 For the next hour, we'll have a panel discussion of some of the issues around the report. I'm delighted to introduce Victor Fung, who will moderate this panel. Victor, as I'm sure you all know, is Chairman of the Fung Group in Hong Kong and has been very involved with this process. In fact, was the Co-Chairman of the Executive Committee that produced the report. So I will, with no further ado, turn it over to Victor and let him run the show. Thanks. Okay. Thank you very much, Matt. I'd like to also extend my very warm welcome to all of you. It's also great to be back in Washington. I have to echo CH Tongue's words. I think your adrenaline is flowing when you're in Washington. Anyway, I'm very happy to be able to moderate this particular panel. I think you've heard from our speakers. The U.S.-China relations, in my mind, without a doubt, is the most important bilateral relationship in the world. Not only because of the size of the economies and the fact that they are major participants in different aspects of the global economy, but I think also because in today's world I think we need some leadership in the global economy to really, in my mind, think about re-establishing the efficacy of the multilateral systems. I really look to the two nations to take the leadership role working together on that basis. We'll come to that as we go through our panel. I'm very happy today to be able to have a very distinguished panel with us. I will introduce them in a moment, but before we start I just want to emphasize one thing, which really is a follow-on to what Larry and Mike have said about the report. I view the U.S.-China relationship not only as the most important bilateral relationship in the world, but also very often we tend to think of it as a zero-sum game, a win-lose situation. I think that really would be very tragic if it became a zero-sum game. To be sure, there are differences on both sides, but I think there is also a huge white space in the middle for the two sides to cooperate in their own national interest. We're really looking at, in the technology and the words of Professor Mike Spence, this is a very complex multi-phase non-zero-sum game. We really need to exploit the non-zero-sum nature of this, the cooperative nature of this. One of the things we're really focusing on in the report is over the next 10 years, as this relationship evolves, how do we come up with different ways in which we can actually think about win-win cooperation, win-win aspects that would actually build trust for us to deal with some of the more problematic issues that will obviously surface. And I think that idea of how we actually work that white space, I think it's going to be absolutely crucial. In my mind, I think this bilateral relationship is also anchored in the economic relationship. If we look back over the last 30 years, that is what started this relationship. This is what this relationship has been built on. But to be sure today we must go beyond the economics, but we cannot forget about the economics. It's still the bedrock on which we're building. So the fact that this is a look, this study is a look at the economic relationship over the next 10 years is not to say that other issues are not important, but to emphasize the fact that the bedrock is still the economic relationship. Only without that, it's hard to do anything else. But with that, we may not succeed completely either. There is obviously a potential downside as well, but it's a necessary but not sufficient condition for us to have a strong economic relationship. And what we really are focusing on is how do we actually create that over the next 10 years. So I'm happy to have with me on the panel four distinguished panelists who have all had a part in directing the study or actually writing chapters in the study. So there are the experts on this. To my left, I'd like to introduce Vice Minister Ma Xiaohong. Vice Minister Mao was the Vice Minister of Commerce at a crucial time doing China's WTO entry. And most importantly, she was very much involved in the implementation of China's WTO obligations post entry. So also I have Yana Ramesh, who is a principal from the McKinsey Global Institute. And she has been the author of the chapter on the Chinese middle class. And that's something that frankly the whole world is very interested in. And we look for some very interesting thoughts from Yana later on. I have on my right John Zhao. John is the CEO of Hone Capital, which is the investment arm of legend holdings. And he's a global investor as well as a major investor inside China itself. And on my extreme right is Peter Seligman, Chairman and CEO of Conservation International. One of the most prominent NGOs that are really working in the environmental area and doing a number of major projects in the environment. And Peter has been responsible for the chapter on sustainability and so on in the report, which is part of our report. So let me start the discussion by turning first to Mr. Ma. Minister, you know that the last, as I said in my opening, in the last 30 years, you might say that the relationship between the US was initiated on the base of trade. And trade certainly was the thing that has built a very strong bedrock over the last 30 years. As you look on that particular development, what are your thoughts about that? Very importantly, I'd like very much like to get your view about how this relationship on trade and investment will evolve in the next 10 years. Thank you. It's my great pleasure to participate in this meeting. Particularly, I'm very pleased to see the paper delivered yesterday and get very positive reaction from many aspects. I think everybody very concerned about Sino-U.S. economic and trade relationship, not only for past 30 years, but most concerned is for next 10 or even longer period. So I think the paper delivered information about very bright future in the next 10 years. So it's very important to confident to the people who are involved in these aspects. So just as Dr. Feng said, and also as the first several speakers delivered the information, in the past 34 years, the trade and other fields in economic and trade relationship developed very rapidly. At the beginning, when two countries set up a diplomatic relationship, the trade volume is only 2.5 billion U.S. dollars. But in last year, the trade between two countries in goods already reached nearly 500 billion U.S. dollars. The trade in service was about 41.5 billion U.S. dollars. And the tourists from China to U.S. is over 1.8 million people. And the tourists from U.S. to China is about 2 million. So it's a lot. At the beginning, when we set up a diplomatic relationship, there is only very small amount of trade volume. There is no other cooperation in other fields. But right now, the trade volume in goods, as well as in service, is really expanding so rapidly and has very big fundamental changes in this field. But most interesting thing is that the relationship between China and U.S. in economic and trade not only present in the trading aspects, but also in many, many other sectors. The foreign investment is one of the very important part. By the end of last year, the investment from U.S., direct investment from U.S. to China, has reached 70 billion U.S. dollars accumulatively. From China to U.S. is over 10 billion U.S. dollars. The investment from China is only started from recent years. So 10 billion is not a very big figure, but it shows one of very important sectors for further Sino-U.S. economic and trade relationship. For next 10 years, I think the paper already shows very clear. It's very bright future. But of course, the precondition is that China and U.S. can keep sustainable and healthy development in bilateral relationship. There is no very clear figures for 10 years, but the figures shows in the paper, I think it's very encouraging. But at least for next five years, I think there is something we can predict, such as the trade between, not only between China and U.S., but I can give you some figures for next five years for China with the whole world. The trade for China, the international trade figures, I think in the next five years, we reached more than the import for China. We reached more than 10 trillion U.S. dollars. That's in goods. But in service, the trade in service we reached 500 billion U.S. dollars, two trillion U.S. dollars. The investments from China to the overseas investments from China can reach 500 billion U.S. dollars. And the FDI flow into China, I think can keep the scale of 100 billion U.S. dollars every year. So that's some basic figures. But of course, in tourist cooperation, in agricultural cooperation, in science cooperation, in many other aspects, I think there will be very encouraging future. And for the next 10 years, I believe, according to the deep reform and further opening up for China, China will become the largest market in the world, as well as one of the largest investors in the world. So probably the Chinese investment in U.S. will be larger than a U.S. investment in China. That's my result of studying. But of course, some other areas, I think China and U.S. can have very good cooperation besides the trade and investment, such as in multiple trading organizations, such as WTO. I think although right now there is difficulties for WTOs around negotiation. But based on the cooperation from China to other nations, particularly with U.S., I think we can push forward to have a more strengthened, stronger multiple trading system. And also in other fields, such as the regional trade and investment cooperation. The China and U.S. are very active participants in FTA manners. Although we are stark yet to talking about FTA between China and U.S., but I think since both countries are very interested in facilitating the convenience for investment and trade manners. So as a proposal from this paper, if China and U.S. can start to thinking about studying the feasibility study for setting up FTA, or we can start the negotiation for FTA, I think that's very interesting and challenging things. But the result, I believe, will bring a very bright future for both nations. Thank you. Thank you. Thank you very much, Minister. I think that is an extremely good background with somebody who has been really involved on the firing line on this whole development, especially in recent years, especially in the development of trade and how trade is now leading to a much more varied and multiple areas of cooperation. One thing I'd like to explore a little bit more. In the study, we feel that it would be very interesting to start a more thorough understanding of the possibility of an FTA between U.S. and China. What in your mind, Minister, would be some of the major obstacles to having that happen? I think if it can be done, obviously, we can see a very bright future. And maybe all those relatively nice forecasts would even have to be revised upwards. But how do you think some of the issues that would be involved in the feasibility of an FTA? I think from an economic point of view, it's very possible for China and U.S. to starting thinking about to set up an FTA agreement. Because U.S. and China are first, the largest, and second largest economy body in the world. And also the first and the second largest trading power. Right now, U.S. is the largest overseas investment, investors, as well as the largest FTA recipient country. And China is the second largest FTA recipient country, only behind U.S. And the fifth largest overseas investors right now. But of course, according to the rapid growing for overseas investment, China quite soon, I think, will become the third one. Not only in terms of GDP and trade and investment, but in many other aspects. I think for China and U.S., from implementing the free and convenient trade and investment can be very good partner. So that's the basic conditions for considering if it's necessary to have FTA or not. But of course, from another side, for U.S. and China is very different in development level, as well as the conditions in many other aspects. So if we are thinking about setting up FTA, negotiate for FTA, I think it's also very challenging. But when the questions be raised, I think last year, from my idea is why not? At least we can try to think about it and study what's the result of setting up FTA. I think that's challenges for everybody, but it's very hopeful to let everybody think about, to promote about it, to finally find the positive one much more than the negative one. Thank you. Yeah. Thank you. Thank you, Minister. I certainly agree with you. Maybe the ultimate goal of a complete FTA is long and relatively difficult. But the process of looking at that possibility is going to create an environment and atmosphere that can be conducive to a much better relations and could also review some interesting things that both sides can work on constructively. So thank you. I think, let me turn to you next, Yana. I think all of us have thought about China, especially pre-2008 as the factory for the world. And we thought of China as the place to produce. But I think what has become very clear now, especially post the Lehman crisis in 2008, is the enormous potential of China as a market. And the thing that is driving China as a market, of course, is the growth of the Chinese middle class. And Yana, you working at the McKinsey Global Institute have really contributed a very interesting chapter in our study on focusing on studying all the ins and outs of the Chinese middle class. Can you share some of that very quickly with us? But the thing I want to get to is what are the opportunities for the businessman as a result of this huge growth? From 230 million, might you were saying, to 630 million in this middle class segment in 10 years time. So, Yana. Thank you, Victor. Thank you for the invitation to contribute to the report, as well as thank you for CSIS for the opportunity to be here this morning. It really is the sheer size of the Chinese rapidly growing middle class that makes it such a large economic opportunity. As we have heard, the size of Chinese middle class today is already 70% of the US population. And the way we define middle class is starting from the income of $10 or more a day, which is a time when you can afford to pay, not just for the basic necessities of food, shelter, and clothing, but you have about 30% of your income to spend in discretionary goods and services. So while it's obviously clear that the average income of the Chinese consumers is significantly lower than the US consumers and will continue to be, it is the large number that are already starting to tilt the global markets in a way that's very visible. Let me give you two examples. Flat screen TVs. Last year, there were 50 million units sold in China against 42 million in US and Canada combined. Laptop computers. There were 27 million units sold in China against 22 in the US. So already we are seeing China be a much bigger marketplace in many segments and it's not just electronics, there's a number of other goods and services as well. And this is the situation today. We are also seeing the growth very rapidly. As Larry and Mike both mentioned, we will see the Chinese middle class grow from 70% of US population today to roughly twice the size of the US population. So this is a very significant growth that even though we tend to focus on the fact that the average growth rate of China is declining somewhat, we should not forget the fact that we continue to apply the growth to an increasing base of either GDP or consumption, which means that the absolute growth that we are seeing in China is, and will continue to be very, very high and growing. So then to Victor's question, why does that matter or what are the opportunities? Clearly the capacity of China's middle class to become a real engine of global growth is the most positive news perhaps that we could think for the global economy today. That is something that the US consumers have been for years and as we see the demographic tailwind if you want declining, it is a very important message overall. And for companies who are looking for new growth opportunities, that is a big market, both in terms of experts as well as investments in China. But it is not just taking them to China. I think fortunately as both Larry and Minister Ma mentioned, Chinese consumers are increasing their share of consumption that includes tourism. There were somewhere close to 1.8 million tourists in the US when you look at the Chinese consumers, one out of 10 of the upper middle class consumers visited a place outside China last year and in total there were 80 million outbound tourists from China. So the growth opportunities are very large and this is again, remember today and that's one out of 10 of the upper middle class only. There is large opportunities for that to create jobs not just in the US but in the Asian, proto Asian environment as well. And the good news about tourism is that it's one of the industries with most labor intensive impact. So it creates a lot of jobs across the globe. Yet in addition to just the pure consumption it will actually have impact more broadly. As we see the share of emerging consumers be larger in the global economy, it will loom large on the company's decisions on where they are going to invest and what they are going to do in their next term priorities. And that means that they will want to know what do the Chinese consumers prefer, what are their preferences and that will influence the kinds of innovations, the kinds of investments and productivity improvements that companies will look for. So that will create a new challenge for companies of understanding what is going on with the Chinese and other emerging consumers but it also will influence the kinds of goods and services that we will see in this country because companies are going to change where and how they do things as a result of larger and larger parts of their consumers being in the emerging world. Niana, thank you very much for that. I must say that I, as a member of the business sector I totally agree with you. What we're really seeing now is the supply chains are becoming a lot more complex in the world. Pre-0208 let's say, you know, the whole world used to think about sourcing from the developing countries mainly from Asia and selling in the OECD market. So you buy from the East and you sell in the West and it's sort of unidirectional supply chains and the containers, remember used to come back empty but now where is the market? And it's not clear that it's actually, your supply chains are a lot more nuanced and the development is also now, how do you actually supply Asia? And we're also seeing a lot of goods flowing this way from produced in Europe, produced in America because why? You produce things in Italy for example, for sale in China because Made in Italy commands a premium in China. Food source from the US, Made in USA commands a premium in China. So I think that the world is becoming a lot more complex. And I may also point out, Minister Ma, that in terms of the trade statistics that I totally agree with the forecast but if you look at the complexion of the trade I think the imports into China used to be majority, two thirds or more basically semi-finished goods and raw materials. Now as China moves away from being just the world's factory but also the world's market you're gonna see the import of a lot more finished goods, finished products. And I think that the whole complexion of the trade is shifting. So I think I thank you for giving us that picture. Let me now move on to you John and I know you're one of the most active investors in China and increasingly outside of China. You know, why don't you give us a little bit your view about how the Chinese direct investment and since you wrote a chapter on that is actually developing. And what sort of impact do you think that will be relevant let's say in the United States as a result of outbound Chinese investments? Thanks Victor, good morning everybody. It's my pleasure to be able to be here and share with everybody some of the experiences we have. Well it is being said often that what happened in China in the last 30 years is an economic miracle. Much of this is being driven and contributed by FDI. And American investment in China has played a very large role. In the report we listed some of the numbers and Larry was summarizing that as well. Accumatively we have up to seven billion US dollar invested in China through so-called direct investments. And I will leave the numbers to everybody's reading but I wanna tell the story that is beyond the numbers. If you look at the China, some of you have been visiting China recently. A typical middle class Chinese life start with maybe waking up to a American tune and drinking a cup of Starbucks coffee, making a call to inform his later rival because Beijing's traffic was an Apple phone. And for sure will probably drive if he drives or she drives a Buick to work. And then the story goes on. That's a result of FDI that started 30 years ago when Motorola opened the factory and when Kentucky Fried Chicken decided that that's world's largest emerging markets. And so FDI effect goes really beyond and associated with all these numbers are ways of life. For us what we've seen very significantly in the last few years is the way that the companies will be governing, managing and carry themselves. And that's very powerful. So much so that a lot of Chinese companies are ready to not only serve the mask requirement but also utilize the resources to serve the ever-changing demand in the world. So the second point I wanted to make is the FDI from China to the world, especially to US. It's coming and it's increasing very, very rapidly. But one thing that I wanted to share is that having, facilitating some of these investments into US and doing more, it's very different. And I think now and maybe for the next decade also, a lot of these Chinese FDI into Europe, into US are actually very domestic focused. They're not like Japanese when they came out to the US and it was really for the market that is in the US. Majority of the Chinese FDI into US would be actually for bringing back the concept, management, service concept, technology to actually better serve their domestic markets, the 200 million to 600 million middle class transition because it's actually very simple to calculate. That's the market, that's the focus. So my point beyond the report is that these investments alongside with continuous US investment into China would actually all be focusing on arguably the best market opportunity, which happens in China. So a lot of these will be greenfield investment in US to bring human capital into serving Chinese requirement to bring technology into applying for Chinese characteristics. And certainly there will be some of the investments that are for securing the food security that is in China, energy security that is in China. So it's very different. I don't think the world has seen that. It's not the kind of direct investment that's saying, you know, buying to the foreign markets at least for the next 10 years. So what it really leads to is, I think, the next round of FDI, which is very different. You know, the last 30 years, it's one-way street from US to China. In the next 10 years, it'll be two-way street. A lot of US direct investment into China like before, very refined, you know, moving from factory to service sector. And even more, Chinese investment to US, again, bring the concept technology, again, for Chinese market. These two-way exchange for direct investment would actually create, hopefully, some benefit that is beyond just FDI. For instance, the opening up of Chinese capital market. When the Chinese do not have a requirement or need to invest their capital to foreign market, they tend to close up their capital market. When they have this need, there's mutual requirement by a lot of lateral exchanges. If we're gonna do FDI, or FTA, I'm sure opening up of foreign capital market is very top on the list. And that will actually further enlarge the mutual benefit. I'll stop here. Thank you. Thanks. Thanks, John. That was very insightful. You know, one of the things that you were talking that came to me is, you know, the US-China relations came from a very simple, you might even say simplistic, origins when diplomatic relations were established. It was basically a pure beginnings of a trading relationship. And then it developed more and more. People then started thinking about using China as a manufacturing base for re-exports and so on. That is relatively simple. But now when you think about selling to China as well as manufacturing in China, you're obviously digging deeper into the innards of the economy, and you're encountering more issues. And as you now think about not only just selling products to China, but actually selling services to China, that really touches the internal legal system and everything. So I take the view that the complexity of the US-China relation actually is a natural progression. And in my mind, a very healthy one. It's obvious that as you get into deeper and deeper engagement, the relationship gets more and more complex. And also then you've got to resolve more and more issues, but the relationship is developing. The reason these issues develop is because you are more deeply engaged. If you're only thinking about manufacturing in China or just exporting from China, it's a very simple relationship. But now you're thinking about selling services into China. It's a total different thing, but it's something that we should all think about addressing and addressing over time. John, you really brought that out. I was really. But I will let you go. One thing before you say, this really has raised other issues and so on, what's your view about the efficacy of a bilateral agreement of investments? And how that would actually help the mutual two-way flow of investments? Because I know a lot of people in China are thinking of investing more in the US and would, for example, the sovereign wealth funds, would more clarity on what they can or cannot invest up front that might be embodied in a bilateral investment relationship actually facilitate a better flow? Yeah, I think if you can have an agreement or even just an understanding up front, that would be very, very helpful. There's some mystery about Chinese companies or investors. And because it's known that they don't enter prices or SOEs still play a large role in Chinese economy and in early attempts of foreign investments by Chinese companies being facilitated or driven by these SOEs, financial crisis brought down the whole system, the Chinese realized they really needed to go secure resources because just to feed that huge demand and they can't rely on things that they don't control. It's just so happened that some of those are sectors that are monopolized still by their own companies. So they came out and got into a lot of debates. But just like any economy, the real driver of the economy is actually private sectors, non-SOEs. And these guys are coming out. For instance, Lenovo, this is one of our subsidiaries under Legend Holdings, came here and made an acquisition of IBM PCS at. And it's just all around the success story after about six or seven years. The brands leave song and the jobs are preserved and expanded. And the way of managing a good multinational global companies have gotten into China before it was all driven by US driven companies, the benefit just goes on and goes on. So I think some clarity in that regard or understanding in that regard would be very, very important. Yeah, well, I think that's certainly one thing. Even if we don't go all the way to a bilateral FTA, perhaps some sort of understanding on investments could be at least an intermediate objective. So let me go from there to you, Peter. We listen to some very interesting statistics and developments in the US-China bilateral relations. And sitting here in the audience, a lot of us could be thinking about, wow, the two largest consuming nations in the world, the two largest emitters, the two largest users of energy. I can't help but think that the world, in my expense's word, could be sitting on a consumption time bomb. And the US and China are the two main, shall we say, players in that. So what do you think are the areas where US and China could really work together to achieve some large-scale sustainability gains for themselves and the rest of the world? Thank you, and thank you for the invitation to be here. There's a lot of detail in the chapter that we wrote. And I guess that will be released today or tomorrow. So that would really be the place to dive in and get the long list. I think that there are just, before I kind of directly answer that question, I'm listening to this conversation and thinking about my history in China. And I've been going to China for, since 1985. Actually, 1980 is when I first went to China. And I think that what you just described is really important. It's, as you get into more detailed components of the economies and the relationships, you begin to uncover little barriers, but you have a conversation. And I think the most important thing for us to really understand is there's a very important opportunity right now. Number one, there's an opportunity for creating trust. And we need trust to deal with these issues. We are really, we cannot not work together. We have to. And that takes trust. And so we have to really be focusing on that. And secondly, there's leadership. And this is really what's important for this conversation and important going forward. That we're dealing with some global challenges that are the X factor. And the X factor is the environment within which our economies operate. And it's easy to look at climate change as one of those X factors. And we can recount recent developments in terms of hurricanes, in terms of tornadoes, in terms of floods, in terms of opening up of trade routes because the ice is melting. So many things are happening relating to climate shifts. And it's destabilizing. It's threatening to the capacity of the United States. It's threatening to the capacity of China. And we have the two largest emitters. Although it's important to distinguish that CO2 emissions per capita are three times as high in the United States as in China. Per capita. Per capita. Per capita. And so it's, let's say, 5.2 CO2 metric tons per capita in China. I think it's 17.3 or 18 per the United States. So it's not as if it's an equal playing field in terms of the driving of the economy. So going forward, I think that we need to be focusing, if we're really going to be thinking about these issues, on two big interrelated challenges. One challenge is how do we reduce very, as quickly as we possibly can, CO2 emissions. The US and China have an opportunity for global leadership. And I'm very enthusiastic about the conversations that are being had right now, that there's a recognition that there's an opportunity to actually come together and address that. And what we have to be looking at is how do we work away from subsidies for fossil fuels? How do we increase investments in renewable resources? How do we share technologies and innovations that it cannot just be government to government. It has to be university to university. It has to be private sector to private sector. Because we really are in a race against time right now. As New York Times published a few weeks ago, we now have CO2 levels that are at the highest in one million years. That's even before our economies started to grow. So we've got, and at the same time, what we know is that we have another challenge. And the other challenge we have is that our renewable natural resources, that's our food, our water, our fisheries, are directly impacted by CO2 concentrations. Ocean acidification impacting the productivity of coral reefs. Three quarters of the global fisheries have been severely impacted by overfishing. And we have the capacity globally to catch right now four times the amount of fish in the ocean. We have enormous subsidies for our fisheries industries. And we're destabilizing the ecosystem health. And actually, not only do we have the highest CO2 emission levels in a million years, but our extinction rates are higher than the Pleistocene. They're about between 1,000 and 100,000 times normal. So we actually, right now, are in the process of destabilizing the capability of nature to provide essential services for humanity. And that's a shared challenge that our countries have. At the same time, and this goes back to Yana's discussion about the middle class, in the next four decades, we're going from 7 billion people to 9.5 billion or so. We're going to double the size of the global middle class, which means that we're going to double the amount of energy we need. We're going to double the amount of fresh water we need. And we're going to double the amount of food we need. All on a planet that is destabilized by climate shifts and ecosystem deterioration. Now, that really calls for intense, trusted collaboration between the United States and China as the two largest consuming nations. And you mentioned consumption, what's really frightening is that within 12 and 18 months of consumption of any product, about three-quarters of resources that are used for production are actually thrown away. So we are extraordinarily inefficient. So when we look at efficiencies, that will give us about 50% of the reductions that we need. We have to look at land use management in order to, if we protect forests, we're going to, together, the United States and China, collaborate on forest conservation. We can reduce global emissions by 16% to 17%. So there are specific actions that our countries could take if we collaborate on some of these specifics. Peter, thank you. Peter, I think that's really a great exposition on the X factor, especially on climate change. You talked about trust and leadership. I can't help but think, as you were talking, when we talk about this bilateral relationship between US and China, I think our focus has to be much more than on those two countries. What we're really talking about is China and the US having the opportunity. And indeed, I would say the responsibility to actually take the leadership, to actually do something for the whole globe, which, in turn, obviously will help themselves. This idea of this collaboration, looking at this bilateral relationship as something that would actually help create global public good, especially in this sustainability area. We looked at all the numbers and so on. It's great. The graphs keep going up. But then how about the rest of the equation? It's kind of not there. So I think we really need to look at this from a bigger basis. This relationship is not just about the two countries. It's about the world. And how the two countries now have to seize this moment, seize the moment. We've got a new leadership on the Chinese side. We've got a new administration in the US. I'm so glad they're meeting in California. Nice sunshine. And some people will say, not in Washington. Maybe on the golf course or what have you. And really, hopefully, without a specific agenda, but talking about these types of issues, how would the two countries and their leaders seize the moment and really provide some global leadership and create some, you know, the whole multilateral system in the world, in my mind, needs fixing. It's done its job for the last 40 years, 50 years. It's now time to update that. And really, we need, and we're facing all these new challenges. So with that, ladies and gentlemen, I think I'd like to thank the panel and then and get Matt up here and conduct the session. You're not off the hook yet. And we're going to do a few Q&A. We're running a little behind. But since I gave you an unscheduled break earlier, if you'll indulge, we'll cut about 10 minutes into the next break. So I see a lot of hands, and I'm going to sort of sweep left to right. So over here, please identify yourself. Wait for the microphone. Identify yourself, and please do ask a question. Clement Miller from Wilmington Trust Investment Advisors. And my question is really about capital markets. And it's kind of puzzling to me and to other portfolio investors that while China has grown by maybe 40% to 50% over the last four to five years, that stock prices have been basically flat. So what's the story there? And will these reforms lead to greater returns for investors? I think I didn't draw too much. That has my name written all over it. We need you. We need you to come participate. 75% to 80% of investors in Chinese secondary market are individual investors. And they're still in the learning cycle and very speculative. And it is being found that when you have a large percentage of investors that are institutional investors, managed by professionals, then it will help. And it will take a long time, but that's the direction it is going. That's why opening up the capital market to global participant inside China will be the critical step next. Hi, my name is Eric Loh. I'm with the Fair Observer. I think we just in the previous context, we talk about food safety. I think that there's a current situation in Shanghai or something about the baby milk of how the people just grabbing any foreign produced baby milk even run a big thing in Hong Kong. So I think that in a certain extent, if the Chinese consumer cannot trust Chinese goods, so how can foreign people trust their own food coming out of China? So do you see that there is a need for standards of situations so that these things could be more properly managed? Thank you. Is that directed in anyone in particular or? OK. Madam Ma. The food safety issues is very critical. I think for the new government, it's one of the priority tasks. In order to solve this problem, right now for the new cabinet, there is a new department to be set up, particularly to in charge food safety issues from top government. But of course, according to the direction and the policies, there will be the system for concerning and solve the issues related to food safety. Because that's not only the issues need to be considered by the industry or by the market, but also it's very, very important for the attitude of the people, of the consumers. So the particular issues that you mentioned, I think it's only one of the small part. But food safety is much more bigger issues. So for the China-US cooperation sectors, I think food safety is also one of them. So how to use these channels to enhance cooperation to help China to solve these issues, I think it's also one of the very important issues need to be considered. But of course, it's one of the stage, the problem. I'm confident that along with the development of China and along with the cooperation between government, industry, and market and consumers. And of course, based on the cooperation with the international cooperation, I think these issues can be solved step by step. Thank you, Madam Ma. I might add to the minister to say that I certainly totally agree. And from a business standpoint, I think while China is really fixing this whole food chain and safety issue, I think they could actually provide an opportunity, a business opportunity actually for the supply of foods and maybe long-term cooperation, both in setting food standards and technology and also actual supply of food. We see this in the report as one of the major areas for cooperation. Thank you. Robert Charrette, president of International Investor, also for Minister Ma. First of all, thank you for making your presentation in English. We do appreciate that. But my question does concern our trade imbalance between the United States and China. Your projections show that both economies will become the largest in the world, if they are already, and both have enormous trading relations and it'll only grow larger. So don't you believe it's important that we each take steps to try to bring our trade imbalance? And can you tell us about any programs in China that are encouraging purchases by other consumers or businesses of US goods that would try to at least lower this trade imbalance that we have? Trade balance is always the key priority concerned by both sides. I think it's not only right now, but we'll keep these issues for the next 10 years. But according to the result of studying in the papers delivered yesterday, I think there is still a lot of deficit figures. By the end of the next 10 years. But I don't think some key issues can impact a lot for bilateral economic and trade relationship. Because when China becomes the first or largest market for US, even the deficit between two countries' trade is still there. But there are a lot of other benefits from this trade to both sides, particularly, I think, for US. And when we're thinking about the figures that show in this paper, I think one element needs to be added in this result of studying. Because this figure only shows the goods, the trade in goods. But there is no other figures for the trade in services. Why, during my speaking, I particularly mentioned the trade in service, although it's still not very large figure, such as last year, the trade in service between two countries was $41.5 billion US dollars. It's not large as the trade in goods, but it's a rapid development, rapid growing one. And for the trade in services from China, it's a deficit. Because last year, we import much more than we export to US. The deficit between, for China, the trade in service is three times higher than the total. But in the future, I think the trade in service will keep the high gross rate. So by the end of next 10 years, I think when we're thinking about service in trade, the trade deficits were much lower than the figures shown in this paper. Larry, did you want to add something there? Thank you very much. I want to tell you, just during the break, a gentleman came up to me. I forgot his name. Yeah, he's there, who was chairman of the Civius. And who actually is? Steve Canner, former colleague at TRED. He actually berated me for even mentioning the bilateral trade surplus. He said, we shouldn't really talk about bilateral trade surplus. And the good economists should never talk about bilateral trade surplus. Because it really doesn't matter. What matters, actually, is the aggregate trade surplus vis-a-vis the world. I think for China, it's actually coming down very rapidly, trade surplus vis-a-vis the world. And I think for the United States, the trade deficit is also coming down rapidly, vis-a-vis the rest of the world. I think you can see the figures coming in. I think when you shale gas, shale oil coming in food stream, I think you would actually see it coming down. So I wouldn't worry about the bilateral trade surplus. I mean, we should actually educate our citizens not to worry about the bilateral trade surplus. But having said that, let me say one more thing. And that is, today is really not necessary focus on the growth trade surplus because what matters is really value added, like Apple. Apple is actually a huge export from China to the US because it's finally assembled in China. But Chinese value added is about 3% to 4%. And Apple's gross profit margin is 50%. So you really shouldn't blame China's. I mean, this is a huge exports from China to the US. So I think that is really the way to, yeah. So that's really the way to really think about it, is really not to get too focused on the gross bilateral trade surplus, but really focus on the value added, on the employment generated, and so forth. Thank you. OK, I'm going to just take two quick questions. And then we will stop there. Gentleman there and gentleman there. Robert Copacon, former Department of Energy employee. My question would be for Mr. Seligman. The economists not so many months ago had a cover story showing up Barron Island, which was, the question was, are these countries going to fight over this particular scrap of land? But it characterized the search for potential commodities in the South China Sea with all of the territorial disputes that exist there as a potential source of tension and even conflict between the two countries, and actually between several countries with different territorial claims. How can we minimize that in light of the need for energy resources of all of those countries? OK, thanks, sir. Could you just hand the microphone to him? Hi, Chen Weihua, China Daily. You have a question for Minister Ma. And today you will talk about a lot of cooperation. I'm just wondering how you're worried about these increasing competition and friction that are going to affect or disrupt the full achieving of this cooperative potential in the coming decade. Thank you. I'm going to take just one more. There was a lady there who I didn't get to recognize right there. Yeah, yes, with her hand up. Could someone get the microphone to her? Good morning, ladies and gentlemen. My name is Rosemary Sekira. I'm the president of Sekira's International Group. We focus on venture capital. And I want to thank you so much for your wonderful presentation. While I'm a US based campan, I'm also from Africa. I'm from Kenya. Thank you for the Chinese, for the wonderful work you are doing in Africa and the matching market. You're working so hard, and I thank you so much for that. How do you collaborate with, like now I'm here in the US, looking at the venture capital here, and then also working with Africa? Are there other opportunities, looking at clope of direct investments which are in Africa than me doing business here, and then also taking the same knowledge and business to Africa, looking at the matching now market in Africa? How do you do that looking at clope, Ali? And thank you again. OK, thanks. We have three questions about energy, competition, friction in the bilateral relationship, and African investment. So maybe, Peter, you were addressed first. Thank you. So I think you asked me how I would solve the conflict in the South China Sea. Is that what it was? I was thinking about that last night, as a matter of fact. And you only have 30 seconds. So yeah, that's 20 seconds. Thank you. I really don't have, tensions always become exacerbated during times of leadership change. And we have just gone through leadership change in the United States and in the People's Republic. So it's been a very tense moment. And what I would do if I could do is I'd kick the can down the road, basically. I think that it's interesting you raise this question, because last year, Conservation International launched a Center for Environment and Peace. And the purpose of the Center for Environment and Peace was to really address conflicts that arise, and how do you avoid conflicts that will arise out of resource competition, because we're seeing that, and you mentioned energy, but fisheries, food, water, arable land, name it. It's all, I mean, as you have displaced populations, you end up with conflict. So I don't have an answer for the South China Sea. It's not really, I don't think, my place to be giving an answer for that. But I think that what's absolutely clear is that we're going to have to be looking at some of these territorial claims and looking for some creative solutions. And one of these solutions that has emerged in the past few years has been allowing a lack of clarity to continue. And figuring out resource sharing scenarios, or even having bilateral or trilateral peace parks or conservation areas. And we've seen that happen in many different territories in South America, in Asia, and now dealing in the Pacific, in different islands. So that's kind of where I would lead. I think competition and cooperation always combine each other. The most important thing is not a fair competition, but to continue in set up and improve the business environment for fair and equal competition environment. So I think if the China, because the deep reform is one of the very important tasks for China's future development, along with the deep reform, the fair and open market for all of the participants in the equal and fair competition, I think will be helpful for China's economic development as well as a schedule for further enhanced cooperation between two countries. The venture capital industry, alongside with later on private equity industry, is really in the early learning stage, as large as it seems to be. So the history is very short. That probably could be an example for some of the Africa markets, in terms of developing its own environment to encourage capital market development and encourage innovation. Alongside with that, I know that many of the investors that are in China have started focusing foreign markets, US is the one. As a matter of fact, almost at equal amount of interests, certainly dollar amounts are focusing the other emerging markets in Africa for the market opportunity that complements with what Chinese market needs. So I do believe there will be more and more exchanges. But again, domestically, having the right set of policy and getting the market open up is very crucial. OK, and Peter wanted to add something? Just on interesting and important to talk about Sub-Saharan Africa and going back to this opportunity for collaboration between the US and China in terms of leadership on addressing what I refer to as the X-Factor, which is the kind of greening component of development. I think it is really important that our country recognize that as we feed ourselves and think about the growth of our nations, that we recognize that sustainable or lasting development requires sharing of technology and capability, not just between ourselves, but also with our trading partners. And as we look at Africa, in particular, or other places in the Americas and Southeast Asia, there's a great need for looking at lasting and sustainable supplies as opposed to short-term mining of supplies. And that's a technology transfer that can be really important for long-term solutions, looking at the health and sustainability of ecological resources. OK, thank you very much, Peter. Thank you all, panelists. We have now officially eaten into the entire break of period. But I'm going to very generously give you seven and a half minutes. And then we're going to come back for the keynote presentations. Thank you.