 Anyway, listen, warm welcome on a chilly Canberra morning to people who come from far and wide. Welcome to the Australian National University. There's been innovation and learning going on on this site and this region for thousands of years. And so the university, especially at major events, is always proud to acknowledge and celebrate the first Australians on whose traditional lands we're meeting and whose cultures are among the oldest continuing cultures in recorded human history. You're here for a really special event. Junior Pacific Week is about this university trying to reach out across the country, across the region, across the world, to bring together people interested in learning about and shaping the future of knowledge about what's taking place across the region. I'm looking to bring together the best and brightest of the rising generation from across the region and across the world. Our objectives here are quite basic, but they're important objectives. First and foremost, we're just interested in expanding, deepening, extending knowledge and understanding about what's taking place in the region. Second, we're trying to build up personal and professional links amongst all of you as delegates between you and various speakers and participants here so that there's connections that you can hang on to and make use of later on. And third, we're trying to strengthen organisational linkages. There's many organisations that have come together to make this work, and let me just single out one network of organisations that's been particularly important in making this event come together, and that's the International Alliance of Research Universities. There's a number of interesting alliances of universities around the world. This one's pretty interesting. Apart from ANU, it's the National University of Singapore, Peking University, the University of Tokyo, Berkeley, Yale, ETZ, ETH Zurich, Copenhagen, Oxford, Cambridge. It's an interesting mix around the world, and that alliance has played an important part in pushing this week's meeting forward. You're a pretty interesting group. A hundred delegates chosen from a pool of 635 applicants from across the world. From 24 nationalities across 44 universities. So it's quite an interesting mix of people. You've got, I think, a quite extraordinary week ahead of you. Starting with this panel that's just about to have the starters gun-fired on it so it can get rolling. Looking at the transitions of power across the region through to a whole series of country and regional panels, master blogging challenge, a war game simulation, the inaugural Q&Asia debate, and of course lots of social activity, which is really important to making these things work. But that coming together with a gala dinner on Thursday nights at Old Parliament House, which should be a lot of fun. And one of our particularly interesting former Prime Ministers, Malcolm Fraser, is going to be giving the address that evening. There's lots of people who need to be thanked for all the work behind an event like this. I'm not going to do that here. I'm just going to mention a few people because it would be a crime against humanity if I didn't. Or a crime against nature or something pretty major and deans don't like to do those sorts of crimes. I need to mention several of my colleagues to begin with. Peter Drysdale, Andrew Walker, Nick Farrelly, Darren Boyd and Jude Shanahan, all who are key people amongst the staff of ANU for making this work. We shouldn't get too carried away with them. Nearly all of them get paid to do this. I said nearly all of them because one of them was shaking his head. He'll probably give you a commercial on himself in a little while. But there's a few people who aren't paid to do this. It gets even better. They pay for the privilege to do it. That's the students, Sam Wall and his colleagues in the organizing committee who have done the great bog of the hard work and the imagining to make this possible. I just want to quickly read out names. I'm sure you'll meet these folks as the week progresses. Apart from Sam Wall, Elizabeth Rezide, Alex McAvoy, Rommel Varghese, Belinda Miller, Brody Warren, Fede Malcolm, Henry Chung, Samantha Chong, Millie Green, Ippie Mondal and Kyle Barnes. Big thanks to all those folks. I look forward to meeting them. The ones that I haven't had the chance to say hello to yet personally as the week progresses myself. Let me just finish with a quick word about us, the ANU. I mean, you hear in winter which is a bit unfortunate. Canberra by Australian standards has pretty miserable winters. But you hear it might be a cold time, but it is an interesting time. There's lots of interesting things going on this week. Apart from Asia Pacific Week, let me just mention a few of them. There's the 17th annual Asia Pacific Model UN conference going on here this week. There's a special ANU Central Party School of the Communist Party of China symposium on governance going on this week. There's the 40th Australian Conference of Economists going on. There's a workshop on interpreting historical sources in the Pacific. There's a seminar that's just started that I have to race through straight after this on the government, the Australian government's response to a very important independent review of our aid program. There's the China Update, which is the biggest, most august conference on the Chinese economy going on anywhere in the world outside China. There's the China Studies of Australia Association annual conference going on this week here. There's the 72nd Morrison lecture on China, which I think you folks will be involved with. There's a seminar on the impact of terrorism on India-Pakistan relations. There's seminars on development, globalization and Islamic finance in contemporary Indonesia. And there's the Indonesian students postgraduate students workshop going on. So all of that's going on this week. So people are going to be racing in and out of multiple things, but I mention that because it illustrates something about which this university is really proud. And it's the scale of its historic investment in learning about Asia and the Pacific. In the English speaking world, this is the largest single concentration of scholars working on this region. And it's something we take really seriously. We see ourselves as not just a national asset in this respect, but an asset for the whole region and the whole world. And so when I or the president of the university are visiting in Beijing or visiting in London or visiting in New York or Tokyo or Jakarta or wherever it might be, we're always saying there's a lot of expertise and capacity here at the ANU. And if we can be any help to you, we're keen to. So keep that in mind after you've had the fun of this week, after you escape back to wherever home is. Keep in mind that we might see you again at some stage in the future. Perhaps as a student, as a postgraduate student, perhaps as a visiting researcher, perhaps as colleagues, perhaps as users in some capacity or whatever, wherever your careers take you, perhaps as users of this huge knowledge base that's here. So we're keen to stay in touch with you by one means or another. Anyway, have fun, enjoy the week. I'm going to be in and out with you as the week progresses. It's time to get down to the serious business. So, Sam, do I just switch off and hand over here? Is that how it happens? Over to you, colleagues. Hi, welcome to the first panel session of Asia Pacific Week. And I'm Peter Drysdale. I'll be chairing the panel. This panel is focused on a theme which I think is rightly said to be one of the most important issues facing international community today, which is the transition of economic and therefore political power in Asia and the Pacific. As the economies of East Asia have grown, especially of course recently China and India coming up there as well, the structure of the international economy has clearly changed quite fundamentally. With that, there are a whole lot of other changes that impact on the world system as we've known it for the last 60 or 70 years. And how we manage those changes is going to be very important to our futures, a focus of incredibly important policy and professional interest over the next, well, certainly my lifetime and probably your lifetimes as well. And we've got a very distinguished panel to introduce us to the main issues that this brings before us today. And let me introduce the panel to you very briefly. First of all, Ross Gano. Ross is Distinguished Professor of Economics here at the ANU, Vice Chancellor's Fellow at the University of Melbourne, former Ambassador to China, former Advisor to the Australian Government, the Hooke Government on Economic Reform in Australia, Advisor to the Australian Government currently on climate change. I might ask him to say a word or two about climate change later on. And a graduate of the ANU Summertime Bank. Yiping Wang is Professor of Economics at the Centre for Chinese Economic Research at Beijing University in Beijing. Also Professor here in the China Economy Program at the ANU. Formerly Chief Economist for Asia of City Group and also a graduate of Renmin University in the ANU here as well. Deborah Broutingham is Professor in the School of International Service at American University in Washington and a specialist on Chinese impact on Africa in particular. And Hugh White is Professor of Strategic and Defence Studies here at the ANU and formerly Senior Advisor to the Australian Government on Defence Policy. So this panel will introduce the ideas. They'll speak for about 10 minutes initially, join in a conversation later on and then we'll open the floor up to your questions and comments. Ross. Thanks, Peter. I'm going to put the story of economic growth and state power into a long-term context to provide context for the rest of the panel discussion. Of the four billion years of history of this planet and the three billion years of history of life on this planet, the things we're talking about are relatively young. Our species is very young, a tiny bit of world history. And civilization, the growth of large-scale social organization and political organization, economic organization. The organization of people into states is a relatively recent phenomenon, mostly to do with the economic change related to development of agriculture about 10,000 years ago. The growth of civilization has been entirely confined to a tiny period of equitable climate and world in the history of this planet over these last 10,000 years. Almost inevitably we're going to move outside the climatic boundaries that have supported the growth of human civilization. There are some interesting years ahead which will interrelate with the questions about economic growth and state power in complicated ways. And in this relatively short history of our species and this tiny period in which large-scale human civilization has been present, the era of modern economic growth is shorter again dating really from the late 18th century, the revolution in probably most importantly in ideas about human organization and the decisive point in all that was the publication of Adam Smith's World Nations in 1776 alongside the industrial and scientific and ideological revolutions of that time. From then you started to get sustained modern economic growth at a considerable rate for the first time. That industrial activity related to science, related to use of markets, the emergence of capitalism, related to rising rates of saving and investment spread from Britain to Western Europe in the early 19th century then to the overseas offshoots of Western Europe which became more and more important. We began to see as a result of the industrial revolution at the first time the emergence of very large technological and economic gaps between some states and others. And it created a unique phenomenon in world history, the phenomenon of imperialism based on differentials in economic weight and economic power. It was that differential in the capital incomes, in levels of technology that allowed tiny countries like the Netherlands and Belgium to exercise power over very large populations, Britain over India. And at first the modern economic growth was a pinnacle of this new hierarchy of technological levels and living standards was confined, the upper echelons confined to Western Europe and its overseas offshoots in North America, Australia, New Zealand in particular. Through the 19th century that process strengthened, the differentials widened. The one exception to the concentration of the new ideas about economic development the new wealth, the new technologies in Western Europe and its offshoots was Japan. A very interesting story how Asia in general but Japan and China in particular responded to the growth of power of the West. China historically had been the world's most successful state and economy. It was so successful that there was great confidence amongst the Chinese elite that nothing could be better than what had developed there for thousands of years. Until the industrial revolution in the West Japan had been an honoured subordinate of China in a significant world of East Asia with an honoured place the Chinese emperor corresponding to with the Japanese emperor in classical Chinese the Chinese scholars never referring to Japanese as barbarians unlike people from other civilizations because they were cultured in the Sinitic civilizations but clearly subordinate. Well all of that broke apart because Japan being less strong than China less confident after a very difficult internal struggle decided that the retention of its autonomy required adoption of many of the successful new ways of the West and so you had the Meiji Restoration. Meiji originally brought to power as a reaction against the Shogunate leaders who were wanting to accommodate the new power of the West but in power the restored Meiji court came to the same conclusion as the people that they had overtaken and embarked upon the deep integration into the modern economy and that was reflected very quickly in an acceleration of economic growth in Japan so soon within a few decades Japan was one of the high-income high technology countries that had much more power than other countries and so that it became part of the system of imperialism with the invasion of North China, Korea, Taiwan eventually culminating in the tragedies of the 1930s and 1940s. Well that was the world of modern economic growth and power until the Second World War Second World War busted things apart in fundamental ways for reasons I won't go into and in the last half century we've had one after another countries of what we came to call the developing world setting out to absorb the wisdom that underlay modern economic growth and technological change. And we've learned in the last half century that there's nothing culturally specific or ethnically specific about economic success. It happens anywhere where you've got an effective state. You have to have an effective state and you adopt certain policies that consist with the absorption of technology opportunities for trade deep integration into an international economy. So we first saw the acceleration of economic growth in a few smaller economies in East Asia, Taiwan, Korea, Hong Kong, Singapore. The really decisive shift was the adoption of open policies and market oriented policies. Traditionally defined as having commenced in December 1978 when Dung shopping got the numbers in the third plenum of the 11th Central Committee of the Communist Party. Now scholarship is telling us to be a bit careful about the single points in time but certainly since 1978 China has been on a policy of consistent opening up market oriented reform enjoying rapid economic growth and several other big countries in the region adopted policies consistent with modern economic growth in the subsequent couple of decades. Most importantly Indonesia and I see the size of events in the mid 80s and India with when Manmohan Singh was finance minister in the macro crisis of 1991 began a path of rapid economic growth. In the long, well the newcomers to economic growth could grow more rapidly than the pioneers ever could because they can grow through absorption of technologies, ways of organization that have already been developed somewhere else that can happen more quickly than inventing new things as you go along as Britain did from the late 18th century and so the rapid growth of the new Asian economies the countries that are newly engaged in modern economic growth has been exceptional in historical terms and it's leading to rapid catching up of average incomes in the major Asian developing countries with those of the west. That catching up was accelerated by the global financial crisis where fundamental weaknesses in the political systems and the financial systems of Europe and the United States led to a change in trajectory, well certainly a long term one possibly a permanent one of slower economic growth in those economies without affecting at all the momentum of economic growth in China, India, Indonesia so within a big historical story the global financial crisis the great crash of 1908 to 2008 there was another great crash in 1908 the great crash of 2008 was an important additional turning point just one consequence of that is that catching up of China in scale with the United States is proceeding more quickly than people had anticipated before happening so quickly that it's taking people who think about power relations by surprise and so we've got to develop new ways of thinking about the international system more quickly than we might have otherwise had to do China has already some time ago overtaken Japan the power relationship between China and Japan has gone back to something more like it was through most of history and that requires some adjustment in both China and Japan China's not used to being more powerful than Japan that leads to a certain scratchiness that wouldn't be there if China was more confident about its position and in Japan of course there's quite a large adjustment in ideas required the catching up with the United States will be more rapid than people think not only for the reason I've mentioned but because once you reach a stage of economic development that economist Lewis called the turning point in economic development you get a rapid increase in real incomes as labour becomes scarce you get average incomes rising more rapidly then simple macroeconomic rates of growth would suggest and that accelerates the catching up so sometime not very long in the future China will be as big an economy as the United States by 2030 it's quite likely that China will be as big as Europe and the United States combined and that has some pretty clear implications for power relations that will be explored later in the panel that's not the end of the story of change in Asia growth momentum in India is very powerful when we first started taking a close interest here at the ANU in India and economic reform and growth and I think we established the South Asia Economic Research Centre I wanted to these things back in about 1993 after a conversation I had with my friend and sometime colleague Jagdish Bhagwati we used to say at that time that India wouldn't be like China because its savings rates were so much lower that that would place limits on levels of investment that were consistent with the economic stability but we found in India as in many places in East Asia and elsewhere that rates of savings and investment are to a considerable extent endogenous and Indian savings rates and therefore sustainable investment rates have been rising rapidly with rapid economic growth and so from a much lower base there's now very strong growth momentum in India all countries that have become rich have seen a demographic transition as incomes have risen the Chinese demographic transition much more dramatic than those of any other country because you've got imposed on that a powerful set of state policies in India you've got fertility and population growth declining very rapidly but in a less forced way one consequence is that India soon will be a more populous country than China and so the combination of a different demography and a very strong momentum in economic growth will mean that China will not stay forever the largest economy on this earth I'll leave it there Thanks for providing that perspective on the longer term change in Asia and in global civilisations you've become very thoughtful in recent years I think even more thoughtful in recent years is probably because of dealing with climate change but let me now turn to Yiping Wang China is obviously a big part of the story even though as Ross said it won't be the biggest part of the story for all time Yiping will tell us a little bit about the Chinese economy story Thank you Peter I will focus a lot more on short term issues let's look at instead of billions of years let's look at what happened the last 10 years I think what happened during the last 10 years probably most important event from my point of view is the fact that China has risen from a small country economy to a large country economy now for those who do not study economics I have to tell you a large country economy is not defined according to territory or according to population size it's defined according to your influence on the global economy whether you're a big country or whether you're a small country if a change in your demand and supply behaviour does not affect the global markets does not affect other countries significantly than your small country so I would argue in most cases China was a small country economy perhaps 10-15 years ago but today it's a large country economy as Ross mentioned China overtook Japan and became the second largest economy at the end of last year and if you look at the IMF statistics the purchasing power parity number China probably will become the largest economy by the year of 2016 so it's obviously a very big country but I think more importantly what I think the real change was whatever China does is going to have a big impact on the global market in China we have a saying whatever China buys it's becoming expensive whatever China sells it's becoming very cheap so that's a good way of understanding what a large country economy is I can give you some evidences examples you already know very well number one the commodity markets China consumes a lot of commodities in the world and the most particular component I mean obviously you heard lots of iron or copper and so on China accounts for something like more than 50% of the total consumption of cement, coal and iron obviously and that's the reason is simple because we are making lots of investment and one simple number to remind you that the housing we are building in China these days every year the annual construction of the housing is greater than the total housing stock you have in Australia as a whole so every year we're making lots of investment we consume lots of commodities number two the consumer goods market I think that's pretty simple last year China overtook the US to become the largest manufacturer in the world so whatever China produces it becomes cheap that's pretty simple if you're thinking of buying some souvenir in Australia and taking back home just be careful check the brand name it may say Made in China number three the FX market the foreign exchange market this is actually a very interesting area talking about the R&B exchange rate the funny thing is this exchange rate is not flexible the currency is even not convertible but if you look at what happened in the global markets there are lots of attention on the currency and that's in part because of the competition in the manufacturing market but also if you look at for instance the study by professor Taka Ito from University of Tokyo he estimated the importance of different currencies in influencing foreign exchange decisions in Asia and his conclusion was today R&B is as important as the US dollar for the exchange rate policy decisions but anyway there are lots of discussions and some people argue maybe we are seeing the beginning of the R&B block in the region whether or not that's a controversial issue the most dramatic argument we heard the last couple of years is the proposal for US and China to form a group of two the so-called G2 for China and US to jointly manage important international economic issues the Chinese government rejected the idea simply because there are many reasons but we think we are not ready yet but I think that does not deny the fact that China and the US are becoming probably two of the most important countries some people would argue well China and the US sit together they may not be able to resolve lots of problems the world faced today but certainly if China and the US cannot sit together cannot agree on important issues it's very unlikely we would be able to resolve some of the important challenges so I think that highlights the importance of China that's probably enough what I'd like to share with you next obviously is the difficulties we're facing for China to play a more important role in the international affairs there are certainly a number of disconnections or gaps between certain things number one how things look like and the reality is in China so for instance people think China is the second largest country and should play a much greater role in the international community the Chinese would say well we're still a developing country our GDP per capita is still below five thousand US dollars it's very difficult for China to play a leadership role when we really have to focus on poverty alleviation on development and on structure transformation the biggest question I think is what we're facing in China you may think China is the most glorious economy in the world we are very much worried about the sustainability of economic growth as I said IMF would predict China could overtake the US in a couple of years but people like Russ who spent lots of time looking at the history would tell you that that kind of straight line is not necessarily always true for instance in the eighties many people expect Japan to become the world's largest economy that never happened in the fifties and sixties we thought the Philippines economy would be the strongest economy in the region that is yet to happen so lots of things we have to be to keep in mind how things are doing well at the moment because there is a probability it can continue but really depends on lots of things we have to do that means also there is a big gap between expectations of the international community and the willingness of the Chinese society what we can contribute and there are lots of argument debates certainly in China what contributions we can make are we ready to do the contribution I will give you three issues we will discuss with you three issues I think the challenges we have to face number one is growth sustainable now we have managed an average GDP growth of 10% a year for 30 years if you just look at the numbers you would say well why not if 30 years is possible 30 years would be possible but in fact if you listen to what our premier Wen Jiabao once said we have a big problem in the growth model our growth model is number one uncoordinated unbalanced inefficient and unsustainable well I'm not going to bore you with the challenge detail the challenges we are facing but in particular I will just say structure is very unbalanced we spend too much money on investment we incur too large current account surplus we don't consume enough and we rely too much on commodities and you would understand if I tell you as I told you we consume already more than half of the global commodities today as our income per capita is only 5,000 US dollars if we don't change our growth model what happens when our GDP per capita becomes 40,000 US dollars most people would say well the world cannot support that and that means we have to make lots of changes the 12-5 year plan just announced in March this year highlights the importance of transforming the economic development pattern basically the idea is we need to make the growth model sustainable we need to consume less commodities we need to make investment more efficient and we may need to make economic structure much more balanced than it is today so for instance our current account surplus is big for small country it's not a problem for large country we already facing lots of international issues and conflicts and so on so if we cannot adjust our economic structure we will face a serious problem about growth sustainability my own view is I'm relatively more optimistic I don't think that's not it's not possible to resolve these problems although we spent last 5 years trying to resolve these problems problems became worse the reason why I think I'm more optimistic now is because we are seeing lots of changes in the domestic market lots of imbalance problems we suffered today actually wrote in the distortions in the factor markets in the markets for labour for capital for land for resources and so on so last 30 years in a way we like supporting growth by implicitly subsidizing producers and exporters that made our growth very strong but at the same time made the structure of the economy very unbalanced so I think if we really start to make efforts like the government has started to do now adjusting the resource prices maybe we will introduce a market based interest rate and exchange rate and the labour market is already adjusting they actually these may generate some negative impact on the macroeconomic structure like pushing up inflation pressure but it's going to make a big change impact on rebalancing the economy we already start to see consumption is picking up because of household income is arising so I think it's possible but that's still a question mark and there's certainly uncertainty whether growth can continue at a very rapid pace in the next 10 years the second issue I think we have to face is really the influence and responsibility we are already a large country but in many areas we still hold some kind of small country mentality so for instance the exchange rate when the US, Europe and some other countries criticize our exchange rate policy some of our experts would say well this is because the US doesn't like us because there are lots of countries in the world who have distorted exchange rate why they pick us they single us out this is an important question I think one of the issue we have to realize is when you a small country other countries pay less attention to you when you a big country you distort the global economic structure and that's something we have to come to realize that we are a big country and now we have to have a large country mentality when we decide the economic policy the last issue I will finish with is really the future direction we want to influence the international community now demands China to make positive contribution in the current transformation of the international economic system but I think we still kind of debating among ourselves China certainly was a main beneficiary of the globalization process so we like open trade open economy free trade free flow of capital and so on but at the same time conspiracy theory is very popular in China whenever you talk about the issue international issue they are always experts say well this is just a simple reason they want to destroy us it's very difficult and so I think this is an issue we have to continue to debate and we have to reach consensus of what we want to do and what we want to contribute but the good news is our leaders already pretty clear as president Hu Jingtao already said we not only want to support the globalization process we want to keep a peaceful development and most importantly we want to contribute to not only a harmonious society within China but we want to contribute to the building of a harmonious world thank you Conclusion reminds me of the aphorism that the future is with us forget about 10 years out of 15 years China is already a big economy and it's impact on the rest and one of the big questions we have to come back to in the panel is how prepared, how adequate the domestic response in China is to managing that circumstance but Deborah will now talk about some of that impact beyond China thank you very much and thank you for inviting me here this is such a pleasure for me to be in Chile Canberra because Washington where I'm from is horrible in the summertime so this is nice to be able to breathe so I think my presentation follows pretty nicely from the last presentation because one of the issues that was raised right at the end is China's position as a responsible stakeholder and part of the global economy and what kind of role is China going to play and one of the places where we've been seeing a lot of criticism of China's role is in Africa now how many of you are familiar with China's role in Africa some of the criticism that you read about in the newspapers ok so people have been reading about this maybe you read the Economist and you saw the special issue or the special section on China and Africa a few weeks ago well I'm going to talk about China going global in Africa and some of the arguments I'm going to make are that this is a much less well understood relationship than we think it's partly because China is not very transparent so the terms of the relationship are not known very well but it's also because the ability of the internet and the media to circulate mythologies about what is going on there is really quite remarkable and when you start to dig in more deeply into a lot of the stories that you think you believe you find that actually it isn't quite like that so let me start out I read a book that was published late in 2009 in which I look at a lot of what we think we know about China the conventional wisdom in Africa and explore that more deeply and show that it's not exactly the way you think and I want to start out today by telling a story and it begins once upon a time so once upon a time there was a very large very poor but resource rich country that was just emerging from a period of intense conflict and this country decided to focus on development we need to modernize our ports we need to develop our energy and our infrastructure they said and soon they had a visit from a wealthy Asian country that had already become a major consumer of their oil and this Asian country said to them we'll make you a bargain we'll give you a line of credit worth 10 billion dollars and you can use that credit to have our companies help you develop your energy infrastructure and your other infrastructure perhaps develop and modernize your minds now many in this poor country were very worried about this offer it was intensely controversial but nonetheless they agreed to this bargain and the work began now in this room I imagine there are quite a few people who know which two countries I'm talking about here you have some ideas how many people think they know ooh okay well I'm hearing some things anybody any other guesses okay you all have some thoughts in your mind about who these might be good lots of murmurs going on now one country I do hear repeated over and over in the audience is China good job one of the countries is China yes China is a large poor country with oil and the other country is Japan and the time is 1978 China is just emerging from the cultural revolution and when Japan and the Chinese government were discussing this it was very controversial in China in fact when these negotiations began the Dong was still in power but when they were concluded it was Deng Xiaoping China's great reformer so there are several lessons I think that come out of this first of all it's a history lesson for some of you but also it's it tells us that China's relationship in Africa where the same kind of model is being used is something that China learned about from other countries to help China jump start its own economic development in the days when China was not credit worthy and couldn't borrow on the international markets now I'm hearing of one deal along these lines that was done in Africa in the Democratic Republic of the Congo the Financial Times wrote Beijing has thrown down its most direct challenge yet to the West's architecture for aiding African development and there are a lot of challenges involved in China's relationship with Africa and most of what we read about is so deliciously frightening that it sells more magazines I think than Princess Diana used to when she was on the cover so all you have to have on the front of the economist is a picture of China and Africa to sell more copies I think or China doing anything really so these are some of the pictures in all Africa one down here is from Latin America clearly that's in Rio and this picture of what looks like Jesus up there with the dragon is even this resonance of Christian and western civilization being under threat by the dragon so we do see a lot of fear mongering I think about this and in Africa China does present a challenge and why is that it's for several reasons one is that Chinese companies have lower environmental and social standards they're about the level that they are in China and this is a lot lower than western companies in general but not always Chinese companies are probably more willing to pay bribes and that's because it's only been very very recently that China even had domestic legislation that made foreign bribery illegal which is something that the OECD countries had to do in 1997 China's now done that but we don't know whether or not it will be enforced Chinese companies usually pay lower wages and the safety standards in their operations their minds and so on are more problematic than those from almost any other country with the exception of African investors Chinese immigrants and traders are proliferating in Africa and this is something that causes a lot of worries on the competition that they provide the substandard and counterfeit goods that we've experienced in the west they're also flooding into Africa and these are particularly in the pharmaceutical industry safety standards these are worries and then from the point of view of governance there's no economic or political conditionality so that China will sell arms to any government that's willing to or able to pay for them and then business and loans are not conditioned on any sort of governance criteria so all of these do present challenges and I think we're quite aware of this but the biggest challenge may be this in many parts of Africa governance is poor but Africa is actually quite rich now we haven't figured out a way to link Africa's riches to its development and the Chinese are actively trying to do just this and they're not trying to do it out of altruism when we look at that first loan that Japan made to China this was not foreign aid this was a market based loan it was a consortium of Japanese banks that put this loan together it was not foreign aid and most of what China is doing in Africa is also not foreign aid it's cooperation with a lot of different instruments now one example in Niger the Chinese are now investing in oil in Niger as well as uranium and the Chinese ambassador was being interviewed by the financial times and he said you know this country has already seen uranium extraction for nearly 40 years that's by the French but when one sees that the direct revenues from uranium are more or less equivalent to the export of onions every year there's a problem and we can do better he said now of course the jury is still out on whether the Chinese can do better but that's what they're promising to do now how big is this involvement in Africa it's actually quite large and has grown very very rapidly as many other things we've been hearing about China over the past 10 years well this is China over the past 10 years in Africa and so this is quite dramatic when you look at trade in 2000 it was very very low and I don't know the 20 million or so and then when we get to 2008 we have trade, total trade over 100 billion dollars so it's an enormous increase 2009 it shrank somewhat because of the global financial crisis but in 2010 the figures aren't there it's gone back up again above the 2008 figures so China is now the largest trading partner of the African continent in terms of FDI these figures are much more problematic because the data that we have for FDI is not very good but nonetheless if you look at the actual figures from 2007 and 2009 we can see that Africa is actually a fairly small part of Chinese overseas investment in 2007 it was about 6% in 2009 it was 4% but nonetheless it's growing as Chinese investment is growing around the world now we hear about Chinese oil interests in Africa they are considerable what we see here are places where there's a Chinese presence in one way or another that doesn't mean they actually have an oil project there but they're exploring and this is already a couple of years old so we can see it's quite a few continents here but it's much more than oil they're actually interested in a lot of different commodities naturally but also manufacturing investment there's some exploration into agriculture small scale large scale we can see down here is a big spinning mill that was set up in Mauritius telecommunications as Huawei company up there but one of the areas that is much less remarked upon is Chinese interest in construction and infrastructure and what we see here this is a picture I took in Tanzania and there's this building in the back is being built by a Chinese company and they're cooperating with a lot of other companies that's doing this for the government of Tanzania up here is a picture of a road being built that was built by the Chinese and there's one that's being built down at the bottom and this is not just being financed by the Chinese government it's being financed by a host of different actors the World Bank the United States aid agency as other donors have untied their aid Chinese are winning their contracts so this shows the revenues to Chinese companies from construction in Africa in 2002 1.2 billion in 2009 28 billion dollars so this is a huge market and huge interest and a huge need in Africa now when we look at official development assistance it's actually quite small these are figures that I put together and since then the Chinese have released a little bit more data on this well it's not very much in 2008 in terms of disbursements Chinese 4 and 8 was about 1.2 billion dollars a lot lower than for example the UK, Germany and the other development partners in Africa now this is a map of Chinese aid agreements from 2006 and 2007 the countries that have natural resources are shaded here but all of the dots and circles are aid agreements that were made during those years and what you can see is this is only in sub-Saharan Africa what you can see is basically the aid agreements happen everywhere and in terms of the volume it's also consistent with this they're not particularly large to resource rich countries and that's because aid is given for political reasons much more than for economic reasons now when I I've traveled around a lot in Africa I've been to many many countries for my research and these are some of the things that I often hear Africans ask me they say you know the West is very critical about Chinese engagement in Africa but what about the West's engagement in China China's record on human rights and democracy is not stellar and yet China's a top destination for investment from OECD countries and trade and in general the West takes the position that business is business when it comes to China but when China this is these principles to invest across Africa the West says you can't do that you know you're being bad and Africans say why is there this double standard the West can invest in China with all of its challenges for human rights and yet when China invests in Zimbabwe or Sudan or other countries in Africa we say this is not acceptable so the last thing I want to leave you with is a few points about why China is different than the West when it comes to Africa they're different the first reason is because Chinese foreign policy principles are different than most in my country for example in China there are five principles that govern foreign policy they're called the principles of peaceful coexistence and two of those are especially pertinent one is this standard of respect for state sovereignty of non-interference of internal affairs of other countries and so we can see in my country in the United States we don't have that in our foreign policy in fact you might say it's a principle that we must interfere in internal affairs of other countries and the second thing about Chinese foreign policy that's relevant is that mutual benefit that foreign relations should be based on mutual benefit and again when we think about our relations between the North West and Africa we're thinking more that it should be based on charity it should be based on foreign aid rather than mutual benefit so we're shocked when the Chinese say we're doing a lot of deals and we're not talking about foreign aid so much we're talking about cooperation so that's different as well the second is that China's ideas the core ideas about development are different than they are in the West in the West we have recipes for how Africa should develop and change every decade or so and some of us in this room are old enough to remember these old recipes back in the 1960s we said it was infrastructure and industry in the 1970s we said it's basic human needs in the 1980s is structural adjustment and policy change in the 1990s it's all about governance in the last decade and the millennium development goals and social spending so the recipe changes every decade so the Chinese it's pretty simple invest in manufacturing in agriculture and Yao Xiangfu Xianqiu Lu if you want to become wealthy first build a road now China is the third point they have experience as a recipient of aid and loans from the West and so they know how this helped them to build their own country and they're using this knowledge in Africa but the final point is that China is in a region of East Asia and in Asia there is a model the East Asian developmental state Japan started out this way Korea, Taiwan Singapore and now China following this of state intervention with instruments to build the economy and in Europe and particularly in the United States we're much more believers in liberalism we don't intervene nearly as much and so that again makes China different so because of an overview if you're interested in any more I wrote a book on this and I have a blog in which I try to look at the conventional wisdom on a regular basis so I'll leave you with that thank you very much thanks very much Deborah Deborah's story of the reach of China into Africa reminds us powerfully of the connect between economics and politics and to conclude the panel the interaction, the connect between economics and politics thanks very much, thanks Peter it's great to be with you guys and great to be on this panel I usually claim to be the gloomiest person in any room and that's because what I do is to study the way in which international society goes wrong the role of armed forces in international affairs, the circumstances in which cooperation between states breaks down and they start fighting with one another and there's an awful lot of work done about why that happens and how that happens but right at the heart of the course it's a very simple idea and that is that states exist in a society it's a matter of relationships between states and that one of the things, perhaps the most important thing that underpins their relationships is their relative power now what we've heard this morning is that these panelists has different aspects of the story of the most remarkable shift in relative power between states possibly in history and this is posing immense challenges for everyone about how we manage relations between states and in particular how we manage relations between states to avoid armed forces becoming too big a part of the way those relationships function I just want to touch a few minutes on how those issues are travelling in Asia at the moment and finish by saying a bit about what they mean for countries like Australia I'm not going to look back 4 billion years like Ross, I'm just going to look back 40 but next year 1972, 2012 you were having different trouble with those decades 2012 will mark the 40th anniversary of Nixon's visit to China and I do think that is one of those very hinge events because what happened when Nixon went to China was that the nature of the international order in Asia, the way states in Asia, particularly Asia's most powerful states started relating to one another changed very significantly for a century Asia had before then Asia's international system and the way states related to one another had been characterised by very intense competition between Asia's strongest powers and it was a pretty ghastly time then quite suddenly after 1972 Asia moved into what has been the most peaceful and this is no coincidence the most prosperous era in its many millennia of history and I would say what's fundamentally shaped that what's made, what's provided the foundations for all the developments that we've been talking about so far and so to speak will make this century the Asian century is the fact that strategic competition between states has been at an all-time low and particularly strategic competition between the biggest states and I believe that's been primarily because everyone in Asia has accepted American primacy. America has not just been the strongest and most influential power in Asia but that its position as such has not been contested by others and that was a deal that's what Nixon did in Mao in 1972 America welcomed China which had been for the 20 years before then the most active contestant of America's position in Asia America welcomed China into the international system and recognized the Chinese government and China accepted American primacy as a foundation for the Asian order now of course that very success provided the circumstances in which so much that's happened in Asia since then in that last past 40 years has been possible. It has made the Asia we know today and in particular of course it's made the China we know today it wasn't sufficient but it was a necessary condition for China to be able to achieve the remarkable growth we've been talking about but of course it is China's growth and the masses shift in economic power that constitutes and that massive shift in strategic power which that constitutes which is now undermining the order which gave it birth and how we manage that how we manage to rebuild a new set of relationships which is as stable and congenial to economic growth in international cooperation as the existing order has been in this very different set of power relativities is the great challenge for Asia in the next couple of decades the great challenge for Asia in the next couple of decades because we could get it wrong there's no law that says that we can't make the same mistakes that our great grandparents and grandparents made that produced the century of really intense strategic competition and some really terrible wars in Asia earlier on and it's a huge challenge to get this right because everybody's facing things they've never faced before nobody now living has ever lived in a world in which the United States did not have the largest economy nobody now active in foreign policy of that matter economic policy has ever worked in an Asia in which the United States was not the most powerful country in Asia and few people exceptionally very distinguished statesmen like Professor Drysdale have worked in an Asia in which United States primacy was not contested there's not too many people around or in this business in 1972 so some of my dearest friends I wasn't bother but there's a very important point here we have got terribly used to Asia working the way it's worked and of course we have because it's worked like a swiss watch it's been a fabulous 40 years but it's worked that way because a very particular set of understandings between states about the way they relate to one another and that set of understandings has been based on a very particular power relativity China accepted a deal in 1972 for amongst other reasons because America was a hell of a lot stronger and it would be unwise to put it mildly and still continue to accept that deal when those power relativities shift now let's just think about how that might work and I'm going to do that by focusing very briefly on China's choices and America's choices it's not to say that for example that India is an important part of the story it is it's not to say that Japan is an important part of the story it is it's not to say the other countries in Asia don't have a role they do but the relationship between China is a current key question 10 years or 20 years or 30 years from now India might be really critical in different ways Japan is critical already but it's the relationship between the US and China that's the most important so that's the one I'm just going to spend a third time exploring the first point to make is that a deterioration and the quality of their relationship escalating strategic competition between the United States and China is not inevitable it's quite possible for the US and China to build a new relationship that reflects the new power relativities between them which allows them to cooperate as effectively for the next 30 or 40 years as they have to ask 30 or 40 years but it's also quite possible that they won't it's entirely possible that the relationship will become increasingly adversarial that rivalry will deepen and that as rivalry deepens the scope for economic and other forms of interaction decline and the risk of a war rises and the risk of that war will be really big I mean a really big war, a nuclear war rises and it's the scale of that risk, the nature of that risk that one has to keep in mind when one thinks about the choice that other countries have that both countries have think of it from China's point of view as China's power grows we can be as sure we can be of anything in this business that China wants to be more influential we can be as sure as we are of anything that Chinese people let alone a government are not going to accept that America should continue to be the leading power in Asia and China should accept the subordinate position as its power grows to equal and overtake United States and imagine what a group of young Chinese your age must feel that China's prospects today and its place in the world and its place in the region and ask yourself whether they could be persuaded that even when China is a stronger country than America economically it should still accept American privacy it's not going to happen and at one significant level it shouldn't happen so what does China want well, some people fear that China wants to dominate the region in a harsh militarised hegemonic way think Joseph Stalin in Eastern Europe that's never a possibility one can exclude sensible policy in Asia over the next few decades should always bear in mind that has a risk but I've got to say there's nothing I see in current Chinese policy there's nothing I see in the evolution of China's strategic position or for that matter in the evolution of its force structure that suggests that that is what any serious group in China aspires to today I do think it's reasonable to expect that China would like to acquire in Asia the kind of leadership actually that America's exercised not harsh and militarised and hegemonic soft but serious and ever present a little bit like the kind of leadership that America actually exercises in the western hemisphere under the Monroe Doctrine and it would be an interesting question for all of us how we'd feel about living in Asia which China dominated in that way it could be a peaceful Asia if everyone accepted it and it would be different it would be very different but it's something we could absolutely would the key point though is I think the chances of everyone accepting it are very low it's one thing for Australia to decide that we'd be happy to live under that kind of Chinese leadership but would Japan and would America accept it I don't think so and one of the peculiarities of our present situation is that although China is very strong and will grow I think even stronger and not just economically but also strategically it will not be strong enough to impose on Asia that kind of leadership the way that United States has been strong enough to impose that kind of leadership on the western hemisphere China will always face very strong strategic competitors Japan is a very significant strategic power Russia is a very significant factor in China's strategic calculations which will always be there India of course is significant and America has not gone away America remains a very significant player so I think if China tries to impose even relatively soft and benign form of hegemony up on Asia a Munro doctrine it's likely to face very severe competition if that's right then the prospects for a peaceful order in Asia over the next few decades are going to depend amongst other things on China accepting that and accepting that the most you can hope for is to move into a kind of collective leadership of equals in Asia in which it shares power with the United States and Japan and India much less I think than most Chinese would hope for and expect but the most I think that China can sensibly expect to achieve without undertaking what would be for China as well as for everyone else a very sustained and difficult demanding and potentially tragic strategic competition but now turn the coin over and look at it from America's point of view what are America's options one option of course is for America to withdraw there's no law that says that America will always retain the kind of very active role in the strategic affairs of the western Pacific that it's had since roughly speaking the beginning of the last century American leaders always say they have an ocean power and they're here to stay but when they say that what they mean is they're here to stay as long as their leadership is uncontested and I bet that's true as long as American primacy is uncontested the United States will remain actively involved why wouldn't you? Uncontested primacy is a bargain but when one's position is contested and when you look at what the alternatives are and I'll touch on them in a minute very short minute then the role of the idea that the United States will inevitably stay engaged in Asia does not seem to me to be one we can take for granted the first alternative of course is to compete with China for primacy China starts trying to assert primacy the United States pushes back and tries to achieve maintain primacy of its own a very natural thing for the United States to do I think in fact a default position for the United States in fact I think US policy at the moment very deeply very strongly held across American political spectrum the United States should retain primacy in Asia and if China tries to compete for it they'll compete back the risk for that is that it will escalate it will provide a highly unstable and contested Asia but if America's not going to withdraw the only alternative to competing is to share power with China I said before I think it's difficult for China to accept that but I think it's almost equally difficult that's more difficult for the United States to share that it's a slightly melodramatic way of putting it but what that would require of America is that it's prepared to treat China as an equal and that's a very big thing to ask Americans to do on the other hand America has to recognize that they have never faced an adversary as dangerous as China not because China's better armed than any of its previous adversaries and certainly not that it's more aggressive it's its intentions but just because it's richer China is already richer than the Soviet Union ever was during the Cold War relative to the United States it's way richer than Japan was when Japan was a strategic adversary relative to the United States it's way richer than the Nazi Germany was the United States has never faced since it became a world power a country with a potential to overtake it in sheer economic size and that makes China a completely different kind of strategic question for the United States than it's ever faced before well, very briefly, where do the rest of us fit into this? both the US and China have got very big choices to make and so have the rest of us let me just put it from an Australian point of view what do we want? I would say that Australians want the United States to stay engaged in Asia because we'd much prefer to not live in an Asia which is dominated by China on the other hand we don't want to live in an Asia which is split between the US and China and distorted by US-China strategic competition so we want the United States to continue to play a strong role but we want them to play that role in a way that does not drive an adversarial relationship with China in other words, for us the share option the option of the US and China sharing power is thus far and away the best and I think that's true of every other country in Asia but it's going to be very hard to persuade both the US and China to accept that and right now the trends are heading in the wrong way the idea of an escalating strategic competition between the US and China is often spoken of as a future possibility no it's not, it's the current reality that's what's happening in the South China Sea that's what's happening in the East China Sea that's what's happening in the development of their respective nuclear postures we were really at the point where it's getting harder and harder to get back to a situation where we could negotiate a stable order between those two thank you that certainly puts some big questions on the table to discuss and you're going to move into breakout sessions after morning coffee to discuss some of those questions with the panellists and among yourselves but we will take 10-15 minutes now to take questions from the floor to the panellists and then have a final statement from each of the panellists on how they view having listened to their colleagues on the panel so can I have a first question yeah take the mic and identify who you are and so on thank you for coming today, I really appreciate it those are some great suggestions I have a question for all the panellists China's century what are we saying China's century hold the mic to your chin the production of alternative energies wind generators and solar panels and there's not growing official support for innovation in this area and how do you think this affects the traditional leapfrog technology model for most of East Asia who wants to go, we got a mic here Ross I'll have a go but this is a crucial second last session leapfrog technology leapfrog technology a very interesting feature of Chinese support for low emissions technology across the board not only in the energy sector but in the cars of the electric car there's a lot of Chinese enterprises and some parts of the Chinese leadership have seen an advantage in completely new areas of technology where China doesn't start behind and I've heard this idea most explicitly in relation to the electric car if you're competing with an internal combustion car then in Nagoya have been in that game for a very long time very good at it and so you start behind but everyone in the world is trying to invent a boot battery that allows the electric car to run thousands of kilometers at a reasonable cost and there is quite explicitly a discussion in China of how they create an opportunity to move into the areas of completely new technology right into the front ranks and that is happening in some of these areas but the technological story is different with every technology in the case of the car there foreign enterprise have been invited in to bring that technology with them recently I've been to with Volkswagen in Shanghai will make Volkswagen the main electric car Warren Buffett the American investor putting a lot of money into a private electric car company in China because he thinks that they're doing well with developments of technology in case of solar China's strictly become the by far the world's major source of solar equipment and that's actually based on technology developed at New South Wales in Sydney their graduates have gone back home and applied very directly that technology and the theoretical part of the technology happens to be world best practice developed autonomously at the University of New South Wales and the global technologies are undeveloped enough for Chinese entrepreneurs graduates of that school of electrical engineering just to set up new enterprise and very quickly develop a world leading position four of the six world's largest producers of solar equipment are owned and run by graduates of the University of New South Wales a story that's different in different places but the fact that it's a completely new area of technology does create an opportunity for China to move more quickly to the frontiers than in other areas You want to come in on this? Okay, we'll pass. We'll take the next question here. Thank you all very much for coming today and sharing your thoughts on the edge of this that's all we're very grateful. My name's Christian Jack, I'm from Beijing University in Australia I think we focused a lot on the relationship between the US and China obviously because we're so close to the US and given our economic interests in China however Michael Lully has recently published a book called There Goes the Neighborhood and he talks about the rising consumption of energy by China and India and this energy is located in the Middle East and the transportation of this energy along the coastline south of India and up through the Australia and up to China so I was just wondering if you could share your thoughts on the power dynamics, I know that China has a string of pearls strategy developing deep water ports along that shipping route so I just want to kind of share with us their thoughts on the developments that are happening there, thank you. Thanks, I'll fill that in, thanks Christian, that's a very good question. I've got to say I do think that the way in which competition for resources is going to be a very dynamic feature of the international system over the next few decades for the reasons that you have the panelists touched on but I've got to say when I look at the future of the US China strategic relationship I see competition for resources as as much as a product as a core that has more product than a core of a deeper strategic competition which is based on status. In the end you can allow markets rely on markets to sort out who gets the oil from where or the iron ore or whatever the sense what worries I would think Chinese leaders for example is not the risk that they can't go out and buy the stuff but that they will be excluded from access to it by strategic or political deals or that the transport will be in addicted for strategic reasons. So I think the real underlying risk there is the management of the deeper relationship between the two countries to minimize the sense of competition. However having said that obviously there will be a bit of effort to securing of the world's sermons of communication for example I think this is less difficult than people think primarily because without getting too far into the operational details of this issue it's extremely easy to sink ships and very hard to stop other people sinking ships. So it would be extremely easy for the United States or anybody else to threaten to sink China's oil trade. It would be extremely easy for China to threaten to sink rivers. And as an operational situation where attack is easy and defence is hard it would end up being quite successful. I think it would be extremely hard for any country that's globally engaged in trade to effectively threaten anybody else's seaboard trade as a strategic maneuver without attracting really unacceptable levels of retaliation. And for that reason the idea that what China needs to do is to build a string of pearls and a whole lot of aircraft carriers to protect its energy ceilings of communication to me doesn't hold water. I think deterrence will do the trick nicely and China's sea denial capability to now well and truly grow to the point of very effective deterrence against anybody else. Thank you very much for being with us today. My name is Paul Lashanko and I'm a captain of the state's army and graduate of state and international relations here in Maine. I have a question for Hugh White in particular with certainly the other panelists who can chime in if they seem to fit. We've talked a lot about economic hierarchy in materialist terms and it certainly seems to us that America's economic hierarchy in materialist terms is a regional or relational aspect of hierarchy. In other words, states provide American legitimacy based upon an order that it can provide. So the question becomes does China provide an alternative or a feasible order that regional states will follow because it seems to me that even the constant power argument overlooks values and transparency is pretty important. Sounds like it's for you again Hugh. Yes, it's a really critical question and I'm going to touch on some of the questions that were raised well about how people see for example China's role in Africa. I've got to say I'm going to sound a bit sort of Marxist about this but I do tend to think that economic wave is what really counts and that an awful lot of the other stuff that comes along with the way we talk about orders, the ideational stuff and so on sort of super themes on that. I mean this is going to sound a bit cynical but why has America been the most powerful country in the world since 1880? It's because it's had the strongest economy since 1880. Now the way in which the order, particularly the order that's emerged globally since the end of the Cold War has evolved. Given as something we're used to and something which works works extremely well, don't get me wrong if I had my choice, the US made order that would last forever, it's been fantastic for Australia. The question we face though is not whether we'd like that to continue. It's whether in the face of the fact that in order to maintain it, there will be no alternative I would say, to either China continue to accept American primacy which is not going to happen it's not going to happen or the US and China degenerating into an escalating strategic competition which is happening and they share power, which is going to require the United States to negotiate the future of their order with China rather than to specify to China because that choice is so stark because the starkness of that choice to me is more about pure and simply by the shifting economic relativities. I think rather than be a bit nostalgic for what we've had and I would say I've loved it it's to start asking the next question what kind of order would we want to see in the process of that negotiation negotiation that the United States will have with China and in some ways the rest of it will have with China. We have to ask ourselves what in that negotiation is really important to us what would we be able to keep away how would we want their order to look what are we sure it must not look like and I think it's that focus on the essential elements of the future which are really critical. Unfortunately we're going to close off the questions there but I've got one sentence answer to a question I want to pose to the panel as a whole which is really about the management of this transition of power if you look at the historical record I suppose, presidents suggest that we've got a very mixed record in this respect but I guess the question is are the significant structural things that restrain in significant ways the conflictual element in the transition in this power that we're seeing in Asia in one sentence or so each of the panelists might come at that question. You've got the mic Q why don't you start? Yes there are very high levels of integration and independence significantly constraining the the rise of strategic competition but obviously not enough because competition is rising Deborah The lessons of history are coming back not to haunt us in this but to provide us with some guidance and I think that it's useful to look at the lessons that have come out of all for the panel's presentations even the lessons of the past 10 years which give us a little bit of its detail and I think that provides for some optimism for the future which is going to be your job He'd think I will make quick points for you to concede Number one I think the transition of great powers in history did not always end up in military conflicts or wars so there might be some hope and I think the world's very different from centuries ago Number two we should recognize China is a transition economy China is doing well in many areas but that does not mean we think this is the standard we're still in transition and we're still changing and number three China does not have any interest in my understanding to build a new system outside existing system we have been the main beneficiary of the existing system and what the shopping said years ago about keeping a low profile in development does not mean we want to build our strengths now and challenge somebody else we actually want to be a part of the system and we want to work with the assets so it's very important to remember whenever you think about the cooperation or competition China doesn't want to build a system outside the existing one The main constraint is that the consequence of things going wrong are much larger in this relationship than in any other relationship between states in history we've had one example of large consequences of complete failure of a relationship leading to the development of the ideas and the constraints that generated that allow the avoidance of the worst possibilities when the first weapons fell on Hiroshima and Nagasaki one would have thought it unlikely that if a great state rivalry emerged in the post war period as it did between the Soviet Union and the United States that nuclear weapons would not be used historically there had never been that sort of restraint on use of major weapons that ultimately it was great wisdom developed amongst a small number of people in intellectual centres and in government in Moscow and in Washington, New York and Boston that gave us that favorable outcome is going to require similarly deep and unromantic thinking that applies effective restraints in United States China competition Thanks very much we now break for coffee then we'll have the breakout sessions and then we'll return here for the wrap up I'll just ask Sam to introduce you