captioning performed by vitac -- graham howardson called it the trap where in 1216 instances in world history where you had a rapidly rising power and it ended in war. and obviously that's a daunting observation. there has never been a power that has risen as far and as fast as china in the last 25 years. do you see military conflict with china in any way inevitable but given the lucidities trap, how can we

avoid it? >> well, i don't think that conflict is inevitable. i think that the world we're in today is probably a different world than the ones we have been in before when a great power arose. the effects of globalization and economic globalization and the movement of people, the interconnectedness of banks and industry, of all these things that you know very well about, i think have made it imperative that we understand the rise of china and that we to some agree, accommodate the rise of china where we can to attempt to shape the rise of china. i've said on many occasions that a china that would -- the china with a military that would come forward as a net provider of security rather than a net user of security would be beneficial to not only the region but would be beneficial to us as well. and i think that's an achievable

goal. i think it has to be looked at how do we deal with china globally and global institutions from their role in the united nations to how they're behaving and conducting themselves in other regions of the world and how we interact with them there. i also think it will require us to have a pinpoint focused on how we see their influence in this region, that we have been talking about today primarily east -- southeast asia, northeast asia. and to understand we have to try to understand what their side of the equation is. and to be honest with you some of the things they have done aren't quite clear today. so, you know we always get a debate about whether we should continue mill to mill, if we're unhappy with the things they're doing, mill to mill engagement. i'm a proponent of taking risks there because there benefit in us continuing to have dialogue, to try to establish those types

of frameworks that allow us to communicate with each other in crisis. we have had some good work with the prc lately of building some confidence building measures that allow us to understand how to operate with each other in these constrained water ways so we don't have a bunch of lieutenants and captains and commanders of ships out there making, you know bad decisions that might escalate us to something we didn't -- that escalate us into a lucidities trap. we need to keep engaging them. we need to be forth right about how we feel about these things and what the u.s. position is on behavior when it doesn't match what our allies and our partners and our values systems support. >> clearly, in recent years the thrust of the chinese has been economic. but in even more recent years it has been military as you have testified today, tremendous growth and sub surface, everything else. what do you make of these actions, which can only be

characterized as aggressive building islands off the shore and increased patrols in the south china sea. what do you read into that in terms of china's military or expansionist intentions? >> yes sir. i think the chinese communicate to us pretty clearly what they're doing. they see themselves as a renewing power. they have the assets to build a military. they're building particularly in the army -- i mean the navy and the air force because they understand the importance of protection of the global areas that you tartstart to see them operate globally in places where they didn't operate years ago. they told us over and over again that they believe that the nine dash line in the south china sea is their historic territorial waters. they have as far as i understand they have refused to participate in international legal venues,

you know, the filipinos have a case at the u.n. law convention tribunal now to challenge the nine dash line and as far as i know the chinese have refused to participate in that. what they're doing is they're, through that they articulate as peaceful means, building land recly reclamation reclamations, opening their options down the road as this thing -- as this situation continues to unfold. >> i'm out of time. one word answer, do you believe it would be beneficial to the united states to accede to the law of the sea treaty? >> yes. >> thank you. >> thank you, mr. chairman. >> thank you mr. chairman. and gentlemen thanks for your testimony, your service. admiral locklear thank you for hosting me a couple of weeks ago. appreciate the time. please send my regards to your staff. three hours on a saturday is above and beyond the call of

duty for anybody, so let them know how much i appreciate that. you know, i've been critical of many aspects of the president's national security strategy in part because i think we have lacked credibility when we say something that we're going to do as a country we need to do it. i think in certain areas of the world we haven't done that. i think it undermines our national security when we do that. one area of the president's strategy i've been supportive both militarily and economically is the chairman stated about tpp is the rebalance to the asia pacific and, you know i believe we need to make sure this rebalance and opt mization of our military forces in the region is credible. we're saying we're going to rebalance. we need to actually do it. do you agree with that? >> yes, sir, i do. i think that the rebalance is -- goes far beyond just military, though.

i think we have to also get our economic house in order as well. otherwise, all the military rebalancing we do will not have the effect we want it to have. >> i agree with that. i appreciate the map, the oar map. wanted to talk briefly, you know alaska is no longer in your oar. as we discussed the troops, which are significant, both in terms of army bcts and very robust air force presence, those troops are still out con to you in the event of contingencies, aren't they? >> yes, sir. >> -- in the region in terms of shaping, but also contingency forces with regard to your op plans? >> well, senator, the forces in alaska, you know if you look at the globe they're as far west

as -- maybe farther west in some cases than hawaii is. the response time that those forces would have into any significant contingency in northeast asia or southeast asia is quite good. and important. that's why the forces i think have been to me -- pay com for a long time. there is a variety of forces up there that are important to us. the fighter squadrons that are there, the bcts that are in including the range complexes we have in alaska are very important. that's why we get our high end training for some of our hardest types of environments aviators may have to fly in. >> general scaparrotti, how about you in terms of the korean contingency issues? >> i agree with admiral locklear. we rely on those forces as part of our quick response we need in crisis. we also train with them regularly and we also send forces to train there too. >> you think if we removed one or two bcts from alaska, do you think that would show that we're

committed to a rebalance or undermine our rebalance commitment? again, this goes to credibility? >> i think that from a perspective of what the other outcomes were of that from a regional perspective there would be questions about the loss of troops -- >> in the credibility of our rebalance strategy? >> i think you to look at it wholistically. i prefer not to take it from just one perspective here, but i think i would have to understand the remainder of the changes that were taking place if that were to happen. >> admiral locklear, do you think that would undermine our rebalance credibility? two bcts in the region leaving? >> in general terms i think that any significant force structure moves out of my oar in the middle of a rebalance would have to be understood and have to be explained because it would

be counterintuitive to rebalance to move significant forces in another direction. >> i agree with that. and i think it is a really important issue as we look at the rebalance as a successful rebalance that is credible. can i turn to -- i want to also commend you for what you stated and senator wicker on the strategic lift issue. i think that was certainly something i saw on my recent trip that was a concern we're moving forces to different parts of the region, but the strategic lift seems to be lacking both air force and our capacity. but to get there, we need to have a successful laydown. are you confident the realignment of forces from okinawa to guam and australia and other places is going to be on schedule in terms of cost and timelines that the department has laid out? that's something this committee has been very focused on. >> yes, sir. well, you know, the last three years had a lot of time to take a look at this and to work through it. my overall assessment is that

we're on plan at this point in time. >> thank you. thank you, mr. chairman. >> admiral in march, the gao published a report on operational contract support and i'm nerdy enough about operational contracts that i pay close attention to this stuff as you know. we wasted billions of dollars in iraq and afghanistan because we had not embraced training on contracting as a core capacity of our commands engaged in the contingency. and in that report, it indicated that your command is the furthest behind in incorporating operational contract support in its joint training exercises and operation plans. now, i know that gao noted that you have taken some recent positive steps to address this. but i would like you to lay out, if you would briefly the steps

you're taking to include operational contract support in your command's joint training exercises. >> well, thank you. not to make excuses but i think the reason we're probably behind is because we haven't had the demand signal that was put on the commanders in the middle east in the last several wars and we haven't had had that type of a massive rapid buildup to support a war effort anywhere. that said, we did recognize it after that report as a deficiency. and we're looking hard at where are those contracted decisions made, how does the commander have visibility to the contracting decisions during the execution of a crisis or campaign because, you know, when a crisis occurs, stuff starts coming. and that's good. that's what makes us strong. when it starts coming, at some point in time you have to decide what is enough and what is not enough. and then who is going to be the steward of it down the road. we're trying to understand the

command and control of those contracts and how much the leadership knows and what they need to know and when. >> i think it is so critical that we never lose sight of this contracting oversight and planning and training as a core capacity because we're never going to go back to the day my father peeled potatoes in world war ii we're not going to have our trained war fighters peeling potatoes ever again. all we have to do is look at the long ugly saga of all the contracts to realize what happens when contracting is not considered a huge priority. so i appreciate your attention to that. on another note i know that you are the primary jammer provider in the navy for dod. could you speak about the role of airborne electronic attacks and how critical they are and how critical is the asset of our

really only electronic warfare capability that is provided by the growler? >> i've been a huge supporter of growler for my entire navy career transition of the squadron which was so significant in many of our conflicts and provide us what i thought was an asymmetric advantage in our air space because of their capabilities. i was glad to see that -- those capabilities and jammer types of capabilities transition to a -- basically a fourth generation plus aircraft that can operate effectively into air spaces. in any campaign that i would envision that would be of a higher end warfare, electronic warfare attack provides me battle space that i have -- may have to go fight for. and those growlers and to some degree the other higher end capabilities we have are

critical to allowing us to have that access. >> finally i want to touch on the stresses that we're feeling on remote piloted aircraft. as you know, whiteman is the home to the 20th reconsankonconnaissance squadrons and those airmen that are operating the predator and the reaper are very important. we're putting incredibly high demands on these folks. they're not getting normal rest. they are not getting time for training. we can't even rotate some of them into a training capacity because the demand is so high. could you briefly talk about what steps can be taken to alleviate what i think is a critical problem. these guys are -- they're working around the clock and getting very little break. i don't know that we would do this to a traditional war fighter, but we're doing it to the rpas.

>> well, the advent of the systems and in the past couple of decades and the obvious benefit that they have brought to the battle space has put pressure, i think, on the air force to be able to produce the types of people and to be able to man them. but unfortunately the demand signal goes up and up and up. one of the asymmetric strengths of the united states is our ability to sense and understand what is going on. we have the best isr in the world. but it is way overtaxed for the number of demands we have globally. and that's where it is showing in the faces and at work hours of these young people. so we need to rationalize, number one what are the platforms we're going to invest in the future and build a structure of man training equipment underneath it that is sustainable sustainable. >> i particularly worry because we think of these as machine and don't realize the human component of this and this the stresses they have. these guys are manning these

things for 10 12 hours and going home to their families for supper and homework and then getting up pretty quickly and going back at it. it is a unique kind of role and certainly nontraditional as we look at the history of our military. i just want you to share with your colleagues that talking to some of these folks, you know it is clear to me that we need to be thinking about their well-being and whether or not we're overutilizing them and what kind of stresses we're going to see in that personnel. thank you. thank you, mr. chairman. >> thank you, mr. chair. thank you for being here today and for your men and women that serve as well. i appreciate it very much. as you now, the dod is planning to transfer operational control or op con to the south korean government in the event of another conflict on the peninsula.

this transfer has been discussed for many many years. it was originally supposed to take place in 2007. it has been delayed many, many times in the past number of years. and it does appear to be currently indefinitely postponed. so can you describe some of those challenges that we're being faced with and those that the south koreans are facing and their efforts to create conditions, which would allow us to successfully do the op con transfer. >> yes, thank you. as you know this past october the secretary of defense agreed upon a conditional approach to op con transition. in the past it had been focused on a date with capabilities. so in short, i agreed with the change that we made to focus on capabilities and conditions as opposed to shooting for a date.

three general conditions, the first is is that south korea developed a command and control capacity to be able to lead a combined and multinational force and high intensity conflict. the second is that it -- they have the capabilities to respond to the growing nuclear and missile threat in north korea and the third general condition is that this transition take time -- take place at a time that is conducive to a transition. now, there is specific capabilities i mentioned that are listed in details as part of this -- part of the agreement. i'll cover generally the main areas. the first was c-4 command and control computers in terms of their capability there which i mentioned earlier. ballistic missile defense generally in their capability there. the munitions that they have to

have on hand for us to conduct the high intensity conflict. and then finally the intelligence surveillance and reconnaissance assets necessary in an environment that is very challenging for isr. and particularly with the assets and the asymmetric assets that north korea is developing. in a nut shell, those are the things that are the challenges that we have as an alliance and the republic of korea is focused on enhancing. >> mm-hmm thank you. admiral, do you have any thoughts? >> i think the dynamic that is most changing in this dialogue about transfer is the behavior of kim jong-un and so that has to be brought in the calculation as well. >> thank you. and general, i do agree. absolutely it is capabilities versus calendar. we have to look at those capabilities. so realist ablg lyrealistically, do you think

moving forward with op con transfers that in the foreseeable future, and if it is, what are the benefits to us then of doing the op con transfer? >> i think it is foreseeable. i don't think it is in the short-term. and i think it is of benefit in the terms of -- our presence in the alliance we have with republic of korea i think is very important for regional security, it plays into global security as well because they have been a very good partner of ours for a number of years and they're developing the capability and they actually employed forces around the world and they have deployed in support of us as well in some of the conflicts we have been involved in. i think in the late-term, the alliance and its development in this regard is good for both countries.

>> very good. i do know the south koreans were engaged at talil air force base when my trucks were rolling through that area. we appreciate their support of those types of efforts. i have very little time left. i want to thank you, gentlemen, for being here today as well as the service of your men and women. thank you, mr. chair. >> thank you, mr. chairman. and to the witnesses for your testimony today. mr. chair, i appreciate the way you're doing these hearings. i now see them -- the method and the madness to have the strategic hearing a couple of days ago. we had a wonderful hearing with strategic experts on this topic before we get to ask you questions actually makes this discussion work very well. i appreciate the chair setting it up that way. three quick questions. admiral locklear, as our military lead in pay com, describe why u.s. support for the law sea treaty is something you support. you gave the one word answer to senator king. i'm asking the why question.

>> well, i'll speak about it from the military side or from the seaside. >> additional elements as well? >> additional elements i won't comment on because it is not my area to do. but, first of all, it is widely accepted after a lot of years of deliberation by many, many countries, most countries in my oar, it provides a framework that we -- that most countries look at it, believe is useful for us to determine who particularly in these sea spaces and these ezs and things that aren't quite clear provides a proper framework for how to go about dealing with those disputes. so it is a rule of law, a rule of process, that is a good thing. by not being -- to be honest with you, on the military side we have been directed by numerous presidents to comply with the law of the sea, at least as it reflects the way we

interact with other countries and our partners. that said when we're not a signatory, it reduces our overall credibility when we bring it up as a choice of how you might solve a dispute of any kind. >> second question, to the lucidities trap, you indicated the u.s. should do what we can reasonably, to accommodate the rise of china within the network of global institutions. and i think you laid out a pretty good rational, the more they are engaged in the global institutions that can have a pro stability effect. one current matter that is pending before congress is reforms to the imf that would enable china to have more of a role, more voting power but also more of a financial obligation in terms of the work of the imf. i don't want you to comment on you know imf reform if that's not your lane and you don't have an opinion but that is -- that

is the kind of thing, wouldn't you agree, we ought to be taking a look at, if you're going to try to accommodate china's growing influence, having them more engaged and play more of a leadership role, but global institutions like the imf is one way to accomplish that integration that can be ultimately a pro stability move. would you not agree? >> yes, i absolutely agree. i mean, you know, if china is inevitable to be a world power in the many different venues they have to participate and be part of those institutions and they have to take some responsibility for these things. >> kind of the common sense that, you know, law firms that get founded by strong partners they often run aground when the next generation of young excited partners want leadership roles. law firms that don't make room for the young leaders find they

split away and end up being competitors. it often holds it together. just seems like that's kind of a basic analogy that we see a lot in human situations. i would hope that on both reform we would take it seriously here because while they have nonmilitary dimensions i think they bear directly upon some of the military issues that we might have. last thing i would like to commend you on one final question, i like the fact that you, in your written testimony, i like the fact that some of our witnesses the other day talk about endo asia pacific. india had an interesting history militarily with united states and more generally the congress party had a long nonaligned tradition that made them slant a little bit toward russia in terms of purchasing material. but now they are significantly engaged with u.s. and u.s. companies. they do more military exercises

with the united states than they do with any other nation. i think there is an opportunity under prime minister modi. the chair spent time with him and others have too to deepen the relationship. could you share your thought on the u.s. india military partnership at this moment? >> yes, sir. part of the rebalance was to develop a strategy for a longer term security relationship with india. we're doing that. we have a tremendous opportunity here as the leadership changes in india. and the world changes for them to be a growing partner with the united states, not necessarily an aligned partner but growing partner. i believe some of the defense trade initiatives we have with them will help bring us together in a more productive way for many years to come. >> thank you very much. thank you, mr. chairman. >> thank you very much. and thank both of you for your work and we -- general

scaparrotti, i do believe that the work in south korea is important. and we have been able to draw down our numbers and i know the south korean military is more effective in many ways than they have been, but i think it is an important relationship. they have been good allies as have the japanese and others in the pacific. and that long-term umbrella, relationship partnership, that we have had remains important, i think to the world and to the united states interests. so i appreciate the work that you're doyne.ing. i appreciate the importance of the pacific. just undeniable it seems to me. our strategic subcommittee has dealt a good bit with nuclear weapons. our relationship with russia the drawdown of our treaty under the treaty our nuclear weapons

system, admiral locklear. but we don't talk enough about china's position. and they built a nuclear weapons capability and i assume they have the ability to surge that at any point they choose to. they have the finances and the technology and the capability of doing that. is that correct? >> yes, sir. we observed them pursuing a deliberate modernization of their nuclear forces, both land based and the ones that are subsurfaced based. we have now, i believe, three operational submarines in the pacific pacific, ballistic missiles operations that could grow four or five in the future and we know they're pursuing missile systems -- missiles to be able to put on there that would extend their ability for a nuclear second strike -- nuclear

attack is what they explained, how they explained it. it is growing and i think it will be a continued consideration for us as war planners. >> we, in congress, and policymakers in washington need to understand the reality of the nuclear armed submarine. how many missiles would that -- those submarines, chinese submarines be able to handle and launch and how many warheads could they launch? >> to give you an accurate answer, let me respond to that for the record if you don't mind, multiple. >> would it compete with our capabilities? if you're able to say, if not, that's all right. >> i wouldn't say, sir. >> all right. one of the strategies that china has used has been to create a

zone outside the nation to make it difficult for our ships to inhabit. and put them at risk. is that -- is that part of a df-21 missile plan and do they have other plans that design to make it more difficult for our ships to be within hundreds of miles of the shore? >> across the board the chinese have improved their -- greatly improved their ability to build missiles of all kinds cruise missiles ballistic missile defense, i do think they have a quite credible technology. the df-21 missile is the missal that they're fielding and testing and producing that could potentially, if employed properly, and work right, it would put u.s. forces at sea at

risk at greater and greater distances. it is one of those things that we are dealing with and trying to answer. >> i think you're correct. and i think the navy is thinking clearly about that. and in a wise way. what about the capabilities we have? army has some potential land-based missiles that can create also a zone around our interest, our country, our territories that could protect us. has any thought been given on -- as i believe secretary hagel mentioned of using some of those capabilities to -- from a land -- to provide a better safe zone around our bases and territories? >> i wouldn't know nor, senator, what he was talking about at that time but i would get specifics and answer it.

>> well, thank you, both, for your service and i believe we have a fabulously capable military, well led by talented leaders and we thank you for that. >> senator donnelly. >> thank you, mr. chairman. and thank you, both for your service. admiral locklear, what would you say is in -- i apologize, haven't been here the entire time -- when you look, two biggest challenges you look at in your command. >> well, the biggest estgest challenge is making sure we can respond to the most dangerous situation, north korea peninsula. so i have a huge responsibility for helping north com with the defense of homeland, defense of hawaii defense of guam, and then follow on forces and things that flow in to support general scaparrotti on what could be a short line problem in korea.

so north korea. so that's kind of number one problem. >> okay. >> the second is just, i think ensuring that the rebalance does what it needs to do ensure that u.s. is properly positioned in the asia pacific for the rest of this century. and under that fall a lot of things. ensuring the alliances are as strong as they can be. building new partnerships and in some cases ensuring that the rise of china doesn't turn into a lucidities trap. >> general scaparrotti, as you look at kim jong-un, the decision-making process that he uses, and i don't know if the appropriate word is random, but would you say there is like a chain of command or general structured way that decisions are made or is it pretty much you're not usually certain as to which way something is going to go with him? >> yes, sir, thank you. we don't know a lot about the

decision-making process inside of that regime. if you look at just the three years he's been the leader, he's changed his senior leadership more than his father and his grandfather put together. and so from one perspective, the use of carrot and stick, the use of brutality in many cases in order to ensure absolute loyalty to him i think undercuts and leads concern with me that one he's got a group around him that will be frank with him that won't only tell him what he wants to hear. so i think that's a dynamic within that decision-making process that gives me concern. >> and as you look at the way the decision-making is going on right now, it appears there is somewhat of a move toward russia, toward creating an additional strengthening and bonds between them. do you think that provides any more stability for them or do you think it just makes them more dangerous? >> i think you can see not only the outreach to russia, but

others in the last year as an attempt by them to get around the sanctions, which are having an effect and develop others that would provide trade and funds to them, which, you know, their economy can be tight, given thegive n given the percentage he puts into the military. that's his attempt there. we don't see lite ofa lot of return on the efforts at this point. >> admiral when the north koreans start to saber rattle and start to mack ake a lot of noise, oftentimes your command brings a presence into the area there and helps to change the discussion. do you have fears or concerns about any plans they might have to come after your fleet in particular? >> well, certainly we're talking in the context of north koreans,

you can't rule out any unpredictable type of activity. so we know that they also pursue a pretty significant missile program, whether how good it is sometimes we're not sure. but that's not just a ballistic missile capability but a cruise missile capability that would have to be considered when forces were put in the area. but -- they also have a submarine force that is -- if it is operational could be quite unpredictable, many subs and things like that. they're generally locally contained, not far reaching. at this point, i'm not really concerned about our ability to project power should we have to support a contingency in north korea. >> general, what is the one thing in your command that you're most concerned about? >> sir i'm most concerned about a provocation, which north korea commits two or three every year.

and one of those provocations escalating into conflict. >> thank you. thank you, mr. chairman. >> thank you, both for your time and for your service and more importantly for the service of all of the men and women in uniform that you represent in your commands. admiral locklear, do you believe china's increasing aggression in the south china see reflects their cal lagss s calculations that the u.s. lacks the ability to challenge them in the south china sea? >> well you'd have to ask the chinese if that's the way they feel about it. my guess is that they -- as they always do, believe, they listen carefully to how the u.s. feels about things globally as well as in that region. and where they have a clear understanding of u.s. position they have a tendency to understand it and respect it.

>> do you think the balance of power is shifting to the point where they believe that they now have a military advantage over us in their regional waters inside the first island chain? >> i don't think they think they have a military advantage over us because they also recognize that we're a global power and that they're not a global power. i think that they believe that their ability to build and produce the military they have has provided additional decision space for them in their local region. >> one point you mentioned is the importance of clarity deterrence works best when the lines we draw are clear and strongly enforced. i've read press reports recently that during prime minister's abe to visit to washington later this month, the united states may make an explicit pledge to protect the senkaku islands under administrative control of japan, but china also claims them. do you think that would be a wise step to take for the

purposes of stability in the east asian theater? >> well my understanding is we have pretty much made it clear our position in the east china sea as it relates to the senkaku islands. we still maintain we don't take a site on territorial disputes. the issue is for them to figure out. what we have said and has been said at numerous levels is the islands do fall within the administrateiveeive control of japan. i believe that that alone has provided a level of stability to the issues in the east china sea, northeast asia. >> the press reports -- i appreciate and understand and agree with the points you made. the press reports i've seen has said we would be reducing that to writing and that can provide more clarity than words. could you comment briefly on your military to military

relations with thailand at the time? >> well we maintain military to military contact with thailand. we do it at a lower level, post coup or post coup. we were on a very good glide slope, positive glide slope. i think the -- prior to the coup, the opportunities we were pursuing together were good for the region. thailand is our oldest ally. in the end, it is my expectation we want to keep thailand we love the thai people, they're close to the american people. and we have similar value systems. and so it is important for that. but post coup, we have truncated a number of military to military activities reduced them in scope and we're managing those through an interagency process where we go through and decide is this one we want to continue or not? we hope that the leadership --

current leadership will move actively and aggressively to restore, you know, rule of law, constitutional processes and civilian control of government. >> thank you. general scaparrotti, korea is in many ways a unique area of operations in the world calling for unique capabilities. i want to speak about cluster munitions. our stated policy is as of january 1, 2019, we will no longer use such munitions and have greater than 1% unexploded rate. can you discuss the challenges that we'll face achieveing that rate? >> yes sir. the cluster munitions are an important part that i have because of the effect they create for me. there are plans now, work being done for replacement munition that would meet the requirements of less than 1% dud rate. i -- that's requirement we must

meet as you said before 2019. we would use other munitions, but the munitions we have available don't provide the effect i have today in my inventory. >> thank you for your service and the service of all those you represent and your families and theirs. >> thank you mr. chairman. admiral locklear, general scaparrotti, thank you, both, for being here this morning. admiral locklear in your testimony, you point out the significance of china's military modernization efforts and earlier this week we heard from admiral ruffhead from other experts on east asia about china's modernization and how swiftly that has happened. what do we need to do to respond to what is happening in china. and can you also talk about how

if we go back to level of funding that is required by sequestration what that does to our efforts to make sure that we are technologically ahead of where the chinese are? >> well i think, first of all, we need to continue to encourage the chinese to be more transparent, and to be more forward leaning in how they respond to their neighbors, how they he respond to the international community, to be a responsible leader in the region. if they have a military and they're going to use it for security, they should be part of the global security environment, participating and not being at odds with them. that's a choice they have to make. we also have to make a choice to accept them into that environment, so that's something we have to always consider. and there may be some risk as we do it because we as they rise as a power it will be a

collaborative on one hand and competitive on the other. and though that kind of relationship resorts in friction and will always be friction this and friction, some of it may end up happening in the south china sea or the east china sea. managing that friction and understanding how to manage it so it doesn't escalate into a large contingency is very, very important for all of us particularly between the united states and china. so we're working that part of it. >> and so, before you answer the sequester question, how important is the effort to rebalance -- i use that term in parentheses, to asia that has been set out and doing those kinds of things with respect to china. >> well, the rebalance is not about china. china is one of many issues around why the u.s. should be in asia pacific, why we should have a security posture there but they are a big concern in that. so the rebalance is -- on the

military side, ensuring we have the right assets to be able to manage the situations, to be able to understand the environment and to be able to respond effectively are extremely critical. in sequestration, what happens is that in general you have less force structure, less ready that is less technologically capable capable. we get under fiscal pressure like we're in now, the first -- one of the first thing to go is technological advances because we got to keep what we got. everybody wants to change. so the things that we need to stay relative, not only in that part of the world, but globally in the technological arena in war fighting starts to be pushed off the table and pushed to the right and gets pushed into timelines that make us start to lose our technological advantages in war fighting.

>> one of the things we heard from former admiral ruffhead earlier this week was the importance of continuing the carrier launched uavs and that that program would become even more important as we look at what we need to do in the asia pacific. do you share that view and how do you see that -- that affecting what we need to do in that part of the world? >> i think in general the -- whether it is launched off the carrier or anywhere else in my particular area that unmanned vehicle is both air and surface and subsurface are a significant part of the future. so because anytime you can take man out of the loop, you operate into an environment much easier, a lot of benefits to it. so to the degree that the uav

would be from a carrier, a carrier for me is just a very flexible air field that can operate widely through the theater. so i would see huge benefits in being able to operate long range isr, long range strike if necessary from those platforms. >> and, general scaparrotti, is this something that would be beneficial to you in the korean theater? >> yes, ma'am absolutely. >> thank you. thank you, mr. chairman. >> thank you both of you, for what you're doing for the country. i wanted to ask about follow-up admiral locklear on your written testimony where you said iran has built its robust nuclear infrastructure and advanced its ballistic missile systems with materials that have pass the'ded through u.s. a-com. how are they getting these materials and could you describe for us what you understand is the cooperation between iran and

north korea in particular on their missile programs? >> well, i think it is pretty well known that there has been a movement of proliferation of activity from our -- from north korea into iran in this case of the types of technologies that iran was looking for. i think that's been known through the interagency for some time. >> do you think that's how they'retheir icbm program? >> i wouldn't discount that as a possibility. >> so in addition to that, you've also noted that north korea continues to procure for its nuclear and ballistic missiles program and from the region and in a network of individuals and entityies in the region. as you know that violates u.n. security council resolution 1718 in terms of the ability of member states to directly or

indirectly supply to north korea these kinds of materials and obvioustally there are many u.n. resolutions that apply to iran as well but so as i look at that testimony, what more can we do to isolate north korea in terms of those that are supplying the country of things that we don't want them to have and are against u.n. resolutions, and who do we need to be tougher on in the region in that regard? >> well, i think that primarily in terms of proliferation security, we have a proliferation security initiative that's global in nature, multi-national. i think that's also an important key because we have to bring in, we have to deal with other nations that help provide intelligence and also forces that may help us in

interdiction et cetera, and continue our training in that regard, which we do. in terms of the nations that i think we have to be concerned about, i would prefer to answer that actually for the record in a classified document as opposed to here in the open forum, if i could. >> of course. thank you, general. i appreciate that. i also wanted to follow up, admiral locklear i note in your written testimony you mentioned taiwan i believe once in passing. in light of china's major military buildup, what's your assessment of the current balance of military capabilities in the taiwan strait between the pla and taiwan and where does taiwan have an advantage and where is the pla's advantage. so what concerns are you hearing from the taiwanese and what platforms, weapons assistance and training has taiwan requested from the united states that we haven't yet provided?

>> well we have a robust interaction from the paycom headquarters with taiwan. we have ongoing right now over there their major annual exercise where we participate with them, we send advisors over and we go and in fact we sent general thurman, who used to be scaparrotti's predecessor, who will be over there with them at my request advising them and assisting them. so that's important. i think that in general over time, the capabilities of the pla, the prc, will vastly eclipse what the taiwanese could produce on their own. it's just a matter of magnitude of force size. if prc stays on the course that it's on now, my task is to support the taiwan relations act and to provide my advice up to

the president for him to decide on what kind of things we provide. i know that they have requested our assistance in submarine programs and we are contemplating that at this point in time but have not committed them one way or the other. they are particularly interested in us helping them in cybersecurity areas that allow them to pursue asymmetric capabilities that will improve their defense and improve their confidence that they can make decisions on their own and not be coerced. >> thank you. >> colonel graham? >> thank you, captain. admiral, would you describe china's behavior toward their neighbors as provocative? >> i would call it aggressive and i guess provocative would be in the eyes of the beholder but

from my view it's aggressive. >> from the eyes of the japanese, would you say it's provocative? >> i think they would say yes. >> north korea, general, would you say the regime on a good day is unstable? >> no sir. i'd say -- i'd say the kgu's in control. we see no indicators of instability at this time. >> so you think we don't have to worry much about north korea? >> no, sir, that's not -- >> when i say unstable, i mean unpredictable, provocative. >> unpredictable provocative, a danger. yes. >> that's what i meant. >> willing to -- i think willing to be provocative as well. >> so in your backyard, you've got dangerous provocative, unstable with nukes in north korea, right? >> yes sir.

within short distance from the capitol. >> the leader of north korea seems to be like nuts. i don't know how y'all should describe the guy but he seems nutty to me. so under sequestration, at the end of the day, how will your ability to defend the korean peninsula and our interest in that region be affected from an army point of view? >> well, from a holistic point of view, sequestration would as admiral locklear just said end up with a smaller force a less ready force, probably -- >> if the army goes down to 420,000, let's say that's the number they want to hit if we don't fix sequestration, how does your theater of operations fare in terms of threats? >> in high intensity conflict that you'll have on the korean

peninsula, i would be very concerned about having a force that had enough depth, particularly for sustained operation. >> so it would be seen as weakening our position in asia, right? >> yes, sir. >> admiral, under sequestration the navy would have approximately how many ships, if it was fully implemented? >> well, i would have to refer that back to the navy. i don't have the exact numbers. >> how many do you have? >> i have about 150 ships in my o.r. that are signed all the way from san diego to the theater. probably 50 or so of those are west of the dateline at any given time. what would be impacted by the size of the navy is the ability to rotate forces forward to augment those west of the dateline which is the problem we're having now with sustaining our numbers because of the readiness, even with the size we have today. sequestration would just drive that further into the ground. >> it would be hard to pivot to

asia under sequestration. >> yes, sir. >> all right. so the likelihood of an armed conflict between south korea and north korea, how would you evaluate that on a one to ten scale, one being very unlikely ten being highly likely, say in the next ten years? general? >> sir, i think that a caveat by saying i think the kgu knows that if you were to conduct a conventional attack on south korea it would be the end. so i don't think that's its purpose. i think it's to maintain his regime. but i think over a ten year period, it's above a five. it's a six, probably. >> and the more we reduce our forces the less deterrent, it may go up to a seven? >> sir i think with less

deterrence it becomes more likely that we have a conflict. >> admiral, from your point of view, if we reduce our forces in your theater of operations to sequestration level, do you think that encourages china to be more provocative? >> i think any signal that we send that we're less interested in the asia pacific on the security side than we currently are would be an invitation for change in the region and that china would be interested in pursuing. >> do our allies in the region are they beginning to hedge their bets? what's their view toward our footprint and where we're headed? >> i don't think they're necessarily unsatisfied with our military footprint. i think what they're concerned about most is the growing divide between what they see as the economic center of gravity which is predominantly asia or more

and more around china, and their security center of gravity which is around us. so that creates a conundrum for them as they have to deal with strategic decision making. they want us as a security grantor because they believe -- they see us as a benevolent power and like how we operate but they see us as a diminished economic power in the region and they have to deal with that. >> admiral and general i would appreciate it if for the record you would give a written estimate to this committee as to the effects of sequestration on your ability to carry out your responsibilities and please make it as detailed as you wish. we are going to have this fight again on sequestration ongoing and members of this committee are dedicated to the proposition that we have to repeal

sequestration and your testimony as to the effects of sequestration can affect that argument probably more effectively than anything that members on this side of the dais could accomplish. so i would very much appreciate it if you would give us as detailed as possible short term and long term effects of sequestration on your ability to carry out your responsibilities. admiral, is this your last appearance before this committee? >> yes, sir, it is. >> well, i want to take the opportunity on behalf of all of us on this committee and in the united states senate thanking you for your outstanding service. i think you can be very proud of the many contributions that you have made to this nation's security and you are one of the

reasons why the leaders in uniform are so highly respected and regarded by the people of this nation. so i thank you, admiral. this hearing is adjourned. next on cspan 3, remarks by the chinese vice minister of finance, followed by the greek finance minister. today, turkey's minister of foreign affairs talks about the country's evolving policy toward the middle east including its role in the conflicts in syria iraq and yemen.

he will also discuss turkey's relationship with its western partners and its responsibilities in nato. live coverage from the carnegie endowment for international peace begins at 2:30 p.m. eastern here on cspan 3. >> challenging the new fcc internet rules five organizations have filed lawsuits against the fcc. tonight, on the communicators, we will speak with the president and ceo of one of those organizations. u.s. telecom's walter mccormick and a supporter of the rules, christopher lewis. vice president for government affairs and public knowledge. >> what we're challenging is the reclassification of internet access from being an information service to a telecommunications service regulated as a common carrier pursuant to 19th century railroad regulation. common carriage is a vestige of the english common law, originally applied to railroads and then to trucking companies and then to airlines, but it's

been repealed for all of those industries going on over 30 years ago. because it proved to impose new costs on consumers, yet delayed deployment, slowed innovation and really chilled investment. >> we both agree that net neutrality protections are important and that's an important thing to start with. but we do disagree with the lawsuit. we have been very supportive of the rules that the fcc enacted and have now become force of law. we think that after a decade of working towards a way to have net neutrality rules that can hold up in court, that this is the strongest set of net neutrality protections that we've seen in the three different attempts at the agency to ensure that the internet remains open. >> tonight at 8:00 eastern on the communicators on cspan 2.

>> on friday, the chinese vice minister of finance delivered remarks at the atlantic council in washington, d.c. he addressed china's economic policies, u.s./china relations and the need for global economic structural reforms. he was introduced by atlantic council chairman and former u.s. ambassador to china, jon huntsman. this is about an hour. >> good afternoon, everyone. i'm jon huntsman chairman of the atlantic council. we welcome one and all and thank you particularly this afternoon for joining us to hear china's vice minister of finance, zhu guangyao, speak about his country's vision for a more prosperous asia pacific region. mr. vice minister, we are

delighted and hon toreored to have you here. thank you so much for being with us. this event is part of the council's project on shaping the asia-pacific future. led by our scowcroft center's nonresident senior fellow, olin wethington former special envoy on china. this project is currently on phase one which focuses on the economic and financial architecture in the region. the vice minister's meeting to washington comes at a critical time as new regional initiatives supported by china such as the asian infrastructure investment bank, the new development bank and the silk road initiative are showing strong momentum. and the effectiveness of existing multilateral financial institutions are under

increasing scrutiny. on a broader scale, china is playing a larger role in shaping the global economic order and is calling for adjustments in the existing economic and financial architecture. the rmb's internationalization continues to expand and the outflow of chinese capital into foreign markets is rising. at the same time, many economic forecasts point to the prospect of an economic slowdown in the asia-pacific region, including in china where efforts to strengthen the economy to a new normal face challenges. we are undoubtedly facing a transformational period in asia. where there are great opportunities to pursue common interests but also serious potential risks of fragmentation in the finance, monetary and trade architecture. we are delighted to have vine minister shu with us today to provide his perspective on these very important developments the role new financing institutions

will play in the region and china's long term vision for economic growth in asia. vice minister zhu guangyao was appointed to his current position in may 2010 following a very distinguished career at the ministry of finance including as china's executive director at the world bank, director general of the international department and assistant minister. he serves the critical function of china's g20 finance deputy and also is deeply involved in the u.s./china strategic and economic dialogue. these roles will be particularly critical as china prepares to host the g20 heads of state summit in 2016. so without further ado, i'd like now to invite vice minister zhu to the stage for his remarks after which we'll continue with a q&a session moderated by olin. vice minister zhu, the time is now yours.

>> thank you very much, ambassador huntsman, and i particularly thank you for your contribution to promote friendship between china and the united states. i know how many days you've spent in beijing and washington to boost our relations. we particularly thank you very very much. and here, i'm so happy to see many old friends. dr. cato dr. wa. i really appreciate this opportunity and thank you -- oh, professor also here. your contribution to great relations between u.s. and china. today i am really honored to be here at the atlantic council to talk about ambassador relations

between u.s./china across pacific ocean and here is a real factor to remind us to think about in atlantic council to talk about relations between our two countries across pacific ocean. and this, indeed, reflects the change and reflects the new global situation. but we fully understood that one factor is no change. 300 million people you have two oceans, atlantic ocean and the pacific ocean, and china with 1.3 billion people, our country is facing pacific ocean. just as the president xi jinping

emphasized to president obama, pacific ocean is broad enough to accommodate our two countries. china and the united states. at this time i also recall in 1972 the time when president nixon land at beijing airport he said to chinese premier i shake hands with you, closing the pacific ocean. that's history since 1972. great change happened in our two countries and our relationship must be strengthened. not our relations not reflect in

the $520 billion trade annually. the u.s. had more than $100 billion investment in china. china hold about $1.2 trillion u.s. treasury bond but our relations very connected so close, interconnected relations. both of china and united states hope and strongly wish other's economic development will contribute to other side development, make contribution to other side because it is so close connection between our two countries. i know although we have very many common ground and that's particularly we are all focused

on peace and development this is very important for our continual develop our relations. however, i also understand the difference particularly of culture difference, that's the history, that's culture background and here as the chinese particularly understand u.s., american sometimes is not very patient to listen to others speak a long time so i guarantee you and particularly media friends, my speech is no longer than 20 minutes. i must finish before 3:20 and there as ambassador said we have more time to discussion. i would like to address to you two points. one is regarding international

financial architecture. second one is regarding how we are working together chinese and americans, to prepare september event for our presidents' meeting. we really thought this historical opportunity and the successful meeting and the good result not only impact our two countries relation but also to the world. so for international finance architecture, here is many experts in the room, and not just old friends. but also in charge of chinese relation with world bank so i just want to use this opportunity to say china is a

key member of imf world bank because until today bretton wood system is still reflect by the key agencies imf and world bank. this was established just before world war ii end, 1944 july 1944 and 70 years to show this system is continually play the role. china is involved in the system in the early 1980s after china opening up and reform process begin. so today china is very important member of imf world

bank and we really felt as important shareholder of world bank and imf those agencies is also our agencies. we just make every effort to enhance capacity of those agencies and also we push the reform of these agencies to enhance the efficiency. that purpose is each country's voice can reflect fairly, those agencies reflect a change of global economic structure and thus ensure that those institutions can play efficiency role to promote global stability and promote global economic development.

and i just want to quickly recall during the crisis, china [ inaudible ] and bilateral borrowing program gave extreme financial help to imf, and we also, is a vital key member of world bank. the project implemented in china so far i believe here is many former director of world bank china department here, you can identify with these, the part that implement in china successful and the most successful part is in china. and not only that since [ inaudible ] china become donation country, now we can see

15, 16, 17, china's contribution to the world bank group is increased amount with economic development, although china have domestic poverty issue to be solved but we understand our international responsibility. we increased our contribution to the world bank group. particularly ida. now this one we hope with our adherence for poverty reduction contribute to the global poverty reduction program not only just to largely reduce poverty population in china per se, but also contribute to global poverty reduction precise and

china has done more impact with global system. we can proud to say china is actually participate in the current international financial system. also, we made big contribution to current financial international financial system. now we just follow ambassador huntsman just said about china's proposal for asian infrastructure investment bank iib. chinese president made this proposal is based on the real demand for infrastructure development in china. according to ibb figure the next ten years $8 trillion gap

in asia, that's between money supply and real demand, so big gap. one sign we really hope world bank play more important role increase the lending leverage and give more support to infrastructure development in asia. we take the responsibility we give the proposal, give our suggestion to the international society, particularly to asian members. now it's time we establish aib. president xi jinping made very clear when he met with delegate in beijing to sign mou for establishment of aib. president xi jinping emphasized three points. i strongly believe these

three points are the real guidance for china's proposal to establish aib. fortunately, president xi jinping emphasize we must join with the challenge to promote growth, and we have strong solidarity, we can achieve the goal. president used the old frame to say if people can really solidarity together, [ inaudible ] can be mold. the president emphasized this solidarity. secondly the president also used the chinese old saying if you want become rich, you must force the fed up road. that's a very simple but very deeply reflect fact, the fact

that the whole importance of development infrastructure. this big gap must be filled and we must develop infrastructure to boost our economy. third point president xi jinping emphasized aib is open and inclusive. this gave us very clear instruction and aib propose the bank president on behalf of china, [ inaudible ] country outside asia. the intention for that is the forecast on economic development rather than any other intention. the relationship between aib with world bank is a complementary role rather than replace. so more generally to say china role in current international financial system is constructive

and we play the contributor function and we want improve that. we want to have the capacity of that rather than any intention to overthrow the current system. the president from very beginning just gave the word, the very clear symbol, that's three point, very clear symbol, very clear and really reflect the president's policy, china and president xi himself. and so we pay attention to secretary after his visit to beijing last month. just in the beginning of this month, the secretary made a speech in san francisco on

international finance system reform or international financial architecture reform. so we hope china and united states very important members of imf world bank we are working together to contribute to improve and enhance the capacity of imf and the world bank. we strongly urge u.s. congress quickly approve 2010 imf quota reform agenda, that's five years too much debate. that damage the reputation of imf, damages reputation [ inaudible ], also damage the image of united states and i strongly hope u.s. congress can accept the proposal recently made made, more quick to conclude their internal debate.

i'm sorry. i must finish, okay. second one is about president xi jinping visit in september. president obama invite president xi jinping visit to have state visit to u.s. in september. so this very important visit, we strongly believe the successful visit, successful meeting between president xi jinping, president obama can give very positive impact to the relations between china and the u.s., also give very positive impact to the global. and i just recall in 2013 in california two presidents have a

meeting and they got [ inaudible ] among them. i think the very important one is between our two countries to reach agreement, two presidents lunching negotiation of bilateral investment treaty negotiation is preestablishment in china before frankly [ inaudible ]. now just last week we had two province [ inaudible ]. that's one big impact from the

discussion. last year, two president had long time talk. we know agreement was reached. the most attractive one by international attention is environment agreement. both president joined statement, announced goals on climate change. that's a positive moment of global efforts to deal with the challenge of our climate change issue. so i just say that's a very important achievement by last two times presidents meeting. now we have great expectations for september meeting by president xi jinping and president obama.

however, we understand both are based on strong support by our two great people. so we are hopeful every effort for president xi jinping and president obama's meeting. okay. that's 3:20. i must close here. thank you very much. >> thank you very much, minister zhu. you have a reputation of being forthright and strong and open and i think you more than met that expectation with your opening comments today. we thank you for being here -- >> many times, very frankly, that's the culture because our two countries are neighbors. >> that's right.

i must indicate that the idea of opening this to the media came from his ministry. and we appreciate your desire to be frank, to have an open exchange. i want to underscore your -- and recognize your commitment to a very strong bilateral relationship. and so we're very grateful you would take the time at this busy moment to come and meet. let me start this q & a and i'll just pose one or two questions to you. i want to turn it to the audience very quickly, please. and let me begin and probe a little deeper, if i can. you had highlighted in the first half of your remarks china's initiatives with respect to the financial architecture, in particular in asia.

and ask you about rules, norms standards that underlie these institutions if i could. you have indicated in your remarks a very strong commitment to the existing international system, the bretton woods system. you have also said that the new institutions that china has proposed are complementary to that. is this about simply the adjustment that's required in recognition of china's rising status? is this simply about the mobilization of resources, this $8 trillion gap in infrastructure you reference?

is it about inefficient and slow existing institutions in responding? is it about representation, that is, a need for larger voice at the table? not just for china but for many emerging markets? or is there, if i could ask, something more than that? is there here a set of shall we say, chinese or asian norms or rules or principles that you are seeking to establish as undergerding the existing architecture? help us understand a little deeper the distinction between process, structure and underlying values behind these institutions if you would.

thank you. >> thank you. you want to know what's inside contribution. i understand that concern. fortunately, i just report all of you those three part emphasized by president xi jinping that give the proposal to this bank aib and absolutely we follow the instruction from our top leader and the president himself also keep very close watch and must be on the right track for development. that's a general important, comprehensive policy guidance. now more detail. i want to report you for our thinking the bank must be uprooted based on rule of law.

adb is mandate of aib or article agreement of aib. now the founding member is fixed in the leader, you'll have more opportunity to gather together to discuss mandate. that's very important. if that inside guidance and everything to be decide by real negotiation and law rule of law of aib is mandate of aib, of bank, so that's true not only china, that's rule the negotiation. of course, china heard from u.s., from others they want high standard. we agree with high standard. and that would be gathered pending negotiation and reflect in the formal legal document.

that bank will exactly follow the rule of law of aib. we hope [ inaudible ] we can really conclude negotiation on mandate. so we know from world bank, building the discussion negotiation of article because members have different emphasized part. we must reflect large members [ inaudible ]. for procedure of rule of mandate for different members is different. this process should be followed each member country's legal

system and this is rule of law. beyond this that's policy guidance for example, world bank bank, procurement guidance that's detailed policy guidance. i think the board of aib should discuss exact the team and the team give the proposal to approve board and that's the procedure for the bank to follow. of course, we hope that this bank really can help to fill the gap of funding need and funding available investment in infrastructure but we understand even $50 billion to $100 billion

as capital still not -- still smaller to compare with the larger demand. there must be real capacity to mobilize private capital. so for private capital mobilization, we must be very careful and let's properly fund to show the function and mobilize private sector investment. we should invite private sector insist on the principle. the only thing with investment is real perfect. otherwise they will wait. so probably support of development of bank through the law as seed money and to have project assessment and prepare project may be more

comprehensive way and balance real demand in social side and profitability. but i think that's the world bank adb very marginal profit base, we should be learning from that interference. also for detailed project design, we should exactly follow the policy guidance b we couldn't expect one project could achieve all policy intention. for example, we saw world bank sometime [ inaudible ] many time if you want [ inaudible ] it's very difficult to achieve results and some failure is of course too much. expectation is good, really, but not real reflect reality.

so we hope exactly follow the policy such as resettlement policy procurement policy and so on but through project reached the policy target should be based on reality. so that's the basic thinking. in general we hope that's the mandate, the real rule of law and the inside policy we will learn from world bank, adb and for real policy to show reflect reality. >> those are high aspirations. i'm struck, i think, by the language you use and in many ways its similarity to the kind of standards, the values and

operation that existing lenders use. institutions are obviously impacted by a lot of externalities. you made reference to the necessity to incorporate high standards with respect to environment, population dislocation. interest groups, outside interest groups in these areas have obviously had a significant impact on the ability of existing institutions to lend into infrastructure projects. you reference also the discipline of the market, the ability to take projects to the market and to fund them in addition with private capital. that, obviously, is another

constraint that impacts. how do you think operationally about the ability of the bank to deal with these kinds of outside realities? i mean i hear the standards you articulate. some have said and i would be interested in your reaction to this, that if the aiib wants to become successful it really has to look a lot like the existing multi lateral lending institutions, certainly if it's underlying standards. >> rules modes of operation are similar.

policy similar, but [ inaudible ]. i used to be world bank executive director in 2001. i jointly with india made the proposal suggest world bank should be bank to finance infrastructure. in the history [ inaudible ] jointly made proposal to world bank to finance infrastructure. that means world bank some path away from investment in the infrastructure because for 1990, 1980, that time, many private sector job infrastructure so people think now withdraw the public money, world bank adb or

other bank withdrawal focus to only social development. i think that's the lessons we must learn. we should insist on the policy infrastructure development is real goal. i don't think world bank totally back but now world bank already increased the investment in infrastructure side. but i just recall in early 2000, that time, world bank is away from investment. so i think that's very clear distinction in the goal and the way. so that's why we must insist on to implement our policy goal in infrastructure development because we really [ inaudible ]

in india and other countries the same challenge. in asia, that's real gap. that's why it's very important. if you move from your vision, your goal, sometimes you lose opportunity but lost opportunity is one thing that's delayed process of development. now i must say we will count increased investment infrastructure. >> you indicate a role for partnership between the institutions. >> yes. yes. >> pushing them both toward common -- >> yesterday i had talk with president kim. president kim said he warmly welcome world bank and much expectation so we see the new

aiib of world bank is complementary role to the current development bank and i believe president kim, president adb in sync. they are also opportunity to cover to boost investment infrastructure. that show real complementary role and help each other. >> right. let me now, if i could, turn to the audience, and we'll start with the lady here, then go up here and then i'll get some of the others who have raised their hands. if you could state your name and affiliation first, i would appreciate it. >> sure. i'm reid hutchens from central news agency taiwan. regarding the aib, i wonder is the chinese [ inaudible ] for being a member and from china's point of view, are you are wear

of any reason why taiwan cannot be a prospective founding member of aib? thank you. >> a hard one. >> we are very happy to answer my fellow's question. we hope that both sides people think we should have working together to develop. regarding her question specifically on aib, i repeat about president xi jinping's side, the third principle is open and inclusive. both sides have opportunity for

cooperation. as founding member status, as i know, both sides close the street deepening discussion. now issue is what real [ inaudible ] to join aiib so i can say taiwan is now funding member but certainly they have big opportunity as new member of aiib. we hope it's opportunity between street. that's more understanding and more cooperation. and enjoy the peace together. >> i will go to the front, then work my way back. >> all ladies. all ladies. >> i'm jennifer li with hong kong tv. i have a question regarding yesterday's g20

meeting. yesterday you had a meeting with your counterparts of united states japan and europe. i wonder what's the many issues you discussed and have you reached any consensus? also, is the aiib also part of the discussion? have the united states and japan showed their intention to join or not? thank you. >> as i said that's the lady's question at the top and also from our [ inaudible ] that's reporters asking these questions continually. yesterday we had a g20 meeting but four countries had meeting so you got this information publicly or privately? >> privately. >> privately. i just say yes.

taking advantage of opportunity of g20, that's many countries to have bilateral or bilateral meeting and discuss the global economic situation. i must emphasize g20 is very important forum because of global economic situation and financial market stability. and now we are seeing some improvement in global economy, but unfortunately, recovery is too slow and even situation is too much. that's why we must strengthening our policy coordination and this time we also emphasize very much this boost of confidence and we certainly face some challenge ahead, including divided monetary policy.

u.s. certainly will [ inaudible ]. we will not realize normalization in next five meeting, that's in april. but after that, anything can happen. let's leave the room to think in june meeting is possibility to increase or not increase. so that's very careful chairman yellen introduction. and however, my understand is that u.s. will go to increase that normalization and with very patient way is increase rate on u.s. side.

on the other hand, [ inaudible ] and their intention of course is to make the rate 2% and boost european economy. that's some improvement in economy, but we pay attention to yesterday and the day before. germany ten years bond yield to the negative. so cpi is up. that's good thing. but bond yield particularly ten year yield is to the negative. we should very carefully evaluate situation. for japan it's already eight trillion [ inaudible ] so how impact the japanese economy still need to be assessed. in this way the global

coordination become more important on the developing country side. for emerging economy certainly also performance show that's a different situation. show a different trend. and you can read the communique. the key emerging economy shows stable growth. on the other hand in russia and brazil should make more efforts to improve. so that's the situation. a very diverse situation. even in emerging economies. so now how important are policy decisions? could it just relate our policy?

fiscal policy? that's real meaningful policy expansion if it's possible. so i think to all this general discussion. what's your next question? oh, not too much. but i can toughen you just much. he on behalf of president obama, gave us full discretion u.s. policy. and you can double check with the treasury. i know some people from treasury also here. all proposal regarding infrastructure development.

the third point, u.s. insists on high standards. and for this one all will continue to keep information checked. last u.s. will go through everything both sides accept the strengthingening of the issue. >> going to call on matthew here in a minute. just a comment, if i could very quickly. we may be see in it as i think your comments indicates and as i think we're sensing here that we've exhausted the impact of accommodative monetary policy.

you mentioned the impact of fiscal. but as a suggestion, just very quickly, i'm not asking you to respond. structural, that is you need structural reform in economies as a theme, a focus of your presidency next year in the context of the g20. the deep structural reform. although different in each of our countries is very profound. >> particularly in this idea and the increase of the potential productivity become more important. that's deep with the restructure reform. >> we've exhausted monetary and fiscal personally. matthew and then here. matthew? >> thank you, first of all i agree. structural reform is very important. i want to ask two specific questions about the governing of aib. if japan or even the united states or taiwan were to join in the next round or a future

round, not as a founding member, how would the capital shares of those countries be handled? it could cigsignificantly change the allocation of shares. second question is about your plans for a resident board or plans apparently not to have a resident board in beijing at the bank. can you explain the rational if that's the correct understanding of your plans? >> yes, first of all, i think that's for japan and the economy is different than the u.s. u.s. is -- of asia. and japan is inside asia but that's 25% to 30% of share.

so you ask outside of asia? and japan or others, other economy in asia should include 75. that's a big portion. and they already agreed and reflected last october. this one about residential board. i know there's many debate. i think that's the intention to increase the efficiency and improve the capacity. but again, that's why it should be decided in the negotiation mandate discussion. >> right here and then next. >> thank you.

from the china news agency of hong kong. i still remember the last full-time whn you came to this town, you made a speech in the peter peterson institute. you talk a lot about b.i.t. bilateral investment treaty. and you also mentioned china will not challenge the the dominant leadership of the united states in the financial system. and you -- you mentioned that b.i.t. negative list will be proposed in the early months of this year. but we still didn't see that happen. can we expect that to be reacheded before or when he comes to have a visit. and secondary you mentioned that china will not challenge the current international financial system.

but do you think that international reaction and the response is beyond your expectations regarding the aiib? thank you. >> about b.i.t. it's very important achievement. in similar discussion by president xi and president obama to launch a negotiation on bilateral investment between china and the u.s. and last november in beijing both president made the decision and instruction for staff. so you can -- on next month. but very frankly, i think that president xi and president obama

to have an important meeting. we couldn't conclude that. the entire expectation in september, we can reach substantial achievement. and that will pave the way for next. but i can report to you yesterday, senator sullivan asked the same question. he said he expected to see what happened to the real documentation. so we both have that intention in the next two years with the obama administration we can conclude. but we should base it on hard work negotiation team. and the u.s. team will be

removed back to this conversation and the negotiation. but both sides for china we saw less. not only relations between china and the u.s., we also think that's too pro mote domestic reform. so now you can see we issued our independent activities. that's more short. but for this offer that we go through the negotiation. and we hope that's hard work by both teams. expectation in september. big achievements and next year we try very hard to conclude

negotiations. and secondly -- oh oh. yes. we have communication with the u.s. side. i can report to you from the very beginning i brief u.s. official. white house official for china's proposal china's intention. and just one issue that u.s. asked china apply the big law in international affairs. and the u.s. beginning to show. but frankly secretary and on behalf of president obama made very clear the expectations. now we are deepening the communication. >> thank you. i just want to take note, if i understood you i don't