 Welcome. Welcome to CSIS. My name is Matthew Goodman. I hold the William E. Simon chair in political economy here at CSIS. Delighted to have you here. John Hamery, CSIS president is traveling in Asia this week, but he asked me to add his warm welcome to all of you. Thank you for joining us. In addition to the large audience we have in the room, we also, I want to welcome and recognize our online viewers. We have quite a devoted following, and those of you who want to follow us on Twitter, you can find us at CSIS. Larry Summers once said that he could imagine, the former US Treasury secretary of course, said that he could imagine a world, a future in which the US and China are both successful, and he could imagine a future in which neither the US nor China is successful, but he could not imagine a future in which one succeeds and the other fails. As usual, Larry, a boss of mine twice, hit the nail on the head. I think he really highlighted the fact that these two economies' destinies are intertwined, for better or for worse. So we talk in Washington a lot about when two large bodies like the United States and China converge, there is naturally friction, and certainly there are challenges in this relationship, and it would be foolish to deny that or not to try to take on those challenges. But it would also be foolish not to talk about the many benefits that both countries have enjoyed in this relationship that has been growing so dramatically over the past 30 years, and to acknowledge the potential gains that we could have in our relationship going forward if we address the challenges, if we look for opportunities to exploit complementarities in our economies and to find areas where we can cooperate. And it's in that spirit that we're organizing this event here at CSIS with the kind and generous sponsorship of the China United States Exchange Foundation in Hong Kong. We have a terrific lineup of speakers and presenters to discuss and explore these issues. You have a report in front of you produced by the China US Exchange Foundation, which covers many of these issues, and we're going to talk about that shortly. Let me give you a quick overview of today's events. In a moment, I will introduce our first speaker to make some introductory remarks. Then you will hear from a distinguished group of presenters about the report and about some of the issues that arise from it. Then we will have a panel discussion on these topics, followed by questions and answers, and then we will take a short break and then have our two keynote presentations. Finally, all of that should wrap up around 12.15. Then we will have a lunch served in the back, which you can all stay and enjoy. With that, it gives me great pleasure to invite to the podium Mr. Tang Qihua, better known to most of us here as C.H. Tang, who is chairman of the China US Exchange Foundation and also the person responsible for the report that you have in front of you and for this occasion. So, C.H., with no further ado, please come up. Many friends here, distinguished guests, ladies and gentlemen, I'm always happy to come to Washington. To be honest, always intimidated as the day began. Normally, I would prepare very thoroughly on everything that will be raised on every issue I would want to cover, on the messages I want to bring to Washington. And very often on a whole subject, the issue from A to Z, what I need to bring out. When I got here, the first thing I would learn is that what you want to talk about, nobody is interested here. Washington has its own ways, has its own agenda, has its own momentum about issues. And so you have to know how, when you come to Washington, and get on with the things you want to get out. And it is really a tremendously, intellectually stimulating experience to be in Washington. Because eventually at the end of the day, you want to get through what you want to tell people. And it's a lot of hard work, my friends. But I always went away enriched. And the reason why is that you're willing to engage, you're willing to listen, you're eventually willing to listen. And I would go away wiser. And I would go away wiser. And I hope, having listened to me, you will think, this is worthwhile. So but today I just, I came not with just by myself, I came with a team of experts, team of experts, who actually know this subject a lot better than I do. So I hope you will enjoy listening to them, talking to them, asking questions, have communication. And I hope we all go away wealthier in terms of knowing how important U.S.-China relationship has become and how important this economic relationship between the two countries is and how much it not only can help to create economic vigor, economic opportunity, but also create millions and jobs for both countries. But more than that, such an economic relationship can really help U.S.-China to move ahead on the overall relationship of these two countries. The United States and China are two very different countries with different histories and cultures. They are also at different stages of development, one being the largest development nation and the other being the largest developing nation in the world, each of substantial economic size and therefore each contribute to global economic activities in different ways. Working together, we can do more in such areas as global economic recovery and financial stability. Furthermore, U.S. and China are the two largest trading nations in the world. Working together, we can help to further liberalize trade of goods and services around the world. The fact is, whether it is in energy, security, food-safe, sufficiency, protection of the environment, climate change and nuclear weapon proliferation, fighting terrorism, preventing epidemics or drug trafficking, all of these and other transnational challenges that the world faces today require multilateral efforts. But if U.S. and China work together on any of these issues, the chances of success will be enhanced. It is for all the above reasons that from a global perspective, U.S.-China relationship is the most important international relationship today. From a bilateral perspective, the economic relationship between the United States and China has developed over the past few decades from virtually non-existent. Henry Kissinger was saying to me yesterday when they met early in 1971 in Beijing, the size of trade between China and the United States is smaller than the size of trade between the United States and El Salvador. That was the economic relationship at that time. But now, after a few decades, this relationship has developed from virtually non-existent to becoming a highly interdependent and mutually beneficial one. As the two largest trading nations in the world, they are also each other's second largest trading partners. A vast volume of trade in goods, integrated supply chain, a growing volume of trading services, substantial direct American investment in China, and even larger Chinese investment in U.S. Treasury securities speak to the importance of the relationship. On balance, the relationship is of tremendous mutual benefit. But the question we want to ask today is where is this economic relationship going in the future? To answer this question, the China-United States Exchange Foundation engaged a group of eminent scholars with advice from academics, business, political leaders from both countries to undertake a study to examine the economic relationship. The study reviewed the past, examined the difficulties in the economic relationship that could impede increasing commerce between them, but most importantly looked into the future. The study concluded and you will hear many of this being presented to you, but it concluded that, here I quote, both countries want to establish a pattern of secure, high-quality, sustainable growth and employment for their people. And this study demonstrates that bilateral relationship build and adapt it over time can make a material contribution to that shared goal. And there are many examples how U.S. and China can cooperate with each other, but this is not my role to talk about it at this moment. What I do want to say to you is that you will enjoy listening to the presentation that is going to be made to you. I want you to really think about this. I hope we can at least give you some food for thought as to how important this economic relationship is. And also I want you to hopefully to think in terms of not only the economic opportunities and the job creation that can come about because of a better relationship economically, but how this better economic relationship can make a real difference to the overall relationship of the two countries, because that is really important as Matt said earlier on. That relationship is really the most important relationship on Earth. So if on a multilateral basis there is reason for us to be together, on a bilateral basis there is reason for us to be together, then there is no reason why we cannot get on with it. And I look forward to be sitting down there, listening to everybody, hearing your questions. And I'm sure after the lunch this afternoon I will go away a wiser person and come back again to Washington with renewed energy to bang my head and get things happened. Thank you very much. Thank you very much, C.H. And if I could now invite the three speakers to come up to the stage. So I think Larry, my mind has gone blank, Mike and Mr. Wong. Where is Mr. Wong? Yes, there he is. So as I mentioned and C.H. mentioned, this report that you have in front of you on U.S.-Chinese economic relations in the next 10 years was produced by a very distinguished group of experts based in Hong Kong, but with some advice from a number of other experts around the world. And here's the inner core of that group who were responsible for most of the hard work. And it was a lot of very hard work, believe me. And lots of late nights over the past year or so. So let me, I'm delighted to introduce the three presenters who will talk about the report and the issues in it. First of all, Dr. Lawrence Lau to my immediate left, your right, who is the Ralph and Claire Landau Professor of Economics at the Chinese University of Hong Kong. And also the Quoting Li Professor in Economic Development Emeritus at Stanford University where he worked for 30 plus years, I think closer to 40 maybe, which is hard to believe he started when he was a teenager, clearly. Larry will speak first in a moment, but let me just move down the line. Next to him is Michael Spence, also I think a well-known person to everyone here, Professor of Economics at the Leonard N. Stern School of Business at New York University and also recipient of the Nobel Prize in Economics in 2001. So Mike will speak after Larry. And then at the end we have Dr. Wang Chunzheng, who is the executive vice chairman of the China Center for International Economic Exchanges and former director of the Economic and Financial Leader, leading group of the People's Republic of China. And Dr. Wang will speak after Mike. So with no, you have more biographical information in your packet, which is why I didn't go into detail, but there's a lot more distinguished background to each of these people and I would encourage you to look at those biographies. So with that, Larry? Thank you very much, Matt. Mr. Tong, distinguished guests, ladies and gentlemen, as a great honor and a pleasure to be here today. If I could get the PowerPoint to work. It's always the technology. We're at the same problem in New York, so. Exceit your vision. Let me see if I could. I knew I should have brought my magic tricks to entertain you while we were waiting. Well, maybe first of all, let me give you a overview of the study. The study actually consists of two parts, part one and part two. I think you have in front of you basically part one. Part two actually consists of 19 chapters on various subjects, you know, authored by different experts, and it is available online and it will be printed, you know, in several weeks. And everybody here, if you would like a hot copy, just let us know and we'll send you a hot copy. Basically, as Mr. Tong indicated that what we like to do is not just to review what happened in the past. I mean, this is about China has actually been undertaking its reform and opening to the world since 1978. But we had a review of the past, but mostly we would like to focus on the future on what the two countries, what could it can accomplish by its cooperation. So anyway, let me start now. I would pose this PowerPoint on my webpage in a couple days after I've returned to Hong Kong, but it really covers everything that I said here is actually in the report somewhere. Okay. I already said that we have part one and part two and the focus on the future potential of U.S.-China cooperation. Well, in this study we have actually projected that the U.S. and Chinese economies will grow at 3% just below 3% for the U.S. and which is 7.5% for China over the next decade. We think that this can be accomplished achieved by both economies. In 2022, our projected U.S. GDP is 21 trillion. And the projected Chinese GDP would be 17 trillion, both in 2011, I'm sorry, 2012 prices. However, in terms of per capita GDP, that was to be a huge gap. A projected U.S. per capita GDP would be around $63,000 and for the Chinese per capita GDP is $12,000. I mean, it's still less than the fifth of U.S. GDP. You can see here this is basically the projected U.S. and China GDP in 2012. The blue line is the U.S. GDP. The red line is the Chinese GDP. And it's a rapid catching up, but the U.S. is still going to have a higher real GDP. This is the per capita GDP forecast. You can see that there's still a huge gap despite the fact that the Chinese GDP may appear to be growing faster. Now, the next thing we like to talk about would be the economic complementarities that both Matt and Mr. Tong mentioned. We know that the benefits of economic exchange and the interaction between two economies, they are really maximized when they are the most different. Because then they really complement each other and the comparative advantages have the least overlap. Now, if you really look at the factor proportions and compare the factor proportions of the United States and China, you will find that China has more people, more workers, more labor. But in terms of the other inputs like tangible capital, arable land, R&D capital, the U.S. is really way ahead, both in absolute values but also in terms of proportion to the working age population. In terms of human capital, which is very important in the United States, the percentage of the labor force that has had college education is around 40%. In China, it is really just approaching 10%, not quite 10% at this moment. We believe that the United States has a comparative advantage in intangible capital, intangible, not intangible capital, intangible capital meaning human capital and R&D capital and I think the U.S. would have a tremendous advantage for another couple of decades at least and perhaps even longer. This is just a table summarizing what I just said and you could see that in terms of tangible capital, arable land, poor working age population, R&D capital stock and patents granted, the U.S. is still way ahead. I think in 2012 the number of patents granted to U.S. nationals in the United States was about $120,000 and the number of patents granted to Chinese nationals for patents granted in the United States is below 4,000, so that gives you a sense of the difference. Even though the United States does have a home-court advantage in terms of patents in the U.S. Another aspect of the commitmentarity is the fact that there's a huge difference in the saving rates. The U.S. growth savings rate is about 12% currently and in China the Chinese saving rate is approaches 50%. It is certainly in the 40s but in some years it would possibly hit the 50s. China saves too much and also invests too much and the U.S. saves too little, so there is actually room for both to benefit if the excess Chinese savings could be used to outman the investment in the U.S. We believe that on the basis of these complementarities that the United States and China should conduct feasibility studies for a bilateral U.S.-China free trade area. This is not really meant to replace other efforts, not the Trans-Pacific Partnership or the RCN plus 3, RCN plus 6 initiatives, but I think it is an idea that really can be pursued. There are many people on the Steering Committee, Executive Committee have been pushing the idea of a feasibility study. We know that this is going to take a long time, but I think it is an idea that is worth studying. The other thing that we believe that the United States and China should do is to try to conclude a bilateral investment treaty as soon as possible so as to facilitate two-way investment between the two countries. Not just U.S. investment to China but also Chinese investment to the U.S. We believe that by 2022, the United States and China are likely to be each other's largest training partner in the world. One of the chapters in our study is a chapter done by Dr. Gary Hofbauer from the Peterson Institute who is here today and we have these trade forecasts. We believe that the U.S. exports to China would be raised to around 530 billion in 2022. This is really an average of all the projections that we have obtained from various sources. This is more than three types of current value. So it is a huge increase. 2022 Chinese exports to U.S. we project would be around a little bit above 800 billion. Despite the much higher rate of growth of U.S. exports of goods and services to China since 2007, Chinese trade surplus with the U.S. is likely to remain high in 2022. Our estimate is 275 billion. It is about 1.5 percent of the then Chinese GDP. However, it is expected that China will run the trade deficit with the rest of the world at the time. So overall Chinese surplus should be less than 1 percent of GDP at the time. This shows you how the projected bilateral trade projections and the red line is Chinese exports to the U.S. The blue line is U.S. exports to China. You can see a very rapid increase in the blue line, but still because of the differences in the base, the U.S. trade deficit vis-à-vis China would remain relatively high. But this shows you that the rates of growth that we use in the past as well as the projected rates of growth, you can see that since 2007 the blue columns which indicate the rate of growth of U.S. exports to China have consistently been higher than the rate of growth of Chinese exports to the U.S. I think this trend is likely to continue. But despite this, I think China will still have a trade surplus. What are some of the impacts we look at of this trade, bilateral trade on employment and GDP? We have, using input over tables constructed both by the Chinese Academy of Sciences as well as by the Bureau of Economic Analysis of the United States, we have actually done some projection. We believe that the, okay, I guess it's not quite here yet. This is, I'm sorry, this is, okay, the right investment actually has been quite significant. I think it is currently running about 5 billion in both directions, roughly speaking current rates. The stock of U.S. direct investment in China is somewhere between 54 billion and 70 billion, somewhere along there. And then the stock of U.S. Chinese direct investment in U.S. is not quite 10 billion at this moment, but it's actually slated to grow in the future. The U.S. direct investment in China has been quite successful generating almost 40 billion of annual profits and also creating about 1.8 million jobs in China. The Chinese service sector is relatively mature so that the U.S. has the most sophisticated service sector in the world. So there's lots of room for the U.S. to either export services to China or to invest in China in the service sector and actually to help China to expand its service sector, creating more jobs for the Chinese. Let me go back to this impact on employment and GDP. We projected that in 2022 U.S. exports to China will actually generate $456 billion worth of value added to GDP in the United States. And this is really about 2.2% of the then projected U.S. GDP. And we believe that it would create about 2.5 million jobs in the U.S. because of this trade. Similarly, on the Chinese side, we believe that an estimated value added of about over 500 billion, or 3% of the then Chinese GDP and total employment of about 12 million. If you think about it, these are really very large numbers and it actually testified to the fact that the potential economic interdependence is really huge for the two countries. What are some potential areas of cooperation? We have identified seven areas of cooperation in our study. This doesn't mean that there aren't others. We just have enough time to take care of these seven, which we believe have the most promise. Trade, investment in agriculture, tourism, science and technology, energy and global sustainability. Given the expected growth of Chinese economy as well as the middle class in the coming decade, China is likely to overtake Canada and Mexico as the United States largest market. One projection done by McKinsey basically projects that the Chinese middle class will grow from its current 230 million to 630 million in 2022. Now, regardless of the spending power, the consumption power of Chinese households would be increasing very dramatically over this period. Prospects of US direct investment in China are excellent. We know that General Motors is already a market leader in the Chinese automobile industry. The Walmart is China's largest retailer and McDonald's and KFC, Starbucks, these are all household names in China. Potential for these and other US businesses yet to invest directly in China is actually enormous. Chinese direct investment in the US can also create many new jobs. I think we are just at seeing the beginning stage of this as well as the GDP. And I think especially if the investment is a green field investment, that is we have new investment, creating new jobs and creating new value added. Now, one major concern of China and its people, food security and food safety. Is there enough food to feed everyone? Is the food safe and hygienic? China has a limitation of arable land. It has only 7% of Chinese land areas potentially arable. And then the demands for urbanization is slowly basically taking over the land even though the Chinese government has committed to a red line that the arable land would not fall below certain amount. But the demand will keep increasing as urbanization increases. So there is actually a lot of room for the China and US to cooperate in agriculture. The United States has the most sophisticated agriculture technology as well as the systems to ensure food safety in the world. Abundance of arable land and actually water, high productivity efficiency of US agriculture means that the US has the capability to further increase its agricultural production as well as exports to China and help China ensure its food security as well as food safety at the same time. I think both countries can benefit greatly through such cooperation. Another area with the tourism in 2012, about 1.5 million tourists I'm not completely sure if this number could be higher, but anyway, this number is expected to exceed 5 million a year by 2022 and if these are procedures is streamlined but it would actually, we try to go to 10 million per year if in fact, well, these are all together on both sides, on both countries. We have done some studies and then what we have come up with is that 1 million Chinese tourists will create about 3.5 billion of GDP and more than 60,000 jobs. So if you multiply this by 10, you are looking at a potential of 600,000 jobs which is really quite significant. The other areas would be in energy. China today, some of you may know, relies overwhelmingly on coal as a source of energy, about 70% of Chinese primary energy is supplied through coal and we know that burning coal has many factors produced in the atmosphere but it also emits excess greenhouse gases. China has very large deposits of shale iron and gas and the China welcomes the investment in technological cooperation in U.S. firms in the shale oil and gas industry and this can help China reduce its dependence on coal as a source of energy and this benefits not just U.S. firms and China but it also will help reduce significantly the Chinese carbon emissions and has the risk of global climate change. We know that when you switch from coal to gas the emissions are actually reduced by 50% and some people claim even 100% so that it will greatly improve the air in Beijing for those of you who have visited Beijing. There is also the potential cooperation in the provision of global public goods the U.S. and China is the two largest energy consuming and producing countries in the world can cooperate to improve energy efficiency, assure energy security and promote research on the renewable source of energy. The U.S. and China also as the two largest emitters of greenhouse gases should take common responsibility for the reduction of the risk of climate change and cooperate to forge a global consensus in the forthcoming negotiations relating to the control of global emissions. I believe that there would be another meeting towards the end of this year. One of the things is that if the U.S. and China can have a common approach some things may be possible but if they have very different approaches I think things are basically impossible. The cooperation between the two countries do not necessarily guarantee that things will happen but if they don't cooperate clearly things will not happen. Finally the U.S. and China as the two largest trading countries in the world should also take the lead in reinvigorating the Doha Rong of world trade negotiations as well as enhancing the multilateral trading system benefiting not just themselves but also the rest of the world economy. Let me stop here. Thank you very much. Thank you very much Larry. I think that gives us a very good sense of what's in the report but I would recommend that you read it as well and get more of the color. Mike? Good morning ladies and gentlemen. Matt, thank you for having us. Somewhere along in this process some part of our team suggested that somebody ought to look at the evolution of the global economy the Chinese economy and the United States economy in the next 10 years which seems like almost everything and so somebody said why don't we get Spence to do that and so I did it's one of the chapters in part two and now I have 10 minutes to tell you a bit about that and the reason we wanted to do this is that the world is changing really quite quickly for all of us and if we're going to try to find over time sequentially ways in which we can cooperate and help each country and indeed our brethren in other countries achieve their goals then we need to have some sense that's not trapped in historical reality of how this is going. So let me give it a try. I'll start with the global economy. We are in a sense at a turning point that many of you know about. The developing countries as a group who have about 85% of the world's population and a minimal part for much of the post-war period of the global economy are now half the global economy and that fraction is rising very rapidly because of an accelerating and spreading pattern of growth in the developing world. Obviously China is at the core of that. Both shares are always a zero sum situation because they add up to 100 but this growth in the share of developing countries is going to be produced by large scale absolute growth in those economies and therefore in the global economy to support one of the many things that Larry covered. We're talking about if things go well a global economy that in the next 25 to 30 years will triple in size will be that I know believes that if we try to make that journey on what you might call the old growth model including the old way of using natural resources that our planet gives us nobody thinks we'll get to the end of the journey without a major disruption. So for sure these two countries having such a dominant position in it are going to have to have a leadership role in inventing over time an adjusted growth model that's consistent with the natural resources that our planet has. Now in this growth in the developing world China has an absolutely central position. It is the sort of high growth core. I did the following exercise about a couple of weeks ago. I took the other bricks and Mexico and Indonesia and added up their GDP and it came to just larger than the Chinese GDP. So China is at about half the size of the European and American economies right now at these growth rates it'll be on a 10 to 15 year horizon where people differ where you fall in that interval it'll be about the same size as our economies at which point they'll have a per capita income of somewhere between 20 and 25 percent of the advanced country. So size and individual income and wealth are two very different things. The journey to being comparable in terms of incomes is much much longer. The developing countries are also what is sometimes called partially decoupled. The post crisis experience has indicated that unlike the past. I mean if 25 years ago you had a disruption in the advanced economies of the magnitude that we've now experienced and continue to experience that would have immediately killed a substantial fraction of the growth in the developing world that has not happened now. So these economies are resilient because they have big domestic markets they are richer and demand things beyond housing energy and food. They trade with each other a lot. Now that doesn't mean when we I live in Milan. So we're kind of the epicenter of global systemic risk. Now if we have a huge downturn now that that will and is already adversely affecting growth pretty much everywhere. May make one more point before turning to the to the to account these two economies and that is at some very deep level our interests are aligned even though we are living through a changing world. If you go to China and say apart from getting the job done internally what would you most like to see happen in the global economy. They will respond. We'd like to see a full recovery in Europe over time and we'd like to see a pattern of restored growth and health in the American economy to continue and if you go around to these other places you know you will get similar answers vis-a-vis the other two. The bottom line is even though we have a tendency to focus on the frictions and the mistrust and the other things that divide us at some very deep level we don't have an interest in a failure in these three now core systemic parts of the global economy. Now China is going through the middle income transition. Some people use the word trap. I don't like the term because there are counter examples. Japan, the Taiwanese economy in South Korea are among those who went through the middle income transition at high speed but the fact is that those of us who study developing country growth patterns and stages will know this that the vast majority of countries that enter the middle income transition either slow down or stop completely. In fact the vast majority of the developing world now is measured by GDP is somewhere in the middle income transition trying to accelerate out. You will get various opinions on China. I'm on the optimistic side. I think China will manage these very substantial structural changes that go along with the middle income transition. They have a history of tackling these things with great skill. It is one of the most open economies with respect that I've ever been in in the developing world with respect to understanding the positive and negative experiences in other countries and learning from them. This is not the occasion to discuss the bits and pieces of this transition to spice it to say they are major major structural changes on the supply and demand side. But if it all works out this is an economy that will be on the on in terms of demand a major opportunity. The McKinsey Global Institute wrote one of the chapters for this study and estimates that the middle class group in China now numbering 230 million will rise to well over 600 million in the next 10 years. That's on the order of doubly American population. This is an essential part of the growth model in China but it's also a huge, huge opportunity for virtually every other country. I should say that the network structure of the global economy is such now that for a large and growing list of countries China is their major external market. That would include India, Brazil, Australia, most of Southeast Asia and a great and a growing list of countries. So and a major halt in China would slow their growth virtually immediately. Not stop it. There's a monogamous growth engines but slow it. Now let me say a few words about the American economy and then close with some general thoughts about this kind of cooperation. The two presidents are meeting in Los Angeles at the start of June very soon. We all hope that they feel confident about the reforms and structural adjustments in their own economy and that they manage to get a number of things done. One obviously will be addressing the sort of inconsistencies in our system and the frictions and mistrust that result from it. We all hope that they also address a rather more fundamental question that Henry Kissinger talked about yesterday which is what do we want these two economies to look like and how do we want them to relate 10 years from now as a context for an ongoing process of the more detailed job of figuring out how we cooperate. This isn't a one-shot effort. We're hoping this establishes a pattern of cooperation where we discover over time. And the last thing that we hope these two countries do is to think carefully about the roles they want to play as leaders in providing a global context that's stable. Now the good news is the American economy is recovering. Probably much better than we ever would have thought of even, you know, nine months ago. We have increased competitiveness in the trade bull sector, employment and exports going there. Our deleveraging is quite far along, not complete. So the demand shock that we experienced in 2008, 2009 is starting to recede. The housing market is stabilizing and we have the tailwinds of renewed sources of relatively low-cost and clean energy. So we're a little more confident and maybe a little less inclined to focus only on our own. We have lots of issues. We are under-investing as a country on the public sector side and that probably won't go away soon. We have a tax system that was prominently featured on all the programs as a result of Tim Cook showing up from Apple and being grilled and winning, if you saw it. It's just nuts. So we've got lots of work to do and a lot of the heavy lifting. But as C.H. said at the start, we believe that both in China and in the United States this restructuring and establishing sustainable patterns of inclusive growth is hard work on both sides, but that if we can make a material difference with a cooperative relationship. Finally, on the global economy, it's a relatively dangerous place right now. It's highly interdependent in evolving patterns. If you study global supply chains, you'll discover that they are becoming more and more complex. The network structure of the global economy is evolving very rapidly. There's some very good research, including by the IMF, for those of you who are interested on this. But the bottom line is that we are in a situation in which the interdependencies have outrun our capacity to manage, regulate and oversee. So this is a potentially volatile world and we all know at some level that this is not a pattern that we want to continue indefinitely. In my view, it's a generation's work to build the international capabilities and institutions that are capable of surrounding and providing the stability in this interdependent global world that we want. I remind myself occasionally that in much of the post-war period, this job was done largely by advanced countries who dominated the global economy. Indeed, Americans, I think especially younger Americans, forget that America had the leadership role right after World War II in creating the fundamental characteristics, the architecture of the global economy that's produced all of this growth and all of this optimism and opportunity in the developing world. And it's something that we should be quite proud of. But now we have a new job. Now we have got a highly diverse set of influential partners to work with. And I think the thing that our team would all agree on is that if the United States and China at some point don't join together and provide a leadership role in creating what are sometimes called cooperative non-equilibrium outcomes in the global economy, as opposed to non-cooperative equilibrium outcomes that are sort of deficient in terms of Pareto efficiency, then probably nothing good will happen. That is, this is not a sufficient condition for effective global cooperation, but it's almost surely a necessary condition. So we're optimistic about these two economies, and we're hopeful that the cooperative scenario starts to dominate. We do not underestimate the challenges associated with achieving that, but we think it can be done with effective leadership. Thank you very much. Thank you, Mike, and thanks for ending on a note of optimism there. Dr. Wong, would you like to speak here or there? Either is fine. Okay. And we are going to, Dr. Wong is going to speak in Mandarin, and we will have a consecutive interpreter. I'm very happy to have the opportunity to be here today for this launch of this new report, and this report is a very important report in which Chairman Tong was the principal researcher. And for the first time in this report, we see a deep look at the past, present, and future of U.S.-China economic and trade relations, and it is objective as well as comprehensive. Yesterday, in New York, it was released, and it got excellent reviews. As for the current economic situation and the future economic growth posture in China, a lot of our friends have expressed a lot of interest, and that's why I'm here today to talk a little bit with you about a few of my thoughts on that. First of all, it's about China's economic growth. As you know, over the past 30 years, China has maintained the growth rate of nearly 10% in recent years. On the one hand, there has been an impact on the international financial crisis, and on the other hand, China's economic growth has changed. On the other hand, China's economic growth has reached a relatively large scale, the second major crisis in the world. The economic development's structural contradiction has increased. The transformation of the economic development method and the reasonable adjustment of the economic structure have been quite outstanding. Under this big background, the Chinese government has determined to improve the quality and efficiency of economic development. The Chinese government has decided to put a lot of effort into the development and improvement of the industrial structure. The growth rate will also be significantly slower. This is also the process of a lot of countries' experience. Many scholars believe that this is the inevitable rate of economic development. This is the improvement of the structure and the slowdown of the growth rate. This year, the data shown in the first quarter of this year, the growth rate of the third industrial industry has reached 8.3%, and the growth rate of the second industrial industry has increased by 0.5%. The growth rate of the third industrial industry has increased to 47.8%, and the growth rate of the fourth industrial industry has increased by 1.6%. This trend also matches the requirements of the international public administration. First of all, let's look at the direction that the Chinese economy is taking. Everybody knows that in the past 30 years or so, China operated at about a 10% economic growth rate. In the past few years, that rate has been down a little bit. That is due in part to the international financial crisis as well as the external environment, which went through some changes. At the same time, the economic aggregates in China have reached a point where we are the number two largest in the world. The economic development right now is in a situation where there are major structural tensions, and it's very important for us to go about transforming the way our economy is developing and to tweak the economic structure. This is right now a task and a job where we have our work cut out for us, and it's also very urgent. Against that backdrop, the Chinese government has set up some goals to try to improve the quality as well as the efficiency of economic development and make that a main task. We will be working very hard to transform the industrial structure, upgrade it. In that process, the growth rate may come down a little bit. A lot of countries have been through this before us, and a lot of scholars think of this as sort of an unavoidable law of economic development. So what will happen will be that our whole structure will improve while the rate, the growth rate itself comes down a little bit. If we look at the statistics from quarter one in 2013, the value added in the tertiary industries grew at 8.3%. Which is 0.5% higher than the way the value added in secondary industries grew. And these tertiary industries value added accounted for 47.8% of GDP, which was up 1.6% year on year from last year. And this is a trend that's positive and that also is in keeping with our macroeconomic regulatory goals. China's economic growth rate has been slow, but it's still at 7% to 8%. In comparison to the whole world, it's still higher than the growth rate. We are still optimistic about China's economic prospects. This is because, first, China's growth in industrialization and urbanization is the key period. It has expanded the right to do so. Second, China is going to continue to develop and expand. This is also the biggest red light of China's future development. This will also bring an important impact to global economic development. So, with the growth rate coming down a little bit, it will be in the range of 7% to 8%, which actually is considered a high growth rate compared to other places in the world. As for the Chinese economic prospects, overall, we are optimistic. That is because, first of all, right now in China, we're going through a period of industrialization and urbanization, and we are also working on improving our domestic demand. There is a lot of potential to stimulate domestic demand. The second reason is that we are committed to deepening our reforms and opening up further. This will bring about a lot of dividends. These dividends will bring a lot of good things to everyone in the world. The total number of government debt is more than 30 trillion yuan. The average domestic production rate is only about 60%. And the total debt is more than 95% of the total debt. The government's debt risk is completely empty. From a long-term perspective, China has to continue to improve its financial system and financial system especially for debt crisis and financial risks. Of course, we do face challenges and we do face risks, but we do think that the risks that we're facing are controllable entirely, and everybody is very interested and is very concerned with the debt issue in China. According to statistics in the public domain, as of this point in time, general government debt, the government debt at all levels added together in China, is a little bit over 30 trillion RMB, which accounts, and that, is a little bit over 30 trillion RMB, which is a little bit over 30 trillion RMB. That accounts for about 60% of our GDP, and of that debt, 95% of it is domestic debt, internal debt, and so we think that these government debt risks are fully controllable. Looking at it long-term, we in China will also be doing more in-depth reforms in the fiscal and tax arenas as well as financial reforms, especially when we look at what's happened in the area all around the world with debt and with financial risks. We're very aware of this. We're very alert and we're on our guard about it. We will not let down our guard when it comes to issues like that. Thank you very much. Ladies and gentlemen, China is a member of the great family of nations, and we are also one of the most important trading partners of the United States. We will continue, and we would like to continue to work together with all countries of the world in the economic arena, and we are committed to the liberalization and the facilitation of opening up our trade and investment environments. When it comes to complimenting each other, China and the United States are very complimentary. If we do everything right, we can have a win-win situation, and I really hope that the two sides will increase strategic trust between each other, and we'll work together in innovative ways, like, for instance, setting up a bilateral free trade zone between us. I hope that working together and doing all of this, we will bring about a better life and a better world for the peoples of both of our countries and make the world a better place. Thank you, Dr. Wang, and thank you, Vicki, for that interpretation. So we will now do a little bit of a break. You shouldn't get up. We're going to switch places here and put the panel up here, so if you could just bear with us for about one minute, we're going to do a little choreography here. You are welcome at any time to get coffee in the back, but please don't be anywhere because we're going to go.