how can we all come together to make the city child friendly? i will share with you three snapshots. our children are often told not to play in the parks. services like multiplexes that close down the doors for the child in the street. how do you open up the doors to our children? the busiest street for traffic and make it a playground for children. iran for the first time street.ake corner i said, no. i want main street. i kept insisting is

that it needed to be a metaphor for one day in the month, can not the city slow down and recognize that children are mportant? they are wonderful. it was around independence day, 15th of august. there would be more traffic on the roads. the police recognize that it was sevenderful that now years down, the city now takes this story when they are ahmedabad. it is the first child friendly city in the world.

they have come into become storytellers. they come in to do creative workshops. ♪ they are taken to the best multiplex and given popcorn and the cinema. ♪

complex it is very unique. they time in ahmedabad, give so much time to the children. they are just so caring about the city.

>> now that we knew that the city was opening up, we needed to take the same failing to the world. we created the largest design thinking challenge to take it to everyone and to tell them if the mind says, "i can," then i will. i want to show you the snapshot of where we started in 2009. >> how can change happen? how to read and write. children are supposed to study in the school. this will help to teach all of that this will build

from the future and change happens. i can. on august 15, independence day, 2009, we empowered 100,000 children to say "i can." reach ofoded the design for change from india and has traveled around the world. ♪ i can you can together we can ♪ changing the world ♪ a and the winner of 2011, design-based school competition program designed to enable children to express their own ideas for a better world. ladies and gentlemen, please welcome kiran bir sethi from ahmedabad, india. [applause]

yes, we can. >> i said it before obama. [laughter] [applause] >> it's a simple idea. it's a constructive idea at the same time. if ideas are too complicated they don't travel and some of them are self-congratulatory rather than constructive. this is a wonderful, construct a gift to the school, the community, the nation, and now many others around the world. here is to design for change. >> what is particularly interesting for me is to say that design is not something that has not been talked about in our schools. has brought change

them into the schools without realizing it. >> today, your voice, your decision changes. >> we would like to give a big hug to the rockefeller foundation for telling every that every child says i can instead of "can i?" here."text [laughter] it is reaching over 200,000 schools from reducing the weight creating the power of ideas. it is significant for what it

did to the community and the child. how it changed one child's life forever.

>> it will not happen.

right? ng,

we have become storytellers now. they have given us the unique responsibility to tell these stories beyond the particular schools so we got into publishing. models, we, role have these wonderful stories in comics, story, books, movies. who are you waiting for? gandhi ino find the you. now we are creating the very first design thinking student guide to get every child to take this particular mindset which is optimistic and being able to that it is possible. is acrosshis book geography.

a better surgeon, engineer, artist? design is at the core of that thinking. had to make sure that they meet each other, the be the change .onference they used always take a holiday on the birthday. and everyonemagine knows what has to be done. they will be making the world a better place. this is how that looks. >> anyone can do it. it ain't about us. it ain't about that.

.t's going to go global >> i'm still struggling to believe that i can make a difference in this world. it has been experienced by them when they were 11 years old. how has the journey changed you s a person and as a leader? >> i'm there every saturday. >> harriet going to spread this to the rest the schools in zimbabwe? ministers, everyone. and trying toging raise money for that. >> one thing you learn about is

this. everything.o >> i did not think it could bring me so much happiness. >> and has made me more constant. >> it's a celebration of youth and empowerment. the matter what language they speak, the idea is basically what connect them. conferences,hops, talks. two days of great energy. ♪

>> to everyone that we educated about it. >> what started with my son has been affecting children in 200 thousand schools with the "i can" spirit. a pathetic responsibility does not happen by chance. it happens by design. --. that's why riverside maybe that's why riverside is

here. thank you very much. [applause] >> thank you so much,, kiran. now we will go to the audience for questions. if you could wait for the microphone and make sure your question is a question. started a young women's leadership charter school. could you tell us a little bit about anything you've learned in chicago that you may be able to implement in design for change? muched there is so potential in each of the schools and just wanting to forge more to educate or parent out of fear.

chicago is ready for it. i'm excited. we have had some wonderful conversations. >> not all people welcome change. you have encountered obstacles by those who maybe don't want to see change. >> you want us to teach quadratic equations or do this? it comes from leadership and the fact that we had to finish the curriculum. we have no time. we have no time to make our

children empowered. i find that is a mindset. do? can one person nothing is going to change. keepe core of this, i thinking if only we could have started with "what if" isnteansd of "what's wrong" mentality. toneed to go back human-centric otherwise we end up trying to solve the wrong problems. nothing changes. humanjust go back to the -centered approach, i believe it is natural that we would respond with positivity rather than responding out of frustration and being overwhelmed by the

magnitude of our problem. >> this is just incredible. a loss for words. let me ask you a question. it's clear why the children are open to this but how do you that thishe teachers can work and that this is so important for the kids? >> can i convince you? i don't know. i'm hopeful. i've seen it happen when it and there were9

stories of change. we wanted to go deeper. 1500 stories of change. there is this need, this gap. they're recognizing that we don't need to be ruthless leaders. there is an opening to this concept. thereotlight is always was the strongest, the smartest. we're not saying you need to do more. it is not either/or. if we could spotlight someone who is empathetic, we have a good story going. approach is clearly showing that academically, you will do better when you do good. we're trying to be able to collect more data because we are

working with dr. gartner's project and the connecting this scores. maybe the last bit of resistance will melt away. >> here in the front row, please. >> yours was a very interesting presentation. however, in chicago, we have so many problems with our children in public schools. very often, a child is not even able to make it to school byause he or she is shocked some gang. you have problems in any of these other places? these are young people also, but we have a specific problem in our city and i wonder how you would deal with that or make your ideas circumvent that

problem. our children do not die because of games but because of poverty and hunger. these are equal problems. have 300 million children going to school and only 18 million graduate college. from that 18 million, 70% have unemployable skills we are doing something significantly wrong and producing a staggering number of graduates who believe they cannot get a job so we are killing them anyway. whether it is the perspective of being shot were killed because of the fact that we don't empower them, it is much bigger. the numbers are just staggering. works in india, it can work anywhere in the world. there are all of the possible pieces, and it's an

exciting time. this has been interesting that has, for certain pieces of the puzzle. each of these are now showing significant gain. riverside model can be replicated for certain schools, certainly. whether it is something that everyone can do, absolutely. whether this particular problem can be solved, do we have a problem? our children are dying through many other things. it is a similar problem. .> the front row hear was very inspiring to what you've done. i'm curious about how you started your first class.

you saw what was happening in son but to convince them of division, it's easier to have them sign on when they see the results. what we callols private schools or subsidized by the government? how are they paid for? >> i did not have to convince because i don't think people bought into the vision. i got 25 students when i started . five of a new and one was my daughter. they came for multiple reasons. maybe their children did not get into any other so they came to mind. will keepht maybe i them here for one or a two years. it did not matter to me. i just needed kids.

i had 27 believers, nonbelievers, it did not matter. yesterday because of what we've .one, they believe i just needed to start and be able to share this particular concept and this possibility that it happened with this motley group of people. a singled not speak word and he sat quiet for six months. just took them in and then built the credibility. we are a private school so we don't get subsidies from the government. the student population is diverse. they come from below the poverty line.

they also support and sponsor those that come in with zero money. >> here in the front row. weeku have told us this that we have seen the creativity in your school, the spark, the delight in the children, the imagination which is really quite something. you told us that in literally thousands of schools, the teacher teaches, they listen, but there is no creativity, etc. we are told that you are one of to meetwere selected with president obama when he was in india. somebody likes you. [laughter]

>> "i can." he was wanting to know why i did that. the creativity to spark the dynamism in your school, whoever picked you, they recognize that they should travel through the country? is there hope for that? >> i'm presuming they picked me , theye of the 20 selected were doing work with business and establishments in the u.s. partnershipr the stanford andith all of the best minds. we were looking to see how much we could work and share with

each other. right of her here on the bench. >> i just have to say you are speaking my language. i'm a fellow design figure. you touched on a number of key and i'm wondering if you could talk about a rapid learning from rapid iteration? you have to keep going back. for me, that's critical. the kids are now learning that. when the first idea is generated, they have to test it coming into the

market. timing is critical. i love it. it's fabulous. rapid prototyping is repeatedly going back to the user not to understand the product but to understand the user. it's critical. we don't think, this is so wonderful, please will that. after love it. kids are saying they want to put the whole body and to the learning experience. >>, the gentleman in the plaid skirt.

-- right here, the gentleman in the plaid shirt. >> the standardized testing we have to do, they study for the standardized testing and it agrees that you need time to do .t what are some clues that you could give me? looking for something new. you are now 50% more confident, more empathetic. then what happens is if you , itot make it visible becomes something you can leave away. .e can make it tangible

i think it could be very useful. there is so much till that you are teaching. is happeningiculum in this particular stock. there is the bigger risk of learning and make it specific. i believe this might be a. >> you started with one school, riverside, but you mentioned

30,000 children in india. can you talk more about the that you use?isms there are problems with the scales you have to use in order for it to be effective. him ande would walk say, oh my god, what are you doing ec? say,ople would walk in and what are goiyou doing? and replicatedt anywhere else. being careful is not a franchising model. the whole point of the prototype is this is why it's important. your cultural setting is important for the cultural process. we have documented everything that we have done and i'm

excited to say with my technology partner that we are putting the "i can" in a box. they can transfer or start new. what we have been doing is teacher training. we have been reaching out to over 6000 teachers with riverside processes and we are now and 11 other schools. it started small. we are in the right place. we are ready to now send it in using technology. maybe next year i will share with you what we've done. >> karen jones the second row. >> how are you working with the

universities that are teaching our teachers? how do you get that kind of passion? a gap inhere is teaching like training the trainers but i think that would be a critical piece if they are taught all along how children learn. what is your thought on that? success withd some some of the teacher training. it is so redundant and stuffy at the moment. that's a very difficult thisucracy to get through below we try to do is partner with this. group thatlovely does a lot of the work and specifically introduced the design thinking model. i believe if every teacher can go through that it leads to a remarkable change. we have done it with some in my state. 2500 through the

process and with the satellite, we have trained more than 50,000. we want to do it as a more because theyoject don't really have much of an effect. we want to do more consistent planning for that. >> the third row. >> do you start with very young children? process an unlearning with children that are beyond a certain age? >> we start with pre-k and they can come in at two and a half. we can mess them up our own way. >> what about your graduates? my first batch graduated last year and just two went abroad.

the others stayed to study in india and went to the best institutes. one wonderful thing they told me as they got back because the deeply unfortunate incident that one of my boys passed away when he went to college. they all came back and rallied the parents. they recognize that they were not alone. the big mark of my graduating batch was understanding that they were not leaving my boy. they were going along with the .ourney they were so moved with the way they have responded. god forbid my son had died and another school, the maximum they would have done is have an announcement and did assembly and that's it.

his life was just wonderful. the kids just in came back. subsequently, they rallied and had cake sent to the parents. they all came down specifically for the festival because they knew the first year would be the most tough. a human face to education and they did not know it was possible. i think the boys will be fantastic fathers and great husbands, you know? that will be really good. i think that is wonderful. as one offrom india the first in the classroom.

i understand what you are talking about and sending my son to school like yours in america. tore are two things i want ask you. we have a tendency of hanging on to just change everything desperately. out of the desperation, i asked my first question. how will you infiltrate something you are doing to the rest of the incredibly impoverished people that are all over? looking at the social , yourences in this video school seems to harbor higher socioeconomic kids although you have some middle and lower becauseomeone deferred of economic reasons. how can we change across india?

somebelieve that we have strength in india with the eastern philosophy and our culture. expandingou integrate the virtues of our culture to the western world? [laughter] >> and then i become queen. there were too many questions in that. i would love to sit with you over a cup of chai and take this on because that's a long story, a long question. we could take this on afterwards, yes? very india-specific question. kiran will be speaking on a panel tomorrow about combating violence and how there are different ways of doing that

around the world. it's at the museum of contemporary art. ladies and gentlemen, please join me in thanking kiran for her wonderful presentation. [applause] thanks to pat and mike koldyke for supporting this. we are enjoined. good evening. [captions copyright national cable satellite corp. 2014] [captioning performed by national captioning institute] >> for over 35 years, c-span brings public events from washington putting him in the room with congressional hearings, white house events, briefings, and offering complete gavel to gavel as a public

service. we are c-span created 30 years ago and brought to you by her local cable or satellite provider. like us on facebook and follow us on twitter. month, we'res pleased to present the winning entries in the student cam video documentary competition. it encourages middle and high school students to think critically about issues. what's the most important issue the congress should consider in 2014? in troy, junior michigan. he believes congress should make education the most important issue. >> i went to be, um, a ballerina

teacher. >> i want to be a model. >> many of us are introduced to the american dream. however, even as the schools have generally been improving, it has been anything but equal and they are not keeping up with me wealthier peers that undermines the ideal of social mobility. >> we cannot use the brutal reality and the catchall excuse to avoid responsibility and helping them beat the odds as thousands do year after year. >> recapturing the american dream truly begins with education. weekday, students at troy high, one of the best goals of

the nation, finish and go on to enjoy a variety of opportunities. >> they're successful because of the culture of our city, the culture of our school. it's a culture of high expectations and excellence. >> strength really lies in our staffing. we have made a concerted effort in 31 years of hiring quality, quality staff. >> our success shows that education is not fundamentally flawed. the system works when it's properly supported. >> the current state of education in america really depends on where you live. they are traditionally more underserved in the education lacking. really kids and classrooms here are in elementary rooms full of 40-45 kids where as the peers in more affluent communities 10 miles

down the road only have 20-25 aide and othern specialized programs. critics this is indicative of the income achievement gap that refers to the lapse in learning between the students. the extent tos which many of our schools are failing. >> your income level plays a larger role in your academic achievement than race. but the stanford center for education did is they looked at they sawzed tests and the test scores between affluent in low income students has grown by 40% since the 1960's. is nowgap in test scores nearly twice what it is between white kid dan black kids. >> 96% of kids from the highest income group complete high

school. , 63%, fromwo thirds the lowest economic quartile do. schools dor public not pay as much as wealthier schools just a few miles away. >> there are huge inequities between wealthier district in suburban areas and high poverty other advanced nation tolerates. >> think about how that hurts us and what it means for the lives of children and family trying to escape poverty. americans not the dream. child, the student, that family should lift itself up out of that really terrible situation through the education system. you can go on to do anything you want.

education is anyone's ticket to success. we have to make sure it's always that way. we need to always have those opportunities. that is the root of the american .ream think the people in detroit public schools are stupid and brutish because of what they see on television. it's not true. we want to learn. we want to be able to do when other children are doing and have the same opportunities as they keep taking them away from us. >> they have a desire to do something.

you create kids that don't want to do anything. >> the issue of educational inequality is a dire truth. what can we do about it? congress, listen to your educators. hire educators for your government positions. >> how do we get them? you have to convince them to do it and not leave. can be very stressful and unsatisfying. .> i hope they would continue >> the more we can address all of this at the elementary level problems,discipline less failures in our middle and high school. needs to lookally at and evaluate how they will fund the school time programming. >> we are running afterschool

programs, on the weekends, sundays. >> the state of michigan needs to have the ability to run its school system and receive funding internally. >> as you have seen there are countless solutions for the education crisis. congress, what matters is you prioritize the issue and make it your greatest concern to provide a high-quality education for all children because we, the youth of america, are the future. >> our children only have one wait ford they cannot poverty to disappear. they are chasing the american dream. we'll share that responsibility. >> go to c-span.org and clicked on student cam. tell us what you think about the

issue the students want congress to consider. post or comments on the facebook student cam page or tweet us. earlier supreme court this month struck down limits on the amount of money a person can contribute in federal elections. before the ruling, an individual could spend no more than $117,000 in an election cycle. they found it violates the first amendment. here the oral argument later today on c-span at 7:00 p.m. eastern. -- hear the oral argument. >> joining me is the law correspondent for slate magazine to talk about political funding. what did the supreme court decide about contributions to political campaigns? if you can, tell us about the case where the decision was made. at a veryre looking narrow issue in the bandwidth of campaign financing, something

donations.egate this is not the base limit but this is about if i want to give that amount, over and over and the cap onwhether the aggregate limits of violates free speech. in effect, it is an add-on to citizens united that said for corporate corporations they have the free and speech rights as individuals and did away with .ome of the caps this was a very wealthy mccutcheon, why can he not give to 12, 40, 50 campaigns? it was found by the now familiar 5-4 margin that the aggregate limit is unconstitutional and it

speech.ccutcheon's there is no compelling interest in having that kind of limit so it's ok to do away with it. >> is there a problem the court is trying to fix? >> in all of the long trend of campaign-finance cases, it is a notion that goes way back. you have to have a really important interest and the court time and time again, you do not have that interest. to problem they were trying and not just corruption in politics. trying to fix the

appearance of corruption. big money controls everything. while the case is not that important, it's a tiny fraction of americans who can't afford to give the way that he does. victoryrtant symbolic says that very wealthy americans are going to be able to put a lot more money and if you think about this problem of corruption , campaign finance reform, then i think there is a real question about whether the court is creating a symbolic universe in which we don't have to worry about corruption. they know it when they see it. spend asust let people they choose and i think that is

a symbolic worry about the influence of big money in politics. an articlee earlier this month in slate. how influential was chief roberts? back to theok obamacare cases from two years ago it was the chief justice who voted with a liberal branch to care reformealth law. he was clearly the determinative factor there. there was a sense among court they tend to put the institutional interests of the court before his own interests so it's important to remember when citizens united feelingn, there was a that we don't want the court to take the hit for this.

maybe his vote was in play in this case. he feels very strongly that there is an important free interest bound up with money and it is accorded to the wealthiest americans. >> what has been the public and corporate response? >> the public response has been almost complete silence. care buttoo cynical to the response has been pretty much quiet. >> dahlia lithwick with slate magazine. thank you for joining us. will be al arguments little more than two hours from

now at 7:00 p.m. eastern on c-span. , two00 p.m. eastern reporters writing a book about the boston marathon bombings. tv" inan 2, "book primetime with a look at human intelligence. on c-span 3, "american history on the american historical association conference live from washington, d.c. 100 fathers and defeat is an orphan. i would not be surprised this in the recent activities. >> we are talking about the fact that an interrogation with senator goldwater looked at the fromf the carrier aircraft essex with markings painted out. we figure someone over there told them about that on

wednesday morning and therefore goldwater is going to spring it and they will try to spring it you were way that wrong and i was wrong. >> historic audio from the aftermath of the attempt to overthrow fidel castro. fm, online, and nationwide xm 120. >> former treasury secretary henry calls and said today that china's economic model is not sustainable. his remarks came this morning at the center for strategic and international studies in washington. >> hank paulson is just back from a trip to china and i asked

him how many times he had been to china and he paused for a moment and said, "more than 100 at goldman and the treasury." now pursuing a third career which is, interestingly, 100% nonprofit. he has no investments in china except maybe his heart a little bit. , i thought i would start with remembering that you over a horrible financial crisis in the united states and we are a country that we thought had a sophisticated financial system but it did not turn out to be quite as good we were led to believe but in some senses, the chinese are facing what is widely regarded as potential for a financial crisis perhaps with less expertise in handling them, although they do seem to have a few resources if they need them. i'm wondering if you can talk

about how big a risk you think there is in the shadow banking, credit home, housing, and how well you think they are prepared to manage it. >> david, thanks. and thank you all. it's great to be here. 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. 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 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. 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 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 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 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. 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 encouraged because i don't believe it's rhetoric. the party needs to do this if it's going to keep its

they are doing a lot of things. there is no doubt they are serious about it. >> one of the things you mentioned and it came up this partyg is the role of the which has changed some. talk a little bit how the role of the party is compared to the last couple. >> the party has always been predominant in china. americans -- because when we talk about thinking thee

chinese may be in the back of our minds. they are trying to create a system like we have. atwhen they look market-based reforms, these are reforms that are good for china and us. they arelook at what doing a modernizing the government, it is good for china and us. it came from a very prominent and powerful family, a chinese communist party. strong party is critical to him being able to achieve successes in the reform areas he is pursuing. is the onlyparty strong institution.

he has done things and doing things -- increased the credibility of the party. and whole lot of things including very, very strong anticorruption campaign. party -- as the someone who has been going to beijing 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? is he trying to make -- break the gridlock of government? how do you build a strong government if the party is being so much -- is the $64,000 question because what happens is -- if you look at the reforms, most people in the u.s. and most of

the press are focused on the economic reforms which are very broad in scope and extraordinary which is all about giving the marketed decisive role. it is good for mark -- for china and us. it is also a huge agenda in terms of modernizing government. governmenttions of because china does not have the institutions, the governmental institutions that it takes to with an economy as big and diverse as china. there is a -- work on restructuring. part of it is a structural issue. take the ministry of environmental protection.

areas, it is going to take more centralization which is counterintuitive to many americans who think there is already too much authority and top-down authority. how do you regulate the environment if it is not done centrally 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 the role of law and restructuring the disciplinary my counterpart has done. is thes a catch-22 which party probably is the only organization in china that i

strong enough to get these thing -- that is strong enough to get these things done because there are huge vested interests. there will be a lot of resistance and she has consolidated power to an unprecedented level. i think he he is going to need that to get that done. maybe because the party is so strong, that is one of the reasons why we don't -- they don't have the institutions they need. >> you mentioned the anticorruption campaign. do you look at this as a crude way for him to reward his friends and punish his enemies to say, i am sure there are plenty of people that are corrupt in china and the leadership could always target you, that could make you more loyal. or is it less about hard power and more about time to clean up the system to keep the people happy? and forfor background,

those who haven't been following himlosely, it was led by among the central disciplinary committee. there is a really highly publicized program to battle -- to go after not just the flys, the tigers. some very senior people have been targeted, including the former standing committee member. right up there is corruption,

property rights, clean air, water, food security and corruption. this increasesbt the credibility of the party for the people. no doubt about that. number two, to the extent that some of the people being targeted are senior and some of the state owned pillars of the economy, i think will lessen resistance to some of the reforms. they areso believe very serious about curbing corruption for domestic and international credibility. thatnk they understand although arresting people for past transactions -- transgressions will strike fear in a lot of people and they will curb the behavior going further.

this is a systemic issue. it is one that has to be changed and has to be changed through sort of long-term policies emphasizing values and integrity, changing incentive --tems, part of this will be part of which will be paying the officials to do the jobs they need to do. part of it will having clear rules on anticorruption and a legal system that is more even as it enforces the law. 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 smaller role because i think the current system where the government play such a big role is, again, one corruption. -- responds -- spawns corruption.

>> it might make the system more cleaner and work better but on the other hand, if that the week and resistance to reforms, that is not such a bad thing either. all, it first of strengthens the party. also therebility and is no doubt that i think that some of the vested interests in state owned enterprises and other places is the fact some of those people have been targeted will help get reforms. >> i think the american view was always that you cannot always have successful market focus capitalism without also having political freedom. the chinese leadership clearly does not buy that argument.

do you see attention there? are they going to bfeel pressured to have more political freedom? restlessnessf among the chinese people or is it the alternative if they could deliver the goods and clean air few -- andd that a can get away with having that. >> first of all, i would say that right now it is very popular in china. people, all the the people i talked to are really focused on delivering the goods on these other things. it is going to be very hard to deliver on when you talk about the sorts of things that is being taken on. has been for some

time and it continues to be that the system is evolving and ast they have ultimately you move to have a market economy that is as integrated as china is for the rest of the world, the system needs to evolve to become more open. it really does. so, i believe that the government will not achieve the success they expected to achieve. if they move in that direction. i think there will be pressure to move in that direction. this is a pragmatic leadership. one of the reasons why we have gone -- i have gone to china as much as i have over the years is when they are focused on their economic objectives and reforms,

they are pragmatic. they are not locked into ideology. they are looking for what will the and again i think system will evolve and needs to evolve. >> when you worry about china, when you think about what could go wrong, what is on your worry list? >> to me, the big picture is this. it is that this is a country that has accomplished an extraordinary amount over the last 30 years and they have done it with an economic model that has run out of steam in my judgment. it just plain isn't sustainable. bunch ofet a

economists consider on the room. when you talk about what they need to do in terms of reforming the labor market, removing immigration restrictions, all of the various social reforms, the government reforms, the economic unleash therder to potential of the private sector, to reform the financial system. changeillion economy to is a difficult thing to do. is thethe good news leaders understand it. it is not like talking to u.s. politicians sometimes. it is like a problem doesn't exist the people.

when you talk with them, they are very pragmatic. they know the problem exists. the question is are they going to be able to get the things done? acause, i am going to make very big, important point -- when you look at the scope of scale that i the have taken on and the personal credibility that they have put on the line, it is very unprecedented for a general party secretary to be the one that heads up to the central reform leading group. they've taken it on, but the question is it is so complex to

do this. they've done a lot. how are we going to know if they are going to be successful or not? it comes down to competition. just plain and simple is that. i will define competition because economic competition -- the things i'm going to look at our first of all, are they going to be the key sectors the private sector how petition? -- competition? i think they will, but are they going to do that? are they going to reign the state owned enterprises and continue to reform them which is not an easy thing to do at a time they are really underperforming? you take away their special subsidies, protections and put them on a level playing field to make them compete is going to lead to unemployment in those

areas. thirdly, which i think is really important, are they going to open up to foreign competition? i think that is critically important. there are two groups of performers in china -- refo ares in china, many of whom the domestic companies that are all for competition as long as you let them run their own companies. ast is why i have been focused as i have been on this bilateral investment treaty because just like he used wto admission to thrive economic reforms internally, i think this is what the current

government would like to do. >> use the treaty to introduce more competition within china because that is what you have to do. >> it benefits china tremendously in terms of increasing the efficiency. i don't think the reforms will be as successful as they need to be without it. it is the only way you were going to build healthy, strong companies in china. look what happened in every industry, every country when you protect. an industry. we protected our auto industry for years a local we got -- and look what we got. i think it is critically important. to me, what i worry about is agenda.such a big there will be strong vested in political

resistance, it is going to take some doing to get it done. it is complex. how you sequence these reforms. >> it is going to be difficult if growth is slowing and they're worrying about not creating jobs and then you tell him to take away the protections of the state owned enterprises so they have to lay off workers. >> there will be right now -- i have been looking at what they have been saying about growth. i was very encouraged by two things that the premier said recently. he is well aware that growth is slowing down. i don't see them slipping back a bunch oftterns of

lending stimulus, infrastructure which is in needed -- isn't needed. they recognized the growth and then they announced of this really -- i looked at it as a programpilot project between the hong kong stock exchange and the shanghai exchange which will lead to a lot of two-way investment below into each market. i think it is something that if it works could be regulated -- ravi collated -- replicated with other markets around the world. what i think we all have to how easy is it to get done. >> one of the things i noticed when i visited china, we talked

a very wealthy people, successful entrepreneurs or companies that serve these people. i think a great deal of insecurity is that they are afraid they will be accused of corruption or date all seem to seem to be all buying a house in vancouver and making sure their kid goes to harvard and gets a green card. am i wrong about this? are the insecure about their future in china? >> i wonder what everybody together -- i wouldn't want everybody together. it is a vibrant private sector. friends ored to my with jack of ali baba. look at what they are doing in internet banking and taking on the banks. there are a whole lot of private sector people who are encouraged

believe thatreally this is a government that understands the future of the country is the private sector. ping, wherever he was, every pro blem, there was a big emphasis on the private sector as opposed to state owned enterprises. there are other people who have accumulated a lot of wealth and people who really benefited from the vested interests. -- who anybody who is understands china, i have to believe most people that are there understand it better than that thesegnize reforms are not going to be easy. >> what role do the people's

liberation party play in the economic reforms? our van obstacle because they have vested interests or not? -- are they an obstacle because they have vested interests or not? >> as you look at the state owned enterprises, the government owned enterprises, central a group of government owned companies. when i talk about state owned enterprises that is what i have been focusing on that there is basically 100,000 plus entities in china owned by different and some of them no doubt owned by poa in addition to

municipal governments and so on. bese entities need to reformed. they are underperforming. be and ahat they will lot of them will be broken up, be sold, be taken public because you look at the pressure on municipal governments to pay down debt right now. i think that is going to be working in their favor. >> because they own some of these enterprises. --i think one of the things when municipal governments have been under pressure to the filter mandate -- fulfill their mandate, they sell the real estate to developers or bring on orocal company which may own

infrastructure that is not commercial. i think there will be pressure. >> let me turn to the u.s. what is it 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 of the globally in terms economic objectives we have that we want china to succeed with these reforms. now, many people don't agree with me and of there are some

people that always thought what is good for china economically are beginning to question because the relationship is becoming more complex. more now thanve ever that we need -- because of some of the tensions in the national security area, foreign policy area, it is really important to thicken that relationship. it is quite important that we have koppelman three policies -- complementary policies. the two things i would say is bilateral investment trading. we have a lot of shared interests. we have some things where we have differences. we need to figure out how to manage those differences. we are going to be competing in certain areas and in other areas we can't let that cloud cooperation. notng shared interests is

enough unless you turn it into complement three policies -- complementary policies. if china it and say identifies those areas where there is not market access, that is going to add to the transparency and predictability of the investment process. if they narrow those areas rather than carving out big parts of the economy, that is going to be really good for them in terms of helping them have a more efficient economy to speed up the reform process and build stronger companies. i think the u.s. needs to negotiate hard to recognize that is a big step forward and take a reasonable approach to transition. i believe a bilateral investment treaty will also significantly increase u.s. investment in china because it is going to

increase trust and understanding. investmentting cross on an international treaty basis will take it to a larger extent away or help insulate it from the political cycle or the ups and downs, of the tensions between beijing and washington. i think we should welcome chinese investment to this country. important. -- on mire mental area the environmental area, i think this is one most people understand. part of the reason why the paulson institute work so hard, sustainable economic policies in china and the u.s. and sustainable urbanization is the people.eral hundred

it is hard to get your mind around that. going to cities around china will drive environmental outcomes. as we cannot -- it is very important -- i happen to believe climate is sort of the overriding social and economic issue of our day. that is what i believe. i don't think there was anything we could do in the u.s. by ourselves to solve this problem. a number ofd with developing countries, i think the chinese leadership gets this to a greater extent than any other major developing country i could find. i think there is a huge opportunity as the two biggest submitters -- users of carbon and energy for us to really work together and cooperate.

there is a natural fit. no one innovates like we do. universities, our look at silicon valley, look at all the financial legal infrastructure we have around that. new technologies quicker and is a fast-growing energy market than the chinese. what are we doing? we are exporting coal and expecting big quotas when they want to sell us solar panels cheaps. . there are a lot of policies that are hard to explain unless you look at the politics. there is a lot of room for cooperation. >> i think we could turn to questions. we have about maybe 10 minutes. there are a lot of people so tell us who you are and remember a question and with a question mark. ma'am?

>> the mic isn't working. >> [indiscernible] we have difficulties narrowing the gap. do you think that ability will help benefit china for them to have potential future trade negotiations or does this agreement -- what kind of impact will this agreement have on china? >> you are can -- referring to the transpacific partnership. the question is are the chinese threatened by this or --

>> i happen to believe it is very important dealing with china to be -- for us to be strong economically. diplomatically and strong militarily. importantparticularly to be strong economically, diplomatically, militarily in asia. number two, i see the tpp is very important, top priority because it is focused on economic integration. it is looking at behind the borders and some of the other restraints -- moving the other restraints the competition. i think if we get a high quality surprise if the chinese don't want to become part of it.

i think we should welcome the chinese. i think they would benefit and we would all benefit. and i think we are starting to hear them talk more openly about being part of it. that is something else that would drive reform and be quite helpful. >> do you think the chinese attitude is that the u.s. has to choose between china and japan, particularly militarily or do the except we could be allies and partners with both? they look more broadly when it comes to that. they absolutely accept we should -- our onationship should be based mutual respect and there will be differences. and that those differences should be managed and are clued cooperation -- preclude

cooperation. chinese-japann, comput and tension is quite -- conflict and tension is quite theurbing because i think two forces that are in conflict with each other, you see it in the pacific, one is need for economic growth which china and japan needs and all of asia needs will all benefit from it. that,s in conflict is putting that in jeopardy are the political tensions. to me, that is disturbing. it is just really, really important that we have great communication. the u.s. government keeps pushing. we have to have political level,

senior level, right down to the boat captain so you don't have a conflict. i think that is very important. there is a lot of history there. sentiment and of nationalistic sentiment in both countries. i wouldn't underestimate the significance of it. mosti talked to some of my china,ome friends in people that have gone to u.s. schools, people that have had admired our system in our country and that raise that about they talk history and we were allies in world war ii. we don't get it.

the fact is we have a defense treaty with japan. they are an important ally. we have individual risk -- disputes, but we don't take sides. we try to be neutral. tension is something i worry about. it is a concern. >> in the back. >> my name is doug. recently, the treasury issued advisory to china to not let its declining currency values get back into play when there is concern about unemployment. many independent economists say china's currency has been overvalued and needs to be make adjustments. who is right? >> i look back and say that i look forward to the day when we

don't have that debate. the only time we are going to not have it is when we have a market determined currency and they don't. only pretty clear to me when they have a market determined currency are they going to have really globally competitive capital markets, they are going to have an economy that is where the market is playing a decisive role. are they going to be able to move up the chain and do all the things they want to do to rebalance the economy? i am not the only one that thinks that. you can do two things. being --eep in are intervening in the currency market or you can speed up moving to a process of market determined currency. intervening, you're

going to keep accumulating foreign exchange reserves. -you are going to be funding the structural deficits in the u.s. and japan. you are not going to be rebalancing your economy. or you can move the had and do things for your economy. they clearly think that need to take action. this is always a hot button issue in washington, d.c. one of the reasons why -- when i am outside of washington, i don't talk as much about that because it is easier to understand. i don't -- i am not downplay the importance of currency, but i think even more important are the structural issues that lead to imbalances. cause themral issues thater save and the issues

-- we cannot blame the chinese for the fact that we borrow too much as a government and as a people. we have policies. well.id must be doing it's coming. >> thank you. reform.ioned political the evolution is needed. this comes at a time when china is cracking down on the flow of information, internet, media, people who even agitate in favor of government policy could find themselves in jail. is this undermining the need for diversity, transparency, working against the economic policy? i am an i am -- >>

american and i love our political system. i think that i would like to see -- i think it is important that they move through something that is more open and more inclusive. . what you have seen is -- you have seen the administration, at the same time they have put out a whole set of reforms which are badly needed. they have also said we are going to deal with a number of hot button issues like the one child camps, labor reeducation they have focused on the major issues of food, water, air, corruption. that at the same time that they have cracked down

on those things. have -- i say they are dealing with issues that the people care most about today. don't think that is a winning formula. time they won't be as successful as they are going to be a less they have a more open, inclusive government. then theoman here and gentleman in the back near the camera. >> thank you. embarks on its economic reforms, i'm wondering if mr.

paulson could talk about the secrecy of these reforms especially in the financial reform area. the secrecy is very important of a reform because, for instance, if you normalize the know, andet with, you let everyone migrate to the big their benefits with them, you have them flooding beijing. they cannot accommodate more people. how do they do that? they are going to normalize the market for second and third tier cities first. the financial market reform, you they are going to need a

budget responsibility. they have to be held accountable and have sources of revenue that they can call on, but right now mayors don't have budget responsibility and they don't have financial statements that are transparent. which are required to have a market. if you need amended civil -- a municipal finance market, they have a ways to go up because they cap fiscal reform, tax therm, give the mayors tools they need to manage a budget. these are going to be very -- that is why he has given himself seven years from the time the announced these policies which was some time ago to get them done because it is going to take a while. what i look at are what are the

things that can be done soon and are they doing them? are they doing the things they need to do right away? i focus a lot on the financial markets. the reason i do is these are things that have been studied, debated in china. they know what the issues are. they -- these reforms are very important. i start with the idea of letting foreign financial institutions come in and compete because you are going to need a world-class institutions and i have never seen a situation where i believe joint venture, institutional investors, or investment banks to run onerd enough where you have control so you're never going to get there with a

joint venture. markets so that toy -- capitalist allocate households rather than state owned enterprises. eliminating the caps on the interest rates that savers receive. there are a whole list of things. the other things i am going to look at is competition. are with a moving quickly to do the tough things with the state owned enterprises? it is not going to get easier. as time goes on. byave been quite encouraged not only what they have said about the markets playing a decisive role, but some of the steps they have taken the, the rollbacks, the red tape, and the regulatory barriers to keep their private sector from getting and competing into

certain industries. they have done a lot in terms of weighing out a very ambitious program. they have worked -- moved very quickly like in areas like anticorruption. we have to wait and see for the environment. >> you are talking to an american worker. is, i understand that the air breathe has something to do with the pollution that comes across the globe from china. if i am an american worker, my wages have not gone up, my company has a lot of investments in china and they tell me it is good for me but i am not so sure about that. what do you say to american workers whose wages are stagnant and see that men in cities can do business in china. what is in it for me? what you say to them? >> the american worker

struggling in manufacturing. we have eight or nine times the output we had in 1950 with the same number of workers that we had then. when i go through plants in china, i see very similar things the best see in companies in china and the u.s. which is i go through manufacturing plants, i see robotics and technology. this is inside. we need technological advances. it is driving productivity but in almost every industry i look at whether it is architecture, engineering, almost any business, technology and manufacturing is destroying jobs. we need to really focus on this and focus on having the proper

training programs, etc. what i say to people in the u.s., i think worst and most important, we need to fix our own economy. that is going to be the key to our relations with china and everything else. everything starts with our own economic strength. the things we need to do to be competitive. we can kick all these things off. there was a good number of them. the other thing i would say to a u.s. worker is we should be fighting to open up and continue to open up opportunities for u.s. products in china. right now, it is very interesting. you talk with farmers and ranchers, that is an easy sell. they look at what is happening and how fast the consumption engine is growing.

it is no longer -- you mentioned wall street. it used to be wall street and a lot of the big clue -- global companies. i think right now the constituents -- clean technology companies and technology and -- in the state and city level, there are a lot of people that are looking for chinese investment to come in. a went to a company in chin last friday which wasn't that long ago. it is a leading manufacturer of auto glass. they just bought a huge plant in china, in ohio. hire 1000oing to people. i think that is the case we need to make.

i think it is a hard case and i sure don't want to be the one that is trying to say this directly to someone who has lost their job in a plant. i don't think there are a lot of -- products we are importing from china by and are products we would be importing elsewhere. that is the fastest-growing area. that is why we have to fight so hard to open up these markets. please join me in thanking hank paulson. [applause] thank you, mr. secretary. thank you all for coming, especially on a rainy day. we will be continuing this conversation for another year at least so i hope you will join in with us. thank you. bye, bye.

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