 This is going to be great fun and I would like to especially say my sincere thanks to Secretary Madeleine Albright. It's a great privilege to have her here. You know, there are many things that you could say about Madeleine Albright and she's set records in every dimension. The one that stands out to me most is that she has five bestseller novels or books. You know, I don't know anybody else in public service that has five bestsellers in the New York review books. It's remarkable, but it's typical of this very broad and grand intellect that has devoted so much of her life to making America's foreign policy better. And I first had a chance to interact with Secretary Albright many years ago when I was just a little staff guy up on the Senate Armed Services Committee and used to hold salons over in Georgetown where you were trying to help people think about better ideas for America's foreign policy. And I've had a chance through little ways to work with and around Secretary Albright for the last 20 years, 25 years. Yeah, I'm very proud to say that Secretary Albright was an alum of CSIS when at one time she was a research assistant to Drs. Big Brzezinski. And at the time there was a question about what was going to be her title. And Dr. Brzezinski said, I think we should call you Empress of Research. But it shows the kind of the affection and respect that they had for each other and continue to have for each other. I must say I've been the great recipient of being in her presence and around her for many years and it's been a real joy. Secretary Albright, while she was Secretary, was quite instrumental in shaping much of our current policy portfolio as it relates to China. And I can remember that she was championing the way that we should help China become a member of the WTO. And this was one of her signature accomplishments when she was Secretary. And it has been since that time she has kept an active both intellectual and business presence working around Americans and Chinese helping our two countries understand each other and find the positive benefits of working with each other. So I think you are the perfect person to keynote this and to bring this conference to its climax. So could I ask you all with your applause to please welcome Secretary of State, Madeline Albright. Thank you very much, John. And there's nothing nicer than to be introduced by a good friend. So thank you and I am delighted to be back at CSIS though this is much grander than when I was Empress. And I want to congratulate the Simon, the Simon Chair and Political Economy Program here at CSIS for putting together such an informative and comprehensive report on China's economic transition, which I understand is the culmination of two years of in-depth study. And this is indeed a critical time for China's development and for U.S.-China relations. So I very much applaud your efforts to probe China's economic decision-making processes and to better educate policymakers and business leaders on the complicated political and economic landscape in China today. And the title of the report is especially apt as I read the papers this morning, the Wall Street Journal about the Chinese Navy and everything that is going on. So as always, well done. As the study notes, after 30 years of rapid historic and by and large successful growth where hundreds of millions of people were lifted out of poverty, China finds itself at a challenging inflection point. Labor is neither as cheap nor abundant as before. An emphasis on low-skill manufacturing has given way for the need to innovate and excess capacity and growing debt have called into question the sustainability of an economic model from which China has benefited for so long. The United States has an awful lot at stake when it comes to China's economic decision-making, which explains why so many in this country are concerned about China's political and economic trajectory. Indeed, today there are growing questions about whether Chinese leaders will be able to take the actions necessary to transform the country from an export-oriented and investment-focused economy into one in which the drivers are consumption and innovation. It's equally unclear how well Chinese leaders will be able to grapple with the host of additional challenges that threaten social stability such as urbanization, serious pollution, rising income inequality and persistent food safety concerns. How China addresses these problems matters deeply to the United States because our economies are more interdependent than ever before. And we stand to benefit greatly if China's economic reforms succeed and we could suffer if China fails or if its rebalanced economy is not open to Chinese and international firms alike. So we need to come to a better understanding of what's happening in China today and how its pursuit of economic reforms will impact the 21st century's most important and complex relationship. And let me repeat it. I do think that this is the 21st century's most important and complex relationship. In my current role as chair of the Albright Stonebridge Group and through my association with various Track 2 initiatives, I travel to China often and frequently participate in dialogues designed to foster greater understanding between our nations. But my own perspective on this subject does extend back several decades to when I first began serving in the United States government and that was late in the 1970s during the middle of the Cold War. I was working in the Carter administration at the National Security Council for Zbigniew Brzezinski who had actually been my professor at Columbia so I tell my students they should be nice to me. But and my job was to convince members of the US Congress to cooperate with the executive branch and this was not an easy assignment even then as now. President Carter as you know had proposed a historic plan to normalize relations between the United States and the People's Republic building on the opening made by President Nixon and Secretary Kissinger. For President Carter's plan to succeed Congress had to agree and in an effort of persuasion I had the privilege of accompanying a congressional delegation led by my previous boss Ed Muskie of Maine. To me the trip felt like a great adventure because for almost 30 years they had been very little contact between our two countries and even though it was a few years after Nixon's visit most of what we knew about each other still came from magazines and history books and much of that information was inaccurate, distorted or just plain wrong. Our lack of familiarity meant that our meetings although friendly were also formal and stiff and both sides were curious about the other and very polite but no one dared to inject humor into the conversations or be able to relax. One of the things when we first arrived in Shanghai I loved the idea of getting up very early in the morning to walk around and what had happened there I had seen everybody in their dark suits, malsuits but I did notice early in the morning that the Chinese had exuberantly colored underwear that was all on the lines in Shanghai. When I returned to Shanghai in my official office I now see that the underwear and colored underwear has been replaced by neon lights but I'll never forget those early walks in the morning. I think one of the things why it was hard for us to understand each other and relax is because we represented vastly different cultures and ideologies and economic systems and we were each unsure about what the other wanted and failed to fully envision where those initial conversations might lead or how soon China might transform. To be fair there was no such thing in those days as a Chinese entrepreneur and few signs of apparent were apparent to us that the leadership in Beijing was already planning for dramatic change. Yet hardly a year passed before Vice Premier Deng Xiaoping came to the United States to share with President Carter his plan to open the Chinese economy, a decision that continues to shape both of our countries and the entire world. As we all know since the beginning of the period of reform and opening up China's economy has grown at a faster rate over a longer span of time than any other in history. Extreme poverty has declined sharply, average life expectancy has more than doubled, illiteracy is vanishing, the middle class has mushroomed and Chinese industrial centers have become magnets for investment. In the process the country has established a host of new connections to the United States and has gradually assumed a more expansive international role. And all this helps to explain why in the late 1990s when I was Secretary of State, I visited China five times in four years. The Chinese Foreign Minister and I had become very good friends but frankly both of us seem to be very bored in our meetings as we sat there with our talking points given to us by our staffs and so finally one of the times I said okay here are my talking points, give me your talking points and let's have a strategic discussion which we did and so I think that because we were able to expand on each other's thinking I think that it was a very helpful kind of process. I have to say the part that was interesting was watching Chinese behavior as it expanded. When I was at the United Nations first it was very hard to get any Chinese to be a part of any discussion in the informal sessions unless it concerned interference in internal affairs. Otherwise the Chinese representative would just sit there and you never knew whether the person was going to vote or not. So I finally gave the Chinese rep a little blue ball so that he could practice raising his hand in order to vote but basically it was a matter of trying to get China involved in international affairs. I do think that what did happen was as our relationship progressed our meetings became far more interesting and so among the things we did discuss and John thanks for mentioning it was about most with China's potential membership in the World Trade Organization. As you may remember the Clinton administration fought hard and successfully to persuade our Congress to authorize permanent normal trade relations and thereby make possible China's entry into the WTO. Ken you had an awful lot to do with all that so we prevailed in part because of the vigorous support we had from the American business community. Together we argued that China's membership would be good for both countries and we were right. It's hard to believe this now but US China trade back in the 1970s was less than American trade with Honduras and when China joined the WTO in 2001 our bilateral trade exceeded 120 billion and today as you all know annual trade is worth over 600 billion dollars. The bilateral relationship that our policymakers and businesses helped nurture all these years is much more complex now. We're no longer creating something new but managing bilateral ties that are well established sometimes rocky but always evolving. So where does our relationship stand today? First it's very much worth noting that both presidents Obama and G have demonstrated their commitment to maintaining strong bilateral ties. The two leaders had a chance for that one-on-one interaction early on at Sunnyland Summit two years ago and shortly after she came to power and have since met several times to discuss issues of importance in our countries and the world. At the APEC Summit in Beijing last November both presidents agreed to a landmark ambitious agreement to curb the effects of climate change with China committing to stop emissions growth by 2030. And this was a huge step forward and a key step in spurring other nations to do the same. As President Obama told President Xi when the United States and China are able to work together effectively the whole world benefits. As in any relationship of this complexity there have been and will continue to be stresses and disagreements about issues ranging from territorial claims in the South China Sea to human rights. But of particular concern to me and of great relevance to today's conversations are the challenges facing our economic relationships right now. The United States has had many longstanding issues with China such as inadequate enforcement of intellectual property rights, investment restrictions, regulatory barriers and licensing problems that have restricted market access for our companies in China. But in addition to these legacy issues U.S. businesses are voicing increasing concerns about a series of actions taken by China in recent months including its enforcement of China's anti-monopoly law, its development of new cyber security regulations and the government's increased support of state-owned enterprises. It's interesting to note that Secretary Liu just in the last 24 hours has been working on the issues to do with some of the cyber security regulations. These measures are changing the mood about China and in the U.S. business community which has historically been the strongest backer of closer U.S. China ties. A recent poll released by the American Chamber of Commerce in China showed that nearly half of U.S. companies surveyed feel less welcome in China now than they did a year ago. Almost 60% felt that foreign firms were being singled out by the Chinese government's recent campaigns. These actions are also shaping perceptions of President Xi who has clearly been the driving force behind these measures. I often think back to a dinner that Xi Jinping hosted for me and other former people when he visited Washington as vice president and heir in, heir apparent in 2012. In our conversation he appeared to be very much attuned to the needs of his domestic constituents and indeed he has since taken on populist themes to enhance his and the party's credibility with Chinese people. But he also appeared eager to establish connections with the United States. He made a big point about telling us about his days in Iowa as an, on an exchange program and he said that he had kept in touch with his hosts and fondly recall the generosity he encountered, his love for Mark Twain and the beauty of Muscatine, Iowa at sunset. Three years later there's no question that President Xi has become China's most powerful leader since Deng Xiaoping. He has already skillfully asserted his control over the direction of China's economy and foreign policy. Xi has also reinforced his authority over the Chinese Communist Party through his anti-corruption campaign and measures such as his fore comprehensive which includes a call for a strict discipline among low and mid-level party officials. Indeed when I visited Beijing last December as part of a dialogue between the Aspen Strategy Group and the Central Party School I was struck by how closely officials adhered to the party line. It was a marked departure from other dialogues I've had in recent years. One was between American, Democratic and Republican political leaders with the International Department of the Chinese Communist Party where we had, first of all I was trying to figure out why they wanted to have the dialogue in the first place but clearly in some effort to figure out how to release some of the pressure at the bottom of the pyramid and there really was much more discussion there to the point where I finally had to say don't tell me about your party system. We don't know whether we have 71.5 million members and nobody registers, nobody goes to party school at which point one of the people in my delegation chairman of the Democratic Party Howard Dean said yes we do know how many people we had because of the great database I established. So, but we did have some back and forth. One would think that the centralization of authority would yield rapid progress on the reform goals Chinese leaders laid out in November 2013 but implementation has been slower than many had expected. And I think that that was the kind of the frustration that many on the American business side feel about the pace of economic reforms. My own impression is that the anti-corruption campaign and other new policies have had such a chilling effect on the Chinese bureaucracy the governance is being disrupted for it is safer to do nothing than make any policy or commercial decision that may be called into question. It isn't only American companies who feel under pressure. In recent months the environment for civil society has also become much more precarious. I'm deeply troubled by the growing number of detentions of advocates and lawyers as well as the tightening of control over foreign and domestic NGOs in China. The ongoing anti-western ideology campaign is also making Chinese entities fearful of partnering with foreign academics or NGOs. And this is extremely hurtful to China's continued growth and development and to achieving President Xi's own goal of creating an innovative society. So it's fair to say that I have some concerns about China's current direction. There are real questions about what will happen to such a top-down political system with its burgeoning middle class when people start to expect more from their government. I'm told that President Xi and other Chinese leaders have studied the fall of the Soviet Union. It struck me recently that they and Vladimir Putin have this in common, none of them want to be Gorbachev. But China is not the Soviet Union or even Russia under Putin. And the relationship between the United States and China is too important for us to even think about not paying enough attention to it or writing it off. President Xi and other Chinese leaders want to put their economy on a stronger footing and to succeed they will need to raise standards and best practices in industries and throughout their economy, develop technical expertise and strengthen transparency and rule of law, not rule by law. The Chinese government knows it can't do all this alone and that it must continue to look to the United States business community for assistance. And American companies can, for example, help improve the safety of China's food production process by sharing best practices on inspection techniques and recall processes. They can help make farming more sustainable with smarter integration of new technologies in the agricultural sector. And they can partner with China to integrate new technologies such as mobile internet, cloud computing and big data with modern manufacturing. There are many compelling examples of areas where American companies can be helpful in creating a stronger, more stable business environment in China. So we have to continue to encourage this interaction because our own well-being is in many ways dependent upon how well Beijing implements necessary economic reforms. But when we see that foreign participant in China's economy are not being treated fairly, we must confront these difficulties head on. For example, the United States has been vocal about its concerns with China's draft counterterrorism law and its cybersecurity provisions which would effectively force many U.S. technology companies out of the Chinese market. And that is a lose-lose proposition for both sides. The bottom line is that both of our countries have an interest in safeguarding security of new information technologies and in the process preventing cyber aggression from becoming an even greater source of neutral suspicion. One thing I've learned about engaging with China or any other country for that matter is that leaders cannot be bullied into acting against their own perceived self-interests. We can, however, appeal to the pragmatism of its leaders to find areas where our interests coincide. And I expect that will be the Obama administration's focus on the run-up to President Xi's visit to Washington this fall. I know from my own years in government that leaders in both Washington and Beijing must cope with enormous pressures. Some of these pressures are political and some economic and some domestic and some global. All are inherent in the challenge of trying to govern countries of hundreds of millions of people in an era of technological revolution, social mobility, and ideological uncertainty. We see this growing pressure at the bottom of the pyramid today in China. And President Xi's added dilemma is that many of the most important systemic reforms, particularly those that would increase the role of market forces and increase competition in the economy, may slow growth all at a time when the economy already has begun to show signs of flagging momentum. The temptation in all countries will always be strong to find a foreign explanation for problems at home. Thus, deflecting immediate blame but also making diplomacy more complicated. And this is especially the case when a relationship is as vast and has as many dimensions as that between the United States and China. When I was Secretary of State, observers spent an awful lot of time debating how best to describe the connection between our two countries. Some called it our relationship complex while others preferred multifaceted because it had more syllables. Some said that we should be called strategic partners and others thought strategic competitors would be a more accurate term. My own view is that such labels are so dependent on particular circumstances that they can often be more misleading than helpful. Terms like competitors can also encourage a zero-sum view of U.S.-China relations, which I think is counterproductive as we've seen in some of the debate over the Asian Infrastructure Development Bank. The truth is that our two countries' relations are far warmer, deeper, and more productive than anyone would have dared to predict a quarter of a century ago. We've made amazing progress and at the same time, our governments, businesses, and civil society organizations still have moments of irritation and disagreement. And there's no doubt that we are in one of those moments right now. The good news is that we have learned through experience to prevent these disagreements from causing a rupture in ties. The bad news is that sources of potential strain will continue to appear at unpredictable moments. The one thing we can be sure about is that our relationship is and will remain the most significant in the world. And that means that we have to persist in the task of understanding and adjusting to each other. We have to make this relationship work and we have to get it right. And that this does mean that we will always, it does not mean that we will always agree because we won't. It does not mean that either country must abandon its interests or retreat from cherished values because that will not be necessary and certainly not viable. It does mean that we should endeavor to identify projects on which we can join forces and manage our differences so that they become less and less frequent over time. And to that end, our leaders are more likely to act wisely if the American and Chinese people continue to learn about each other, communicate with each other and make the effort to better understand one another. And I have to say this conference and this report is an amazing contribution to that as I look through the text and the recommendations. So let me thank you once again for inviting me and I now look forward to answering your questions which I will be able to do since I'm no longer in the government. I'll move this out of the way so you all can see. And oh, if you hold it off. And I think it's really nice to have name tags so you know which one is Madeleine already and which one is John Henry. I do get us my step John. That's exactly right, but not intellectually. Let me just first start. One of your bestselling books was entitled Read My Pins. And so tell us about the broach you have on right now. There's always a special message with Madeleine. This is very important. First of all, let me say how the whole thing started with Remind. I was up at the United Nations and my, as an instructor, ambassador to make sure that the sanctions stayed on Iraq and on Saddam Hussein. So it was a series of sanctions so they kept coming due all the time. And I, my instructions were to say perfectly terrible things about Saddam Hussein which he deserved. He'd invaded Kuwait. So finally a poem appeared in the papers in Baghdad comparing me to many things but among them an unparalleled serpent. And since I had a snake pin I wore it during a rock thing so that's how it all started. Anyway, one of the things I'm very careful about is the Chinese calendar and the year of whatever. So we have just finished. Some of the ones are more fun to wear snakes. And so this is the year of some animal that I can't determine. It's kind of a sheep or a goat with horns. So that's what it is. So she has the ram. I mean it just, we ought to get it started on a right and light note. Let me start, if I may, just with how you ended really when you said that we really need to find ways where we can work together. We need to find projects, things we can do together. Recently we stubbed our toe I think a little bit on this Asia infrastructure bank. What are your thoughts about that? Well, I think we really did in a number of different ways. First of all, this has some history in that there has been question not just from the Chinese but others that the United States has been too dominant in the World Bank. And the attempt had been, and there are proposals before Congress to try to adjust some of the voting in the World Bank and the IMF in some way to try to get more equitable voting shares. And that has been held up by Congress. So I think that there has been a certain amount of frustration about that. And then frankly I think we miscalculated. In terms of that other countries also wanted to be a part of the Asian, the Chinese initiative. And all of a sudden everybody wants to be in it. And so I would hope that we could recapture some kind of sense of cooperation here and work with the bank. And see, and there has, I think, I understand, I hope anyway, that there's some discussion about how that bank and the World Bank can cooperate. But I think if I, this is not entirely, there are those who have felt that the Chinese want to use the bank in order to push their own economic theories and policies throughout the world and use it as a way of entering other countries. I think that may be one of the motives but the bottom line is I think we screwed up. I think that we need it, we should not have done it this way. Well, one of your themes through your speech, and I thought your speech was terrific, was that China for its own good needs to pursue more of a rule of law, more transparency. It strikes me that our involvement with the bank would have helped us make those cases from the inside rather than be on the outside and hold ourselves away. Absolutely, and that is the hope now that we don't see it as some kind of a Chinese power grab but an opportunity for us to be able to put forward ideas on transparency, on some of the regulatory questions and deal with real problems out there where loans would be made in countries where we could have an influence on institution building and rule of law. And it shouldn't be a substitute for trying to reform the IMF. I mean, we did look back. That's for sure. Let me ask Secretary, because you several times spoke about our mutual suspicions and the tendency for get into rivalries and that sort of thing. We tend to read each other fundamentally wrong in some ways. I mean, China, I think some people in China feel they can push America out of Asia. We know that's not going to be the case. Nobody in the rest of Asia wants us out. Some people in America want to contain China. That's not possible. We know that's not going to work. We know that. But what's going to be our relationship with the rest of Asia as we sort out our bilateral relationship? How do we design a system where we can have a relationship with China, but brings in the rest of Asia when it seems that that's kind of the pivot point here? I think you put your finger on what is a basic problem here, which is that the way things have been viewed is that there's China trying to get friends and allies and us trying to get friends and allies. And that we are not, that we're operating in parallel lanes and not really looking at ways that we can cooperate. I think that in both countries there are those forces. I think we always, we know we're not monolithic, but I think we also have to understand that there are a variety of forces in China. And there are those who would like to make clear that the U.S. is trying to contain China. They have, I would say, a peculiar relationship with our military that wants to make clear that we need more military so that we can compete with them, not contain them, but compete with them. And so I think that there are forces on both sides that want to show that we have to be strong in order not to be consumed by the other one. And there definitely is a competitive aspect to that. The part that I think gets more complicated is in the trade relationship, for instance, where I think TTP is a very good agreement with 11 countries there, but China is not one of them. And at the same time, the Chinese are creating their own economic package in terms of and trying to figure out how we compete with each other when frankly there ought to be some way to bring this together and some of this has to do with the fact that there is no real structure for how Asia, East and South and East Asia are run. Having just spent a lot of time with NATO and various European organizations, there's nothing really comparable, comfortable in this region. But I think one of the things that makes it really difficult is that our allies, the Japanese and the South Koreans, are not viewed very well in China and vice versa. And certainly, anti-Japanese feeling is rampant in China and so it makes somehow bringing all this together a little bit more difficult. I do think one of the things that I've always said, as I said, I've just dealt with Europeans and they are very irritated at our rebalancing to Asia and feel that we have abandoned them. And the Asians believe that we are there now to contain them. Clearly, the way that I think I have stated all along, the United States is not a monogamous country. We are both Atlantic and Pacific power and we belong in both places and we need partners in both places. I felt that there's a bit of a tension in our government's approach on TTIP. I strongly support TTIP. I think it's a very good thing. But as you said, TTIP can't work if it's meant to exclude China, that it has to be broadened and so that ultimately China becomes a member of it. Yet at the same time we're saying that the TTIP is important because if we don't define the rules, China defines the rules. So there's a tension here. How do you think about this? Well, I think that I don't think the latter should have been stated, frankly, and was kind of irritating to the Chinese for a good reason. I think that it would be more useful for us all to be together in TTIP in a way because part of what I said in my remarks and you said earlier, one of the reasons we wanted them, the Chinese and the WTO, was that there was kind of the sense, first of all, that we didn't want to pull up the plant every year to see if it was growing to see about having trade with the Chinese, but also with the hope that international regulations and international pressure would in fact be an adjustment generally to the way they operated. So being a part of a larger economic system in which there are countries with different trading rules, more alike to ours, I think would be very helpful. I would not have framed it as saying, we have to do this so the Chinese aren't the ones who make the rules. I think we have to learn to figure out how to talk to the Chinese. And one of the things that in the last, I mentioned this Aspen strategy meeting where we just were and one of the people there was asked, what word would you, if you had to use one word to describe how Americans talk to the Chinese, what would it be? And this person said condescending. And I think that we have to be very, this is a major power. I now stated three times in my remarks the most important power. It has to be done in a way where it is viewed in a sense of parody and respect. Do you see then a, should we start now thinking about how TTIP should be expanded so that there is a pathway for China to be brought in? I think it wouldn't hurt. How should we do that? Well, the other thing that we are doing is negotiating a bilateral investment treaty a bit with them. And I think that's another method to try to straighten out some rules. But it isn't easy. I mean, the Chinese have complaints about us to do with how difficult access to the United States is. I think they overestimate the importance of CFIUS and they see it as the method that we keep everybody out when in fact it doesn't deal with, it deals with national security issues and mostly with acquisitions, mergers and acquisitions. But it's viewed as kind of a major barrier. And so I think there's just part of a number of misunderstandings that we have in terms of our relationship with the Chinese. Several points in your speech. You talked about tension inside China right now. Xi Jinping very powerful pursuing an anti-corruption campaign. But you also say it also might be contributing to the slowing down of the economy and the holding back. I mean, this obviously is a very serious dilemma for President Xi. I think that this is probably true of every country when you have a brand new leader who makes massive speeches and seems to have acquired a great deal of power and you've got a country, any country, everything that's ever been written about bureaucracies is true. But especially in a country that has a history of a variety of bureaucratic systems, I think that people are nervous. And they don't quite know, I think they're beginning to see that some, that Xi Jinping is using what is a very popular anti-corruption campaign because there really was a lot of corruption to also get rid of people that he doesn't like. And so I think there is this kind of wait and see. And so our experience, and as I said, I go there frequently, is that things are just slow and that people will say, on the anti-monopoly legislation, for instance, they will say, well, this isn't just against you. It's our own, we're worried about monopolies in our own country. And then you talk to somebody that's really in charge of it and they say, well, you know, we're trying to figure out what the rule really is and is it our office that worries about this or somebody else's? And I do think that bureaucracies have a tendency to keep their head down. So it's slow things, there's the normal kind of slowing down with a new leader and trying to grasp who is who. And then I think there is a certain amount of fear going on. What is happening is this is a re-collecting a lot of the power of the Communist Party and authoritarian. That's why when I say rule by law is very different than rule of law. And when China economically just exploded, it was when the heavy bureaucratic hand was lightened and allowed the creativity, remarkable creativity of Chinese to blossom. But in the last several years, there's been more of a shift towards championing of state enterprises and big entities. And yet there's still this desire to be an entrepreneurial society. This strikes me that this is a bit of contradiction. Well, I find it fascinating because as a political scientist, there's certain verities that one has learned in my case through endless years of being a student, Empress of Research. And so the bottom line is one of the things that you learn is if you create a middle class, that a middle class will wanna make some demands on the political system. What has really happened in China, even though there continues to be a huge division between the rich and the poor in a communist country, there is a middle class. And that middle class in some ways has been not as politically active as one might imagine. For instance, the contrast with South Korea that did develop a middle class and change the system of government there. Partially it is because there is a way of people having been satisfied by a lot of consumer goods and being able to have a better life and being able to travel. But what has happened is that there is a limit on, I don't understand how they're doing this, frankly, creating this class and yet controlling them. And the other part is you can't have innovation if you don't have information and the capability of really linking up with those that are innovating. So I have found it endlessly interesting to study and read about China. What they have done is allow a certain amount of freedom of information domestically, but they can't connect with all the internet and stuff externally. And so at some point they will become behind. There's no way to innovate if you can't really have access to all the things that are going on. What it has done, though, and this they are good at, is actually at economic espionage. That is what we're nervous about in terms of people just kind of, when people talk about cybersecurity, a lot of it has to do with economic espionage. We have to be careful about that. Okay, colleagues, we've, by the way, we're going to offer a light lunch if anybody wants to stay, it'll be outside. The secretary is gonna have to leave in about seven minutes. And so we're gonna have a very brief period for some questions. So let me just, if you take right back here in the corner, we've got a microphone coming to you from behind. David, you'll be next. Barry Wood, RTHK in Hong Kong. Madam Secretary, there's an irony, it seems, that the United States was the principal advocate of the reforms in the IMF that would have given the Chinese and others more say. Why, in your view, has the Obama administration and the business community failed to energetically fight for these reforms in the Congress? It is my belief that they have been trying to energetically fight, but nobody is energetically listening. And that there are certain things that they do not, I mean, there are issues in a whole bunch of things like this where there have been the economic structures, I'm talking about Ex-Im Bank, et cetera, where there need to be some adjustments and changes, and it just has not been a very receptive audience. And I think partially, especially on the IMF, there is kind of this sense that we have the power, we have the money, I mean, the IMF is not run by an American, the World Bank is, but I do think that there needed to be some redistribution and people are concerned, frankly, that we will lose the influence. And that there are, on the Hill, those who wanna make sure that America is always out there before, not seeing the larger picture where we would be better off. We don't have to run everything all ourselves. But I think it is a, I had spent time on the Hill. I've spent time in the executive branch. I have been in the executive branch when the party on the Hill was the opposing one. It's hard work, but you have to do it, but the opposing party has to listen. Believe it or not, I was just going over some speeches that I have to give and some interviews. I spent a lot of time with Jesse Helms, not the most pleasant moments of my life, but the bottom line is it had to be done and I think that that's what the other side has to also see the issues clearly. Brother Sadney. David Sadney, a non-resident here at CSIS. I would like your comments on one of the recommendations in the report that I found most practical, which was dealing with level of relationships. The report points out that the U.S. cabinet level members tend to get trapped in meeting their counterpart, so-called ministers, when the actual power resides at higher levels at state counselors and vice-premiers and the report very strongly urges that we try and change that, but it's very hard to change established patterns. So do you agree with that recommendation and if so, do you have any recommendations for your successors on how to break through to the decision-making levels in China? I think it is very hard, but let me just say this. One of the things that happens is having been a minister that once the people from the other side want to only meet with your president, it kind of denatures what you can do as a minister. So I do think there is a matter of having some kind of counterparts that you deal with and that's why the division of labor, I think it's actually a good recommendation, but it has its unintended consequences, which means that the foreign minister is not going to want to talk to the secretary of state and so I think there has to be some way that you talk with your counterpart and then try to establish higher relations or relations that take place. I mean the strategic and economic dialogue, I think creates a very good place and then the whole commercial, those dialogues I think in some ways need to be made even more important because they are really working, but you do have to get to the top, there's no question, but you can't decide you're not gonna meet with the ministers. Right down here, if we could run the mic real quick, we'll get this and we probably can sneak this in as our last question. Thank you, Paula Stern. Madam Secretary, I thought your comments, particularly in comparing NATO and our relations with our NATO countries, with the building that we're trying to do in the Pacific vis-a-vis China, yet at the same time we've got the issues of Japan and Korea vis-a-vis China being so fractious. So I'm wondering if you have a suggestion of how the US strategically knits this more effectively so that we can have a very positive, more constructive Pacific relationship. Well, first of all, I often tell people, I went to college at some time between the invention of the iPad and the discovery of fire. There were different organizations in our alphabet soup. One of them was CETO, and there were different ways that we were looking at some of the post-World War II and Cold War structures. I think there have been, there are kind of embryonic organizations, ASEAN and a variety of different ways. There have been discussions about creating some larger infrastructure. Six party talks, different ways that, I think it would be very useful, but very hard to do and primarily, and I know people never liked this comparison, is the way that Japan is viewed. Germany was not in everything at the beginning, but at least Germany behaved differently, at least those that were kept waiting for an apology thought so. I have been stunned by the anti, stunned is the only word in the anti-Japanese feeling and making it very hard to kind of, since Japan is our ally, of how to make this work. One hopes that there is a way that Abe economics might press them to do something a little bit different, but until that has worked out, I think it makes it very hard. I do think there should be some attempt to try to get TTP and the Chinese grouping, maybe relations between the two groups at the beginning or use the bit in some way to get more, but I've been in ASEAN meetings, I've been or APEC meetings and it's just, they're the seminal aspects of some kind of organization, but my own sense is until the Japanese issue is dealt with in some way, or in South Korea, I've been in meetings there, it's unbelievable what they say about the Japanese. So I think that this is one of the big stumbling blocks in all of this. Colleagues, I mean, we've all been given a great compliment by the way that Secretary Albright has spoken with us today. She's spoken with candor and energy, honesty, great conviction. It's been a privilege to hear. Would you all with your applause, please thank. Thank you very much. Thank you.