September 17, 2013
On September 17 the Atlantic Council’s Strategic Foresight Initiative hosted a distinguished panel discussion for the launch of the China-US Cooperation: Key to Global Future report, the culmination of a yearlong US-China Joint Assessment Project. For the project, the Atlantic Council’s Strategic Foresight Initiative, housed in the Brent Scowcroft Center on International Security, partnered with the China Institute of International Studies (CIIS) under the Chinese Foreign Ministry to engage in a joint assessment of long-term global trends and their implications for the China-United States relationship. This work was generously supported by the China-United States Exchange Foundation. 

Moderator:
Frederick Kempe,
President and CEO,
Atlantic Council

Speakers:
Stephen Hadley,
Principal,
RiceHadleyGates

Lieutenant General Brent Scowcroft, USAF (Ret.),
President,
The Scowcroft Group

C.H. Tung,
Chairman,
China-United States Exchange Foundation;
Vice Chairman,
Chinese People's Political Consultative Conference

Li Zhaoxing,
Former Foreign Minister,
People's Republic of China

STEPHEN HADLEY: Good morning, everybody. Thank you for being here.

Good morning. Thank you for being here. I'm Steve Hadley. I'm on the board of directors at the Atlantic Council. And the purpose of this morning's activity is to roll out this report, which was available in the door – at the door before you came in, produced by the Atlantic Council and the China Institute for International Studies.

What's interesting about this report is it builds on work done by – in the United States by the National Intelligence Council and done in China by the China Institute for International Studies to assess global threats and trends out to 2030. They then came together with the working group and found, surprisingly enough, a remarkable consensus about what the challenges were for the two countries through 2030.

But what's interesting is that the two groups, together, and the working group, reached a consensus that the only way to deal with these problems is if the United States and China approach them cooperatively. Neither country can solve them alone, and together they can solve them only if they lead the international community to address these threats. And the reason is because neither country can reach its own goals for its own domestic policies if these problems are not addressed and solved.

And I think that insight really provides the foundation for what people have been saying might be a new model of great power relations, one where elements of cooperation outweigh elements of confrontation, and particularly conflict. That's not to say there won't be disagreements between the two countries, there won't be competition, there won't be hedging behavior, but the need to cooperate to meet global challenges will hopefully outweigh countervailing tensions for confrontation and conflict.

There is a lot of work to be done to elaborate this new model of great power relations – what it would look like, what are the areas of cooperation, what are the kinds of things that could derail that relationship, and how to explain it to our respective populations – but I think this working group report has given us a good foundation and starting point. And now it's the obligation of governments and those people in this room to try to carry this work forward.

So my thanks and congratulations to the working group, and now let me turn to my colleague, C.H. Tung.

C.H. TUNG: Ladies and gentlemen, I'm delighted to have the opportunity to attend the rollout of this outstanding study entitled "China-U.S. Cooperation: Key to the Global Future." (Laughter.)

(Cross talk.)

FREDERICK KEMPE: I certainly welcome this U.S.-Chinese initiative to work on the sound system – (inaudible). (Laughter.)

(Cross talk.)

MR. TUNG: Well, it's a joint effort of distinguished scholars of the United States and China. The China-U.S. Exchange Foundation, of which I'm the chairman, is proud to be associated with this study. This study, as Steve just said, is based on a U.S. report, "Global Trends 2030: Alternative Worlds," prepared by the U.S. National Intelligence Council, with contribution from the Atlantic Council, and the Chinese report entitled "Global Trends to 2030: The Prospect of U.S.-China Relations," prepared by the China Institute of International Studies, with contribution from the School of International Studies at Beijing University.

This study confirms that independent but fully developed reports were generally consistent in their assessment of global trends and provided a solid basis for development of scenarios to illustrate what might happen under different assumptions about cooperation between China and the United States. The scenario in both analyses depicts markedly different outcomes for China and the United States and the world.

When China and the United States fail to cooperate, and pursue narrow interests or win-lose or zero sum outcomes, both countries lose. Continuing down the path of – (inaudible[5:48]) – and episodic cooperation that we are now on also leads to a lose-lose outcome. But when China and United States cooperate to meet looming challenges, both countries benefit.

The fact is, the United States is the most developed nation in the world and China is the largest developing nation in the world. By having the two countries work together with other major countries as stakeholders, we will have a better chance of successfully overcoming any challenges. This study outlines the pace of collaboration between the two countries and makes several specific recommendations to make cooperation – and to make cooperation both possible and to move forward.

(Inaudible) – to this study, on May 22nd in Washington, the China-U.S. Foundation rolled out an economic paper entitled "U.S.-China Economic Relations in the Next 10 Years: Towards Deeper Engagement and Mutual Benefit. This paper reviewed the overall benefits accrued to the two countries on the economic relationship since 1978, examined some of the contentious issues that confronts the economic relationship today, but most importantly took a hard look at the economic relationship over the next 10 years. On this paper one can see that the economic relationship will become more and more interdependent in the years ahead.

You may ask, what is the present state of U.S.-China relations? As the two nations engage with each other more and more, the relationship is becoming broader and more complex. With that, unfortunately, misunderstanding, mistrust and sometimes genuine differences invariably occurs. After all, we have a different history and culture and we are at different stages of economic development and other societal development, and therefore our needs are different.

It is important, however, that misunderstanding and mistrust be addressed and differences be managed and contained. And under no circumstances should they affect the overall U.S.-China relationship. We must have a multilateral perspective, as outlined in this study, and follow bilateral perspective as outlined in the economic paper. The two countries have too much at stake together. The relationship between the two countries must move forward politically.

Indeed, since President Nixon's visit to China, eight presidents of the United States and five generations of Chinese leaders have worked diligently to move this relationship forward. And throughout all these years, despite ups and downs, the relationship has been improving. But given today's needs, I believe strongly there is a greater urgency to move this relationship to the next level.

When President Obama and President Xi met each other in June in Sunnylands, California, they called for the building of a new power relationship between China and United States. And this call was repeated when they recently met at the sidelines of the summit meeting in St. Petersburg. The study that is being rolled out today makes a compelling case for the need to build such a relationship. We indeed are confident that this study will help to achieve – (inaudible).

The person who is really working every day of his working moment to improve this relationship is the ambassador of China to the United States. I was given the task to introduce him. He doesn't need any introduction. Please, Ambassador, please stand up. Let's give him a hand. (Applause.)

AMBASSADOR CUI TIANKAI: Thank you, Mr. Tung, for a very fine – (inaudible). It's so nice to be in this new building.

FREDERICK KEMPE: Mr. Ambassador, forgive me but you're going to have to speak up just a little bit. It's a new building and it's also a new sound system. (Laughter.) And they're trying to iron out the issues right now. We've got this recorded and we'll have it up via text, but if you could speak up just a little bit. Thank you very much.

AMB. CUI: Well, let me first of all thank the Atlantic Council and China Institute of International Studies and China-U.S. Exchange Partners for inviting me today to this event.

I also want to thank all the members of the joint working group for their hard work in putting together this report. And in particular I would like to recognize and extend my appreciation to General Scowcroft, Vice Chairman Tung, Mr. Hadley. For years all of you have been strong supporters for China-U.S. relationship and have made significant contributions to this relationship in different periods of time and different ways. Your vision and dedication have reinforced our confidence in the future of China-U.S. relationship.

And I'm also very happy to see here my past Minister Li. (Laughter.) I think all of you know him very well. He was one of my predecessors here, and he was the Chinese ambassador here in Washington, D.C. in some of the very critical years in our relationship. In addition, whenever I have a new post in the foreign service he was always the first one to express his sympathy to me. (Laughter.) So thank you, sir, for understanding. (Laughter.)

I recently – (inaudible) – a second report that I have witnessed in the past three months, which is supported by the China-U.S. Exchange Foundation. When the first report, "U.S.-China 2022: Economic Relations in the Next 10 Years" – when that report came out in May we were in the middle of intensive preparations for the two presidents' historic meeting in California. And now, three months later and just days after another successful meeting between President Obama Xi Jinping and President Obama in St. Petersburg, we are releasing another important report: "China-U.S. Cooperation: Key to the Global Future." We all want to commend your efficient and critical work.

Over the past few months we have seen some new and satisfying developments in China-U.S. relations. When our two presidents met at Sunnyland, California in June, they agreed to build a new model of the relationship, free of conflict and confrontation, and it characterized our mutual respect and – (inaudible[14:24]) – cooperation. This has set the goal for the relationship. And after that historic meeting, our two teams have been working together very closely to follow up on that great vision. The fifth round of the strategic and economic dialogue was held here in Washington, D.C. in July, and it was very successful and good work.

It is particularly encouraging to note that there have been positive exchanges and engagement between our two militaries. General Chang Wanquan, China's defense minister, came here for a successful visit in August. And just a week ago, Admiral Wu Shengli, the commander of the PLA navy, was also here for an official visit. He brought with him the captain of China's first and very small aircraft carrier. (Laughter.) Three Chinese naval ships had a port call in Honolulu 10 days ago. That's why I made two trips to Honolulu within one month. Both are for military-to-military (operations ?). And that port call was the first such visit in seven years. Internationally the two countries continue to work together on a wide range of issues, including the global economy – (inaudible) – international – (inaudible).

So the two presidents gave a very positive evaluation of the progress so far – (inaudible). And they agree the two sides should continue to go on along this track. So I think it is fair to say that we are already moving forward with the establishment of the new model of the relationship, but more needs to be done. The ultimate goal of building such a relationship is to achieve real end results that will not only benefit the Chinese people and the American people but also people all over the world. And in this regard the report before us offers a thought-provoking perspective. It gives us a clear picture of the critical maritime and – (inaudible) – in the world today and tomorrow.

(Inaudible) – why China and the United States should join hands and step up cooperation to respond to all these challenges in the interest of world peace and prosperity and for the world – (inaudible). This is a responsibility that we will all shoulder, being the largest developed country and the largest developing country in the world. This is also an expectation placed on us by the international community that we have to live up to.

Going forward, we need to further develop the idea that – (inaudible) – is recommended, and most important, heed this call for action. In order to contribute to – (inaudible) – let me try to make a couple of observations.

First, we should waste no time. The megatrends outlined in the report are for the long run, but they are already very much with us even today, affecting our economy, our society and our lives in increasingly significant ways. People who are really serious about taking the lead in forging a global response to them will have to act right now. Early action and progress here will also help build up confidence in China-U.S. relationship and bring broader support to our cooperation. So it may be appropriate here to put the – (inaudible).

Second, we have to do well – (inaudible). We should have no illusion about the magnitude of our task, but we have already taken the first step, though a very small step, to a strategic cooperation – (inaudible). In the framework of strategic and economic dialogue, we are working together on global and regional security, on energy, the environment, global economic governance and so many others. We have also established working groups on climate change and cybersecurity. Both started their work in a cooperative way. These – (inaudible) – are the building blocks for the grand strategy envisioned in the – (inaudible[20:38]). These are the initial steps that will help us cover a thousand-mile journey – (inaudible).

There is – (inaudible) – cooperation – (inaudible) – and forward looking. Our two countries are very different from each other. What brings us together is a mutual need, common interests and our shared future. We will continue to have differences and disagreements, or even disputes, but we shall not – but we should allow none of these to derail our cooperation, because none of them would outweigh our – (inaudible) – and our responsibility to the global future.

Therefore, we have to always keep the big picture in sight and the larger common interest in mind. We have to respect each other's major concerns, be sensitive – (inaudible) – and be cognizant and proactive where we can cooperate. Our joint response – (inaudible) – for defending our future, and we will develop this cooperation and also be forward-looking in future – (inaudible). We should have the wisdom and courage to break away from the old way of major countries competing with each other.

And this is – (inaudible) – why our two presidents have made that commitment to – (inaudible) – relations. They have no illusion that our two countries would be just the same, but they have a firm belief in the strength and complementarity of our common – (inaudible). They have full confidence that the two great countries will be able to work together to build a better future for ourselves and for the world.

Now the goal is set – (inaudible) – and the – (inaudible) – has presented a clear-charted course – (inaudible). We should not let the world down and should not let ourselves down. Thank you very much. (Applause.)

MATHEW BURROWS: Good morning. I'm Matt Burrows. I'm the head of the Atlantic Council Strategic Foresight Initiative, and I wanted to give you some idea of the key findings, just briefly state them before we move to the panel discussion.

Now, the report is – as everybody has already indicated, has a very simple message, and that is that U.S.-China cooperation is essential going forward if we are to meet these global challenges. The report outlines big, moving challenges. This is not an exhaustive list but I'll go through several of them to give you some idea of the kind of challenges that we're talking about.

First, looking at the global institutions, the global systems, we've had an incredible amount of change over the past couple of decades: new rising countries, phenomenal growth in the developing world. The international system was designed for a world in which the G-7, the very rich countries, predominated, designed after the Second World War.

This report is taking into consideration what has – merely what has – the flourishing prosperity that has happened over the last couple of decades, and begun to think about what kind of changes need to be made to that international system and also to the global institutions. The U.S. and China are key to that, other countries also. We want to emphasize here this is an inclusive process.

Secondly, the economy. Obviously, having survived the financial crisis, we want to move forward and actually rebuild and rebalance the global economy. Again, U.S.-China efforts are key to this, but also within a global context they – (inaudible) – cooperation under – (inaudible).

Resourcing. Over the next couple of decades, demand for key resources – food, water, energy – is going to be going up by double digits – 30, 40, 50 percent in some cases. We don't want this to be a hindrance to further prosperity and growth. So again, cooperation on these key resource issues, and also dealing with – (inaudible) – which is another key issue facing all of us. And again, the U.S., as the largest developed state, China as the largest developing state, have to be on the same page in dealing with this critical issue on, again – (inaudible) – also boosting green energies and the green economy.

Finally, U.S.-China relationship, that's very key – as we've been talking here – to the future. Obviously we're proposing here a vision group. That vision group would be out trying to think about these longer-term trends. This is not a replacement for the mechanisms that we already have. Those mechanisms are very important, but oftentimes they're consumed by the day-to-day. There has to be a group out there that is looking forward, looking at these looming challenges, figuring out a way of really how to tackle them, and tackle them in this context, this global context. This is not a G-2 world. We're talking about this is a very – (inaudible) – world.

Now, let me just mention the process, which I think was very unique. A lot of the previous speakers have already mentioned that. I was a member of one of the teams, particularly contributed a NIC report on global trends. What was very fascinating for me personally in the meetings in Beijing last year was the fact that our analysis of these global trends and these possible scenarios, either positive or negative scenarios, oftentimes overlapped and matched with the analysis that the China Institute for International Studies also did.

From that basis, thinking about what the analysis was, then the joint working group then began to think about, how do you really deal with these challenges? How do you make sure that the scenarios that we – the negative scenarios that we all agreed were possible at this particular historic juncture, how to make sure that those do not materialize, and instead that we – (inaudible[29:15]) – the positive interactions.

So from the beginning this has been a very joint operation, to think through those processes. We want to thank particularly Chairman Tung here for the support that he has provided the China-U.S. Exchange Foundation for the report. And I think with that we will turn it over to the panel discussion to drill deeper into some of these issues.

MR. KEMPE: Thank you. Thank you, Matt. (Applause.)

So let me start by apologizing to the audience and to the speakers. We're still sorting out issues with the sound system, and I see my team scurrying around the back, trying to fix that.

In the meantime, I'd ask the panelists – I think we're not fixed yet, so I'd ask the panelists to amplify – self-amplify their remarks, if they could. (Laughter.)

First of all, I'd really like to thank the ambassador, who I think made a very important statement. We'll have transcripts of this up on our website, atlanticouncil.org, and I think this was a very important statement – Chairman Tung, I want to thank you as well for your statement, and Steve Hadley.

Our view, in doing this report and trying to do strategic foresight and strategic forward thinking together with our Chinese counterparts, is that if the U.S. and China can think about future challenges together; if we can think about medium-term and longer-term challenges, problems, issues together, then it's less likely that we're going to get thrown off-balance by short-term issues and immediate problems that come up on the radar screen. So we think this is a very important not just project but process.

And thank you, Matt, for briefing us on the report and setting the stage.

Onstage with me today we have four distinguished gentlemen – for everyone in the audience, this is on the record, as were the first comments – four distinguished gentlemen who have shepherded the relationship – U.S.-China relationship literally for decades.

General Scowcroft, a former two-time national security adviser, helped cultivate the relationship when it was in a nascent stage and maintained it over the years, even as both countries faced tough times, as the Cold War ended and other issues arose.

We also have – and I'm very delighted to have – Minister Li Zhaoxing onstage with us. He reminded me, Mr. Ambassador, as you were talking, that the "seize the day/seize the hour" comment was quoted when Richard Nixon was in Beijing and visiting Beijing. And so we're in a position where we want to seize the day, seize the hour again, and I hope you'll talk about that a little bit, Minister.

His notable career in the Foreign Ministry led to his appointment as foreign minister, 2003-2007, in President Hu Jintao's Cabinet, as China became more recognized for its economic growth and rose to prominence as a key political act on the international stage.

Steve Hadley, during his tenure as national security adviser for President George W. Bush – so very lucky to have two national security advisers, both members of the executive committee of the Atlantic Council; obviously General Scowcroft is also the interim chair of the Atlantic Council – Steve, during his tenure for George W. Bush, saw the relationship change, in parallel to what Mr. – Minister Li was working on. His work under Presidents Ford and George H.W. Bush allowed him to see the full evolution of what the relationship has now become.

And then of course Chairman C.H. Tung, the former chief executive and president of the Executive Council of Hong Kong, one of the wisest of the wise men on this relationship. He's been president, Executive Council of Hong Kong, from 1997 to 2005 – an extensive knowledge on all the developments not only in the bilateral relationship but also the developments that – how China has developed into the – into the country that it is today on the world stage.

So there can't be a better group to discuss this – and I'll put this word in now – great power relationship and how do we conquer the hurdles presented by bilateral problems and foreign policymakers on next steps. And I'm sure I speak for the audience when saying we're very excited to have you all with us.

So let me cut right to the chase and start asking questions. And General Scowcroft, perhaps I could start with you and Minister Li.

We've heard President Xi call for this new great power relationship, but what does that mean? I'd like to know what it actually means to all four of you. And where do we start? Who takes the lead in this? How do you think the relationship gets built? And what are we talking about when we're talking about a new great power relationship?

General Scowcroft.

LIEUTENANT GENERAL BRENT SCOWCROFT: I think we're talking about two things.

First, a new relationship with each other. It has not been that long from a period where we had no relationship with each other. We didn't talk to each other for over two decades. That's a tremendous amount of time in a rapidly changing world, when we had no idea what the other – what the other power thought. So there's that kind of thing, getting to know each other, getting to understand each other.

The second is a rapidly changing world environment. We're past the years of the Cold War, which initiated our first relationship. It was a common concern about an expanding Soviet Union that led to the Shanghai Communiqué and led to our first relationship.

So both of these have been evolving together, I think resulting in an almost unprecedented period where we need to examine the relationship and the relationship in connection with a rapidly changing world.

MR. KEMPE: Thank you very much.

And earlier, I wonder if you could touch a little bit also in one of the issues you were talking about outside the room earlier, the whole difference in how the U.S. looks at history and China looks at history and where this fits into trying to pick up a new power relationship.

GEN. SCOWCROFT: Well, we are – we are very different countries. The United States is 2(00), 300 years old. China is 2,000, 3,000 years old. That's a tremendous difference. We have lived in different international environments for the last 500 years. Ours has been the environment of the nation-state system, a bunch of absolute sovereign states interacting with each other.

The Chinese relationship is very different. In the Asian part of the world, it's sort of China and everybody else, and to adjust the relationship between those two is really – is really quite dramatic. We don't think the same way. We don't have the same intellectual framework to express ourselves. So when we say something to each other as Americans, for example, we understand the context in which we're set. When we're talking Chinese-Americans, we don't necessarily speak from the same context, so what we say may be interpreted very differently on the other side.

And these are the kinds of things that we need to adjust. I think we can do it. I think it's obvious we need to.

The time I went to China, one of the first men I met when I got off the plane was Foreign Minister Li, was in the advance trip for President Nixon's visit to China. I hadn't been to China for more than two days when I said to myself, this is a relationship we have to nurture. This is different. It's going to be powerful. And it has developed just exactly that way.

There have been misunderstandings. The world has changed, and our initial relationship – that is, joint action in defense against an aggressive Soviet Union – has disappeared. And in the United States, we've had eight presidents since Nixon went to China, and some of them starting out with very different notions about the relationship, but every one of them has come during his time in office to the realization that this is one of the most important relationships the United States could possibly have.

So I think – I'm optimistic about it, but I think the chances for – not necessarily disagreements – those of you from Washington know we have a few disagreements inside the United States on what we ought to do. (Laughter.) It's not disagreements, it's misunderstandings that worry me, and there I am hopeful and I think this new relationship is essential if we – to deepen the kinds of understanding that will lead us to productive dialogue.

MR. KEMPE: What an interesting way of putting it – not disagreements, misunderstandings.

Minister Li, I wonder if you can pick that up. And what does President Xi mean by a new great power relationship? What does it mean to you?

LI ZHAOXING: Well, thank you very much – (inaudible) – for giving me the opportunity to speak in front of so many old and new friends. I'm so honored and so happy.

Besides, I am also enjoying the good sense of humor on your council. You've invited us to come here to this Atlantic Council to discuss the relationship of the two countries, (and everybody can see me ?). (Laughter.) That's really good.

So that itself demonstrates the importance of all our strategic partnerships. I – (it is new ?), of course, so that is obvious.

And I also thank you for apologizing for the not working so well of this – of the sound system. But before you do that, before you give that, I was keeping my fingers crossed to find – want to find out whether that's working, since it was made in China. (Laughter, cross talk.)

MR. : (Inaudible) – assessment.

MR. KEMPE: You don't want to look at it.

Part of the reason we haven't solved the issue yet is we're trying to solve it unilaterally. (Laughter, cross talk.)

MR. : (Inaudible) – deal with the –

MR. KEMPE: So I think we need a working group (consensus ?) but can also thank you for praising the Atlantic Council. We see that we're embracing Asia, but we haven't yet used the term here of "pivot," so we're embracing –

MR. LI: Anyway, I believe the new model or new type of relationship between or among major countries is obvious by itself. That is, we should march with time. We should now at the moment really implement the spirit of the Charter of the U.N., the headquarters of which is not far from here. I worked in D.C., but also I worked for about three years – and it's also obvious that we are two countries, one the biggest developing country and the other the biggest developed country – should really respect each other on the basis of equality and should also work hand in hand, shoulder by shoulder, and even heart to heart to identify more and more common ground or the common interests to serve our two peoples and also even to benefit people of the rest of the world.

We have a lot in common. In history, for example, I have some new discoveries. Some of them should be really perhaps confidential, just inside this house. For instance, as early as in 1862, the good man I highly respect, President Lincoln, emancipated the slaves. Only – nearly – (inaudible) – (new/knew ?) China realized the emancipation of slaves in China, Tibet. What is something similar in our two countries' histories?

Later on, on July the 7th – (inaudible) – the birthday of my highly respected old friend Chairman Tung – (laughter) – July the 7th, his birthday – (laughter) – and in the year of 1937, Japan on that day launched a comprehensive aggression against my country.

A few years later, on December the 7th, 1941, Japan attacked by surprise Pearl Harbor, with – (inaudible) – within one month. That's why he said I really should (have extraordinary sympathy for him ?). To be ambassador here in America is not an easy job. (Laughter.)

Well, when Japan attacked China on a comprehensive manner, Beijing was called Beiping, meaning "peace in the north." However, the Japanese aggressors thoroughly destroyed the peace in my country.

And in 1941, when the Japanese (leaders ?) attacked Pearl Harbor, that precious pearl was also damaged so seriously. So our two countries, there are a lot in common in history for us to have a sympathy for each other and to support each other.
Before I came to D.C. this time, I read history of World War II. I have found that in the few battles the Chinese army won only because, among other things, we had the support of our American friends. There was a small city in southwest China named Kunchung (ph). In the Kunchung (ph) battle, the Japanese lost more than 1,000 soldiers than the Chinese army, and that is partly due to 19 American pilots lost their young lives in the air and on the land of America. I paid my special respect to their tombs in China. So we always thank our American friends in their support for China's anti-Japanese war.
I started my diplomatic career about 49 years ago, and I started my diplomatic life abroad in President Obama's grandparents' motherland, Kenya, eastern Africa. And I learned quite a lot from that country. For example, one should always love one's motherland, including love your grandparents, your parents, the skin color. The first president of Kenya made an important speech to young people. Towards the end of his speech, they shouted together with audience, "Black is beautiful." I learned that. And I – this is part of the American pioneers in the independence war, I believe; that is all men are equal. So we also have a lot to learn from each other.
In Kenya was the first time I saw a flower by the name of – a very queer name or unique name. The flowers was called Yesterday, Today and Tomorrow. (Laughter.) I don't know whether in this country you heard this word. Yesterday, Today and Tomorrow. I think one of the most important common grounds we have is that we have some common yesterdays, today, and many tomorrows.
Today, for example, all of our two peoples love to enjoy a life of peace, so in or diplomatic efforts, we have one thing in common; that is, to join the rest of the world to maintain world peace, to resolve issues that will disturb world peace, such as at the moment in Syria. We have such – we have this this very important common ground.
(Inaudible) – I'm very happy to find out the etymology of the name of my friend the general, "Scowcroft." When I was a freshman, I was a – what, an etymology major, so whenever I came across a person, I first would ask the etymology or the meaning of his name. Today I have found out that Scowcroft means school compound or school (field ?), so where you see him, well, you – (inaudible). (Laughter.) And I learned that my friend is already ¬at the age of rice in Chinese. In China, the Chinese character for rice also means 88. So when I see my friend, I'll feel confident that with him with us, we'll never suffer from a shortage of food. (Laughter.) (Inaudible) – foundation, as have developed our agriculture, develop our economy, and in this field, we have learned a lot from our American friends – (inaudible) – to learn more. And of course we also do – (inaudible) – to assist other countries.
So I think our job is to identify and find more and more common grounds and as well as to do the work to do our best to let our dream come true so that peoples of our countries and the rest of the world will benefit. This meeting and the report we have now have made a really good beginning at – (inaudible)..
And language-wise, I believe I have one advantage; that is, I'm already over 70, and I have a country-fellow by the name of Confucius. (Laughter.) I never see him because he was gone too early. He was born in the year 551 Before Christ. (Laughter.) I remember I read one sentence which said something to the effect that if you are living after the age of 70, you can really feel free to speak anything to each group because there are talking points prepared by your secretaries or – (inaudible) ¬ – writers. So I'm really very happy. I'm talking about (I'll speak ?) my mind.
AUDIENCE MEMBERS: Ah!
MR. LI: So let's join hands and work hard for a very good future for a very strong (strategic ?) partnership for our country – for our two countries and our two heads of state. I feel I have come to end of my much too long remarks.
I think of two good men I highly respect, one a famous writer, my friend. He had one thing that was not so good; that is smoking – (scattered laughter) – cigarettes, because he loved cigarettes, every day. But he joked to himself, I'm also good at giving up smoking or quitting smoking; I do it one dozen times also every day. (Laughter.) So my thing, my idea is, in doing next two things, don't learn from this good writer in the field of giving up smoking. But in doing good things, we can learn from him in other fields.
I also learned from another good man, a poet whom I like also a lot, is Longfellow. His famous line I can remember is, let your tomorrow be better than today. So one of my dreams about our friendship and partnership is, let the tomorrow of our partnership be stronger and be more beneficial to the people than today.
Thank you. (Applause.)
MR. KEMPE: Minister Li, not only could no one have said and put it better than you just did, and more poetically, but you've also unlocked the secrets to our sound system. So I think that was – (inaudible) – (laughter).
As to "Hadley," I don't know the derivation of your last name – (laughter) – but I wonder if you could carry this discussion of the great-power relationship just a step further. You know, we all know that there are bilateral issues, and there are tricky ones. And they come up every day, whether it's cybersecurity, Taiwan or NSA, whatever else. We also know that our publics – and there's domestic politics involved in this as well. So I wonder if you could carry this a step further. What do you mean when you talk about a new model of a great-power relationship?
And then how do you transmit this to our publics? What issues are there there, and what sort of bilateral issues – I don't mean to pile on too many questions on top of this – do you see as most in danger – (inaudible)?
MR. HADLEY: In meetings between U.S. and China officials that I witnessed, they would always start with the neuralgic bilateral issues, and they would always focus on the problems of the relationships. And after a couple hours, you'd sort of say, you know, this is going nowhere. And I think one of the things about a new-model great-power relationship is to change the agenda. And we talk too much about the problems of the relationship, not enough about the potential of the relationship.
And that's why I would have the agenda of U.S.-China conversations start with these multinational challenges, the kinds of global challenges in the report, and start identifying ways in which we can cooperate productively together to solve them. And if we can build some momentum on those issues, I think they provide a better and richer context for dealing with some of the neuralgic bilateral issues that might get in the way (inaudible).
I think one of the things about this new relationship is to not set too high expectations. It cannot be that, well, we have a new power of great-power relations, that means the United Sates has to accede to every complaint that China has, or vice-versa. This is something – Brent said, I think, it doesn't mean that we won't have disagreements, it doesn't mean that we won't have differences, but we will have them in a context that we can manage them better.
For example, it is going to require each of us to accept some behavior on the part of the other that we will not like, in order to not derail this new model of relations. The Chinese military is going to get bigger as the Chinese economy expands. It just is. And if Americans think that we're going to somehow be able to cut that off, we are not. We're going to have to accept it and figure out how to manage it. Similarly, China is going to have to understand that the United States is going to continue to be present militarily in Asia and we are going to continue to keep our commitments to our allies.
I think that's actually good for China because I think our presence is a source of stability. But it is the kind of conversation we're going to have to have so that this new model of great-power relations isn't pie-in-the-sky, isn't that all our differences are going to melt away, but in fact we're going to have a new context in which to discuss those differences in a productive way. There will still be competition. There still will be differences. There still will be hedging behavior. But if we can have an agenda where cooperation is the dominant theme, it can – and a candid conversation between our two countries, we can manage, I think, these other things.
I think one of the things we can talk about at some point is how you explain this new model of great-power relations to our two populations so it is sustainable politically. We'll be talking – can come back to that. I think the thing that most likely to threaten it is actually in the military sphere, not being able to manage what I just described, trying – the expansion of the military and the American need to be present in Asia. I think that is the area where it is the most problematic, and that is why I think it was so encouraging to hear what the ambassador said about the growth in military-to-military exchanges and conversations that he was a witness to.
MR. KEMPE: Thank you, Steve.
Chairman Tung, I wondered – you heard already the other three speak, so you may want to respond some to what you've heard, but also the same question, great-power relationship. But if you're looking at this great-power relationship, is the current set of institutions adequate? Do we need new institutions? Does the U.S. – do U.S. and China have to work on that? Or can we reform this in order to accommodate the rise of China? But address also what you've heard from the other three, and then we'll try to get to the audience as soon as we can.
MR. : Thank you, Fred.

New power relations. I think we don't want the old power relations because what happened was that in history – (inaudible) – a rising nation and the existing superpower actually went to war a couple of times.

Now, we don't want this to happen. President Xi said – (inaudible) – we don't want to go to war with the United States of America. And I think it goes the other way also. America doesn't want to go to war with China. So how do you build this new power relationship? It's a – it's a relationship of peace and, from there, prosperity.

The paper has actually very well reflected many, many of the multilateral challenges – (inaudible). And working together, the two countries, and together with other countries, I think will make a huge difference – (inaudible) – of the world if we work together.

And our bilateral – (inaudible) – if I may, I just want to emphasize, on issue like agriculture, China has 7 percent of the world arable land but has to feed 20 percent of the world population every day. And as – and so far, China's doing all right. We can manage this. But as our population move into city centers, as urbanization continue, eating habits will change, and we'll consume more food if we are urbanized – (inaudible) – 50 percent more food. So there's a huge need in China in the longer term.

United States, you're blessed. You have all the land you want, beautiful land, beautiful weather and very fertile. And you can produce for whole world. If the farmers are asked – (inaudible) – not to produce.

So there's a complementarity. How do we work together? It helps China. It helps the United States. And then we need to work together. And then – you know, the Chinese farming is small in scale, family-driven, and your farming is with modern enterprises, technologically very advanced.

So how can all this add up to make China's farming more productive? These are some of the real issues.

The Chinese are huge savers, huge savers. And we'd be very happy to have the opportunity to invest in America in almost every form. How can we work these things through? And I'm very happy that this discussion are by two governments – (inaudible) – on the bilateral investment treaty has now started. Ambassador was talking about it, S&ED dialogues, which was one of the result of the S&ED, dialogues – (inaudible).

So there are lots of areas complementarity. And there are also areas where we have to work together. United States and China are the two largest consumers of energy. We are two largest producers of energy. We're the largest producer of greenhouse gases. But if we really work together – (inaudible) – we can make things happen to this world – (inaudible) – our energy security. And these are the areas which actually you called for – (inaudible). That's just thinking about two or three things, you know. I think you understand how the two countries really work together.

And one final thing I want to say is that – before I answer your question – is that, you know, China has moved away or tried to move away from a export economy to one that is driven by domestic consumption. And it is coming along very, very nicely. It is coming along very nicely. And this is important to know because wealth creation is also happening in China, individual wealth creation is happening in China.

And, you know – (inaudible) – has forecast by 2022 the Chinese middle class will be in excess of 600 million people, which is a huge number. And at that time Chinese domestic consumption will have obviously – (inaudible). And the Chinese influx from the United States, China – (inaudible) – will replace Canada as the largest importing nation of the United States.

So all these things are happening. And it helps in a way the United States on job creation. But it also helps China in many different ways. America can do so many things to help China and vice versa, create more jobs and makes – make things happen between the two countries. That's why I said earlier on this interdependence, which is beginning to gather momentum, every day that we see it's happening.

I can go on, but I just want to answer your question.

MR. KEMPE: And – (inaudible) – question of institutions, let me raise that also for the other three, and then we'll go to the audience.

MR. : OK.

MR. KEMPE: But the real question is, can the institutions we have accommodate this bilateral relationship, this new power relationship, or must we together act to reform the institutions or create new ones?

MR. : I think China is a net beneficiary of being part of the multilateral institutional arrangement. China is a net beneficiary. China is trying to be proactive and participate – (inaudible) – WTO, WHO, World Bank – (inaudible) – and so and so forth. That's number one point I'd like to make.

The second point I'd like to make is that the emerging nations, as the economy grow, they would like obviously to see a larger say in how the institutions are managed, and China is part of that, the emerging nations. But I think it can be done not in a revolutionary but in a evolutionary way. Progress continue to be made in such a way that the voices of the emerging markets are heard more and more, and their views are not only known, are taken forward.

And so I think there is a evolutionary way of coming forward. And obviously, United States, China and the other nations need to work together to find this evolutionary of moving forward. And I think it's important for us not to be too patient, but on the other hand, need for us to understand that a evolutionary approach is probably the best approach.

MR. KEMPE: General Scowcroft, can you tackle that one as well on the institutional issues? Evolution, revolution, you know, maybe even taking a look at the United Nations as an example, or maybe you may have another one to pick out. And then I'll – after General Scowcroft – (inaudible) – unless anyone wants to interrupt here and comment, I'll go straight to the audience.

GEN. SCOWCROFT: The nature of the world environment is demanding international organizations. More and more of the things that a country needs, whether it's – whether it's health care, whether it's agriculture, whatever, can only be gotten by cooperation with other countries.

The institution we have to deal with that is basically the United Nations and a lot of auxiliaries. The United Nations was built in a world which has disappeared. (Inaudible) – crises, like, for example, the representation of China on the Security Council. One could easily say we need to start over again. The world has changed, so the United Nations is too crippled by an organization which was for a world which is gone.

My own sense is that while that is true, starting from scratch would be an enterprise that would be very difficult for us all. I think better to take the United Nations and modify it in a way that makes it more useful both for the growing middle class of the world, which is now unrepresented, and also more equitable in the way it deals with problems. I don't have a precise organization for it, but we in the United States sort of ignore the U.N. now, other than when we want the Security Council to do X, Y and Z. But in terms of representation of the world's middle class, in terms of some of the fundamental things that are happening as the world evolves into a more cosmopolitan and unified structure, we don't pay any attention to it, and we need to.

MR. KEMPE: And unless – Minister Li or Steve Hadley, do you want to step in here?

MR. LI: Yes, one thing. I agree that – you know, that we might need some reform. One of the ideas I have is that – (inaudible) – discussion will involve more and more young people – (inaudible) – the young people represent the future of all our bilateral partnership as well as the future (even of the world ?) in America. Now we have at least 70,000 students studying at your colleges and universities.

MR. KEMPE: Seventy thousand Chinese students?

MR. LI: Yeah, Chinese young people here. In China, we have 9,000 American young people studying in China's universities and colleges – (inaudible) – I think it's essential and important.

MR. KEMPE: More and more American students in China, more U.S. students in China to match the 70,000 – is that what you're suggesting? (Laughter.)

MR. LI: I'm not – really not. (Laughter.) But we have too big a population. We can afford to send more young people to this side of the Pacific, but maybe not vice versa. (Laughter.) But I thank you for the idea. (Laughter.) (Inaudible) – whenever in this (good ?) country, I think of my teachers. When I was a freshman and sophomore, I had one teacher from California – (inaudible) – my teacher was from there, and she taught me – (inaudible) – language from ABC – (inaudible) – be very careful about not only vocabulary but also about grammar and so forth – (inaudible) – the English language. (Only ?) in China, we have more people learning English than the total American population. (Laughter.) So when I (released paper ?), which I highly recommend it to (our ?) young audience – (inaudible) – but only one (amendment ?) – (laughter) – (inaudible) – last sentence of the whole paper – (inaudible) – the last line or two, I share with you. The last line – (inaudible) – to both the United States and China and to the rest of the world, I believe – (inaudible) –

MR. KEMPE: (Inaudible.)

MR. : (Inaudible.) (Laughter.)

MR. LI: This was probably three years ago – (inaudible) – American – (laughter) –

MR. KEMPE: Thank you – thank you for – thank you for that – (inaudible). (Laughter.) (Inaudible.)

MR. : I can't follow that. (Laughter.)

MR. KEMPE: But yeah, if all we disagree on in the future are grammatical and – (inaudible) – then I think we're in good shape.

Any questions, comments? Please. (Inaudible) – yeah. And also say who you are and who you would like to direct your question to.

Q: (Inaudible.) I'm Garrett Mitchell, and I write The Mitchell Report. And I'd like to ask General Scowcroft if he could expand – (inaudible) – amplify, but I think we fixed that problem – if he could expand on this very interesting notion about the important distinction about disagreements and misunderstandings. And one of the ways that I've been trying to think about that intellectually, conceptually, makes a great deal of sense. What it raises for me are whether there are current examples – it's hard to anticipate the future – whether there are current examples where we might describe them as disagreements, but perhaps they are also a form of misunderstanding. And just to use a couple of easy examples, the disagreement about Syria and about Egypt, for example, the different approaches that the U.S. and China have to these two problems, but we could list others – it's easy to describe them as disagreements. I wonder if they also, in your judgment, have some fundamental form of misunderstanding about each other's intentions and motives.

GEN. SCOWCROFT: That's a very good question. Let me – let me use an example. We, the United States and China, disagree frequently on the national – on the Security Council about intervention. The Chinese believe deeply that the United Nations should not interfere internally in the affairs of nations. We believe more and more on the responsibility to protect, that if a country is not – a leadership of a country is not – cannot or does not protect major elements of its population, it is up to the U.N. to intervene. Those are fundamentally different notions. And the U.N. itself is ambivalent about it. That is a difference of opinion, and we need to reconcile those kinds of issues. Differences of interpretation, meaning when we say something, we say it in the context of our own world, the Westphalian world, for example, of independent nation-states – the Chinese may interpret it within their own historical interest as meaning something very different from what we – (inaudible) – and those are the kinds of things we need to guard against very (sincerely ?). With someone who's a brilliant English speaker and corrects our own grammar, we don't have to worry. (Laughter.) But culture to culture, we do. That's what I mean by differences of interpretation and differences – and differences of substance.

MR. KEMPE: Back to Julia. (Cross talk.)

Q: Julia Chang Bloch with the Atlantic Council board and U.S.-China Education Trust. First let me say that I think this is a very important report, even though I haven't yet had a chance to read it. (Laughter.) But at first glance, it's obvious that this report takes a different or maybe new – I should say different approach to global relationships. And that is marked, I think, particularly by the very engaging remarks of Minister Zhaoxing because in what other august foreign policy expert or decision-makers group would a former foreign minister of a great country refer to American literature to talk about this relationship? What I'm suggesting is that finally I think we have serious institutions and serious people taking a departure from the traditionalist approach to foreign policy. And I wonder – (inaudible) – whether you have yet had any initial responses or reactions from, for example, the military or intelligence communities in both countries to your report and to your approach? Do you think that we finally will have a new way of looking at foreign policy because of your report?

GEN. SCOWCROFT: Steve?

MR. KEMPE: Maybe Steve Hadley and Chairman Tung could take a shot at that.

MR. HADLEY: I think that the ideas in the report reflect conversations that are going on within the intelligence community and within our governments, and I hope it would be – (inaudible) – say that, you know, policy discussions are not like science. You know, science, you can have one person see something that nobody else sees, they patent it, and they go make a gazillion dollars. But you know, for policymakers, I think a lot of smart people looking at the same set of facts – (inaudible) – so I think what you are seeing here is an evolution of the relationship. And I think one of the reasons it's changing is because China's perception of itself in the world is changing. I'll give you one example. Like a lot of American policymakers, I would have conversations with the Chinese about intellectual property protection. And I would go on and on about how important it is.

And I would say at the end of my presentation, you know, intellectual property protection is not something that China is going to do as a favor to the United States and the West; it's something China needs to do for its own purposes and continue innovation. And that would largely fall on deaf ears. But after I left office, 2011 or '11, I went to see Dai Bingguo, who was then state councilor and who I'd had a lot of these conversations with, but we had a nice conversation for an hour and a half, and I said to him, State Councilor, we should probably talk about intellectual property protection since we talked about it every time we got together. And he said, well, let's do that, but let me tell you, Mr. Hadley, that intellectual property protection is something China does for its own purposes, not as a favor to the West. Well, you know, he had gotten it. He had gotten it, and the Chinese officials had gotten it. Innovation was going to be the future for China, and for that they needed intellectual property protection. So I think that part of this misunderstanding is if we can have these sustained conversations as China changes and sees its role in the world changing, it is going to actually begin to understand some of the positions that we have taken, and we in turn, I think, will be better able to understand what China's doing. So I think this is going to be a process that has been underway, and I think a lot of voices in this town hopefully will reinforce it.

MR. KEMPE: Chairman Tung, would you like to comment on this? No?

MR. TUNG: Julia can help. (Laughter.)

Q: I asked the question. (Laughter.)

MR. KEMPE: Please.

Q: Ed Timperlake. I'm the author – or editor of Second Line of Defense, a U.S.-French national security publication. And the question is for the Chinese honorable gentleman. In 1994 I traveled to – (inaudible) – to initiate an effort to rebuild the elementary school systems, headed up by Vietnam veterans. We've built 48 so far. Consequently, at that time in dealing with the Vietnamese, I found that quietly and professionally, they're very proud of the fact that their army blunted the PLA invasion to the hill country to the north of their border. There was a dustup. The U.S. had nothing to do with it. It was – (inaudible) – anything we could control – (inaudible) – consequently, today as I'm speaking – your intel may be better than mine – the Vietnamese are going to take possession of the first Russian submarine, a Kilo submarine – (inaudible) – going to Cam Ranh Bay as I'm speaking – (inaudible). So we see the Vietnamese coming up and the mobilization of military scale here. It's a game-changing submarine. It's announced this morning, I believe, that the Philippines may ask us to go back to (Pacific Bay ?), and Japan is very concerned. So I'm going to take Steve's elegant question: How do you explain this? How do you explain that your neighbors are very concerned about your words and your actions? And from your perspective, how do you explain the – and justify, or not, the American Air-Sea Battle, the pivot to the Pacific to honor a treaty commitment? What's your view of all this?

MR. : Can I respond?

MR. KEMPE: Yes, please. Actually, I think the question is how does one manage these sorts of questions and issues in the context of the new model of power relationship that we're talking about.

MR. : I was hoping someone would ask me this question. (Laughter.) Let me say this, that you know, if we're looking through history, wars just create a structure – (inaudible) – (nothing gained ?). In the first world war, when it ended, every country in Europe went bankrupt -– (inaudible) – eventually. And after the second world war, the same thing happened. And I think, if you asked the leaders, you know, oh – (inaudible) – and in Asia, at the end of the second world war, every nation promised that – (inaudible) – bankrupt.

And the lesson is that war doesn't help anybody. Doesn't solve any problems. And it's really pursuing peace you can get prosperity – create wealth for the people. Everybody wins – (inaudible). And that's certainly China's objective.

Number two thing I want to say is this: China has 14 neighbors. And the United States – you have no idea how lucky you are. You have the Pacific and the Atlantic, and they don't talk back to you. And then you have Canada and you have Mexico, and China has 14 neighbors. And of the 14 neighbors, since the second – since 1949, after the establishment of People's Republic of China – (inaudible) – with 11 of the countries – territorial dispute has been resolved. There are three more to go. China is working very hard trying to get peace and to find solutions. And in the interim period, the situation was complicated because the United Nations, in the '80s, you know, started working on this (combination ?) of the sea – Law of the Sea. And in the '90s, it become part of United Nations requirements.

What does – what does it do? Among other things, you get 200 nautical miles (economic ?) zone off your shore. And when that happened – that's a new thing – when that happened in South China Sea, East China Sea, you see a lot of areas where each side has claim of the same piece of the ocean. So it's not as though China suddenly discovered what's happening. It's because of the United Nations Law of the Sea. There is a huge change, you know? So suddenly, Chinese fishermen go to fishing in South China Sea for decades – hundreds of years – suddenly, the other nations say, hey, I have a – (inaudible) –

So what I want to say to you is that these are issues that need to be resolved, but the only way to resolve it is through peace. Now, China cannot give up its territorial – territories, because, from the Chinese point of view, some history, integrity of territories – (inaudible) – but what China is trying to pursue is to say, look, let's find another way, you know? I'm going to claim the territory; this is ours. And as the Chinese, I won't give it up. You can claim the territory, but let's shelve this argument – let's share what is the wealth down there – let's try to ensure there is a free passage for all the ships to go by. Right as we speak, the ASEAN nations and China, just last week had a meeting trying to work through this code of conduct for South China Sea, and with Japan, there was an agreement until not too long ago when this particular item was a national – (inaudible) – and so on and so forth.

We – but China, we don't want to go to war over this. We have to find a way out of this. But let me say this to you: The future of Asia depends on how smart the politicians are in securing and protecting peace. And that's what we are trying to go for.

MR. KEMPE: General Scowcroft, I see you nodding your head.

GEN. SCOWCROFT: Yes, I agree very much with what Mr. Tung said. I would only add, the United States has not ratified the Law of the Sea convention; we have no standing in any of this.

MR. KEMPE (?): Yeah, on the – on the South China Sea issue and these various issues that C.H. Tung was talking about – how concerned are you that this is a potential problem spot – if that's the right –

GEN. SCOWCROFT: Well, I agree with Mr. Tung that one, in a way, has to set sovereignty aside – sovereignty is not divisible. And some of these go back centuries, and who owns them and so on. I think what – the solution is to set sovereignty aside. What's important is not a rock sticking up in the – but the resources, the fishing resources, the mineral resources underneath. And those can be rationed or allocated, and we do it all the time in the open sea. We have fishery conventions that deal with – the problems themselves are solvable. The issue of sovereignty needs to be set aside.

MR. KEMPE: Thank you. Questions? I see one here. And I'm a little – I'll watch around this – (inaudible) –

Q: (Off mic) – focused on – (off mic) – I was going to bring – (off mic) – my question was going to be on cyber – the question of cybersecurity; and the sort of prominence in the U.S.-China relations during this year, both for – (inaudible) – but in particular – (inaudible) –one of the critical – (inaudible) –and the question is, do we actually – (inaudible) – do we have the right institutions? I mean, now there is a dialogue – (inaudible) – between China and the U.S. that came out – (inaudible) – Strategic and Economic Dialogue is that – (inaudible) – aggressive, is there – (inaudible) – question of cyber, and do we have the right institutions – (inaudible) –

MR. KEMPE: So let's throw that together. So cyber realm – how do we address this institutionally, bilaterally? Who wants to jump in? Mr. Li? Tung?

GEN. SCOWCROFT: Well, I'll just start. Cyber is one of the vexing issues, because it is technology moving forward. First, all we had to worry about was mail being intercepted. That was a pretty arduous task. Then we got telephones. But to get into a telephone hook, you have to do something physically to get into it.

Now we have cyber, which was designed as an open way, and open to anybody, and we don't know how to control it. We need to have serious, frank discussions of what this means and how to do it, and we're just playing around the edges of this at the present time. I think it's an excellent example of the world technology – globalization and technology moving us forward past our political ability to deal with the problem.

MR : And whether we do it bilaterally –

MR. : I think you start bilaterally.

GEN. SCOWCROFT: I think you start bilaterally, and then, when you get a general framework, then you move it into a worldwide framework. But don't start worldwide or you'll never get anywhere.

MR. : I would like to add to what Brent said is that, in fact, Strategic and Economic Dialogue, which met in July in Washington, and a month after the – (inaudible) – actually, a couple of subjects should be – (inaudible) – these issues, and that both sides having to produce additional data to try to confront these issues. And so that's number one.

Number two is that the cyberspace itself has no – no international regulation. If something needs to happen, and I suppose S&ED will actually discuss these subjects in the meetings ahead. So something is going to happen.

MR. KEMPE: Steve, as Brent said, this is one of the most vexing areas of the bilateral – (inaudible) –

MR. HADLEY: It is. We don't know the solutions, and I think this is a case where it is a good thing for the United States and China to be having such a candid dialogue. I think we're actually structuring similar dialogues with Russia; Europe has a big interest in this, and I think this may be something builds to a trilateral conversation between China, the United States and Europe. But I think we need more – we need to build up our intellectual capital first to get an understanding of this problem, which has five or six different dimensions, and distinguishing between them is – you know, is a starting point.

I think only when you've made that kind of investment, both in government and outside of government – (inaudible) – they're talking about, what kind of international regime, if any, would be appropriate? Because, you know, the power from cyber and all the innovation, of course, comes from the private sector, and it has really transformed our societies in ways that are very positive in some respects and negative in others, and I think we need to start a dialogue with – between and among countries, make some intellectual investment, and at some point, the time will come back to say, well, what kind of international institution is appropriate? But I don't think we understand the problems well enough now to move forward on that. I think we'll get it wrong, and I think we may stifle the kind of innovation that is really transforming our societies in lots of positive ways.

MR. KEMPE: Question here.

Q: (Off mic.) I'm from China, and I'm a junior student at – (inaudible). My question is for Mr. Li Zhaoxing. Facebook – (inaudible) – China last week. I wonder if there is a possibility for China to unblock Facebook in the future. (Laughter.)

MR. : There you go.

MR. KEMPE: Is there a possibility for China to unblock Facebook in the future?

MR. ZHAOXING: Well, I'm really a so-called outsider in this area, however, I want to recommend to you a document which I feel all of us should read, no matter whether we have bilateral discussions or lateral – multilateral discussions, and that is the U.N. charter, to which my friend the general has just referred.

In the U.N. Charter preamble, it reads, even the U.N. itself has got no right to interfere with member states' internal matters. So I believe we will let each sovereign country to decide for itself on its internal matters – policies or matters to take. And on that basis, on the principle of the authority among nations big and small, we can hold bilateral discussions. It is not abnormal, our differences. However, it is abnormal to – (inaudible) – and to try to resolve them through nonpeaceful means. This is what – (inaudible) – I hope that we are so near the headquarters of the U.N., they have more reason to read and abide by the U.N. charter and the charter's spirit. Thank you.

MR. KEMPE: Thank you for your question. Please – (inaudible) – one after another.

Q: Hello. I'm Julia Wilson with Wilson Global Communications. Thank you so much for holding this important discussion. One of the things I've noticed in going and back forth to China is that Chinese people seem to know more about Americans than we know about them. There are many more students studying here – there are many more of them coming here and learning our language better than we know our language sometimes.

And one of the things – the important things that Mr. C.H. Tung and the China-United States exchange Foundation has been doing is to bring American students and faculty and civic leaders to China to let them learn about China, to understand its culture and its history and its language. And I think that is such an important way to begin these bilateral talks – from a people-to-people point of view. And he works a lot with an organization called the Friendship Association, and I'm wondering, for the Americans – maybe Steve – if there's any comparable effort or organization here in America that is reaching out to China and ensuring – and helping to ensure and working with Mr. Tung and getting Americans over to China to learn more. Thank you.

MR. HADLEY: I can't (preside ?) on that. I think, though, the number of high school students that I know that are going into junior year and studying in China, or college students, like my own older daughter spent a semester at Tsinghua, I think that you know, in some sense, there are organizations doing that; we should do more of the people-to-people exchanges are a terribly important foundation for the relationship over the longer term. I think a lot of that is going on, mostly because of the curiosity and interest of this younger generation, which is traveling a lot more than my generation ever did. You know, my idea of going – you know, going to a foreign country was going to Canada, you know, and my daughter's, you know, been all over the world at this point.

So I think more can be done, more should be done. I think our educational institutions are doing a pretty good job in that respect. And it's an important foundation for the relationship going forward, no question about it.

MR. KEMPE: Thank you for your question. I see one right here, as well.

Q: Thank you, my name is – (name inaudible) – and I am the communication director for – (inaudible) – group. I'm also the editor for the – (inaudible) – China desk, which is a bilingual magazine about U.S.-China relations.

So our company does some work on the local level to help a citizen develop a relation between U.S. and China, in particular at local level. So I read the report and I very much agree with where the report says, the future of the globe – the global future will depend on the depth of the U.S.-China relationship. And I think, speaking of depth, other than working on a national level, the local level, some (nationalism ?) is also important.

So I'd like – I'd like to ask the panelists, what kind of suggestions you have in terms of developing a better, stronger tie at the local level between the two countries? And what kind of expectations you have in terms of how strong this kind of local tie can become, let's say, by 2030?

Thank you.

MR. HADLEY: You're beginning to see some of that already. The National Governors Association of the United States are reaching out to governments and provinces in China. My friend Hank Paulson, for example, had a conference, U.S. and Chinese mayors getting together and talking about common problems. I think forcing this relation down, both in the national bureaucracies, but also, down into civil society, and then into government at lower levels, is a – is a very good idea.

I think it's beginning to happen; I think it's (already ?) happened within issues in the private sector, quite frankly, (with ?) the federal government, but that's OK.

I think what you want to have in order to, as Brent would say, manage differences, but avoid misunderstandings, is you want to intensify relationships all the way down at all levels in society. And that's what is beginning to happen now, and I think it's what needs to be encouraged. And there is – you talked about earlier – extremely important and beneficial to those officials, both with China and the United States.

MR. KEMPE: (Inaudible) – (Tung ?), do you want to touch on this?

We're down to our last five minutes; I see a couple more questions. I'll try to get to you here. (Inaudible) – let's see if we can take these; I'm not sure we'll have time for all three; we'll see.

Q: Hi, my name's Eric Johnson; I'm with the China and Latin America Program at the Inter-American Dialogue, and actually a recent graduate from the University of Hong Kong, so I couldn't agree with you more for increasing the student-to-student exchange.

And Steven, you raised an example of the Chinese (altering ?) the perceptions on intellectual property rights. And I'm wondering if any of you could give an example of how the international community or the U.S. has actually altered its positions or any aspects to – here to answer – (inaudible) – on the Chinese side?

Thank you.

(Off mic conversation.)

MR. HADLEY: That is a wonderful question. (Laughter.) And a fact that us four are seeing figures are sitting up here and no example comes to mind, that is very interesting – (inaudible) – and I cannot – I cannot give you that example. And – (off mic) – the question is, can I give an example about Chinese began to understand differently their perception of intellectual property protection, could I give an example – could we give an example where the United States' understanding had changed an issue of concern for the Chinese through this dialogue process?

MR. TUNG (?): I'm not sure if I'm answering the question, but I just wanted to tell you last year, there was – (inaudible) – Hollywood movies – I – (inaudible) – Hollywood movies – (they were in ?) China and they – (inaudible) – off the box office of China, so what does that mean? It means intellectual property must be – (inaudible) – protected, otherwise, how would you get such large box offices? I don't know if that answers your question or not. People clearly don't recognize this, but this is what happens.

MR. KEMPE: So as I said, we're down to the last five minutes. I think I'm going to do a last round – a last round of one – (inaudible) – for each of you on the following question, that I think is really – with one minute, so just one example. In a pre-meeting we had, we had a very interesting conversation about threat assessments and opportunity assessments, so maybe we have to go to opportunity assessments in the present.

I'd like to go down the line with you and have each of you talk about the one issue where you have the most concern for the relationship, whatever it may be, very short, and the one opportunity, what you think the biggest opportunity is in the relationship. And again, not long answers, but just short phrases or words. I don't know whether, Steve, you want to start there and we'll come down from left to right.

MR. HADLEY: I, you know, started to answer what you had. I want to try to take a stab at this question, and I think it's going to be very brief, because I think in some sense, the American response to China is not a single issue, but where we are now with the Chinese relationship (isn't ?) where we were four years ago. I mean, it has positively transformed. You know, our friends in China say the United States wants to keep China down. You know, if you – want to keep a country down, you don't have the kind of great relationship we have with China; you don't have 300-plus billion (dollar) trade deficit with the country. You don't try in some sense to sponsor and encourage China in its efforts to become part of the international system to join the WTO and all of these other things.

So I guess I would say that where we have listened to China and responded to its aspirations is, rather than trying to keep China down, even though China is a potential competitor for the United States, we have, in fact, done just the opposite and have cooperated with China in order to try to become a more peaceful, prosperous country that is a constructive part of the international community. And I think that's a great accomplishment for China, great accomplishment for the United States. And what we're talking about here today is to how to make sure that kind of constructive relationship continues in the future.

MR. KEMPE: Thanks very much. The – and then the very quick answer, maybe that's the answer – (inaudible) – well, what concerns you, in short?

MR. HADLEY: It's the military piece. It's the military piece, it's managing our relationship with China, and then, quite frankly, helping friends and allies in the region have a constructive relationship with China, as well. I'm less worried about the South China Sea than I am about the East China Sea, quite frankly, which I think is, in some sense, more complicated by the fact that we have – (inaudible) – with Japan that puts in some sense, us involved in this – I think the management of these – of the military piece of this is where we could really come – (inaudible) –

MR KEMPE: Quickly, Chairman Tung – (inaudible) – sorry.

MR. TUNG: I think this opportunity to pursue the peace in Asia, because at the end of that rainbow is an American prosperity, not only for Asian people, but for – across the Pacific for (these battles ?).

MR. KEMPE: Thank you, sir.

MR. TUNG: Concern, we've got to go for it, peace, peace, peace, in Asia.

MR. KEMPE: Yeah, General Scowcroft?

GEN. SCOWCROFT: Concern – like Steve, military. There's an instinct in the – in every military to see the enemy and to prepare for enemies; that's what militaries do. That controls the government – (inaudible).

Opportunities, I think in a – in a rapidly changing world, which none of us understand very well, opportunity – (inaudible) – to working together and understanding where these trends are taking us, technological, political and so on, and to join together to deal with the consequences.

MR. KEMPE: Thank you, and Minister.

MR. LI: Just two points for me, one: I'm so happy to find another common ground that is entirely – (inaudible) – I'm so happy to hear that we have – (inaudible) – even a Tsinghua student – (inaudible) – so we have a common ground.

MR. KEMPE: Yeah, yeah. (Chuckles.)

MR. LI: So one suggestion is we hope to make joint efforts to further expand our exchange between our two countries, the young people are never too concerned. They will have more chances to talk to each other if you acted – (inaudible) – understand each other even better, for instance, on the issue of the South China Sea. I fully share the points made by Chairman Tung and I also want to quote something from Ambassador Mr. Cui when he talked about the Diaoyudao issue in the East China Sea. He told some of his friends here that this is not enough not to let the Japanese stone to drop on your own feet. I think this is well said and it's very pragmatic.

Last but not least, I hope, along with – (inaudible) – change in the field of education, the Chinese language will be more and more learned to our friends here. And one of the things – Chinese the language is much easier to learn than English. (Laughter.) But one of my dreams is when we talk about the year 2030, I hope you will have a similar session with you, my friend, again as a host – against, in the year 2030, we might have the Chinese language as the working language. (Laughter.) That's my dream . I hope that will come true.

Thank you. (Laughter.) (Applause.)

MR. KEMPE: Let me just say three very short things in closing.

First of all, the Atlantic Council is not naïve. Our partners CIIS and Tung's organization – they are not naïve. We know how difficult these challenges are to get this new power relationship right. But we also know the difference in 2030 and beyond in a world where we do get it right and a world where we get it wrong. And so we at the Atlantic Council are committed to this, to continuing this course that we've set with this work of thinking and acting together and in a much more cooperative and positive manner.

And Minister Li said this was a good beginning. I think that's right, it's a very good report, excellent report. But most of all, it's a good beginning for the work that we want to do in the future.

Second thing I want to say is I want to thank the Atlantic Council team that put this event together, and I'll tell you, as we were going through the sound problems, the great thing about this team is I know they're twice as concerned about this as I am. And so – and so that's the kind of high-performance team I love working with, and thank you for fixing the problem.

And then finally, thank you for these great panelists and to the ambassador and to Matt Burrows for the opening statements. Thank you very much. (Applause.)

(END)

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