anecdotes talking about chinese. the entrepreneurship, china going out and bring himself or the other for sale. and this kind of entrepreneurship is quite distinctive. but lastly, i think the perception of china's rise should help china in that regard whether it's real or not real but international regimes sometimes in reality that china whether we agree or not that china helps tremendously. >> the thing with our competitiveness is really in the manufacturing area. mostly in the past it was in the low margin area or low profit area but now we have some

improvement during the past few years because of the of this innovation and the entrepreneurship because we cannot always rely on the low margin or low profit manufacturing. ..

so at least if the possibility of being true. it's the first time in modern history that the leading economy in the world has also had a gdp per capita that is much lower than many other countries and that puts china in sort of a schizophrenic position, which i think is part of the problem around some of the transitions that china has to make. but if the comment but it struck me. >> it's an important point. the united states in the middle east in a small population we have the highest per capita net

from. china says roughly 100 in the world in so it's got a long way to go before its per capita net income is high and the wealthiest countries in the world to have a much higher per capita income than china does. china's low-priced but it's got a lot of work to go before it catches up with the united states per capita net income. >> anyways -- yes ma'am. >> i have two questions. >> i think we ought to make it one question. >> my name is chad. the question is, you are hoping that china increases domestic consumption. so this would likely that were chinese savings with it huge u.s. passes it deficits. the question is are we shooting ourselves in the foot here? i'll get my response is nonetheless treasury department. mine is a personal appeal and then look at the special well-rounded view of the

china has done us a service by supporting the dollar over the past years and really helping us find the data set. in a sense, it's enabled us to mask our fiscal problems by keeping interest rates lower than it otherwise would've been. and i don't think we can continue on thy brow. obviously you want transitions to be gradual, not sudden because certain transitions make for deception in all kinds of other unpleasantness is. fundamentally, i think chinese support of the dollar for their own trader export purposes, by virtue of buying treasury bonds, have kept the interest rates lower than they would've been intense pressure off by political systems to do with fiscal situation. i think that's a good formula going forward. to agree with part of your question, you also want to do these things at a recent case,

otherwise as i said a moment ago you have great dislocations. anybody have a different? >> now, i'd agree with you that right now the question that many investors are asking the world is very straight going to come from? they look at the u.s. in europe and japan and the headwinds that they all face. and they see china and economies still following very export dependent growth model. so the best thing china can do right inc. for china and the u.s. and the world is to move resolutely forward as quick as they can't implement its own five-year plan. to move from an economy that was based on export led growth, much more on home-grown domestic demand consumption led growth. right now if you look at the years on treasury bonds, there's no shortage of demand for treasury bonds.

people think that china is financed being our budget deficit. i just ask one question for you guys. david, you mentioned there were 14 billion -- $14 trillion outstanding u.s. treasury securities. can one person to ask him and you know, what percentage of the 14 trillion china owns? 8%, all right. he the u.s. treasury. you're right. it's a percent. >> i would be 12% of the publicly owned that. >> 8% of outstanding treasuries. >> by the arithmetic is the only way i know that. >> china is the holder of the u.s. foreign securities, but the overwhelmingly large fraction of treasury securities are run by americans. >> bought by foreigners totally

is still 30 some%, wouldn't you say? 31%. look, the greatest growth opportunities are investing conferences to talk about the u.s.-china relationship. [laughter] more of them than anything else. with that sage observation from a very wise investor -- there you go. merry said the final question, but there's a clock that says we have to possibly due to questions. depends on the answer is. >> my question is related to the solution for u.s. to improve on its trade balance. let's say that germany is a country which is high reports and has managed to maintain a

compromise for many, many years. so if you ask -- u.s. follows or adapt some of the german model, will you gentlemen think that you would have u.s. to significantly improve the trade deficit? thank you. >> yeah, i'll give you one response and i must ask other people. i think there are things we can learn from germany. for example, they are good as you know i gather from the question that niche manufacturing of the things that go inside the city want to call it that. their education system is very wealthier to the job market, but there's other -- may well be other lessons to be learned from germany. one other observation i made is that their exchange rate is a lot lower than it would be if it was independent exchange rate because here is an exchange rate for the whole area and that's a not inconsiderable at and shoot

them in terms of competitiveness. also, i think i'm right in saying that wages remain flat for some period of time. sort of a social compact on those. but i wouldn't disregard that way that the currency dimension of this, which comes from the fact that their current economy exchange-rate doesn't reflect german economic situation, but rather europe's. just as somebody said, the world would benefit greatly from increased domestic demand led growth in china and same to germany. the three biggest export in the world are expert in using a relatively cheap currency. germany come united states and china are relatively speaking have a lower currency than say japan in terms of values and is obviously hoping exports.

>> they all have relatively lower currencies. the experts would be hurt for a while. >> yes, ma'am. i agree with that. >> thank you. i am don alexander and i run a consortium of banks internationally and we are concerned about the fact that we are looking at these two economies, these two leading economies in thank you for your help on a lot of things are looking now. one of the concerns is that we are going to export our way out of the problems and then some of the message the u.s. and also the message that china is looking at. you're looking at the two largest economies focused with the same solution and an export equation is at least two sides of the equation. i did not hear any countries jumping up and down saying will single helped import your way

out of this problem. david, you touched on some of it, but i'd like to hear a bit more. >> i had this image of ships colliding. the chinese five-year plan invasion and i guess the plan wicked we could opposes the object is that the five-year plan going to be obtained and be if the archive is that iraq did not face? >> the cisco can be attained. the five-year plan when we talk about this plan will not be driven by the export oriented day of social security mma can have growth rate be maintained. i think some of the other characteristics like paying attention to the ordinary

peoples and increasing the income of the people and those and also energy conservation. >> well, one thing about the five-year plan is the emphasis at the emerging industries, which has all of these i related with new energy, clean energy. so there is an opportunity for cooperation with china and other countries. so that's the area for opportunity. at the same time china should be sensitive to believe these and introduce the market force in state companies continue to enter into the field. so that's a monopoly. >> we've now reached the end of our time. make let me make a couple comments closing. take this rate there'll be a true and this amount of conferences. i think for both countries in

the 21st century come internist amount is on our ability to forge a constructive relationship, but leadership on these relations will affect global economy is also dependent on these countries to forge a constructive relationship. if humor panel says it such a bad thing. thank you all very much. [applause] [inaudible conversations] >> that was directed. i just want another around of applause. thank you very, very much. [applause] we will head right into her next panel so we'll just ask the audience to stay in a will go for 45 minutes and have a break. [inaudible conversations] [inaudible conversations]

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[inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] >> our next panel is going to talk about china's reach into latin america, africa, europe and the middle east. chair in this discussion is sri mulyani indrawati and our

partner here today oxford analytic go. before coming to oxford analytic, not her founded a firm and has worked at an investment banker at goldman sachs insert after united through there you through non-and the u.n. political officer in bosnia-herzegovina. please welcome, sub one, as everybody knows him, the great nader. >> thank you very much. we almost two thirds the way a terrific discussions, global china. when we first at the "washington post" and oxford "politico," but china team is very much around china's investment in economic activities around the world changing the global economy? house or changing societies in which china is investing and how does the rest are packed into a

political perspective. we heard this morning some skepticism about the impact that china is having in some markets and elsewhere. i thought it would by way of short introduction to this panel make four points from the experience that we have as an advisory firm working in africa and elsewhere. the first thing i'd say is there a great diversity in the nature of chinese investment. it's not just one shape in one form. second of all we see in african countries is that elsewhere that china is in fact building infrastructure that no other institution, particularly with economic global environment is going to build and not many of the multilateral institutions. the third is from a western perspective certainly is important to remember in a lot of these economies the relative western record of investment is not always the good as this imagine. of course it is also not always true that the western investors in this country are truly free

market in contrast to the state-owned entities that are investing on behalf of china and chinese investors in these markets. i'll end with one quick anecdote. i was recently in a meeting in a country with an african minister with the western energy companies they are to invest in the issue of chinese competitive investment came up in the western executives said meaningfully to the african minister, you have to be careful. the chinese are here to exploit you, to which the african minister looked and said why exactly have you been here for the last 50 years? so we have to remember there is a complicated story here. and i think we have in the peanut hear a really terrific group of individuals who can give us a very diverse perspectives on the impact of china going out in the world. and on my left thursday's sri mulyani indrawati of the world bank who joined in 2010 and is not responsible for the bank's operations in the americas, caribbean east asia pacific middle east and north africa.

very importantly, ms. indrawati served as minister of finance prior to coming to the world bank and the country obviously of enormous to be an impact and watches very much feeling for chinese investment trend in the world, particularly in asia. she holds a phd in economics from the university of illinois and a ba in economics from the university of indonesia. to her left is curt campbell come assistant secretary of state for near essays from east asia and pacific affairs to join the administration in june 2009 and previously the founder of a very important think tank here in washington, center for new american security. mr. kamala serving capacities in government over many years and is certainly understood very well the intersection of politics and economics as it relates to china's role in the world. to his left is mr. mingjian bi, a u.s. adviser in the china international corporation and if

they're not capacity head of its investment banking operations in new york and in the united states and has been very active in a bunch of landmark cross-border transactions coming out of china. finally, we are very privileged to have with us mr. wang, the chief economist at the bank in china, who was summoned from my perspective the same very much out a chinese capital is being deployed both on behalf of chinese companies as well as around the world and has himself a background at the imf. a very distinguished group of people who deserve an extensive introduction. with akamai think what we'll do is start with ms. indrawati and should give her marks after with the others will follow them and will have a discussion just as we said earlier today. >> thank you, nader. i think i was caught by saying that the china role in the world economy and the three regency

mansion, latin america and europe, this is their own struggle to overcome their own middle income track. so everybody says that china is going to become the largest economy in the world if china is going to be 2013. they are now the largest exporter in the world, the second-largest importer of the world and definitely at the trend continues by 2030, there will be 55 south korean economy in the world. it's having its implication. if you look at the trade you mentioned earlier, this is going to be an area which china and the past one decade, the trend of the trade to many developing countries, including latin america, eastern europe, mena, africa included, the growing

exporter definition is really visible. the portion of the different countries of the export destination has dropped from about 85% to only 74%. now why does the study found the world after china in this case in any part of the world? i think the unique position because china is becoming very big and large, but at the same time they are still in the position of middle income countries. and let's make the feeling that there is a proximity of the challenge. many of the developing countries feel they are comfortable with china, quote, unquote because they share the same problem that's an inequality and a problem domestically changing the way they have to build their own fiscal position into a work comfortably dated transparent and sustainable one.

urban population is going to be. so there so development issues with many countries and there is a feeling that it is at least not that far. if you are talking about the changing of knowledge and different experience, china has become more relevant according to many developing countries and that's why it's becoming not very popular in many developing countries. and that is the channel be on trade and investment. trade investment is going to be very important. in driving the growth, but also for many developing countries. for china to export their knowledge of development in the world, dear you seem. the figure is not easy to get what is actually the political figure, but it seems there is

the oda science or china for only 600 million in 2003 and now it's the first billion by 2009. and they are focusing in the area, which is introspect day. everybody expect dean and this because i am leading in the bank and we much have quite a lot of clients from latin america, africa, south asia, eastern europe. they definitely see china playing a very important role, whether this is informed by the oda, sgi or even trade partner. but some countries definitely have some insight. it is not more like the anxiety in the sense that china is going to import a certain value. it's more in a science. for example, certain countries in latin america. when china has an interest to invest definitely on a natural resource, they feel that if they

are going to go through the same place, they naturally will be finished by the next five years. how should we manage this kind of very overwhelming focus of economy as even they are dealing with more time those mac's generation economic development. so here it's going to be for china. for them to be able to overcome the middle income trap, to improve their different model of growth to be more sustainable. they change the different strategy and that has an huge implications. the previous session is started discussing that whether it's one of domestic acer looking in the equality, more sustainable in the resource. they have to be more friendly in the environmental aspect. and that's actually not for their own domestic policy to be able to adjust the closed model.

but it will also reflect the way they engage with many developing countries. that will actually become a property aspect in a sense that if it is going to come to the fbi, dave cannot close their eyes on the environmental aspects. and many of the patterns in which even now with the bank, when they are coming to africa, there is a collaboration between how they are going to ask the bank to work with the government on the frame of our policy will therefore putting on the hard introspective using their capital. so there is the collaboration because they also create a certain discipline for china and what kind of operation is more acceptable for many countries. the procession as you mentioned, is it going to be a threat?

and for that china's own interests, they want to be seen as an opportunity. there is a mutual benefit interaction. and that's why coming with faith and perception of acceptability is going to be very important. and naturally bad, china is going to play a more important role in shaping many global policies put the basement on policy that is causing this case can the previous speaker is mentioned about the human echelons and an environment of compliance and the technology. and they are actually investing quite a lot. china is not educating resource on the research on energy issue and are the biggest and the most excellent on solar energy echelon. so the renewable energy will be important, but also it can have

a significant influence to many developing countries. for latin america, i think that perhaps it now china wants to include natural resource, but it's a growing trading partner on a manufacturing base in the area that this is complementary to their different study found latin america. that naturally come in many countries in the past, which they have more constraint in accessing fbi, not having china coming with maybe a different approach. it's going to create a lot of opportunity of course. in europe there is not really change and democracy. and the portion of the destination is iran 5% and from the last decade up to the decade provided. mena is actually growing very fast in the way china is penetrating bursts. but i more or less in the early beginning. smaller energy echelon will be

an opportunity. so i guess in short, i am going to say that being a middle income country with the largest economy in the world, china has many more bases, which can provide an opportunity. but at the same time, the challenge for them to actually present themselves to become a country dealing with their own domestic issue, but more importantly their domestic issue is reflect the many global development issues also. so the domestic issue constantly will also serve for the global public policy. i think that is more or less the summary. >> rate, thank you. >> mr. wang, if you could comment and i know you are speaking as the chief economist and economist here, how do you see the investment strategy of offering? we know we've had discussions

today about what has been the strategy to date. obviously we focus here on the investments and other emerging markets. word you see the strategy evolving? how would it change over the next 10 years? >> i don't know if it's an investment study. maybe it's irrelevant for a company or for a country like china, you have to take a little bit more underground morality view. now, i'll go to that in a moment. but given the time constraint, let me give you a broad picture. and they also listen to what had been set in the last section and some of the things need to be clarified. i give you broad picture of china's trade investment with emerging and developing countries. emerging and developing countries are increasingly important trading partners. the most recent data shows that

china's foreign trade so far this year continues its robust performance despite the slowdown in the developed markets. including the u.s. and europe. do not guess, china's import increasing year on year, export growth is significantly louder. the growth is much lower than import, but still wrote last double digit. only import money the emerging and european economies. asia, africa, middle east, latin america and the caribbean are coming for 54% of china's exports in 2007.

during the last two years, global crisis, turmoil and subsequent recovery. let's share china's export share to these developing countries and what has increased, offsetting the declining share of north america and europe while many commentators tend to focus on china's export, i would like to now say a few words on china's export. merchandise export. if you export goods and services, china is number one. you can trade with one country. exporters of good and services, europe is way ahead. even this country, the united states to 70% offered a gdp

services for labor working in manufacturing. export of goods and services, u.s. is probably ahead of china. even commodity exports. used to be half, maybe now less than half. you know what it's possessing trade? the bold print from california, from taiwan, from southeast asia. and then put them together and put the label made in china and the export. actually, need in the world. what passes the value added in china? it is part of the value. by definition you have a sudden nurse. you have and ports, 50%, 60% of the value of the total product

and there is some value added paper, and transportation. but now, having set export, i want to say china is really a very large importer and rapidly expanding market. many people like to say china's economic model increased in the next consumption. china's absorption in the assessment in the last few years has increased by more than 50%. china's consumption, household consumption in real terms from 20,722,010 increased by about 9.5% each year. last year 18 million automobiles are sold here last year.

much less. housing, telecom, insurance, even luxury. it's consumption. it's real consumption that is growing. imports increased from less than one in 2721.42010 trillion. and if you believe the imf member will be 1.7 trillion this year. over 70% of china's imports are from asia, africa, middle east, and the caribbean. china's demands for capital goods increasing within asia. the pros of trade between china and other emerging and developing countries have moved in favor from 222,010.

imports are almost 50%. the middle east almost 90%. latin america, 45%. during the same period, it chinas trade declined by almost 20%. and in this developing countries, in terms of import, primarily because the world demand in part lifted by china for these countries export. now let's cover english men. trading across foreign invested enterprises contribute to over half of china's trade for many years. however, there is a large asymmetry between chinese and work in outwork investment. i think that's the subject the last panel discussed. if elected china's external for

investment to china to stop by the end of 2010 because of many numbers you take the government number of the chinese official numbers. 1.3 trillion u.s. dollars, right or wrong is a large number. it accounts to roughly 60% of china. how about china's outward, outbound investment? .3 trillion. only 7% to 8% of china's total asset. china's outbound foreign investment has been highly concentrated in 11 countries. how much? over 90% china's investment stock car and developing countries. >> mr. wang, if we could just move on to the other panelists will have the discussion

afterwards and come back to your final point. mr. bi. >> yeah, i think we have limited time. >> maybe just talk about the lessons to learn of the cross-border investments, the kinds of deals in the environment for those kinds of transactions. >> yeah, we look at the number because people told us a long time ago, investment in china, 20% plus return. the investment you make is a few percentage points. the problem is you don't have the capability to invest outside. so i will focus. if you look at the long-term investment, who is going to be the carrier? if you look at the current hot hot -- about 90% of china

overseas merger went up at the investment. only 10% by private entities, right? more than 55% in resources. in fact, state owned enterprises -- if you look at the current incentive system, usually the good merger conditions don't really prompt or provide the drive for suvs to really invest outside. if you really look at the investment outside now, state owned enterprises and research that carries. if you're mining company, explosive domestic demand. and you know, depleting, internal reserve, what is your response? so you have to go outside.

so dad really pushes the state owned going out. >> is that he directed strategy from the very top? >> i tell you, we have billions coming even hundreds of billions of market caps sitting very quietly, comfortably within china decide about the encouragement from the government and also political incentives nothing happens. so you really have to look at the enterprises. what is the business drive? the drive is strongest for survival. okay? if you look at the last two years, the powers that tear, power utility became very act days. of course in the last 30 years is really gained a competitive edge. so reputable like our friends --

china is a skill to knowledge, very strong. but the real drive for the last three or four years is what? is because of the deteriorating environment. the return of china is about 4%. and here in the united states is 10%. business people, where he picher investment? is very natural. it's not necessary the incentive to make the outcome. and also, if you look at the future, china's foreign direct investment very much depends on the growth of its competitiveness, of its entities, especially private entity. the good thing is if you look at the current -- i don't want to show that picture, but in the consumer area, the missing

company increased by 17 times in the last five years. in the industrial, growth by seven times. so of course a lot of leaders in this area is viral private. but now, that's the hope of china's long-term investment. otherwise you can see certain areas like to obvious advantage, competitive advantage strength. but most of the industry is coming you know, who still have to survive for the contrast, you know, you invest three percentage points. so if you don't grow enough entities, okay, but acceptability, you end up with more capital, channeled through china's welfare -- sovereign

fund. >> curt, for new and observation on this whole question kennedy's idea of a scramble for africa that this is what china is now about. how does the u.s. react? what are your results? been that great, first of all thank you. it's great to be here and it want to commend "oxford analytico" and the "washington post" for this central factor of our lives going forward, the tightness of the asia-pacific region in china at this venture are probably one hundreds of meetings taking place in washington on some smaller developments in afghanistan or iraq. and i just hope over the course of the next several years we can help reverse some of that and spend more of our time focusing on these absolutely critical issues that will define their future but most of the history of the 21st century is going

to berate here. i apologize i am in the u.s. government. usually, powerpoint spirit of is often said i worked in the pentagon one of the generals that worked for used as a power corrupts, the powerpoint corrupts absolutely. and it's a great quote. so if i can -- and that we're delighted you didn't bring powerpoint. >> all go quickly because we would have a discussion going forward here today. just to the regional grouping that has been put on the table in africa and latin america, i would add a fourth. it's also important to look at the pacific as well as many of the characteristics of underdevelopment resources in terms of natural gas that frank reunited more to some of these other places than with asia as a whole and you see different strategies that are applied here in this respect. i think generally speaking you heard a great discussion on ready the economic dynamics of this. what are the political implications? what can we claim from

developments in terms of investments are duties with respect to china that not only the american response, better their larger strategic aspirations in mind in beijing? i think what is interesting if you look at the situation globally is how generally underdeveloped that political strategic rationale is for many of the activities. in fact, chinese leadership has been in many respects either uninterested or have not yet thought about how to cultivate some of these relationships that have been developed over the course of the last decade and translating them into political power or to particular global initiatives. you see a few areas where you might imagine that they would be some of these dynamics, but they are largely absent. the competition that used to take place between taiwan and china for recognition and various aspects of international

regard, most of that has been held in advance given the substantial progress that we've seen in the central diplomatic cease-fire between taiwan and china. so that has not really been a fact there. there has been some utilization of some of these relationships with respect to china's desire not to be cornered and international scenarios. so for instance, in the g20, claiming negotiations, on the issues associated with currency, there have been occasional interactions to ensure that china is not put in uncomfortable situations you to climate or currency. some of that has been successful. some of it is again relatively underdeveloped. so i would say generally speaking you do not see the same sort of political and jury of china that you might have seen in the 1800s.

[inaudible] >> yes, nature magazine with european and other forms of imperial lack dignity and some of these places. the question is, is that a lagging indicator? is that something will see over time? already relatively absent and if my colleague has indicated, is this much more about just a need for driving the dramatic industrial creativity and appetite of china going forward. what is interesting is that you find in a lot of places that you visited, growing apprehension has come anxieties chinese workers and not spreading the wealth, these sorts of things. i think chinese friends are much when tenet of those issues now than a couple years ago. it is not clear they will be necessarily manifested in other policies going forward, but clearly that has been an issue. a second issue you have to ask is in many of these places come

and development issues are still extraordinarily important and has china as their activity and engagement has grown in many places, demonstrated an interest in cooperating with other states or institutions with regard to local norms of development and investment. i think what is interesting to date is that china has been generally reluctant to join in a global norms discussion about investments or your aid and assistance. one of the things we find generally, both in our bilateral dialogue for china, but in larger settings are just in the pacific island was chinese friends politely said frankly we will do their own investment and we will do our room quite pro-quote on a bilateral contacts. were not particularly interested in sharing the full dynamics of our overall engagement. and lastly because we want to begin a discussion, the most interesting question is how does this set of interactions affect?

we really can't call the soft power because it's much for that soft power. it is the attract admits that the chinese system. clearly when you talk about the strategic competition put on the table here, the most interesting dimension of that is not so much a competition, but the comparison of two systems that are at work right now globally. what is of interest of course as we on the outside who were closely and see and interact with chinese friends on a regular basis, we see the clear dichotomy and chinese performance and activism. a tremendously assertive engage china on the global scene. nbc didn't have very possible encounter with your chinese friends. but that is also matched the something that is not as widely regarded edges inside china is a brittleness, and certainty and anxiety about development issues, questions about debate

and dialogue. and so, the mixture of this external assertiveness and uncertainty domestically creates interesting juxtaposition spirit and the global scene, there clearly is an attractiveness to certain models and trends in latin america in particular, but also in africa are comparing the performance of an authoritarian treatment command economy withstand malicious on the side, with some of the challenges we are facing in the united states. i spend most of my time of broad and i will fall you that the difficulties and some of the most basic aspects of basically implementing a democratic system in the united states is something that is watched with growing apprehension, particularly by our friends in asia, but also elsewhere. i think it is the case just an

conclusion that one of the things that is important about a conference like this is to understand more fully the complex motivations of a country like china and the need to have a closer dialogue between the united states and china, not just on central issues about how we engage a macro that policy in the light, but a more global conversation about how we propose to her together in places further afield. >> thank you very much. we are going to open the questions now. but with you, ms. indrawati, d. revolutionary mouse of governments, both in terms of political governance and economic governance, whereby if you have people in countries will choose not just an american model or chinese final, but high praise that are more indigenous and have more resonance within their own systems. what would weekly be your

extensive indonesia? there will indonesia go with this experience of great influence from western financial institutions, obviously influence finance minister, but also raise the indonesia starting at five. >> find a niche product definitely we have a crisis in 97, 98 and then they adopted the package of the imf reform, which was adopted to change the way the economic governance, but it came above the political revolution mexican colleges like in the middle east change of the regime and so on. so we changed quite a lot of vote for legal governance, centralized open economy political system. economically we adapt competition policy, state finance and transparent. it's a good principle in a way, but to put it in a country that

there is an incompatibility. so you can see within the 10 years in the first five years we really struggle to minimum. but i think we built the institution gradually. so now in indonesia there is the development for you comply with middle east experience that the arab spring takes parents. it's a good example. while if you look at them, it's really very deep struggle. now how you are going to look at the model and in this case what options come back as the observation and this is maybe also true in many conversations with developing countries finance ministers and prime ministers, many developing countries really want to build their infrastructure to act debate their development achievement, poverty reduction and so on. the replacement of cap toe and development projects and in

china it is a very good example in which when they built power, when they built this case is very affect theirs and most execution. many developing countries like indonesia now, if you're talking about infrastructure it has become the highest priority, but the developer is flawed because you have to do with the land. you have to deal with indigenous environments and other things. the question is, are we going to put this is a trade-off in which if you want to move fast and effective, do you have to sacrifice the element of human drive, environmental, indigenous , all those aspects. this is many developing countries not in many developing countries don't want and then you become open democrat people will demand you to deliver the

good development, but at the same time abide with this principle. >> so there is not a robot? >> i don't tank so, but still do need to have a very affect the deliveries they are. of course in this case in africa use the blend of different executions are effective, you can see the growth they say because you think there is a struggle related in some of governments and affect events of the delivery of the growth vis-à-vis maybe they need to be more partnership respect to inclusive if you call it that way it's a very popular one. it is slowing down as many stakeholders. this development thinking they try to balance

>> we have time for a few questions. right here in front. [inaudible] [inaudible] >> i am curious if the environmental considerations at the fdic and if so, how are those generations going on? >> yeah, i am not able to answer the question in the policy manner, but i think china is making substantial advances in this environmental side of energy and infrastructure. so people are very good at exploring its advantages. so in fact, this became the

strength. when you really want to develop outside, you have to have competitive strength. before it can be arrived, and if it's deficient, the environmental part of the opportunity to come in a very important part of overseas investments for chinese entities. that's my answer. >> thank you. >> one more now. >> on behalf of the 17th -- [inaudible] [inaudible]

>> on us to treat today someone asking me about the size. i was beginning to wonder because it happens every day since i've been in this job and it was getting near 5:00, so i thought maybe this could be the first aid doesn't come up. first of all, i think would be fair to say one of the highest is secretary kline can do with possible to play with he says, that manchester is species, but visas for students in creating the opportunities for business, particularly from countries like china. generally the good news is no country students have increased as a percentage faster than china over the last five years. in fact, it outpaces every other country in the world. the reason is improving, but

there's a lot of structural challenges we can talk about it some other time. the point i would leave you with his there are many aspects of what we would call the post-9/11 environment, how it has affected our psychology, geography or geographical focus on the middle east more than other places start of a detour from the pacific century updates for a while. it's also the case that one of the things that came out of many of the after action reports was that the state department had too much control over the site issues. so very much of that has now shifted to the department of homeland security. and so in a variety of scenarios associated with he says, visa waiver program, there is a complex set of checks and balances that have been put in place in the last several years, with a tendency as is the american way, to respond or to overreact to certain dynamics associated with security.

.. >> okay. [laughter] >> we have time for a couple more questions. right there, please. >> yes, thank you. rob from aia investments. question, with regards to going overseas, structurally, you're dealing with things that might be newer for the chinese companies like greater disclosure to the stock exchange

and a preference where the local government or the local partner takes a higher shared position versus the chinese partner. how's that being dealt with? this could be more towards cicc directed. >> please. >> you know, you mean as lower share? i think we'll work as chinese investments are made in a number of emerging markets as the terms of the investments. that is, what is the piece given to the local company partners, state-owned entity, and how is that evolving? chinese companies manage that better than western competitors which is why china has the advantage in these markets. how is china structuring these deals in emerging markets? >> yeah, i think emerging markets, the general feeling -- i work in the world bank, quite many times, and so i think the

general feeling is very much different. you know, there's a saying, you know, united states is a big brother of the local countries, and china and africa, at least, it's big brother for the developing countries. it's a generally different feeling. okay, you want to get china into overall system of international aid, you are talking about a different thing. you have experts from europe staying in fancy house and this and that, and you have 16 chinese experts squeezed in small space. it's a different society, different levels. [laughter] basically what, you know, the question i think usually those questions are thought of in the more friendly, more like a brotherhood environment, yeah, so i think when -- yeah, i was in the world bank, policy issues, policy structuring, all of these things, these dialogues, i was part of it for many years, so --

>> well, in is exactly what i said earlier, but being the middle income country themselves and their behavior is close to a middle income country. they feel more familiar with that, and that's why this has become the effective site of china, but what you asking is there any other requirement in the di closures with transparency and it serves the interests to become like them, and that's part of acceptability. >> just one word. i do think that one of the changes that we have is that some of the traditional labels that developed out of the middle income and developing really just no longer fit how to think about china. it's so large, so distorted, the

other comparisons, that it's not particularly helpful. it's also the case, and i watch with great admiration, enjoy very much chinese friends depending on the environment, and certain environments, china insists we are a great power, and we want to be treated as a great power, but in another environment, we're a poor developing country, please have mercy on us. [laughter] i think what's going to be challenging for china, i think they've pretty effectively to keep one foot on each boat and not alien ate or, you know, have the other camp figure out how they are playing it, but those bolts are going -- boats are going in two different direction, and i think they recognize more and more, and it's going to be harder to convince countries like latin america, africa, that we're just like you. they are a great power. >> but the boats will continue to be, as we talked in the last session, because you got the largest economy in the world and lower gdp per capita.

yes? >> actually, i want to comment on this thing as not too long ago, china was a very poor country, even nowadays, gdp terms, china's in the 4,000 or 5,000 range, and kurt is right. china is large, costal and inland are different and this experience of how to rise from poverty, we experience. when we deal with that, the country of counterparts, we have to think. we are not paying lip service or mutual respect. >> that's why it resinates as powerfully as it does. >> this is why the way we would deal with investment, we

generally believe trade and investment are among the most powerful driver of growth for a country of development and we believe choice in investment has to be mutual. it has to be mutual. you mentioned assistance. compare our foreign assistance to other countries, you said the global system, how to join the system, it's different because we believe foreign assistance is only a small part of that, and the objective is to help our partners and donors in that concept, our partners to increase their growth potential. it's why our assistance, especially lone paths, it's 70% of infrastructure. the countries these electricity, the water. if you come there, you see the countries, they are foreign

assistance and the proportion of economic productive sector is much smaller. >> thank you. the clock has been on zero for five to eight minutes. i'd like to survive this panel. i'd like to thank the panel for a rich and fantastic discussion. [applause] >> thank you even, and our long and final panel will begin in ten minutes. it's chaired by orvil shell. thank you to this panel. [applause] following the last panel over at five, we have a big treat. we have david henry wong, the playwright with us here, and we're going to have a one-act

comic play about an american doing business in beijing. it's hitting broadway soon. it's a big treat. the actors have come down from new york, and then it's very short, and then we go on the roof with one of the best views 234 this city to have drinks. [inaudible conversations] [inaudible conversations] >> more about global economics later today when live with "new york times" journalist thomas friedman who wrote a book looking at the u.s. role in the world called "that used to be us." the authors will be at an event hosted by john hopkins university school of advanced international studies. see that live online at 5:35 p.m. eastern today at

booktv.org. while we wait for the day long forum on china to resume, here's comments from earlier today. 234 this part, you'll hear experiences working with american versus chinese executives, america's visa policies, chinese business practices, and communications between chinese and american companies. >> looking here, you have one sitting there, river lou, a chinese citizen, and she can put a lot of insight. i, myself, am american, but i feel i understand quite a lot about chinese business, and a lot of times, i put these business executives together, and i'm one of the few that i happen to advise on both ends, so i advise their executives and i serve also as an adviser to

chinese. >> perfect. let's hear the advice. what's the advice here? >> the first advice to give to americans will be when you -- looking at china, their system does more to our protecters. it's back in texas 20-30 years ago. it's shake hands, understand, forget about a lot of law, the legal system is still -- it's only worth the piece of paper you've written on. it's really that you trust with people across the table. i normally advise american executives, sit down with your counterpart, look them straight in the eye, if you trust each other, you like each other, let's go.

if you don't, go find another partner. the second advice i give is to choose those reputable companies you want to deal with. if there are ducks, doarnt. there's plenty of companies out there that you can work together, and those will be the beginning and you do want someone on the ground in china -- say american companies do business in china, you want somebody on the ground because situation changes very fast so as in the united states. if you're not on the ground, there's lots of changes, and you can retract quick enough. >> so there's good and bad partners americans can have. find ones you're comfortable with and are more 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? >> yep. if the corruption, the laws in china very straight, and you see in the news many of them got caught and it's capital punishment. it's not -- >> like texas. [laughter] >> the only crime is not capital punishment. [laughter] you believe that, you know, why do you keep somebody lifetime in the jail rather than get rid of them? [laughter] that's the -- >> now, just briefly, then, and we'll move on, but your advice for chinese doing business here 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 go buy the state legislatures thinking everything will be hop -- honky-dori. you'll go to jail for that. those are where i advise on both ends, and they really need to understand how things are done. >> charlene, i just wanted to hear from you. if you could do one thing to take advantage right now of chinese investment, what would you do? some fix to attract more. >> one thing generally for the u.s. would be changing the visa system. it's irrational. the united states has add version to smart people.

you get your ph.d. here, and then we say good-bye. it's an irrational system in that chinese business people cannot get visas here and chinese officials cannot readily get visaings here. we took the principles developed after 9/11 and expanded it to cover situations to which it should not pertain and does not pertain. eng if i could change one thing about doing business in china 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 a reproof. there's few transactions turned

down under the process, less than 13 in the last five years. unfortunately, some of these have been chinese, and eng the lesson for china -- 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 the 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, there's a more 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, they ought to create jobs abroad for those national workers, not for chinese workers as is the case in africa and other places where china is at. if i could change one thing on the china side of investment, it would be further liberalization of the investment catalog. china classifies all investment opportunities in one of three ways -- permit it, restrict it it -- means yes, may be no, and prohibited. the prohibited and restricted cat -- category over the years has slunk, but china has many

sensitivities with respect to certain areas where you're investment propegs are more uncertain, and so a further liberalizing of that regime, moving the rest of the restricted and prohibitives towards the permitted category would be very welcome. >> very interesting. i'd like to go back to this tails of the road idea about same bed, different dreams. when we were talking backstage, several of you talked about how there are cultural differences, and i just wanted to hear from a couple of you who work so closely with americans about what's it like and kind of do you have any little stories to tell that kind of show how there are challenges of these joint veeptures that we'll be seeing more and more of? >> well, i'll first follow-up on your comment that you quoted

from the coke's eye, and i'll make a general comment that i think in general, china is getting easier and easier in terms of doing business. china has become more open for business. i think the u.s. has a tendency of becoming less and less open for business. you know, 30 years ago -- >> in general or to china? >> in general, especially when you talk about chinese companies theorists. they say, well, actually, we came, thought this would be easy, and thought everybody would welcome us. when we invest money, everybody will welcome that. actually, they found that's not the case. there were so many regulations and so many hoops you needed to jump through, and there are all of these, you know,

non-business, non-commercial related issues. now, if you look at china 30 years ago when they opened it up, that was a very ideological society. today, it's very practice call. >> earlier today in a day long forum on china and the economy, back live now for the last financial of the day on the future of china. >> thank you for all the comments. i'm going to be editing a special section of the "washington post" next week that's several pages of photos, excerpts from what people said, and other articles about china's economic growing mite. the final panel of the day, so happy to announce it, it's called the new and future chie new chaired by orvil shell, and he's going to then introduce the

other dynamic panelists here. he's the directer of the center on u.s.-china relations at the asian society of new york, also well-known and formally dean of the university of berkeley's california's school of journalism. author of 15 books, nine of them on china. he just got back from bay gipping, and i said how many times have you been to china? this was his stunning answer -- well, since 1975, i think more than 150 times. he goes now about every six weeks. delighted to turn the panel about china over to a guy who knows a lot about it. >> well, thank you very much. [applause] all right, heading down the home stretch here, and this is really our last analytical panel. it used to be that a century ago, there was a state of books

that came out, all with titles like wither china, and the truth is that topic is still very much with us. our topic is the new and future china. one can say that the new china is quite self-evident. you can see it, talk to it, visit it. the future china is infin nitly more opaque, and we're here to define some of the problems we see today in terms of how they impact the future of china. key monk them, of course, is how does economics and politics fit together? we've often imagined in the west that open markets go with open societies. at what point might that come true for china, if ever, or possibly, have they engineered a new kind of authoritarian

capitalist model that will belie a lot of the conventional wisdom of the past? . the second obvious question is the question of the environment. the enormous cost of development in any country, both on china and the world as a whole, and can this be overcome as china continues this very, very high speed growth rate. another problem that we have to address here in defining china's future is the question of the extraordinary technology changes going on within the whole class system of china, immigration to the rising middle class, poverty , and timely, we're about to experience with china another change of leadership, and this is not always been easy for

china since its political system is not politically very well confirmed in terms of the mechanics of transition and how will that come to pass, whean will the new leaders believe in? how will they be different? what problems will they run into to. those are the problems we'll address. the panel quickly, lee young, the directer of research and senior fellow at the brookings institution here in washington, did a lot of work on chinese leadership, and he has a book on china's emerging class, so that category of social change is one he'll address. second, isabel hillton is from the u.k., a journalist, broadcaster, who recently founded and runs the interesting website on china's environmental

challenges called china dialogue. it's both in english and chinese, and it's the go-to place to kind of keep up-to-date on those issues. number three, we have ping, professor and director for the china center for comparison politics and economics. read a very interesting article on democracy is a good thing and another book on how democracy can serve china. well, this is a good topic for us to throw at him today. what's in the cards for the future for china in terms of political reform? timely, richard solomon's whose magnificent building this is, a long time afish aficionado of things chinese, started as an academic in michigan writing a number of very interesting books, went on to become the assistant secretary of state for

east asia and pacific affairs, and is now president here of the institute for peace, so i encourage all of our panelists to be haiku-like in your brevity. we have by my account what is 35-40 minutes. aim for five minutes so there's discussion from the floor. lee young? >> well, i'll focus discussion on china's emerging middle class. i will make three general observations or arguments. first, the new and the future china as emerging middle class china. secondly, i would argue the chinese middle class, is, was, and will be a stabilizing force for china, but it's the relationship with the chinese government that may change from a political ally to a political challenger.

yes, that's chinese communist party is not perceived as a serious political reform in the next few years. that's the second argument. the third argument is the middle class china will be increasingly similar to other middle class countries in terms of values and the behaviors, and the future of u.s. chinese relation will be significantly shaped by how successful the u.s. is in constructively interacted with this emerging economic and social and political force. these are the three major arguments. let me give you evidence or supporting evidence. the middle class did not exist in china 15-20 years ago. there's no such thing as the chinese middle class, but now according to chinese researchers, it constitutes 23% of china's population. that's about 243 million people

already made china the largest middle class income country. now, in major coastal cities like beijing, middle class constitutes over 40% of their residents. it grows at the annual rate of 1% every year according to chinese researchers which means that positively 7.7 million people in china's 770 million labor force, the labor population enters the labor force every year, 7.7 million and joins the middle class. in twenty years, it was 40% of the country's population really make china become a real middle class country. according to my colleagues at brookings and included in the book, by 2035, there are the top

five middle class consumption markets, four of them will be located in asia. china is not number one. india is one, china is two, indonesia three, united states is four, and japan is five. china still has tremendous room for middle class consumption china. it's a moment that private consumption is only 16% of united states' and 56% of japans. we have tremendous room for further development. now, also interesting that the last year the two fastest growing consumption groups in china, everyone knows what are the two areas in the hardist growing consumption in china, but one is religious tourism. not the religious country, but the tourism that's number one

consumption. two is more interesting which is the pet care product. we heard about chinese people about cat meat, and they are no longer doing so otherwise they would not buy pet care products. this is changing after consumption. to the second point, the middle class increases and becomes critical. they can be angry because they are unhappy with certain things and the future member of college graduates, 20% of them cannot find good jobs. the labor shortage of highly graduates becomes difficult to find job. each year there's 5 million college graduates, 1 million of them cannot find job, a serious challenge. also the civil service examinations, each year just admit 1.5%. like the state and energy

bureau, one job, 8,000 applicants. there's 7,000 applicants. i don't like lucky one. that's not the case five years ago or ten years ago because at that time people wanted to enter the private sector, but now private sector is shrinking. state monopoly is a serious problem and chinese unhappy with the state of monopoly shrinking private business and the corruption that's evident, the lord minister and bureau chief, this is an outrageous number of in terms of the money stole from the state, and also middle class, you know, they want call for rule of law in the judicial system, and also the government transparency and the accountability is also an issue. by nature, middle class do not want the media censorship, and

particularly young people entering the middle class rank, urban housing so expensive that if we want to buy a unit, not to mention beijing you have to start saving with the past dynasties. it's impossible. on top of that, china wants to exert property tax, but in china, not like the united states, when you purchase the unit, you already pay the tax, and now the government wants to have another tax. that makes the people very up happy. that's a political sichtion. -- situation. they are positioned with, you know, the corporate democracy, i think increases in the year to come. final point, middle class china will be similar to their peers in other countries. go to other cities, the young

people particularly are really more similar through appearance in new york, in washington, in tokyo, they are in proceeding generations in terms of fashion, music, food, lifestyle, social conscious bs, civil rights, environmental protection. with young people, it's strong. i think this is changing, this is china intends in 50 years will be a very different china. this raises challenges about opportunities. a challenge is the consumption is looming. the environment implication is really quite sturdy, but chinese use a term. the chinese dream to categorize their opportunity to lead a middle class life, i think for the united states, we should welcome that development because i want to end my remarks, i know the five minutes is up. >> you're over. >> okay. [laughter] a quote by r. williamson who said, "american dream is for

americans only. it will remain our dream and will never be our destiny." thank you very much. >> it is surprising though, is it not, that to date at least, the middle class in china has really sought state and seen the party as a main taper of that stability. >> not necessarily because this is argument like any political change or democracy, it will lead to chaos, and so we will hear professor believe that the incremental change could lead to a peaceful transition in democracy. we already see positive development, so, again, i said that middle class was, is, will be a stabilizing force, but needs change to respond to chinese society and the change of political structure in china, the social complication amid other things. the recent events was now with

shanghai, another subway incident, the middle class plays a really crucial role. i think the leadership, if they are smart enough be ahead of time rather than be defensive to use that. with all the problem, all that consumed resentment i describe the relationships change. again, that's -- because of mature middle class, i think china's transition to democracy could avoid this major conflict, and i would be happy to talk about this impact to chinese political system as well. >> hold that thought, and maybe we'll come back to it. isabel, do you think china in the decade to come can get on top of its environmental problems, and i urge you to mention the question of climate change, which is more i losive than conventional forms of pollution. >> well, i don't think china itself will get on top of climate change, but i would say the chinese government has taken a reasonablebly forward position

on climate change and is sensible of the climate threat to china, and a lot of what you see in the five year plan is pretty active mitigation of emissions, so i think due credit there. as the second one up here, non-chinese and non-american, i enter this with trepidation, a lot has been said today, and a lot of what i think about whether china can get on top of its environmental legacy in the text ten years does relate to much of what has been said about the nature of the political system and the nature of china today. you know, we think of china rightly as an old civilization, but remember it's quite a young country. it's 100 years since the last empyre was overthrown and this experiment began. we forget that. the first 70 years of the 100

were terrible and the first 30 years of the people's republic. it's the last 30 years, if you like, have been on an upward curve. this is all very new, and the story that china tells itself as it constructs a modern state is still a work in progress. what are you if you're not an empire? what are you if you're a country whose borders date from the 18th century and attempt to construct on modern poverty dates from 1811? how do you find a political form for a land-based empire never run by innative government. it's very new with many uncertainties in this. the relationship to this and the environment i think brings us back to the question of how you fix the real problems that have been accumulating in this extremely, many ways, successful period of the last three decades. the cost of growth, this extremely costly model, a model

that's wasteful of resources, that has led to long term and serious contamination, the model that's wasteful of energy, a model that, although it delivers headline gdp, has enormous down sides, which if you factor them in, makes the gdp growth look less impressive, and there's experiments in doing this which was referred to early that that bring down the growth impression very seriously. the difficulty -- no, i should say that in the first five year plan, that you read, there's a blueprint for returning china at this rather critical juncture when threes resource scarcity, all manner of constraints on the model that china has, it's a blue print for trying to turn this enormous tanker around, and the question that we ask at china dialogue is anyone who goes to china asks, what is the

relationship between the policies and reality? this is a gap that, i think, many people who deal with china comment on. let's look at something like water, for instance. china is highly, highly water stressed, particularly the north. 20% of the surface water in china is unfit for any purpose whatsoever, and it's used because there's a scarcity of water. you've got thorough contamination because irrigation water is con tom nateed with heavy metals and all kinds of stuff that's taken up in crops and feeds into food safety and food security, so how do you deal with this? well, if you could get pollution under control, then, at least, your available water would be increased, available water would be usable, but there's an effort by the chinese government to get pollution under control, but

great investments in water treatment plans, but, you know, it's the wind turbines with 30% of them not connecting to the grid and water treatment plants in china are not switched on because they cost to run and there's so much gaming of the system. instead, there's far greater investment and far greater effort into the supply side so if we're short on water in north china, rather than getting water management under control, a question of deep policy, let's build the south-north water transfer, a massive engineering project which will have a relatively marginal effect, benign effect on the water shortage in north china. you see this again and again when tackling systemic issues in china, that the difficulty of ensuring that regulations are enforced, ensuring that policy is enacted when you're up against powerful local obstacles, defeats a vertical

system and this particular vertical system because to do these things to great affect, you need all these things that we recognize as general goods. you need freedom of information. you need a relatively free press. you need a driving civil society. you need rule of law. you need citizens recoursed to the law. you need enforcement of regulation. it's not something that government can do on its own, and the problem that china faces now as it tries to tackle these systemic problems is that the instruments are too weak. the non-governmental instruments are too weak, and they are too weak because the government is afraid, the party is afraid that if it strengthens those instruments, it leads to the kind of challenge to power that you have been talking about, so you have a plan. you have a perception that government levels that there is a very, very serious environmental problem here, and

this is not just a marginal problem, but a problem impacting the economy. looking at china's energy demand, which will continue to grow at a very rapid rate in ten years, every energy solution that could assist china involves water. there's a mix of energy and water here that's going to impact the economy very seriously. the same is true of other production, but to address that, you need a systemic shift. i'm going to see what you have to say about this because there's a lot written about the need for political transition in china which i think is something that is very, very widely recognized. from the outside, it's very hard to see that this is really being planned in any serious way in the risk, of course, if it's not planned, then it will be overtaken by events. the problem that the chinese government has now, which you referred to, is that as the only

political authority, it also gets blamed when anything goes wrong so that when there is a train crash, it's the government's fault. when a building burns in shaping high, it's the government's fault. when buildings collapse, it's the government's fault, and so this is a brittle system, and it's a system which when we look at it from the outside, we might imagine is strong, might imagine is in charge, but when you look at it from the inside, it's a system with many fears and many anxieties. just to draw back and look at the u.s.-china relationship as a closing thought. >> very quickly. >> on both sides, you know, if you look at the way china's used as a boogeyman in the u.s., it's not helping elections, but china as a narrative of victimization

by foreigners, very powerful stories since 1989, that doesn't help either, and each side, it seems to me, is underestimating the degree of anxiety about its own condition, and these an sighties are a big inhibiter to the collaboration that the whole world would like to see between the u.s. and china. thank you. >> so we have become accustomed to viewing china's extremely dynamic economic proposition. do you foresee in the next decade we will be able to look upon it as a more dynamic through political proposition in the state flux? >> okay. thank you.

the whole world has dramatic changes in china. i knew the people -- implication of china's economics is complicated, especially in the western countries. for example, more people think here, yes, china has tremendous economic achievements, but made limit progress in democracy. on the contrary, in china according to the official opinion, there's no major economic achievements without political reform. the process of china's reform is

comprehensive progress, not all economic progress, but including political and social progress, so -- give them the criteria and perspectives. when you mention democracy, in your mind, and maybe -- there's three basic elements. firstly, dbl secondly, civil relation of power among legislature, executive and judicial. thirdly, election of public leader. all three elements has been refused that. if you -- if you look at it as a reality in china, you can find

huge changes in policies in china. if in terms of rule of law, civilized, participation, transparency, integrity, and something like that, so in my view politics is much more important in china than in other countries. really there will be no major economic reform without political reform. we often again and again mention reform means the party progress talked in 1978. that political decision of 11 party congress was typically

political reform. the whole organization, the changes, the party's principle and to shift it, the party in the government of policy's focus. if we look at the situation now as it is in china, one hand, of course, you see china has a lot of -- tremendous achievements, especially in economy, but performance against the global financial crisis, but other things you can see also we are facing lots of, numbers of awful challenges, and the problems such as social disperties, gap between rich and the poor, and also as you mention, dead

deagree gages and the high rate of crime, and the very serious official corruption. you can see most of these problems is only with economic development, you never can resolve this challenge, so we have political reform towards the rule of law. these are why again and again -- [inaudible] does not mean hao has his own social science. no, it doesn't mean that. economy, politics, society, culture, and the nature. this is also -- this is why geep

and again and reformally is political reform. democracy, rule of law, and the social has justice. i see fee words about that in the next few years in political reform. some items should be put on the top agenda of political reform in next of the future of china for example, social justice and then rule of law. we have made a step to establish the rule of law to be the fundamental political goal for china. i think it's the reform because

we have law, law, man. there's social democracy, and then public service, and then transparency, integrity, and efficiency of government and also ecological balance. the lesson we have that's important called social governance, so thank you. >> thank you very much. when you look at the leadership subject of which you have deep historical roots on, how do you think they're going to do in the transition? what is it, do you think, that particularly in relations with the united states, which we've discussed much here today, they're really after sort of the

subtext with the specific issues? >> i'd say it's the supertext. let me do the following, and this has been an extraordinary day, and hearing all the great detail that we now are into on the economic relationship, what i'd like to do is try to answer your question by putting the state of u.s. china relations in a somewhat broader framework. we have to realize that we are in one of the most remarkable influx points or breaking points in history that is disorienting everyone. this is the third time, at least in my lifetime, that the u.s. entered a period where it really took some effort to figure out what the issues were and how we dealt with the world. the first, of course, end of the isolationism of the 30s into world war ii. the end of world war ii, we tried to come home, and them the soviet challenge.

the soviet collapse, and we, again, wanted to have a period of peace until 9/11, and then i thought david milliband put it nicely in the opening statement. how will we characterize this period? is it the challenge of terrorism and the complexities of dealing with the muslim world, or is the big issue in china? the answer, of course, is both, but as kurt campbell said,ed meat in china issue and our economic relationship has probably much more serious long term consequences, and part of this period is figuring out now relationships, new coalitions. can we cooperate as henry kissinger said in his noontime address, how can we build relationships that will manage a totally new agenda in world affairs? it's not the confrontation of

military sort that we experienced during the cold war, but it's really how we deal with climate change, nuclear proliferation, terrorism, and above all, economic interdependent -- interdependencies. looking back, this is the 40th anniversary of kissinger's secret trip to china, and what's remarkable about that in 1971, china was still in the throws of the culture revolution. the elite was tearing itself apart, and what was most remarkable is that kissinger and president nixon who went to china, of course, in february of 72, despite the internal turmoil in china were able to establish a strategic frame work, a perception with chairman mao that helped the two countries cooperate, and there was a

tremendous relief in this country because people were frankly terrified we'd get pulled into another war with china in the context of the vietnam conflict, and because of our shared strategic interests of the soviet threat, issues like the future of taiwan were put to the side and we did have several decades of emerging cooperation. the big change, of course, was after the end of the cultural revolution and the passing of chairman mao, the normalization of our relations made possible with ping and opening policies, and in 30, a little more than 30 years, we've seen this unbelievable take off of china, and, again, the statistics and graphics with the curves going up to the sky that we saw this morning give complete evidence

of, again, what a remarkably energetic the chie -- chinese people are. as we acquired economic independence, the basic trust of this relationship in many ways has deteriorated. both sides locked into the struggle for jobs, jobs, jobs, and in the case of china, there's tremendous fear that if the growth rate drops blow 7%, people are unemployed, expectations are deflated, and it becomes politically very destabilizing, and so we get into these unproductive or inconclusive debatings about things like exchange rates and other efforts to open up exports to the chinese economy, and the chinese leadership is determined not to let that growth rate

fade, but as we know from our debates here, jobs, jobs, jobs are also an imperative here, and the relationship between our interdependence with china and the economic fears and its relationship to employment and all that it means for stability is really unclear. now, china is about to make the leadership transition from the fourth to the fifth generation of leaders beyond the leadership, and as best we can tell, there's been a vigorous debate in china about how the country should use the tremendous economic power and growing military power with china's take off. there's an a serges over the -- assertion over the last two years that china should use the power to assert core interests. there was much greater pressure on the resources of the south china sea.

there was greater pressure for more definitive resolutions of the taiwan situation, but that more assertive posture appears to have been scaled back recently. the end of last year, the senior foreign affairs leader, stressed that the approach of the so-called peaceful rise of china , the cooperative approach to developing its relations with the world was still the predome in and -- predominant approach with leadership's dealing with the world. this is in contrast that the evidence of the pla, the people's liberation army, has used new aircraft to shoot down satellites, growing naval power, to concern a presence that frankly for many of us who followed china over the years raises the question whether the party really controls the gun.

if you ask this of chinese leaders, they don't know if the party controls the military, the gun, and you ask if the assertiveness goes against the notion of peaceful rise, and so there's tremendous uncertainty, and just to conclude as i think kissinger expresses in the new book, the challenge of both leaders is to do what previous leaders did back in 71 and 72 is for this new era, for the two leaderships to develop a broader strategic framework where we identify our mutual interests and find ways to contain the potential conflict over what in china they now refer to as core interests. that's a tremendous challenge. you have a leadership now emerging with the new party

leader next year that is much more, if you like, worldly, educated, sophisticated, about the world than the revolutionary generation, but in some ways, it's hard to establish that cooperative perspective, that broad, shared sense of strategy, and that's the great challenge facing the two countries. >> are you optimistic, dick, that the american people would embrace such a strategy if the leadership of this country did? >> there is a real danger just begin the character of our political dates and the job -- debates and the jobs issue if the current economics prevail, that china will be scapegoated. we're hearing that from a number of potential candidates now, and that's a matter of real concern. just as in china, you have now a much more activated