Transcript: Jon Huntsman and Yang Jiemian

June 9, 2013: 10:27 AM ET

A Fortune Global Forum panel on growth and and conflict in the Asia-Pacific moderated by Kenneth Lieberthal of the Brookings Institution.

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Growth And Conflict In The Asia-Pacific

Panelists:

Jon Huntsman, Former U.S. Ambassador to China

Yang Jiemian, President, Shanghai Institute for International Studies

Moderator:

Kenneth Lieberthal, Senior Fellow, Foreign Policy Program, Global Economy and Development Program, John L. Thornton China Center Director, The Brookings Institution

Chengdu, China

June 8, 2013

GEOFF COLVIN:  What we're going to do now is turn our attention to a very, very important topic.  It's been in the news.  It will continue to be in the news.  Growth and conflict in the Asia-Pacific.  To lead our discussion, please welcome our moderator Ken Lieberthal of the Brookings Institution and his panelists.

Ken.  (Applause.)

KENNETH LIEBERTHAL:  Good morning.  We've been talking about China's new rise, or new future.  And the purpose of this panel is to keep that extraordinarily important development in a regional perspective.  And to do that, I'm joined by two outstanding panelists, Ambassador Jon Huntsman, a Former U.S. Ambassador to China, among other positions in his career; and Dr. Yang Jiemian, who is the head of the Shanghai Institute of International Studies.

Unfortunately Kevin Rudd, who was supposed to join us on this panel, was tied up with some parliamentary obligations in Australia, so we will proceed without Mr. Rudd here.

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Let me begin by asking broadly about how China sees its own future in Asia, both in the near-term and if you look out over a period of maybe a decade or so?  What's China's role in the region?  How does it plan to get there?

Dr. Yang?

YANG JIEMIAN:  Thank you.  I think China's roadmap for the upcoming ten years and beyond are clearly laid out in the recently concluded 18th Party Congress.  That is to say there are three major targets for the long-term.  First of all, to create a peace and development atmosphere both inside and outside the region.  For this, China would like to work with the United States as well as other players in the region, like Asia, and Japan, South Korea, India, et cetera.  Secondly, China wants to make the economic cake larger so to make Asia as a continued powerhouse for economic growth and upgrading of its economic qualities.  Third is to have established a more closely-knitted network intellectually, culturally, and on a people-to-people basis, so that we can continue to enhance the Asian spirits based on family, cooperation, hard work, and moving ahead to adapt to the new modern society.

For the near future, I think first things first, first of all China wants very much to stabilize the situations, especially the existent and potential hot spots like North Korea and the Korean peninsula issues.  Secondly, China is confronted with challenges with some issues, like maritime disputes and China-Japan relations.  At the least, we should make them under control, and the overall regional situation should not be hijacked by these specific or other instances.

So for this I think we have a general roadmap that China is heading for.  Thank you.

KENNETH LIEBERTHAL:  Thank you very much.  The basic idea is to maintain stability; use that as a framework within which you can continue to promote economic integration and dynamism and harmony within the region.  We'll want to take up how you're going to do that in just a minute.

But first, Ambassador Huntsman, would you give your version of China's expectations and hopes for its role in the region?

FORMER AMBASSADOR JON HUNTSMAN:  Well, let me just say it's an honor to be here.  And I think we have heard from Dr. Yang, who knows the subject matter better than anybody, and I'm pleased to be next to Dr. Lieberthal, who is one of the premiere experts in this field.

I would say that history should be our guide when looking at where China is going.  And I guess I'm old enough to be able to see where the period when Nixon was successful in negotiating the Shanghai Communiqué, which serves as the foundation of the U.S.-China relationship.  China was then preparing to enter the world.  And I fast-forward that moment to China's ascension to the World Trade Organization, something that I saw as the U.S. Trade Ambassador at the time.  And China then entered the world, a very profound change from just years before.

Then I saw yet a third very distinct phase when I arrived in Beijing in 2009 as the U.S. Ambassador.  And that was the reality that China had risen onto of the world stage.  And I think part of the next five years will be dealing with that reality.  How do you assume the responsibilities and the leadership that go with a position on the world stage where you weren't in such a position before that?  That will take a little bit of getting used to.  You'll have to develop a new approach to diplomacy.  You'll have to refine your politics.  You'll have to engage more globally and more responsibly on issues.  I think that will be a big part of the next five years.

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But I think most importantly, and Dr. Yang hit right on this, is the stability factor.  I think the most important goal of all will be economic growth, because without economic growth you cannot provide for a stable domestic environment, and how do you achieve economic growth?  Well, you have to have a predictable environment in the Asia-Pacific region in which to grow, number one.  And I think their regional diplomacy and security approaches will very much be focused on that overall stability, peace and harmony question.

And then I think the reforms that we'll continue to see, and I'm very much looking forward to the third plenum in October to read more about what those specific reforms might be, will increasingly target those areas that I think will free up the economy such that growth can take place, the expansion of commerce domestically, and more and more in the way of innovation and entrepreneurship.  I think those will all be areas of focus over the next five years.

KENNETH LIEBERTHAL:  Clearly the United States sees the Asia-Pacific region as the most important region in the world going forward.  And the U.S. adopted what has properly been termed the pivot to Asia, I think the White House prefers the term rebalancing toward Asia, which the president announced in November of 2011 and we've seen a roll out of that since then.

Ambassador, what do you see as the intentions of that pivot and the core goals of it?  It's a long-term policy.  So what do you think the president has in mind as he pursues this so-called pivot to Asia?

FORMER AMBASSADOR JON HUNTSMAN:  Well, the very fact that we're still referring to it as a pivot would suggest to me that it has been unsuccessfully communicated to the major participants or players in the Asia-Pacific region.  But, let's face the facts, there will be an inevitable rebalancing that will occur after the United States has spent 12 years in the Middle East, after Iraq and after Afghanistan, and pretty much post 2014, when all American troops will be out of Afghanistan for the most part, there will be a natural recognition that our longer-term interests reside in the Asia-Pacific region, whether they're economic or whether they're security in nature.  And with that will come more of a focus on how we deal with the Asia-Pacific region.

So the pivot I think was an early attempt to sort of set the stage for our vision, economically and diplomatically in the Asia-Pacific region.  And if you break it down into its component parts I'd have to say that it was well intentioned, and its time has come, but there are some very distinct inconsistencies that have to be dealt with over time.

There is a component that deals with shoring up relationships with the allies in the region, five specifically mentioned.  There is a component that deals with the emerging powers in the region.  There is a component that deals with a constructive relationship with China longer-term.  There's a component that deals with economics, TPP would be the center piece of that, and there's a component that deals with the regional institutions, like ASEAN, where I think the administration gets fairly high marks in terms of their engagement.

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The inconsistencies can come in areas like where you have a goal of a constructive engagement with China, and then running up against your economic objective, which is TPP, excluding China.  I don't know how you reconcile that one.  You leave a lot of people scratching their heads wondering what all of this means with its inconsistencies.  And I suspect that over time the components and the objectives of the rebalancing, the so-called pivot, will be refined and perfected.

But, it reminds me a little bit, Professor Yang, of what a challenge we have communicating back and forth.

Sometimes it takes a while for each side to understand what it is we're endeavoring to do.  And I'm reminded just as the pivot was misunderstood, and continues to be misunderstood by people in the Asia-Pacific region.  I'll never forget sitting in one meeting with an assistant, or a vice foreign minister, where China's core interests all of a sudden went from Taiwan to something larger and we walked out scratching our heads wondering what this means and it took a while before we actually understood the meaning behind it.

So I would suggest to you that communication always will have to be perfected and worked on, and that it will take a little bit of time for this rebalancing, which will be, I think, the centerpiece of American foreign policy going forward.  Why, because there is no alternative.  Our trade flows will come through the Asia-Pacific region, three-fourths of them.  Our security concerns will by and large be in the Asia-Pacific region.  And we must prepare for that inevitable future.  So call it a pivot or rebalancing, whatever, there will have to be a policy that is an enhancement upon what we've had traditionally.

KENNETH LIEBERTHAL:  Thank you.  My sense from the perspective of the White House is that there's a clear recognition that the rebalancing toward Asia is a regional strategy.  And it's a strategy that seeks to balance a military component and economic and trade component and diplomatic component.  And this strategy takes China at the center, because China is at the center of Asia, so a lot of bridge building to China and working with China as part of a regional strategy.  I sense that a lot of people in the region see this as taking China as the bull's eye rather than the center, being directed at China rather than to work with China in a regional strategy.  And people who do that tend to point to the more rapid and public response to the president's call by our military with the trade and other aspects of it seeming to lag behind.

Do you get that sense and do you think that, if so, that we're in the process now of rebalancing that rebalance in order to give it a more even keel?  What's your sense of that?

FORMER AMBASSADOR JON HUNTSMAN:  We have a choice in the Asia-Pacific region.  We can either build around China in ways that would suggest that there is some encirclement, or some aspect of threat to our approach.  You can create a TPP that is exclusive of China.  You can rebalance from a military standpoint and have it appear threatening when in reality you've got 2,000 Marines-plus in Australia.  You've got some littoral combat ships.  You might have an additional aircraft carrier battle group.  But, beyond that ‑‑ and that's what's easy to quantify.  Everybody goes to the military component, because you can count the assets that are in the region.

The harder part to understand and this is where the rebalancing of the rebalance will have to happen, is what is the diplomatic strategy?  Does it in include China?  What is the economic strategy?  And does that include China, as well?  If the answer is no then we're going to have to live in a tit for tat world, where China then ends up doing the same thing in response to what we're doing in the region and we'll miss a huge opportunity that would come with a more robust dialogue between both countries.

KENNETH LIEBERTHAL:  Dr. Yang, you focused on stability as the number one concern in order, as this is kind of prerequisite for achieving the other goals.  Has the U.S. rebalancing strategy toward Asia complicated that, or how do you see the comments that Ambassador Huntsman just made characterizing the pivot?

YANG JIEMIAN:  Yes, I think the so-called pivoting, or rebalancing in the Asia-Pacific region is a very important strategic decision by the U.S. government.  For this I agree with the ambassador that communication is very important, because China is somewhat at the center of these strategic and policy rearrangement and readjustment.  If we do not communicate with each other enough so that there would sometimes be suspicions, misunderstandings.  Let's suppose we were sitting in Beijing, we look at around China you have all these military maneuvers, bases, and 60 percent of the naval forces, and 60 percent of the air forces around it.  What would you think?  So I think the Untied States should and could have pre-consultations and explanations to this.

Second is the actions.  The facts are more important than the words.  As the ambassador said, the U.S. is well intentioned, but how we can judge all these actions to prove these are all out of the well intentions, so that I think China and the United States and other countries as well, especially America's allies, and China, and ASEAN and China should have more wide-ranging discussions to assess the possible impacts of all that.

And once Dr. Henry Kissinger asked me how to build up a strategic trust between China and the Untied States I said if China and the United States could be mutually supportive on major issues in the world, mutually inclusive in regional institutions, and bilaterally that's cooperative.  If we have the three mutuals then we certainly can build up this.  So far I think some of the Chinese concerns are not groundless and we need to further discussion and to coordinate in our strategies and policies.

Thank you.

KENNETH LIEBERTHAL:  There's been a question raised in the region here that I've heard repeatedly around the region, which is to say that the rebalance is good.  We want to have a long-term major U.S. engagement in the region, but we aren't sure you can pull it off.  If you look at America's domestic situation, who paralyzed the Congress has been, how difficult we found the process of recovering from the financial crisis, that rebalance is a great idea.  We wish you well.  But we aren't sure that we can count on your staying the course.

What do you think about the sustainability of the American rebalance?  Why don't I go with Dr. Yang first, and then ask Ambassador Huntsman to comment?

YANG JIEMIAN:  One of the strengths of the American political system is you can change or fine-tune by a big margin your existing and past strategies and policies.  So for instance, the rebalancing, in the first few years the Americans somewhat placed an emphasis on the military and security side, and after fine-tuning you go back to more balanced ones that are not only military/security but also economic and other things.  So this is one.

Second, the United States would readjust itself according to American interests first.  Of course you would take care of what is going on around in this region.  But, for instance, in the past decade, the United States entered into two wars, first in Iraq and again in Afghanistan.  However, when the United States decided it's against U.S. interests, the United States just pull out.  And now we are talking about post-withdrawal from Afghanistan by 2014.  If our memory is not that short, the United States decided to pull out from Vietnam in the 1970s, so the rebalancing of the U.S. policies will be adjusted according to the international and American situations.

However, with the increasing importance of the Asia-Pacific region with its economic dynamics, political importance, and cultural vitalities, the United States' attention should be focusing more and more on the Asia-Pacific region.  So on this I think the basis is here, and the United States will pay more attention to the Asia-Pacific region.

KENNETH LIEBERTHAL:  So it sounds like your assumption is that you're fairly confident that the U.S. economy will perform well enough to sustain this emphasis on Asia, and sustain a major American role in the region.

Ambassador?

FORMER AMBASSADOR JON HUNTSMAN:  We have to have a couple of things to pull it off.  One, we have to have leadership that recognizes the salience, the centrality of the Asia-Pacific region to our long-term interests.

And, two, we have to have an economy that supports our engagement with the Asia-Pacific region.  We're flat.  We're coming back up again, but that will have to be strengthened and rebuilt.

Three, we have to live values at home that we're projecting abroad.  Sometimes we talk about values abroad when we're imperfect practitioners at home, and they tend to fall flat.  And that's a useless exercise.  We have to become a more perfect practitioner of some of the values that have made us an Asia-Pacific power over the last 100 years.

And all of these things, I think, are going to be worked on in the next few years.  As Professor Yang said, one of the great attributes of my country, although we stumble, fall, and make mistakes like any other country, is we have a resilient side of our people and our policymaking apparatus.  We're able to get up and dust ourselves off and move forward.

But we'll remain engaged for this very simple reason, our core interests as a country will increasingly be Asia-focused.  And we will follow those interests with policies that are supportive and enhance those interests.  We're a pragmatic people and a pragmatic nation, despite the polarities that we've reached politically on Capitol Hill, we'll get back to a proper balance, and we'll find that the Asia-Pacific region is central to our well-being.

We have some catching up to do.  We've been in conflict in the Middle East far too long, and it has set us back economically.  It has set us back from a security standpoint, and we have to be able to reorient our future.  Our future as a country will not be Iraq.  It won't be Afghanistan.  It will be economics, competitiveness in which education and proper economic policymaking will be central, and it will play out across the Asia-Pacific region.

KENNETH LIEBERTHAL:  You know, as I've heard the two of you, and earlier sessions at this conference, it seems to me in a broad, strategic sense the U.S. and Chinese Governments face somewhat similar issues.  Both countries recognize that what they've been doing successfully for the last few decades is not really sustainable.  In the U.S., it's more on the fiscal side.  In China, it's more on the model of development side.  In each case, we can keep doing what we've been doing for some time to come, and everything doesn't stop.  But ten years from now, if we haven't made major changes to centrally address the core domestic issues we face, we are in such deep trouble, our problems are such a drag on us that it may actually affect the dynamics of this region, and what each of us is able to do in the region.

My sense from what both of you have said is that each of you are relatively optimistic about the capacity of our respective governments to do what is necessary to remain vibrantly engaged in this region.  Do I read you right on that?

YANG JIEMIAN:  I think I'm cautiously optimistic, because looking ahead into ten years and beyond, I think that China will be staying on the right track.  That is to say, continuing our reform program, and continuing to open up China wider to the outside world.  However, we have three challenges.  Number one, and more fundamentally that's from a domestic factor.  China now has come to ‑‑ in Chinese we say ‑‑ a deep-water area of opening up and reform.  That is to say China has to continue to change our developmental models to a more sustainable way, and to have more political reform, societal betterment, et cetera, in a word our hard nut to crack.  This is a very important ten years, because after 30 years plus of reform and opening up, we have graduated from the 1.0 version to the 2.0 version.  It's more difficult.

The second is we have to move to have restructuring and innovation-driven economies.  This is to say from the lower end to the middle, or even high end.  This is very difficult.  And China needs to ‑‑ I think why we are here in Chengdu is to say we want to tap the greater potential of China as a whole, et cetera.

Last but not least is the surround and beyond external involvement since China is growing stronger, and catches more attention of the world.  In Chinese we have the old saying, if the tree is high and big, it will invite the wind to bring it down.  And now we are in the limelight of the stage, and China actually is not that ready.  Because of the 2008 financial crisis China has become prematurely in the center of the stage, and China needs to shoulder more international responsibilities, and have more global obligations.  This we need to match by more domestic consensus, not only at the top, but we need more massive support for that.

So for these things, if we can handle them well, we can pass.  If we fail, then we will meet great, great troubles.

KENNETH LIEBERTHAL:  So that's a very sobering analysis you just gave, and there's a lot of contingency for the kind of role China will be playing.

Ambassador, about the United States, how do you see that?

FORMER AMBASSADOR JON HUNTSMAN:  You know, it may sound a bit odd.  In forums you're supposed to look at the downside risk, and do a lot of hand wringing about where the economy is.  But I've never been more optimistic about where the United States is poised to go in the years ahead.  We'll have to reform various aspects of economic policy.  We'll have to implement growth programs.  We'll have to deal with taxes.  We'll have to deal with debt.  That's just all obvious.  And because it is we're as usual a little late in the game, but we'll get there.

But, around the bend when you look at the emerging industries on the horizon in the United States, whether biotechnology, healthcare related, energy communication, natural gas driven opportunities, I see a lot of blue sky on the horizon for the United States.  And I see China entering a remarkably opportunistic time for growth and for reform, as well. And I think the years ahead are going to be extremely important for both the United States and China.  And key to all of this is something that's playing out even this weekend with our leaders getting together.  I think the question will be are we brave, bold, and courageous enough to think big as two countries.

So if Richard Nixon and Zhou Enlai could sit down against all odds in 1972, we were fighting each other in Vietnam, we had fought each other a few years before in the Korean peninsula where China lost 400,000 men and we lost a lot, too.  The Cultural Revolution was still playing out.  We had no trade, no engagement, and we came together based on common interest and built a relationship, against all odds.  If that could happen 40-plus years ago, I have no doubt that we can rally our collective good will on both sides, focus on our interests, manage our downside, because we'll always have issues that irritate.  It will always be a competitive relationship.  We just have to recognize it.  That's not a bad thing.  In the world of business your people compete all the time.  The U.S. China relationship will have aspects of competitiveness.

But, we have to get down to the one thing that I hope comes out of this conference over this weekend.  And the Chinese would call it xinren, xinren, trust.  If we have trust built up between us in a relationship as we go through our reforms, as China goes through its reforms, we'll be okay.

Trust is a lubricant that makes the relationship work.  Without trust, and I'd have to say we've been running a little bit on empty in recent years, you don't have trust, you don't have a strategic agenda, you don't have a big, bold vision, you tend to fall victim to the most recent headlines, which is no way to manage a super power relationship.  But, if we can do something about the trust, and build around our opportunities and manage our downside, there's every reason to think, Ken, that the years ahead are going to be good, based on growth, based upon new industries being created and standards of living raised.

KENNETH LIEBERTHAL:  Let me just frame this a little bit more and then get right to you.  We're, of course, having this discussion as our two presidents are actually meeting for their first couple of hours of their summit in California.  I wish we had a microphone there to inform this discussion.  You raise, I think, exactly the right question when you talk about the issue of mutual trust.  We talked earlier about the issue of effective communications between us.

Now, the President of the United States and the President of China in the last four years met on twelve different occasions and talked repeatedly on the phone.  We have more than 60 formal government-to-government dialogues that take place every single year.  We have enormous exchanges of personnel in both directions, people going in both directions, a lot of experience with each other.

And yet I would agree with your characterization that we've been running lower and lower in terms of mutual trust, especially mutual trust about long-term intentions.  I guess my question is, therefore, what do we have to do to change that, because it isn't as if we've been in a cold war and we haven't been talking to each other.  We've been talking to each other a great deal.  We also have learned very well over the years how to take care of things when we step on each other's toes, when particular issues come up how to manage them without having them really worsen dramatically.  Still trust has not been growing.  Do you think this summit can do something different that will put us on a better path, or what else do we need to do to develop that lubricant so that we have more confidence in each other's long-term intentions.

Dr. Yang?

YANG JIEMIAN:  Okay.  I think there is plenty to discuss and talk about between the two presidents.  So why they decided to go to Annenberg Estate instead of to Washington, D.C., to go through all of this ceremony and time consuming activities, I think that there are three things that are most important the two presidents will discuss about in a very informal but very frank manner.  First of all, both presidents want to avoid the repetition of the so-called clashes, or confrontations between a rising power and an established power.  I think the United States wants to avoid that and China wants to avoid that, too.

However, China wants to build up a new model of the major power relations, which sees a few precedences, but can be enlightening to the follow-ups.  The United States thinks that way, but because the new Chinese leadership has ten years to go, so we have a little bit longer vision than the United States, because with all my due respect to Americans' political system the president only has two years of window of opportunity of the mid-term elections.  Everybody in the world will be guessing who will be the next in the White House.

So that's come to my second point.  The United States cares more about the issues you have to issue-driven, and the resolution, for instance, when we Chinese were talking about a new type of major power relations, we were talking about a kind of principles, like the cooperation, win-win, mutual respect.  But, the Americans had a set of issues like cyber-security, military dialogue, economic interdependence, North Korean issues, et cetera.  However, people now are very impatient and both the Americans and the Chinese want things right now.  So the two presidents should assure the two peoples that they can manage, they can do something to solve these hotspot issues, and the first things come first.

And the third thing that is to say the two presidents would discuss about things outside of a bilateral relations, most importantly the Asia-Pacific region, but not limited to that, we have a lot to talk about how about the G20, how about the reform of the economic system and also the hotspots in other areas like energy security, et cetera.  So I think that our two presidents right now actually they are having their discussions.  I hope that there will be some very good results come out of their dialogues.

Thank you.

KENNETH LIEBERTHAL:  Thank you.

We want to turn to questions from the audience in just a minute, but let me raise one more topic for a very brief discussion.  So we'll leave a few minutes for Q&A.  Multi-lateral trade and investment negotiations are now unfolding in this region.  There are a number of them, but the two largest ones and probably most consequential ones are the TPP that the U.S. has been very deeply engaged in, and what's called RSEP, a 16-nation negotiation that China has joined.  China is not part of the TPP negotiation.  The U.S. is not part of the RSEP negotiation.  There are a number of countries that are, in fact, in both.  As you look to the future, not 5 years, but 15 years, do you see these two efforts to establish a freer trade and investment regimes with good standards?  Do you see those as eventually leading to a common Asia-Pacific trade and investment platform, or do you see a real danger that they're going to lead to efforts to divide Asia into two competing trading blocks, one more with the U.S. as the central pole and the other with China more as the central pole.  Can I ask you for literally a 30-second take on that for each of you and then we'll have some time for Q&A from the audience?

Ambassador you were in the U.S. Trade Representative's office and then as an ambassador dealt with these issues quite a bit.  So let me turn to you first and then Dr. Yang.

FORMER AMBASSADOR JON HUNTSMAN:  I would say that we're spending too much time managing our problems as opposed to managing opportunities.  And because of that we're missing some openings.  Key to trade and economic prosperity in the Asia-Pacific region will be the U.S. and China.  Let's just get down to the bottom line.  And key to the U.S. and China will be coming up with something other than the TPP, twelve countries and 40 percent of the world's GDP, and RCEP, which is ASEAN plus six.  They're both exclusive.  So we're both looking past each other right now.  That serves no purpose at all.  At some point we're going to have to have a trade policy with China that speaks to how do you put building blocks in place that will allow China ultimately to come into the TPP, and allow the TPP and RCEP to be merged.

We already have an FTA with Singapore.  I was involved in that.  We have an FTA with Australia.  I was involved with that.  We have an FTA with Korea.  So we've done well on a bilateral basis.

KENNETH LIEBERTHAL:  We have to get you involved again.

FORMER AMBASSADOR JON HUNTSMAN:  I know.  But to collar trade promotion authority with Congress that's a pretty important aspect to making it all work.  And now it's really going to be with China.  Do we engage in building those blocks that will lead to integration ultimately, or do we grow apart?  And if we grow apart, we miss.

KENNETH LIEBERTHAL:  Professor Yang, quickly.

YANG JIEMIAN:  Yes.  I agree.  And it reminds me of what Europe went through in the first few decades after World War II.  At that time there were two, one is the European Community, the other is UK-led free trade area.  But I think in the end the EU has succeeded.  And for RCEF and TPP, something like the American school systems, because the TPP is a high standard.  This is a 12-year schooling.  But regional economic cooperation partnership is a kind of nine-year schooling.  So we have the overlapping and then gradually you can have these two coexist or finally merge.

I think the basis is there.  So the most important thing is that we should think broadly, not exclude.  The good news is now China says it will be open, and we'll discuss.  And the ball is on the United States' side; let's just talk.

KENNETH LIEBERTHAL:  Actually, I think the U.S. view is that the TPP is an open platform.  So if it does get fully established, our hope would be that China does want to join it and adopt the standards of that platform.

Let me add that one of the issues being discussed, I suspect, in California is the U.S. Bilateral Investment Treaty.  Negotiations have long been underway.  The question is whether you can wrap that up.  That might open the way to enormous investment flows beyond what we've had to day, and it would be terrific.

We have only about four minutes left for Q&A, so we take one or two questions.  Please raise your hand.  This gentleman back here, this is with the red card, please.  Please identify yourself, and please ask a succinct question.

QUESTION:  (Via translator.)  I come from Mothcom (ph) Institute.  I think your focus or your discussions on TPP, the Chinese Government in the past has stressed the multi-trade treaty, WTO, to promote international economic cooperation, but China is now willing to discuss about TPP.

I have a question to Huntsman.  So what do you think the Chinese Government should do to be more proactive on TPP and what the U.S. Government should do to involve China more actively in TPP?  So from your perspective, can you offer recommendations?

KENNETH LIEBERTHAL:  A little more concrete in terms of what each side might do on this.  Professor Yang, do you want to begin?  Or Ambassador, I guess.

FORMER AMBASSADOR JON HUNTSMAN:  I think there's an immediate and significant opening, even today.  And I think my friends at Mothcom would agree with this.  And I think my friends at USTR and Department of Commerce, Department of State would agree with this, too.  Let's have our two heads of state talk about ultimately integrating ourselves in the region, and the steps that will be required in order to get there.

So if we leave the conversation over the next two days with a roadmap, very simple roadmap about yes we want to begin integrating as opposed to growing up in an exclusionary fashion.  And let's talk about a Bilateral Investment Treaty.  Let's talk about standards on intellectual property protection, and begin moving in that direction.  Let's be bold and aspirational in terms of where we go.  I think both sides could probably agree with that approach.

KENNETH LIEBERTHAL:  Questions?  Down here, yellow card.  The microphone is right behind you.  Again please identify yourself and ask your question.

QUESTION:  (Speaking Chinese) ‑‑ magazine.  My question is for Ken Lieberthal.  For the U.S., is there any difference between returning to China and the rebalance for China-U.S. relations in nature?  Two years ago you mentioned that the serious problem for U.S.-China relations is strategic distrust.  Do you still think so?  How do we deal with that?  Thank you.

KENNETH LIEBERTHAL:  Thank you.  We discussed this a little bit, do you want to add anything to it on the issue of how do you build strategic distrust?  I think you're referring to distrust of long-term intentions.  Anything else we can do in that that you want to mention?

YANG JIEMIAN:  The question is directed to you.

KENNETH LIEBERTHAL:  I know that.  I know that.  But these are ‑‑ my own feeling, frankly, is this is a very, very tough issue.  We've done well in building up confidence in our ability mutually to deal with concrete issues.  But when it comes to long-term intentions; that's a problem.

I think the key to that is for our leaders to discuss the long-term, have the kind of discussion we've just had on what do you see as your ultimate roles in the region?  What are your goals?  What are your principles and what do you have to see occur to make this work?  And then see if those are reasonably compatible.  Then you talk about these more concrete issues in that broader context with confidence that you understand what the long-term vision is.

That is what actually Nixon and Mao Zedong and Zhou Enlai did.  And so even in the Shanghai Communiqué, as you well know, there was a statement about what e agree on, and then there were two different sections as to what we don't agree on.  But we agree that strategically we need to move forward and build this relationship.

KENNETH LIEBERTHAL:  Final two seconds.

FORMER AMBASSADOR JON HUNTSMAN:  And then you have to deliver results.  You have to prove that all of this works in actuality.  And that's when I think trust really begins to emerge.

KENNETH LIEBERTHAL:  This is clearly not a discussion that we can fully cover in just these few minutes.  Please join me in thanking Professor Yang Jiemian, and Ambassador Jon Huntsman.  Thank you very much.

(Applause.)

END

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