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Congressional Program CONGRESSIONAL PROGRAM Co-Existing with a Rising China: U.S. Economic, Security, and Environmental Challenges March 28 - April 4, 2016 Beijing and Nanjing, China CONGRESSIONAL PROGRAM Co-Existing with a Rising China: U.S. Economic, Security, and Environmental Challenges March 28 - April 4, 2016 Vol. 31, No. 1 Dan Glickman Vice President, Aspen Institute Executive Director, Congressional Program Washington, DC This project was made possible by a grant from the Carnegie Corporation of New York, with supplemental support from the Asia Foundation, the Democracy Fund, the Energy Foundation, the Ford Foundation, the William and Flora Hewlett Foundation, the Heising-Simmons Foundation,the Holthues Family Trust, the Henry Luce Foundation, the John D. and Catherine T. MacArthur Foundation, Rockefeller Brothers Fund, and the Rockefeller Foundation. Copyright @ 2016 by The Aspen Institute The Aspen Institute One Dupont Circle, NW Washington, DC 20036-1133 Published in the United States of America in 2016 by The Aspen Institute All rights reserved Printed in the United States of America ISBN: 0-89843-647-8 Pub # 16/010 Table of Contents Rapporteur’s Summary ............................................................................................................................... 1 Robert Daly Should We Worry about China’s Economy? ............................................................................................... 9 Arthur Kroeber How will China Shape the World Economy? ............................................................................................ 13 David Daokui Li Luncheon Remarks ................................................................................................................................... 27 Jin Liqun Cleaning the Environment in China .......................................................................................................... 31 Hal Harvey Climate: How to Win ................................................................................................................................ 41 Hal Harvey Power Shift: Economic Restructuring and Changing Energy Use in China .............................................. 47 Jiang Lin Assertive Engagement: A New U.S.-Japan Strategy for China ................................................................ 55 Dennis Blair The Changing U.S.-China Balance of Power in the Western Pacific: Getting the Transition Right ........ 67 Zhang Tuosheng Negative Scenario I: No Escape from Troubled Seesaw in Japan-China Relations ................................. 71 Akio Takahara Beijing’s Taiwan Dilemma ....................................................................................................................... 77 Harry Harding Heading towards Troubled Waters? The Impact of Taiwan’s 2016 Elections on Cross-Strait Relations .......................................................... 79 Yu-Shan Wu An Apprehensive Hong Kong Faces Its Future ........................................................................................ 85 Harry Harding For China, a Plunge and a Reckoning ....................................................................................................... 89 Orville Schell Xi Jinping: Core Leader of a Great Nation ................................................................................................ 93 Robert Daly Beijing and Washington--Structure, Perception and Destiny .................................................................... 99 Wang Dong Addressing Strategic Domain Issues in U.S.-China Relations ................................................................ 103 Wang Dong Resetting U.S.-China Relations ............................................................................................................... 105 Wang Dong Conference Participants .......................................................................................................................... 107 Conference Agenda .................................................................................................................................. 111 Co-Existing with a Rising China: U.S. Economic, Security, and Environmental Challenges Rapporteur’s Summary Robert Daly Director, Kissinger Institute on China and the U.S., The Wilson Center The Aspen Institute Congressional Program organized into major themes that are addressed under convened a conference March 28-April 4, 2016 in the subheadings that follows. Consistent with the off- Beijing and Nanjing, China on Co-Existing with a the-record nature of the proceedings, no remarks are Rising China. Nineteen members of Congress met with attributed to any individual by name 21 U.S. and Asian scholars to discuss a number of Financial Engagement, Trade, Economy issues affecting Asian and U.S. security, economic, and energy/environmental interests. The Prime Minister of In his overview of China’s economy, one China, Li Keqiang, addressed the group. Participants economist emphasized that, under the “new normal,” were also briefed by members of the U.S. embassy. slowing growth rates were not a sign of economic Educational site visits in Nanjing included the Ford weakness, but the inevitable result of a necessary and Motor Research and Engineering Center, the Amity difficult transition to slower, more sustainable growth. Bible Printing Plant, the Hopkins-Nanjing Center, and China had the resources and flexible labor markets the Memorial to the Victims of the Nanjing Massacre. needed to meet the challenges of the “new normal” and In Nanjing the group also engaged with American and could probably achieve annual GDP growth of 5% to Chinese students and faculty at the Hopkins-Nanjing 6% over the coming decade. Center. The conference was held amidst the longest Another scholar argued that pervasive corruption period of deep Sino-U.S. mistrust since diplomatic justified Communist Party General Secretary Xi relations were established thirty-seven years earlier. Jinping’s effort to centralize decision-making in Despite an atmosphere of suspicion, members of Communist Party (CCP) instruments under his control. Congress sought new opportunities to cooperate with Necessary as Xi’s anti-corruption campaign had been China throughout the seminar, even as they struggled over the past three years, however, it had a chilling to find solutions to security and economic concerns. At effect on economic activity: officials were hesitant to the conclusion of the program, one participant said, innovate or approve projects and private businesses “I’m more interested in China now, but I’m feeling less were unwilling to invest for fear of drawing the threatened by it. The U.S. has problems; China attention of Beijing’s anti-corruption watchdogs. has troubles... China is changing and will be a very One main concern was the tension between the different enterprise in the not-too-distant future.” CCP’s desire to monopolize decision-making and its While the views expressed during the conference were quest for economic growth, which required too diverse to capture in several sentences—or indeed decentralization. After thirty-five years of reform, an entire report—this statement is a suitable epigraph China faced a conflict between the desire for social for an intense, wide-ranging seminar that considered stability and the demand for market-based Chinese and American foreign policy in light of their development, yet Xi seemed uncomfortable with trade- histories and domestic challenges. The conference offs between control and prosperity. His dilemma had followed a roundtable discussion format and was been evident in the poor handling of the Shanghai 1 stock market crash and the Chinese currency (RMB) unaccustomed to structural reform and didn’t know exchange rate adjustment in 2015. Those missteps had how to work with service sector clients. He worried sent confusing signals to international markets. that deleveraging China’s corporate sector could However, recent difficulties should not obscure trigger a hard landing and rampant unemployment. contributions China had made to the global economy He hoped the Trans-Pacific Partnership (TPP) over the past twenty years. China had become the would be adjusted to accommodate China and that world’s largest trading nation during that time and was bilateral investment treaty negotiations would improve now a major international investor. One economist opportunities between the two “highly complementary” contended that 2016 was only the beginning of the era economies. If China opened up its service sector, he of China’s export of capital and most Chinese advised, health services would be a good investment investment would be beneficial to target countries and for American companies: China’s ageing population unthreatening to security. While issues of reciprocity had an urgent need for doctors and nurses and Chinese remained—China’s inbound investment laws remained policymakers could win political support if they made strict even as it took advantage of liberal regimes reforms that would allow American companies to train elsewhere—China’s role as a global investor should, in Chinese medical personnel. the main, be welcomed. The three experts advocated, in different ways, for An Asian economist tried to reassure participants a moderate, cautiously optimistic view of China’s that, despite the many challenges facing China, its economic reform and U.S.-China trade and investment economic fundamentals and seventy years of relations. Conferees’ questions, however, indicated
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