tv Key Capitol Hill Hearings CSPAN April 15, 2014 10:30am-12:31pm EDT
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explore the possibility of bringing some chinese experts of the kind you describe and were unable to get the right person for this particular panel. but i think we would like to do more of this. this is, as i said, only a halfway point in our study, and we certainly expect to have more. and we, by the way, along the way we've had events including chris has done a couple of events with some officials involved in some of these decisions. so we certainly encourage that and want to have, want to have more of that. >> well, and being involved right now with putting together a panel overseas, i've been trying to do this, and what's frustrating, too, is that yet and still the polity in china hasn't reached a stage where -- and you know this from your time in china been where those officials and retired officials even felt the confidence of being able to do the kind of irresponsible thing we're doing right now.
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[laughter] by sharing, sharing our personal views without any baggage. so we're, but i think that's@+2z devoutly to be looked for in a second edition can. >> yep. >> we have time, i think, for a couple more. yeah. >> thank you, i'm from georgetown, university. one of the interesting things brought up in the panel discussion is the disconnect or the lack of harmony, if you will, between the central government and the local government administrations. and it's fairly well known at7g point that there are a range of issues that the central and local governments, especially local governments of the more devout areas in china, places like shanghai, places like beijing, there's a range of officials that these government officials disagree on. can you maybe possibly just elaborate a bit about the outlook of the this issue going forward? for example, can you kind of
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foresee is it more likely that the -- [inaudible] going to develop on itself and people are going to be fine with it, and this kind of action between the local and central government in the long run will not be a huge problem, it won't really adversely affect at least the economic development of china, or do you rather foresee that it's more likely the central government of china is more likely to rein back its power under its own hands and play hardball against the local governments? thank you. >> it's a great question. i'm going to field it to my colleagues here, but with this, with this introduction: if you want an indicator, in my mind, of how that issue is progressing, look at tax reform. again, i'm not talking about the u.s., i'm talking about china. [laughter] if you get authentic, deep revenue, sophisticated revenue sharing that works between the center and the provinces instead
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of the kind of asymmetry that we see now, if you see a tax bill that's that consequential emerge in the year or so, i think that would be a really good indication that government is serious about the rebalancing, but what do you guys think? >> i use this to make what's probably my last thought on this panel? it strikes me we've talked about this local/central. i think some of the reforms require the participation of local governments in implementation, you know, more than others. so as things move ahead, i'm going to be looking at, you know, is there more rapid progress in things that are really more of a stroke of the pen character. so, for example, the central government could introduce more flexibility on the exchange rate, get rid of the caps on interest rates. they're the ones negotiating these international trade agreements like bilateral investment treaty. so if the central leadership is really united around reform, i would like to see relatively quick movement in those areas, but i remain a little skeptical
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because i think at the central level there are some very powerful officials who are not really that enthusiastic. within the politboro, i'm not convinced. but if they are, we should see clear movement on those. other things we haven't talked about, but a lot of local government resistance to reform. you mentioned the tax issues. there's just a lot of things that will clearly require local government involvement in a very deep way, so it'll with be interesting to look at whether there's relative progress in one of these areas versus the other, and it'll be very fascinating to watch it play out over the next few years. >>huko, for those who don't know, is the sort of urban passport that entitles people to get the full range of subsidized benefits; education and health care and so forth. be. >> national id card. >> sort of an id card, right. that is denied to temporary market workers for the most part, but they're trying to change that and give more migrant workers these rights. >> just real quick, i think
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there are some areas that lend themselves to national design, but if you had to make a statement, does power move to the center or does it move local? over the next five to ten years? i would bet that it moves local. >> interesting. >> decentralization. >> interesting. i think we have one more question. we have time for one more. right here. no one said anything about the gender imbalance on either the panel or among the questioners. thank you for at least helping on this front. [laughter] >> thank you. my name is leah from voice of america. we talk about xi jinping's anticorruption campaign in china. there's a perception in china that all government officials are corrupt. in terms of the party, in terms of the government's control over the party officials, they heavily rely on a system called shuanghui. as we know, it's --
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[inaudible] we've recently seen some reports and there are some videos of people how that was like, you know, for people who went through that system. i'm just wondering if, i mean, wonder if any u.s. side has ever expressed its concerns about this to the chinese top officials. i think it's, actually, a human rights issue. of course, also judicial issue as well. and also wondering if you can talk about xi jinping's anticorruption purpose. i mean, it's widely seen as, you know, using this as a tool to get rid of the people you don't like, especially at the local level. but the top level it's more of a power struggle if we look at the cases, even the military vice
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chairman of the cmc was also very closely connected to all these people. so, i mean, is he really serious about getting rid of corruption, or is this just a tool for a power struggle? >> chris, do you want to -- >> yeah. there's a lot of questions in there. [laughter] i'll do my breast. i -- i'll do my best. shuanghui, for people who don't know, it's an extrajudicial form of detention by which somebody can be held indeterminately, basically, without charge. and what's been interesting, central to the sort of judicial and social and legal reforms proposed at the plenum is this whole issue. so even the current head of the public security ministry, excuse me be, the head of the political science and law commission which oversees these issues has talked about the need to make this more legalistic in the way that they do it and follow procedure and so on. so they're a long way from getting there in terms of truly reforming the system, but there
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is pressure to make this system more transparent. on xi's motives for anticorruption, i like to call it his multilayer cake of motivation. i think there's a lot of things going on inside this. one of them is clearly power consolidation and the ability to be able to let key constituencies know that he's in charge. i think there is a basic element though of trying to improve governance, trying to, frankly, keep the party, get the party's reputation rehabilitated. and, you know, to us in the west, you know, these things like four dishes in a soup for officials and so on, it sounds ridiculous, but it's actually a very smart strategy in terms of the people -- he's targeting the corruption that the people see every day, right? the rapacious local official and so on, so that's very important. and i think another key component of it which hasn't gotten much public attention is he's also trying to focus on corruption in the guardians of the regime, and that's the military and the security services. you know, he has concerns just like all chinese leaders do,
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they studied the fate of the soviet union over and over and over again, and one of their key conclusions is that those key guardians of the state had become corrupt and lax and, therefore, didn't stop as xi jinping said, they weren't man enough to prevent the collapse of the communist party of the soviet union. so i think all of these factors are informing xi jinping's emphasis on anticorruption. >> we started with one of my university of michigan story, i'll close with one. there was a professor of ethics who had a colleague at a famous east coast university who was undoubtedly one of the greatest moral and ethical writers of his time but who led an exorable personal life. the guy was a famous lethario. [laughter] at wasn't point a fact all -- at one point, a faculty member confronted him in the lounge and said how can you lead such a morally bankrupt life? he was so morally unaware, that
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he actually thought that was a question. so he answered it. [laughter] he answered it, but his answer offers my closing here which is he said, look, it's like this: you know that big highway sign on the road into boston near wellesley where it says 20 miles to boston? i'm like that sign. i provide reliable direction to others. i don't want actually make the journey -- i don't actually make the journey myself. [laughter] and i close with that story because a lot of times we discuss what is or shouldn't be in a bid and other elements of chinese decision making, but i want to commend matt and his colleagues on forcing us to actually -- and giving us a tool to make the journey so that we actually look at the elements of decision making in a more useful way and maybe in a way that might guide american policy in a way that's helpful. >> to be continued. >> let me invite you to break briefly for coffee out, as matt said, indoors, and then we'll return here at 11:00 please,
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>> so the center for strategic and international studies taking a break now, about 20 minutes. they'll resume at about 31 a.m. eastern -- 11 a.m. eastern time. when they come back, he'll hear from former treasury secretary hank paulson giving his thoughts on china's economy. in 2011 he started the paulson institute with the purpose of promoting sustainable economic growth and a cleaner environment with a particular focus on the united states and china. again, we'll hear from him coming up at 11 eastern as our live coverage continues on c-span2. until then, a portion from in this morning's panel discussion. [inaudible conversations] >> well, good morning, all. my name's kevin nealer, i'm delighted to be here and introduce this terrific panel. you've already met the founder of our get together here, matt goodman, who holds the psi upon chair in political economy, but many of you know that matt was
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white house coordinator for asia-pacific economic cooperation and coordinator on the east asia summit. on my far left, how do you feel about that, far left? [laughter] >> that's where i belong. >> david dollar is currently senior director at the brookings institution but was formerly at the treasury department as their representative in beijing. were you the first? >> no, no. dave -- >> that's right, you were the -- >> the best so far. [laughter] >> and was also world bank representative. dave's made that magic washington transition from being a policymaker to being a resource to everybody for which we're all most grateful. on my far right, and i know how you feel about that, chris johnson is senior adviser here and one of the co-authors of the study. chris has spent nearly two decades in the intelligence and
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foreign policy community on behalf of the u.s. government. and on my immediate left o to lin, former assistant secretary of the treasury for international affairs, special envoy to china and leader of our financial negotiations with them and founder and head of thewettington international right now where you work on m&a work and invest investment of al kinds. maybe it's the cold rain, but on way over i was reminded and kind of chastened by the idea that it's been exactly 40 years ago that i was probably making in the same weather about the same time of year the transit of the university of michigan diag to go to mike oxenberg's class on chinese political thought. mike didn't waste all his time with ungrateful undergraduates, but as many of you know, he went on to be carter's senior director for asia study and to spearhead the china
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normalization effort. mike, among the many things that he taught us, he emphasized the intellectual rigor and honesty and also for unnecessary modesty in appreciating what we don't and can't know in trying to understand china's instincts and motives. i think he would look at the study as a durable contribution to the literature in this area, and it would meet mike's high standards, and for that i commend you all. i think this is an important contribution to the literature. matt, let me start with you. in your, listening to your overview most all of us appreciate that china is not the place where the internal incentive structure permits people to walk around and have free and unfettered views of who's in charge here anyway and how does this really work. those are dangerous
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conversations in washington, and they certainly are not without risk in the chinese political environment. can you say more about how you guys went about this analysis and some of both the problems and the surprises that occurred in the course of what over a year's worth of discussion? >> sure. well, thanks, kevin, and let me say mike oxenberg was also an i said separation to us, he and ken did a lot of the work we first read to get a foundation for this. percentageically, died way -- tragically, died way too young. one of the surprises in this project was that it was actually pretty easy to talk to people. i found very little resistance to talking about this stuff. of course, we were in this first year trying to map the whole elephant, as it were, and i think one thing, one explanation is that there are a lot of blind people who know the tail or the trunk in china, but they kind of had an interest themselves in
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understanding how the big picture works. and so i think that was part of the explanation. partly, you know, these are not as controversial issues as some other things that one could ask about, and we certainly weren't asking the sort of deep, difficult questions that others might. so i think, actually, and i think that the chinese authorities want us, all of us in this room to really understand how china works better, because they want, you know, they want a better dialogue, better exchange with us. and so i think it was, it was no more difficult than i think it would have been here in washington to get access and to get information and insight. >> indeed, indeed. no, well, the end product speaks for itself, and i thinkst useful certainly to us and probably to them as well. david, look, you've been involved with many of the people that matt described as being key to this process both in your treasury job and at the world bank. but i've thought many times and when we were sitting together in beijing that, you know, your
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bank colleagues -- even those with successes like equatorial binny -- look at china and say this isn't the development model that any of us understand. and, indeed, perhaps a decade ago we would have said things should go in a very different way to produce this heroic result, this kind of growth. what factor do you think best explains why china doesn't fit the conventional development model that we all have thought of when we look at successful transitions? >> right. so i think paradoxically, you know, while we think of china as an authoritarian country with a powerful central government, the thing that always struck me working there was power be of local government -- power of local government. you know, i had a chance to work with a lot of local governments around china, the core bank work is with local governments, and my strategy was to find local governments that were interested in reform. usually they conceived it as
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they were interested in a particular problem, you know? some governments worry about air pollution, some were worried about wastewater treatment. so our strategy was to find governments that had a problem and were interested in thinking about, you know, innovative ways of solving it, and our model and our mind always was, you know, this is a country where if something is piloted at the local level and is successful, it tends to spread pretty quickly. so i was both impressed by the independence and the competition among local governments, but then having said that also, they had a very single minded focus on economic growth. and we were able sometimes to interest them in environmental issues, but it was always because the particular environmental problem had risen to a level where it was threatening economic be growth, you know in so it was easier to deal with wastewater, for example, than with air pollution. so the incentives for local government were very, very strong to pursue economic growth. and that's covered in matt's presentation. this is coming down from the center how you evaluate with
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local officials, but then i also think we have to appreciate that the growth model in china created a lot of corruption opportunities for local officials. so their private incentives were aligned with official ones. and i worry as we move ahead, i worry about two things. one, how do you change the incentive for local governments so they're interested in a broader range of things, you know, cleaning up air pollution, food safety? i think that's a very tough nut to crack. >> indeed. >> and secondly, this model that's relied a lot on experimentation has served china very well during this growth phase, but now they're moving into a set of issues, you know, for example, opening up the service sectors or financial reform. it's very hard to do that as a geographic pilot, you know? the shanghai free trade zone, i think, is inheshtly contra -- inherently contra contradictory because you can't just do it in one location. some of the strength that's worked very well for them is going to be a problem going forward. >> so you see it as testing the limits in this next, this next
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phase of development of local initiative and that kind of growth. >> i appreciate your comment about humility. so i'm going to observe this over the next period. i'm skeptical they're going to be able to change the incentive for local government officials, but i have an open mind. >> yeah, indeed. >> can i just jump in there real quick? because i think this this is an important, what david's just talked about so important to xi jinping's philosophy about how to reform this process, and i think in particular if you look at recent speeches he's been making, there's heavy emphasis to the so-called fifth modernization as opposed to the four modernizations, and this is the idea of improving china's structure but also its capacity. and i think this is designed to create a lot of the infrastructure that has managed these problems that david was just highlighting. xi has talked about how in 1992 when the reboot of the reform
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program was launched, he remembers saying it would take china approximately 0 years to achieve this -- 30 years to achieve this process. so xi jinping, i think, again psychologically thinks that that's to occur during his term, and he feels he's the one that that's got to grab that bull by the horns. >> chris, say more about what you think if you're sitting in the place pictured up there, what's the biggest difference, most immediately the biggest difference between the previous regime, the government of the last ten years and xi jinping's agenda now? i mean, we've seen the third plenum documents, we've seen the march party documents, but olin and i were talking beforehand about how little compared to the last three decades how little specificity is there now. i mean, what's your compare and contrast with the others? >> sure, sure. i would argue that the biggest difference, frankly, is
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activism. in a word, it's active. these guys are much more active than their predecessors, pursuing a much more bold process of reform. >> is that by choice or necessity? >> both, but i think that's the rut. because on the one hand, it's encouraging that xi jinping shows that boldness to do the things that he knows need to be done even though there are serious obstacles and problems and all this to overcome. on the other hand, it also shows, i think, that on many of these reform proposals he has leaned very far forward. so far, in fact, that i think he's out in front of the general consensus among key constituencies in the regime. and so if you look at it that way, he's coming to a fork in the road, he has two choices. he's going to either slow down the pace of what he's trying to do to allow a new center to form, or he's going to grab the resistors by the scruff of the neck and drag them along with him. so far from what we're seeing, i think it's the latter case that he's doing. he's using the tools of anticorruption, even ideological enfrenchment to signal get
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onboard, or it's not going to be pleasant for you. >> olin, this is sort of beyond our writ today, but i can't resist having you here having spent so much time in negotiations with chinese colleagues and continuing to do so in the private sector. as you look at what these guys have described, what particular challenge or opportunity do you see for u.s. policy against this backdrop of dynamism, even of -- and this is not new to you -- you know, changes in government structure. heaven forbid we should have significant changes in the way our government is organized. we all do this. we convulse every couple of years with different models and move the boxes around, but in listening to what chris just said, i'm trying to think of what consequences you feel this has for the u.s. and for policy going forward. >> yeah. i think it does have some
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significant process consequence withs as well as substantive. just let me say i'm surprised you didn't put me center-right -- [laughter] i'm happy to be here on your left. >> you're always there for me. [laughter] >> i'd like to associate with the oxenberg former student fan club as well having been one of his students who he wasted a lot of time on. >> i don't think he'd regard it as a waste. >> i think from a u.s. perspective as we view china's leaders' current articulation of policy, they have said that the current economic model is not sustainable. there have even been some, including the deputy to the leading group on finance and economics, who have gone so far as to say it's a dead end. maybe not today, but at some point. be and that new model of economic development, the
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leadership is saying, will necessitate slower growth, a more balanced and sustainable growth trajectory. well, from a u.s. perspective when we see china having generated over the last number of years about 30% of global growth, maybe we should also ask the question with to what extent is a engineered -- at least for short, immediate number term purposes -- slowdown in growth in our interest? well, we may not have much control over that. but i would say that from a u.s. perspective a model of growth that does have a slower, more sustainable trajectory is in u.s. interests, and i say that for several reasons. one is i do agree with the, with the fundamental assessment that
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the current strategy has played itself out. that has implications for social and political stability. and stability in that domestic context is certainly in our interest. i think also they are projecting , the vision includes a more integrated china with the world economy. and i think, certainly, that is in america's long-term interest. so i think bottom line is we have a national interest in affirming, because it is in our interest, the leadership's assessment that they need to change that economic mod hell. model. now, chris had referenced some new considerations with respect to a xi jinping and the current leadership. i think one very significant
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change structurally in the decision making process has been the reemergence of -- not that it was ever dormant, but the party under xi as he projects it will play a much larger role than it has in the past. and in a more consolidated and disciplined form. and as he envisions it at this point, he must at least initially in political terms take the party left. so he is to some extent resorting to the tactics of previous era leftist kind of approaches, ideological orthodoxy, and i i think -- >> which -- information management in some of these -- >> information management, and i think he views it as a means of
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bypassing what has been a state apparatus that has been gridlocked now in terms of policy making for well over a decade. so one should look to a stronger, i think at least in the near term, role for party apparatus. i think to go back to your question that does have some implications for how we interact with china. ..
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point of interaction. because it has elevated from the chinese side for institutional purposes. >> i couldn't agree more with that. i think it's quite important to grasp the full applications of that. for example, on the one and it is good that xi is doing what he thinks is necessary to justify what they hope they need to achieve. there is the risk if they are successful, only that totalitarian highly centralized form of government will work in the country so that's very important. >> if everyone can take your seats. feel free to bring your coffee in. okay. thank you all. hope you all got some coffee. i'm not delighted to move on to the keynote part of our morning.
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we are delighted to have with us former treasury secretary henry paulson, who i'm sure is very well known to all of you. he is now the chairman of a think and do tank in chicago known as the paulson institute, which is working to advance global in our mental protection and sustainable economic growth in both the united states and china and to improve relations between the two countries, better understand. he was secretary of the treasury under president george w. bush from july 2006 to january 2009, and inconsequential period in american financial history. and of course spent 32 years at goldman sachs, including as chairman and chief executive officer from 1999 until he became treasury. he's a lifelong conservationist and was chairman of the nature conservancy among many other related activities. so that's secretary paulson. and then with him on stage is
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david wessel think is also very well known to a washington audience. david a few months ago joined the brookings institution as director of hudson center on fiscal and monetary policy. but as most people know, for a few years before that, 30 name and he worked at "the wall street journal" where he covered economic and many other issues, and he won two coaches along the way which is not bad. he is a frequent participant in ncr's morning edition so i'm sure you have heard him there. with that i will leave the two gentlemen to take it over. >> it's a pleasure to be here. hank paulson is just back from a trip to china, and asked him how many times has been to china and he paused for a moment and said, more than 100 times. both dana goldman and at the treasury, and now in pursuing a third career which is interestingly 100% nonprofit.
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is no investment in china except i think maybe his heart, a little bit. mr. paulsen, i thought i would start with remembering that you presided over you at the helm of the portal financial crisis in the united states and we're a country a lease without have a very sophisticated financial system with good people running it, didn't turn out to be quite as good as led to believe but in some sense the chinese are facing what is widely regarded as the potential for a financial crisis. perhaps with less expertise in handling them, although they do seem to do resources if they need them. i wonder if you could talk about how big a risk you think there is in shadow banking or credit boom or housing, and how well prepared you think they are to manage it? >> david, thanks. and thank you all. it's great to be here.
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not surprisingly that was a question i got a number of times in china. you know, my view is that, of course, every economic system known to man, every economy in time to time are going to have financial crises, and the roots of it almost always, probably always in foreign government policies. and they manifest themselves in the banking system. of course we have an economy like the chinese that relies on to a large extent on debt financing for infrastructure, a realistic, for fixed plant investment, the problem is inevitable. and they almost, they certainly are going to have bad debts.
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and this in many ways is similar to what happened there in 98 and 2000. part of the bad debts related to the financial crisis because of their fiscal stimulus program and policy bank lending, part of it to shadow banking, investments, you know, in that market often to the private sector, and a lot of it a municipal funding. so the way i look at it is, first of all, i don't think anyone doubts that the capacity or the commitment they have to prevent the failures
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systemically important companies, and today the problem is limited to municipal, you know, municipalities and two state-owned enterprises. the public, you know, i don't have leverage and the central government has huge capacity. so today, i think the things that i tell the chinese is they need any system with a few decision-making, they need clear authority and the need to make some tough decisions about what institutions are systemically important and which ones are not. and when the our losses how those should be shared among market participants and they need to make it clear where the government is on the hook and where the government isn't. i'm not making light of the current situation.
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i think it's manageable. i think a much more serious is the flawed government policies that led to this, which need to be corrected. and here i will just point at two things. one is sort of that triangle between the banks, the government, state-owned enterprises and dealing with that. and then the other very significant problem is their system of municipal finance which is ultimately reliant on the real estate sales, municipal governments taking land from the farmers, selling it to developers. and they need a new system, and that's not sustainable. they need a new system of municipal finance. and it's easier said than done, because right now it doesn't work, won't work unless there's a new tax system, and there's
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fiscal reform. because what happens is they have huge obligations and they don't have access to sources of revenue, enough sources of revenue so what they are doing is taking land and selling it and fronting it in the shadow banking market from banks on a short-term basis. so it's going to take a while to fix this, and it's going to take fiscal reform and tax reform. the leaders understand it, but they need to manage their way through this period while they do something that's going to be a permanent fix. >> it sounds like you have a few pretty big bombs on the way to better system, you know? like the state of illinois. >> i would say -- big bumps. the chinese economy, i wouldn't compare with the state of illinois, but the state of
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illinois has, we have some very significant problems, but china does, has their own problems. you know, i think they like any economy are going to have bumps in the road. i mean, step back and look at it even more broadly. there is a huge need in china to develop a new economic model. and the current, xi administration is committed to do just that and really put their credibility on the line and layout really a very broad program to do that. but it's a lot easier said than done. i mean, to take a $9 trillion economy and develop a new economic model and rebalance it and do all the things, so i happen to think you can do
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something like that without some significant bumps along the way. >> 's so to what extent has the xi reforms translated into change incentives for local governments? we talked this morning about how for a long time if you wanted to be promoted you had to produce growth, national gdp target. the rhetoric at the top is for balance growth and all the stuff, but have they changed incentive for the local officials? >> i think is going to take a while to do that. the incentives are critically important. the environment is an area where it sure looks like they have changed it, that they don't have the institutions they need to do with environmental issues the way we do. they don't have a strong, you know, administrative environmental protection where regulations can be enforced.
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so the approach that the xi administration is using is making the environmental protection, clean air and clean water, an important part of the way they evaluate officials. so it used to be when you would meet the party secretaries and mayors, they would go through their litany of what they had done with their gdp and job creation. and now in addition to doing that, they are all talking about the environment. and if they believe that's going to impact their career, what they do, and it's going to be a very unborn part of the performance evaluation. i think that will make a big difference. >> do they have measurable targets like particulate? >> that isn't clear, the extent to which that, but that is clergy something that needs to be done. and i think that, i am frankly
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encouraged because i don't believe it's rhetoric. the party needs to do this if it's going to keep its credibility. >> you been working a lot, give us some example of something that convinces you this is more than just press release. >> well, i've just given to you the best example i can give. i would say that to step back even further, if you had, if five or 10 years ago someone had told me, these are all the things that china is going to do in terms of investing in clean technologies and shut it down dirty plants, et cetera, i would've expected them to have made more progress.
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but what's happened is despite some pretty exporter steps they've taken, that it's all been blown away by this growth. i think there's a real understanding today that the quality of the growth is much more important than just ramping up gdp. and the chinese people are demanding it. when i'm there it is the big issue. and remember, i was there at the end of february also. when i was there at the end of february you could hardly see the sun. it was, you know, two-and-a-half rating, it's in the danger zone when it's about 300. it was about 600. remember, the leaders are right there in beijing breathing the same air. so there is a huge -- look what
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there doing. they're doing important resources, tax with carbon. they're doing a lot of things. and so there's no doubt they are serious about. >> one of the things you mentioned to me and it came at this point is in the xi leadership. the role of the party seems to change them. toggled it about what you've noticed about the role of the party with this later compared to the last couple. >> i think the party has always been predominate in china. i think some americans, because we talk about reform, we are thinking the chinese may be in the back of our minds, people are thinking they're trying to create a system like we have. and so when you look at come you know, market-based reforms,
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these are reforms that are good for china and good for us. and when you're looking i was sitting at modernizing government, it will put china in good growth. but the party is predominate. and xi jinping came from a very prominent and powerful family, chinese communist party. and pcs a strong party -- and he sees a strong party as part and parcel, critical to him being able to achieve successes in the reform areas he is pursuing. and pcs the party as really the only strong institution, and so, in china, so he's done things and doing things, increased credibility of the party. and a whole lot of things including some very, very strong
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anticorruption campaign, but a number of steps. peacemaking the party, and i -- as someone who's been going to beijing for a long time, i hear in the conversation with officials, you hear the party mentioned much more frequently than in the past. >> is that a substitute for government? these he tried to break the gridlock of government that slowed things down? and how do you build a strong government if the party is being so much -- >> well, that is the $64,000 question, because what happens is, you look at the reforms. most people in the u.s., and most of the press, are focused on the economic reforms. extraordinary which is -- things
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are going to be very good for china, for us. but there's also a huge agenda in terms of modernizing government. and the institutions government, because china doesn't have the institutions, the governmental institutions that it takes to govern a country, and economy as big, as diverse as china. so there's work on restructuring. so part of it is a structural issue. take the measure of environmental protection. in certain areas it's going to take more centralization which is counterintuitive to many americans when they think they are already being too much to authority, top down authority,
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but how do you regulate the environment if it's not done centrally and when you have consistent rules at the local level that are enforced? part of it has to do with the legal system, and where due process and with new rule of law and restructuring, restructuring the display process which, you know, my counterpart, but in their sort of a catch-22 that you alluded to, which is the party probably is the only organization in china that is strong enough to get these things done. and because there's huge vested interest there will be a lot of resistance, and xi is really consolidated power to really an
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unprecedented level, at least in my experience. and i think he's going to need that to get it done. but maybe because the party is so strong that's one of the reasons why we don't, they don't have the institutions, build institutions they need. >> you mentioned the anticorruption campaign. did you look at this as a crude way for xi to reward his friends and punish his enemies, to say, i'm sure plenty of people who are corrupt in china and you know that leadership can always target you. that might make you a little more loyal. or is it less about hard power and more about kind of clean up the system to keep the people happy? >> first of all, just for background, david, there hasn't been -- those who haven't followed this closely. the man who runs the center despite committee, there's been really a highly publicized --
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central disciplinary committee. to go after not just come you know, go after the tigers, not just the flies. so some very senior people in your, have been targeted including a former standing committee member and so in terms of what they're trying to accomplish. first of all, there is no doubt in my mind when you look at the chinese people and the issues they care about. right up there with the environment is corruption, okay, property rights, clean air, clean water. they have food security and corruption. so there's no doubt that this increases the credibility of the
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party we the people. no doubt about that, number one. and number two, to the extent that some of the people being targeted our senior, you know, in some of the state owned pillars of the economy, i think will lessen resistance to some of the reforms. but i also believe that they are very serious about curbing corruption for domestic and international credibility. and i think they understand that just, although a resting people for past transgressions, that survey going to strike fear in the heart of a lot of people and they are going to curb their behavior going forward. this is a systemic issue, and it's one that's got to be changed and it's got to be changed through sort of long-term policies, emphasizing
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values and integrity, changing incentive systems that you talked about, part of which will be paying underpaid government officials more for doing the job they need to do. part of it will be having clear rules of anticorruption and the legal system that is more even as it enforces the law. and i think a big part of it is doing what they want to do in terms of having the market play a bigger role in the economy, and government playing a small role. because i think the current system where the government plays such a big role is, again, is one that warrants corruption. >> it sounds like you're saying there are twin objectives and twin benefits of anticorruption. one is if i make the system cleaner, more popular and work better, but on the other hand, if it happens to weaken the resistance, reform, that's not such a bad thing either.
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>> yeah, because the -- >> no after the few -- >> first of all, it strengthens the party, okay. by credibility. and also there's no doubt that i think that some of the vested interest, you know, in state-owned enterprises and other places, i think the fact that some of those people have been targeted will help get reforms done. >> now, i think the american view is always big you can't really have successful markets, focus capitalism without also having political freedom. the chinese leadership clearly doesn't buy that argument. but do you see tension there? are they going to feel pressure to have more political freedom? are these demonstrations a manifestation of a restlessness among the chinese people, or is
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it the alternatively, if they can deliver the goods in clean air and safe food for your kids, and few less education camps that they can get away with having strong, political -- >> well, first of all, i would say that right now xi is very popular in china. and most of the people, virtually all of people i talk to are really focused on delivering the goods on these other things. very, very hard to deliver on. i mean, when you talk about the sorts of things that he's taking on, they are going to be very difficult. my own view has been for some time and it continues to be that the system is evolving, and that, that ultimately as you move to have a market-driven
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economy that is as integrated as china is with the rest of the world, the system needs to evolve to become more open and inclusive or it really does. and i believe that the government won't achieve the success that they expect to achieve. they move in that direction. i think there will be, there will be pressure to move in that direction. this is a pragmatic leadership, you know. one of the reasons why i have gone to china as much as i have over the years is they are, when they are focused on, you know, their economic objectives and reforms, that they are pragmatic, they are not locked into ideology. they are looking for what will
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work. and i, again, i think the system won't evolve and will need to evolve. >> when you worry about china, would you think about what could go wrong, what's on your worry list? >> well, you know, to me the big picture is this, the big picture is this is a country that has accomplished an extraordinary amount over the last 30 years, and they've done it with an economic model that has run out of steam, in my judgment. it just plain isn't sustainable. and so you can get a bunch of economists, they can all sit around for a talk about had to do this, that, and the other thing. and when you talk about what they need to do in terms of
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reforming the labor market, removing immigration restrictions, all of the various social reforms, the government reforms, the economic reforms in order to unleash the potential of the private sector to rein in the state-owned enterprises, to reform the financial system. at $9 trillion economy, it could change the model. it is a difficult thing to do. and so to me, if the good news is the leaders understand it. it's not like talking to u.s. politicians. sometimes guess what, the problem doesn't exist. when you talk with them they are very pragmatic. they know the problem exists and talk about it. so the question is, are they going to google to get the things done?
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because you've got, and here i'm going to make a very big and important point, probably the most important thing i have to say. because when you look at the scope of the issue and the scale that they've taken on and the personal credibility that xi is put on the line, it's very unprecedented for a general party secretary to be the one that heads up this central reform, you know, leading group on economic reform. they've taken it on, but the question is, it's so complex to do this and they don't a lot, how are we going to whether they will be successful in the? to me it all comes down to competition, just as plain and
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simple as that. >> you mean inside china's? >> deferring competition because economic competition. so the things i'm going to look at art, first of all, are they going to open up the key sectors, the private sector competition? you know, we're talking about energy, talking about finance. i think they will, but are they going to do that? secondly are they going to rein in the state-owned enterprises and continue to reform then? which isn't an easy thing to do at a time when they're really underperforming and you take away the subsidies and their special advantages and the regulatory protections and put them on a level playing field and make them compete. that's going to lead to unemployment in those areas. but it will -- i will get back to what will do in a minute. and thirdly, which i think is really important, is everything going to open up to foreign competition?
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and i think that is medically important. there are two groups of reformers in china, the pseudo-reformers, many of whom are the domestic, all for competition as long as you let the capital and let us run our own companies. and so that's why i have been as focused as i have been on bilateral investment treaty. because just like they used wto, you know, to drive economic reforms, that i think this is what is the current xi government would like to do. >> use the treaty to introduce more competition in china because that's what you've had to do to get -- >> yeah, because it benefits china tremendously in terms of increasing the efficiency.
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i do think the reform will be as successful as they need to be without it. and is the only way you can build healthy, strong companies in china. look what happened in every industry, every country where you protect an industry. we protected our auto industry for years with import quotas and look what we got. and so it is, i just think that's critically important. so to me what i worry about is this is such a big agenda, and their will be strong vested interest, resistance, political resistance that it's going to take some doing to get it done. and its complex. how you sequence these reforms.
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>> will be difficult if growth is slowing and the word about not creating enough jobs and then you tell them we want you to take away the protections of the state-owned enterprises to effectively off workers. i can see the dynamic. >> there will be, right now, i mean, i've been looking at what they've been saying about growth. and i was very encouraged by two things that the premier said recently when i was there. first of all, he is well aware that growth is slowing down and i don't see them slipping back into their old patterns of a bunch of linking stimulus building, a lot of infrastructure, some of which isn't needed. and so i think they recognize they need higher call the growth. and then he announced this
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really, i look at it as a massive pilot project or program between the hong kong stock exchange and the shanghai exchange was going to lead to a lot of two-way investment flow in each market. and i think it's something that if it works and be replicated with other markets around the world. so their series about doing this, but i think we all have to worry about is, you know, how easy is it to get done. >> one of the things i've noticed when i visited china not nearly as much as you, talked to very wealthy people, successful entrepreneur's or companies that serve these people, i think a great deal of insecurity among, that they are afraid they will be accused of corruption or they all seem to be i'm buying a
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house in vancouver, i make a sure my kid goes to harvard and gets a green card. am i wrong about this? when you talk to private sector people, is their insecurity about their future? >> well, i wouldn't want lump everybody together. there is really quite a vibrant private sector. and when i talked to my friends, or with -- look what they are doing in internet banking and in taking on the banks, a lot of private sector people are encouraged because they really believe this is a government that understands the future of their country, the private sector. xi jinping, where ever he was
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come in every province there was a big emphasis on the private sector as opposed to state-owned enterprises. and, of course, there are other people that have a cumulative a lot of wealth -- accumulated a lot of wealth and have benefited from vested interest. and i think anybody who is, who understands china, and i've got to but most people that are there, you know, understand it better than we do, recognize that these reforms aren't going to be easy. >> what role does the peoples liberation army play in the economic reforms? are they an obstacle to this because they have a vested interest, or not? >> i would say that as you look
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at the state owned enterprises, government owned enterprises, you have a group of central government owned companies, and when i talk about state-owned enterprises, that's really what i've been focusing on, that there's basically 100,000 plus entities different pieces owned by different entities, and some of them no doubt owned by the pla in addition to municipal governments and so on. and those entities need to be reformed. they are underperforming. i, frankly, think that they will
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be, a lot of them will be broken up, be sold, be taken public, restructured. because you look at the pressure on municipal governments to pay down debt right now, and so i think that's going to be working in the favor -- [inaudible] >> oh, yeah. because i think one of the things, you know, when municipal governments have been under pressure to fulfill their mandate, there go to move is to overtake real estate and sell it to developers, or lean on, you know, a local company which they own all or part of to build some infrastructure or do something, some of which is not commercial. i think that definitely will be pressure. >> let me turn you a little bit
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to the u.s. what is it that you think the u.s. should do, either business or government, to maximize the chances of successful reform in china, that benefits them but also benefits us and the rest of the world? >> i started off with the proposition that to achieve the important things we want to achieve, in terms of of economic objectives we have and the environmental objectives, that we want china to succeed with these reforms. now, many people don't agree with me, and there are some people today that always thought that what's good for china economically are beginning to question it because the relationship is becoming more complex. i really believe now more than ever we need to, because some
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tensions, it's in the national security area and the foreign policy area, it's really important to think in that relationship. and so it's quite important that we have a complementary policies. and the two things i would cite are, first a bilateral investment treaty. step back even further. we have a lot of shared interest. we have some things where we've got differences, and we've got to manage the differences are we will be competing in certain areas, and the other as we need to figure out, we can't have close to operation which benefits both of us. and having shared interest is not enough and russia turned it into a complementary policies. so i look at the bilateral investment treaty, and i look at it and say if china identifies
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those areas where there is not market access, that is going to add to the transparency and ready to building of the investment process. narrow those areas rather than carving out big parts of the economy that are subject to competition, that's going to be really good for them in terms of helping them have a more efficient economy, speed up reform process and build stronger companies. i think the u.s. needs to negotiate harder but recognize that's a big step forward and take a reasonable approach on transgression. i believe that a bilateral investment treaty will also lay significantly increased u.s. investment in china, because it's going to increase trust and understanding. and actually think putting cross investment on an international treaty basis will take it to a
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larger extent away, or help insulate it from the political cycle, or the ups and downs, you know, the tensions between beijing and washington. and so i think we should welcome chinese investment to this country. and i think it's very important. and then, of course, i think this is one that most people understand. part of the reason why the paulson institute works so hard, sustainable as, you know, economic policies in china and the u.s., and sustainable urbanization is one of our thrusts, the next several hundred million people, it's hard to even get your mind around that going to cities in china and it's going to drive global, not only economic outcomes, but environmental
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outcomes. and as we can't -- it's very important -- i happen to believe climate is sort of the overrating social and economic issue of our day. that's what i believe. and i don't think there's anything we can do in the u.s. by ourselves to solve this problem your and having worked with a number of developing countries, i think the chinese leadership gets this to a greater extent than any other major developing country. i think there's a huge opportunity as the two biggest emitters of carbon, the two biggest users of energy, for us to work together and cooperate in. and there's a natural set, no one innovate like we do, right? look at our national labs, look at our universities, look at our community of look at silicon valley, look at all the financial infrastructure we have
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around that. no one can rule out the best technology quicker and has a faster rolling energy market and the chinese. but what are we doing? we're exporting coal to them and we're slapping big quotas when they want to sell us solar panels of cheap. and so there's a lot of policies that are hard to explain, unless you look at politics. but there's i think a lot of room for cooperation. >> i think we can turn to questions. we have about maybe 10 minutes. there are a lot of people there so tell us who you are come and remember the question ends with a question mark. we have a mic over here.
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[inaudible] >> stand up because the mic isn't working. [inaudible] >> narrowing the gap, and then do you think that will benefit china many ways for them to become potential future trade negotiations in the future? or does this tpp agreement, what kind of impact will this tpp agreement will have on china speak with you are referring to the trans-pacific partnership that the u.s. is trying to negotiate a number of asian countries, including japan. and the question is, are the chinese threatened by this? >> so, i would say first of all i happen to believe that it's very important, when given with china too, for us to be strong economically to fix our own, you
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know, economy, to be strong diplomatically and to be strong militarily. and it's particularly important to be strong economically, diplomatically and militarily in asia. number one. number two, i see keep bp is very important. -- tpp is focused on economic integration. not just look across the border, it's looking behind the border and some of other restraints, moving some of the other restraints to competition. and i think that it would get high quality tpp, you know, i would be surprised if the chinese don't want to become part of it. and i think we should welcome the chinese. i think they would benefit and we all benefit. so, you know, that's mighty and i think you're starting to hear them talk more openly about being part of it.
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that is something else that would drive reform and be quite helpful. >> do you think the chinese attitude is as u.s. has to choose between china and japan, particularly militarily? or do they accept that we can be allies and partners of both? >> well, you know, i look more broadly and i'll come to japan in a minute. i think, very broadly, they absolutely accept the relationship should be based on mutual respect and mutual interest, and there's differences. and that those differences should be managed, but this u.s.-japan, the chinese japan tension, conflict, is quite disturbing to me. because i think that there are
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two forces that are in conflict with each other, you see it in the pacific. one, the need for economic integration and economic growth, which japan needs, which china is come which all of asia needs. we all benefit from. and what is in conflict in putting that in jeopardy, are the political tensions. and so to me that is disturbing. it's just really, really important that we have great communication. the u.s. government keeps pushing. we have to have it at the political level and the senior military level and write down to the boat captain so you don't have a conflict. and so that's i think very important. and there's a lot of history there.
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bears a lot of sentiment and nationalistic sentiment in both countries. and i wouldn't underestimate the significance of it. you know, when i talked to some of my most, to some friends in china, people that have gone to u.s. schools, people that have really admire our system and our country, and i raised that issue. you know, they talk about the history and gee, we were allies in world war ii. they were on the other side. we don't get it. the fact is we have a defense treaty with japan. they are an important ally. on individual disputes, we don't
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take sides. we try to be, try to be neutral. but this tension is something i worry about, and you know, there's no doubt -- no doubt it's an issue. >> in the back. >> i'm from the carnegie endowment are recently the treasury issued an advisory to china not to let us decline any currency value. get back into play when there's a concern about unemployment in china. and yet many independent economists say china's currency has been going to overvalued and testing to make some adjustments. who is right? >> well, i look back and say that i look forward to the day when we don't have that debate it and the only time we're going to have, not have it is one of a more market determined currently, right? and they don't. so it's pretty clear to me, only
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when every market determined currently are they going to have really globally competitive capital markets. adequate have an economy that is where the market is playing a decisive role. they have the right pricing, move up the value-added chain, to all the things they want to do to rebalance the economy. and i'm not the only one who thinks that. there are plenty of chinese leaders, so i was look at it and i say when you can do two things, right? you can keep anything in the currency market, or you can speed up moving to the process of moving to a market determined currency. if you keep innovating, what's going to happen question will keep i committed in foreign exchange reserves. you're going, you're going to be finding the structural deficits in the u.s. and japan, and you're not going to be rebalancing your economy.
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or you can move ahead and do things you need to do for your economy. so i couldn't think that they need to take action. this is always a hot button issue in washington, d.c. and one of the reasons, you know, when i'm outside of washington, d.c., i don't talk as much about that because it's a simple, easy-to-understand and i don't think -- i'm not downplaying the importance of currency. but i think even more important are the structural issues that lead to the imbalances. the structural issues that cause them to over save, and the issues that we can't blame the chinese for the fact that we borrowed too much as a government and as a people. and we are policies that incentivize that.
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>> bob? >> thank you. you mentioned political reform, that evolution is needed. this comes at a time when china is cracking down on the flow of information, the internet, media, people who even agitate in favor of government policy can find themselves in jail. is this undermining the need for diversity transparency, working against the economic policy? >> well, as you know, i'm an american and i love our political system, and i said pretty cloudy i think that -- pretty clearly. i think it's important they move towards something that is more open and more inclusive. what you are saying is you have
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seen the xi administration at the same time they put out a whole set of reforms, which was badly needed. they've also said we are going to do with a number of hot button issues, right, the one child policy, labor reeducation chance and then focus on the major issues of food, water, air, corruption, et cetera. and they've done that at the same time that, yeah, that they've cracked down on the press. and so, you know, i look at it and i say the very strong view
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is they are dealing with issues that the people care the most about today, but again, you know, i don't think that's a winning formula. and i think that they will, over time, that they won't be as successful as they need to be unless they have a more open, inclusive government. >> the woman here and then the gentleman in the back by the camera. >> from voa. as china -- [inaudible] i'm just wondering if secretary paulson can talk about deficiencies of this reform especially in the financial reform area? thank you. >> the sequencing is very, very important of the reforms.
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because, for instance, if you normalize the labor market with, no, and let everyone migrate to the big cities and take their benefits with them, you would have been just flooding. beijing can't accommodate many more people. so how do they do that? what they're going to do is they're going to normalize the market for second and third tier cities first. the financial remark at -- the financial market reform, mayors are going to need budget responsibility, right? and have to be held accountable and have sources of revenues that they can call on. but right now mayors don't have a budget responsibility.
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and they don't have financial statements that are transparent financial statements that they can come which are required to have a municipal market. so if you needed municipal financial market they've got a ways to go before they get there. because it could have fiscal reform, tax reform, give mayors the tools they need to manage a budget. so these are going to be very, that's why xi has given himself seven years from the time they announced his policies, which was sometime ago, to get them done. because it's going to take a while. so what i look at our, what other things that can be done soon? and are they doing them? okay, are they doing the things that they need to do right away and i focus a lot the financial
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markets. and the reason i do is these are things that a been studied, debated in china. they know what the issues are, and so these reforms are very important. and here i start with the idea of letting foreign financial institutions come in and compete. because you're going to need world-class institutions, and i have never ever seen a situation where i believe joint venture, institutional and investors or banks or investment banks. it's hard enough to run one we have control so you are never going to get there with joint ventures. so opening up, reforming the markets so that the capital is allocated to households and the private sector rather than state-owned enterprises will be a limiting the caps on interest
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rates that favors -- savers receive. there's a whole list of things in terms of developing the corporate bond market. so those things are important to the of the things i'm going to look it is as i said, competition is are they moving quickly to do the tough things with the state-owned enterprises? that's not going to get easier as time goes on. and so, now i've been quite encouraged by not only what they have said about the markets playing a decisive role, but some of the steps they've taken to rollback the red tape and deregulatory barriers to keep their -- the regulatory barriers to keep the private sector from getting into certain india she. so they have done a lot in terms of laying out a very ambitious program. they have moved very quickly in certain areas like
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the best companies in china and the u.s. which is, i go through manufacturing plants. i don't see a lot of workers. i zero bottom ticks and -- robotics and technology. to get to your question, we need technological advances. it is driving productivity but in almost every industry i look at whether it is architecture, whether it's engineering, whether it is almost any, any business, technology and manufacturing is destroying jobs. so we as a u.s. need i think to really focus on this and focus on having proper training programs, et cetera but what i, what i say to people in the u.s., i think first and most importantly, we need to fix our own economy. you know that is going to be the key to our relations with china and everything else.
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everything starts with our own economic strength and there are things we need to do to become competitive and we can tick all these things off and there's, there's, a good number of them. then the other thing i would say to a u.s. worker, we should be fighting to open up and continue to open up opportunities for u.s. products in china. and right now you know it's very interesting, you talk to farmers and ranchers it is an easy sell because of course they look what's happening and how fast that consumption engine is growing and the need to feed the chinese people. it's no longer, you mentioned wall street. it used to be wall street in a lot of the big global companies but i think right now that constituents, you know, clean
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tech companies and technology, and at the state and city level there's a lot of people that are looking for chinese investment to come in. i was with at company in fujou last friday which really wasn't that long ago and, and, a leading manufacturer of auto glass, you know. the fujou group. they just bought a huge plant in china. they should be in ohio. >> ohio. >> and they're growing to look at hiring a thousand people. and think that's what you, the case we need to make. now i think it's a hard case and i sure don't want to be the one that's trying to say this directly to someone who has lost his job on a plant but i don't think there's a lot of jobs that
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are, products we're importing from china, by and large are products that we didn't import from china we would be importing elsewhere that are exports to china are growing, that is the fastest growing area but it's important and that's why we have to fight so hard to open up these markets and that's why i'm talking about competition. >> with that. please join me in thanking hank paulson. [applause] thank you, mr. secretary. thank you, david, very much. really appreciate it. thank you all for coming on a rainy day. i think it actually has stopped. we'll continue this conversation for another year at least. hope you will join in with us. thank you, bye-bye. [inaudible conversations]
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today at c-span.org. with today being the deadline to file your taxes, we posted a question on our facebook page asking you whether you think your tax bill is too high, too low, or about right. not surprisingly not too many of you are asking to be taxed more. terry says, we should abolish all taxation and have one flat, capped 10% consumption tax with no exemptions to be collected by the states. tyler weighs in, responding pretty fair, considering we have some of the lowest for a developed nation. now if only corporations paid their fair share we'd be golden. you can join the conversation and share your thoughts at facebook.com/cspan. with the senate in recess here on c-span2 we're bringing you highlights from booktv in prime time all this week. tonight the topic is, human intelligence. at 8:00 eastern, elizabeth colbert on her book, "the sixth
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extinction" an unnatural history james artificial intelligence and the end of the human ear row. kaku discusses the future of the mind, the quest to understand to enhance and empower the mind. booktv all this week in prime time on c-span2. today is the one-year anniversary of the boston marathon bombings. at 12:45 eastern today on our companion network c-span we'll have live coverage of the memorial service being held in boston. and later at 8:00 p.m. eastern on c-span, journalist casey sherman and dave wedge mark the anniversary with personal stories from in boston that day. they're the authors of the upcoming book, "boston strong." mere is preview of the program. >> on the day of the bombing the richard family had a decision to make.
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they could go to the marathon or go hiking which is what they did quite often. they chose the marathon. when they were in this position when the first bomb went off, bill richard knew it was a bomb. they now it could be a few things, transformer fire. manhole fire as well. bill richard knew it was a bomb and he knew he had to get his family away from there as quickly as possible. so bill richard jumped the barricade and got on to boylston street, because he thought his family would be much safer on the street than they would on the sidewalk. >> we should clarify. they were at the second bombing. so what happened was they heard the first one and bill reached over the fence and grabbed henry, the oldest boy. >> henry was the person directly in front of bill. and he is pulling henry to safety he is reaching to his next child which is probably martin, and that's when the bomb
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went off. and it is interesting, we have learned that dzhokhar tsarnaev, or the bombing suspect had chosen that family, had targeted that family. in fact there is fbi surveillance film shows him casing that family going back and forth behind them before he dropped that backpack. how do you rip the heart out of america? you choose an all-american family and that's what he did. the martin was still alive after the bombing for a few seconds. and the only words he ever uttered were, where is jane? jane is his younger sister? and jane was almost torn apart. she lost her leg. her life was saved by first-responders. their mother, denise, suffered severe injuries to her eye and other parts of her body.
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one of the things that, we found out, in the course of writing this book was that the day of the bombing, as martin richards body was, remained on boylston street because it was part after crime scene and the fbi wouldn't remove it, his body was lying under a sheet as was the body of lingsi lu. the boston police were outraged. they wanted victims reyeted with their families. one boston police officer said i will not leave this kid, not tonight. i'm going to stay with him until, and i want his parents to know that he was never left alone. now that's, that's heroism. those are the stories we have learned over the course of the past year. they still choke us up when we recount them. it is incredible, what so many people did in the wake of this unfor sakable tragedy.
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>> watch the entire discussion marking the one-year anniversary of the boston marathon bombings tonight at 8:00 eastern on c-span. last month a house energy and commerce subcommittee held a hearing on sports safety and brain injuries in hockey and football and other sports. officials and along with doctors and scientists talked about the impact of injuries and what steps are taken to protect athletes. we'll hear several personal accounts from a professional soccer player and a high school student. this hearing is three hours. >> all right. want to thank everyone for being here the full committee ranking member, the gentleman from california joins us.
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so i will introduce you after my statement and before you start your testimonies. i will open with my opening statement. good morning, jan. so good morning and welcome to this morning's hearing. today it is my hope to learn what steps are being taken to make sports participation safer for all athletes. every day parents make choices about whether or not or to let their son or their daughter to play soccer or what kind of mouthpiece to buy their son for the first day of pop warner football. unfortunately seems like every day we hear about participation in certain sports can be dangerous. it's easy to understand how what parents see in the news and inevitably affects youth participation in sports. case in point. earlier this year, president obama said publicly, that if he had a son, he wouldn't let him play pro football. then, the first lady wants us
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all to move. seems to conflict messages. so, now, we want a better understanding of the innovations being made by sports leagues, equipment manufacturers and the medical community to make all sports safer. one clear example is the nhl which has been working hand in hand with the nhlpa to make hockey safer. dating back to 1997 the nhl recognized the dangers of head injuries and took the proactive step of forming a joint concussion committee. additionally the nhl also established a department of player safety at its headquarters, the first-of-its-kind for any professional league. usa hockey and usa football, two organizations that oversee youth sports in the united states, have followed the lead of their professional counterparts by employing a multipronged approach to making participation safer. usa hockey now requires coaches
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to complete an online education module specific to the age group they are coaching at and that includes safety information, concussion education, proper, and proper techniques. usa football which is endowed by the generosity of the nfl and the nflpa was the first national governor inning body for any sport to participate in the cdc's heads up concussion in youth sports. initiatives also engaged in providing youth with non-tackling alternatives to develop their skills. additionally usa football head-up football program encompasses six elements to make youth football safer including coach education and concussion recognition. proactive actions like the ones i just mentioned are exactly what parents need in order to be assured everything is possible being done to keep their child as safe as possible while
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they're on the field or ice. researchers have also been hard at work to improve the tools that coaches and doctors have at their disposal when treating an athlete. for example, dr. dennis malfasi, sorry, doc, who runs the university of nebraska's brain biology and behavior center located inside the huskers football stadium has been developing an mri machine that can be used on gameday to assess a head injury. this would allow medical staff to determine if a player suffered a concussion, how severe the injury is and if that player able to return. equipment manufacturers are also using technology to make innovation changes to helmets, mouth guards, footwear and other equipment all in order to reduce injuries. i feel confident saying that given the recent rule changes and the rate which technology is advancing playing a contact sport today is likely safer than it has been in the past.
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however, we must accept that there is no silver bullet, no helmet or pad is going to prevent 100% of the injuries 100% of the time. this is why we need to consider a multipronged approach aimed at keeping our kids safer while still promoting youth participating. aimed at keeping our kids safer while still promoting youth participation in sports. this involves listening how leaders like the nfl, nhl, youth leagues and top tier university researchers are partnering to make progress towards making sports safer. these are the types of innovations and paradigm shifts needed to give parents the assurance that all of the possible steps are being taken to improve the safety of their child on the field. i would like to thank our panelists for joining us here today and willing to answer our questions and i would especially like to thank dennis malfasi, and dr. tim gay making trips to washington, d.c. from
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washington, d.c. from lincoln, nebraska. my time is over so i will recognize the is the ranking member, jan schakowsky from illinois. >> thank you, mr. chairman. this is a very important hearing on improving sports safety. i look forward to hearing from all of our witnesses on both panels about their perspectives, experiences proposals how to make sports safer for everyone from children to professional athletes. athletes are continually becoming bigger and faster and stronger and despite some efforts to make sports safer much work remains. 100,000 sports-related traumatic brain injuries occur annually in the united states. sports are the second leading cause of traumatic brain injury among people age 15 to 24 years old, second only to motor vehicle accidents. this is a crisis and one, this
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subcommittee should do everything in its power to address. we're going to hear today from anne heaton a high school senior to suffered a severe head injury during a lacrosse game in his sophomore year. despite his impressive recovery, that hit later identified as his third head injury, left him with a limited ability to enjoy the types of activities many high school students classmates take for brandted. his story should serve as a reminder youth sports injuries have devastating and lasting consequences. we'll also hear on this panel from briana scurry, an olympic and world cup soccer champion, a goalie, forced from the field after a career-ending traumatic brain injury almost four years ago. her struggle to over come the cognitive, physical and psychological injuries follow illustrate even our sports heroes are vulnerable to the worst sports injuries. both ian and briana should be
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commended for their courage. i thank you, briana in their recoveries. and for their willingness to testify on this critical issue. dave during son -- duer son, pro bowl safety, former member of my hometown chicago bears, tragically committed suicide three years ago. doing so he shot himself in the chest avoiding any impact on his brain he wanted donated to medical research to allow scientists to study impact of brain trauma he suffered over his 11-year professional career. it was later disclosed that duerson suffered from moderately, advanced, unquote, traumatic encephalopathy. repeated blows to the head which can result in memory loss, depression and dimentia. heaton and scurry stories that career ending sports injuries can occur at any little of
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competition and the duerson case should make it clear the impact of brain trauma go beyond the athlete's stay on the field and become more severe over time. we'll hear from medical and scientific experts who study the impact of injuries on athletes of all ages. we'll hear about the importance of taking athletes off the field of play as soon as there is suspicion of a brain injury and keeping them off until cleared by a responsible and trained individual. finally we're hear from the nhl, the nfl and youth hockey and football leagues that are responsible for mitigating traumatic brain injury in their sports. i hope to learn what changes they have implemented and will implement to rules, practice drills and other aspects of games that will reduce the risk of brain injury moving forward. i'm not advocating for an end to sport as we know it, maybe not exactly as we know it right now but i also feel strongly that 300,000 head injuries per year are too many to overlook.
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we should take reasonable steps to reduce the risk and i look forward to hearing from all of our witnesses. i hope this hearing will help the subcommittee to better understand the safety risks in sports and what we can and should be done to limit these risks. and i yield back. >> thank you very much. at this time recognize the vice chairman of the committee, mr. lance of new jersey. >> thank you very much, mr. chairman and thank you for holding this extremely important hearing. i want to thank dr. james johnston who will be one of the witnesses who came to my office earlier this morning. thank you, dr. johnston. experts generally agree that a concussion can be classified as a brain injury ranging in seriousness from mild to dramatic. the center for disease control state as concussion is caused by a bump, a blow or a jolt to the head or blow to the body that causes the head to move quickly. according to the cdc, the sports
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that reported the highest number of traumatic brain injuries, buy kelling, football, playground activities, basketball and soccer. from 2010 through 2013 participation rate of children in youth soccer and football dropped considerably. some have pointed to the increased risk of tbis as a result of participating in these sports as a reason for the drop in that participation. increased spotlight on concussions in sports has resulted in an increased amount of research in brain injuries as well as research on how to improve sports equipment in order to prevent such injuries from occurring. collegiate and professional sports leagues implemented standards and revised their rules in order to decrease the number of brain injury incidents. the nhl has hasn't indicated righted its players to wear helmets on the ice and nfl
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instituted new standards for evaluating concussions on the sidelines after the league reported an occurrence of 223 concussions in just over 300 games in the 2010 season. state and federal governments have also been involved in tightening safety standards. since 2009 all 50 states and the district of columbia have adopted laws protecting youth and high school athletes from returning to play too soon after suffering a concussion or potential concussion. this hearing will focus on what more can be done to prevent brain injuries from occurring at sports. at the youth level, the amateur level and at the professional level. i look forward to the testimony of our distinguished panelists. thank you, mr. chairman. >> i have 2 1/2 minutes remaining is there any other member on the republican side who work loo speak with an opening statement? i yield back -- >> missouri, do they play
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sports? and behalf of the big 10, i want to welcome rutgers to the big 10 at this time. >> thank you very much. >> five minutes to the full ranking member of the energy and commerce committee, mr. waxman. >> thank you very much, mr. chairman. decades ago many thought head injury was serious only if a player was completely knocked out, unconscious or suffered a severe contusion. after frequent painful blows, even a young athlete could continue to play. but we now have strong indications that the effects of repeated brain trauma in sports, even those received during one's youth, can aaccumulate with consequences that are long-term debrill tating and even -- debilitating and even life-threatening. these consequences can stem from injuries once considered minor
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known as subconcussive blows which may not be accompanied by any immediate adverse symptoms. serious psychological and emotional disorders have been documented among former athletes that have suffered repetitive brain trauma. researchers have, a number of times found evidence of the neurodegenerative disease, cte, when examining brain tissue of dozens of deceased former nfl players. new imaging technologies have been able to show the metabolic changes in the brain associated with concussions and sub, subconcussive blows. brain injuries in sports can occur in a wide variety of situations and different athletes's brains may respond differently to an injury. sports-related brain injury is a complex matter, requires
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addressing many interconnected issues and so when the title of this hearing suggests we take a multifaceted approach to improve sports safety i could not agree more. first, we need more neuroscience research. radiological and longitudinal research methods can lead to, more accurate diagnosis, better understanding of the risk factors that may be a treatment, better treatment options for brain injuries. second doctors league associations, coach, parents, players need to work together to establish health regulations, game rules and a sporting culture that reflects the seriousness of brain injury and puts the athlete's health first. third, we must address the health and safety risks associated with the athletic equipment and pursue a better understanding how this equipment might be improved.
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three years ago congressman butterfield and i wrote to then chairman of the time of the subcommittee, and full committee chairman, calling for hearings about inadequate testing standards, lax reconditioning certifications, economic disparities regarding the safety of football helmets used by millions of american athletes. we're going to touch on some of those issues today but i believe these those issues merit deeper consideration than they're likely to get at today's hearing and the subcommittee chairman might consider holding separate hearings on these matters. i think it is valuable that the national football league is testifying here today given recent and ongoing disputes between the league and its players on this very topic. i however, believe the players organization should also testify. unfortunately the late notification of the nfl testifying made it difficult for us to secure a players witness. mr. chairman, today's hear
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something important. i appreciate the subcommittee review of sports related brain injuries and i look forward, working together with all of us on this issue in the months ahead. thank you for holding the hearing and look forward to the testimony of the witnesses. yield back my time. >> still have a minute left if gentleman from utah wanted to use it? >> i might just point out that moving physically and conditioning the body is not anywhere near dangerous as subjecting one's self to brain injuries so i don't think they're contradictory. >> yeah. interesting but, the issue as we want kid to go out and play. we want them to join youth leagues. >> and we want sports but we want to make it as safe as possible. >> absolutely. this is, to use your last 26 seconds then, this is one of those where jan and i both agreed was necessary. so this is been a bipartisan
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effort. so with that, let's move on to our witness panel. i'm going to introduce the entire panel now and then we'll start with mr. daley. we are blessed to have mr. william dalyiii, deputy commissioner of the nhl. next to him is david ogren, executive director of usa hockey. then we have mr. jeff miller, senior vice president, player health and safety policy, national football league. thank you very much for being here. then, scott hollenbeck, executive director of usa football. the face of a brain injury, concussions, multiple concussions within soccer briana scurry, a former professional goalkeeper, u.s. women's national soccer team.
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next panel we will have ian, the other face of high school level concussions. so with that, mr. daly, you are now recognized for your five minutes. >> thank you. i would like to thank the chairman, the ranking member and the subcommittee members for inciting me to testify today regarding the national hockey league and the proactive steps it has taken to promote the safety and health of the best professional hockey players in the world. the major professional sport with no out of bounds, hockey is a physical game. at the nl level -- >> is your mic on? >> it was. i'll bring it closer. at the nll level our players want it to be physical and our fans want it to be physical but importantly all constituent groups associated with the game also want it to be safe. this objective necessarily includes promoting safe and responsible play in our game and the national hockey league working together with the national hockey league
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