tv Book Discussion on Dealing with China CSPAN December 30, 2015 1:25am-2:09am EST
now from 2010 former treasury secretary henry paulson talks about his memoir on the brink. >> thank you all for being here and for being patient. the president scheduled news conference and i was anchoring the coverage so i jumped in the car and racier soon as i could read again thank you very much and speaking about something
that's very relevant to what you afford so hard and so i want to talk about the book in the broader economic context of china and just a word about hank paulson. i know something about policymakers behind the scenes and i don't think anyone went through a stressful it period as treasury secretary as you did and put this country on a footing for the future, this country in the world. i just wanted to say it's a privilege for me to be here was someone who is writing here about his effectiveness and as a policymaker in his long experience with and dad with 100 visits to china going back to the cls goldmans. with the of the private sector and the public sector together as he assessed the greatest economic rival and the bankers who until recently believed the
banker of u.s. debt. secretary paulson thank you very much for being here. >> andrea, thank you. it's my great pleasure to be here with you because i have a mired the job you have done for a long time and i think you will for being here. i'm looking forward to the conversation. >> "on the brink" is a fascinating insight -- "dealing with china" is a fascinating insight. the president tried to explain the transpacific hardship the fast-track that he won with divided opposition from the democratic minority leader chuck schumer. the democratic party is divided and it's clearly going to be a big election-year issue and he was trying to make the argument that fast-track authority first of all is not anything other than what has been granted to every president except richard nixon makes it the ultimate deal
is to be negotiated and this dppr transpacific partnership which is so important to our role in asia has unique human rights and labor protections which previous deals have not had and if you don't i into it china would just run circles around those. your perspective on that. >> okay, so first of all the president is right and that's trade promotion authority, tpa i think it's essential to get a trade deal done and we won't be able to negotiate that best possible deal or negotiate any deal at all if the president doesn't have that. otherwise how would the other side now that there was a real negotiation. all this does is put us in a position to negotiate negotiated deal, number one and it's
essential. secondly i think the transpacific partnership is extraordinarily important for a number of reasons. it's important to our credibility, our national security, our economic security because this administration has rightly made this a huge priority. we say we are going to do something he, it's important that we do it. secondly, as the president alluded to china and we will talk about china later as we go on but china is very active on the economic front. they are forging economic linkages benefiting china and the world but economic linkages throughout asia and those economic linkages to trade and investment they believe it helps
their economic and national security influence. and then i take it a step further and the reason this is important to our national security as i think national security starts with economic security. i don't think china as we will talk about later is a formidable come patter and we want the competition to be healthy. we shouldn't shrink from that competition. something we should welcome. wesley.trade deals, people debate trade. their negative some positive to trade but that positives far outweigh the negatives. we have been a huge beneficiary. we continue to be successful with 4% of the worlds population we don't go out and attempt to do as much business as possible but the other 96. the camp put a wall around it and be successful but what i argue which is to me a no-brainer, even those that disagree with me on trade
generally do i think are wrong should want a deal like this because we are to have to trade and globalization. this gives us greater access to other markets and tpp is a very special deal because it's focused on asia and i think it's really important we continue to be strong economically, diplomatically and militarily in asia. >> how would you grade this administration in terms of its so-called pivot to asia? on that felt that it was more talk than action. >> well first of all this has been u.s. policy for a long long time in terms of asia. asia, i forgot whether hawaii is the 49th at the 50th state that we have a stake in the pacific. week have been a major asia power for a long time. the whole region has benefited from our presence there. the security bl it has
provided and you take a look at the huge economic benefits that this is provided for china and everyone else there. i think that's important. i think were emphasizing and putting more emphasis on asia is very important. i think to step back even further because this book is cause dealing with china. relationship and i think that every major global issue or at least most of them are going to be easier to solve if we are working in a complementary way with china, more difficult if we are not. this relationship is becoming more complex and difficult because they are increasingly a competitor so it's hugely important in the areas where we have a shared interest whether environmental issues, climate change and i bring that up
because this administration has done a great job there. it was an historic agreement and we can't begin to solve this problem unless china is a big part of it. by far the biggest emitter of carbon emissions and the fact that the u.s. working with china is very important. the upcoming summit, think most detested the importance of that relationship. i think the issue with u.s. and china is one that a lot of people have talked about and there are are always crazy someplace else and a very important crisis. there is a tendency to go from crisis to crisis which is very natural and if we spent more time on u.s.-china relationship and got that better than some of the crises would be easier to solve. the other thing which would make your relationship stronger is if
the u.s. continues to strengthen its economic situation. chinese respect strength. i think the biggest challenge which i am saying over and over again to u.s. continued predominance globally and a very strong position in asia is our ability to fix our own economic situation and financial situation. china has got tremendous challenges and issues, more than we do. they need to reboot their whole economy into an economic model. they're working to do that so you can make as big a mistake overemphasizing a mistake as you can under emphasizing it so that's putting it and i think perspective and i think the administration has done a job which is very comparable to a
policy very similar as to what we have had for sometime some time but i think we need to recalibrate now. this is a different china and i think it's going to be more difficult to get important things done but it's more important to get those done. >> one of the things that is so revealing in the book is you know these leaders. the personality for. portrayals of the leaders including the current president herself fascinating. as you assess their ability to handle the enormity of the economic reform challenges, the correction challenges so i wanted to throw down. what one of the most interesting economic things in chinese history i think is she one sheet. tell me about your relationship
with him and why you think he was such a pivotal character. >> entry that's a great question because the first chapter and the first scene is a meeting with issue. the reason i have so much respect for him is he was a pioneer in terms of driving reforms and they are never easy. he made some really difficult top decisions and he was a tough clear thinker. there is great resistance to change. the story i tell us about this china telecom ipo. the first major ipo restructuring china did.
when we worked with the prensa goldman sachs and the germans on telecom took six to eight years. who is extraordinary but it was that vehicle. what he did and he was a master. he could tell the story about how these transactions that into the bigger picture and use them as leverage to drive reform in china, open up china to more competition. these external deals just like he used the wto china succession in the wto. >> it reminds me of my first trip to china with ronald reagan in 1984. he was still talking going into the trip about red china,
definitely a buzzword. by the time he came out after a stop in shanghai and meeting with university students we had several days stop in alaska in fairbanks. ronald reagan the great anti-communist circuit talking about the so-called capitalists. he was seeing a different side of china which brings me to come he seen evolution over many years now. clearly they ran into the s. model in the international market yet they still feel that chinese military, the government itself according to every u.s. official that i have talked to is targeting us with cyber attacks. how do you reconcile their
attitude toward international market place? >> let's step back and understand what china is and what it isn't. the current president xi jinping is very direct and he makes no mistake about communicating in his view and his view is that they don't aspire to be a western style multiparty democracy and that they don't aspire to have western values. and he refers to the communist party all the time as the source of stability. at the same time the economic sphere and remember he has inherited, he drove her form hard. i think there were 10 years when reform stalled kds inherited a whole lot of an economy that
needs to be rebooted and he needed a new organizational model. corruption is rife throughout the party and he has huge environmental problems. he could change the relationship between the central government and the provinces, modernize the government. modernize the legal system so he has all these challenges so he is talking about and driving towards economic flexibility here. at the same time these tightening the controls in certain areas. in the political system and the media, the internet and to us. how can you do to at the same time? to him it makes sense because he sees the party as the source of stability in the institution is strong enough to drive reform. i look at it and i say this can't be a road to success
long-term. because how do you do all the things they need to do in terms of building the kinds of companies they want to build to compete in the global system and having the private sector do as well as they are going to want to do and a fading if you don't open yourself up to competition of ideas and how do you run -- i ran a company for a number of years. i don't know how you run a company if it's a global company if you are not totally connected to information. but you mentioned the cyber security and just say a few words about that. i spend a lot of time on that in the book and a number of things get conflated in the cyber area. harris the potential for cyber warfare which is very alarming. no country whether it's no big established country is going to want to cyber warfare.
it's destabilizing. then there is cyber espionage about something that the chinese do aggressively, but to aggressively and other major companies. there are some finger-pointing there but we all do it. then when you get to, there is cyber when you deal with the internet and censorship, that's an issue. there is cyber in terms of picture men of technology which gets into the national security area. there are certain systems we won't die from china because we want to rightly protect ours. the last issue which is cyber theft of intellectual property. i say in dealing with china that i think this is the most divisive, dangerous to stabilizing economic issue because it gets at the fears that people in the u.s. has the
china doesn't play fair. it's time to make an economic system work with that and there aren't easy answers. i basically make to, to oversimplify your tube points. first of all we of all we need do better job of protecting our systems or hardening your systems and second link i think in addition to continuing to push the chinese hard here who need a multilateral approach where we work with other nations to design the rules of the road and enforcement mechanisms and that has been made more difficult because some of these other issues involving conflated after snowden and sohn is harder for the u.s. to have the high ground. i would argue that the cyber theft of intellectual property is a different issue and it is one that should be much easier to have a high high ground and we need to figure out how to work with other nations on. >> my point would be the point that the white house makes at
least his own intellectual property on the success of trade secrets whatever they do it from their own government, from their military. when they do it it's not the u.s. government per se. >> first evolved i would clarify that. i don't think we take intellectual property. there's no evidence ever anti- intellectual property by this company or the government breaking into computers taking intellectual property and using it for private sector use. in china this is rampant. attacks on u.s. companies from chinese companies and it sure looks like any sponsorship by the chinese government. very hard to tell because a lot of the state-owned enterprises play big role in others it doesn't. the problem is unique in its different from espionage and the others.
i agree with our government on that point in terms of how to deal with it is not an easy thing to agree with some of the things they have done. >> i would like to bring in to guess from the audience a little bit for a couple of questions. does anyone have a question out here? wait for the microphone. here it comes. >> good afternoon. my name is arnold zeitlin payday been teaching in china and i for some who has been working with you for quite some time. you already have alluded to your relationship with xu and now you've had an opportunity to work with xi jinping. can you expand a little bit and compare the reform climate under
xu wat they perform climate under. shay: -- she now? as a result or sense the anticorruption campaign the chinese bureaucracy has been paralyzed and nobody wants to make any decisions. can you discuss that? >> i will say first of all xu people underestimate the difficulty of getting things done at some of the really tough decisions he had to make. i write about this in several chapters. i write about it with the first bank deal and the first deal overall. when you are laying off hundreds of thousands of people and i describe, we describe in the book what it looks like it's a medieval village. they had their own stores, hospitals, schools.
and to come in and deal with that was difficult. let's get to xi jinping. this job may be even more difficult because reform has stalled when you have a certain amount of success and they have had a lot of success. hard to get people to change and he is looking to change. i don't think any leader, i think in the history of the world has ever tried to change so much on such a massive scale. so it's one thing to talk about rebooting an economy that if you are relying on municipal finance to invest in infrastructure and that's not going to work because it's built up so much to come up with a different model and come up with a different tax system and they're working harder and a different relationship with the provinces is hard. and yet he is looking to redo as
i said the courts, the legal system, deal with the environment, deal with the property rights issues that people are so unhappy about. now let's talk about the corruption campaign. this is the most extraordinary thing i have witnessed because it extends to every part of the party, every part of society. they have party punished over a quarter of a million people and over 70 at them administrative level. this seems to be a intensifying and this is driven first and foremost because corruption is such a huge problem and he believes the party won't survive if they don't deal with it. this is an issue that's very much on the people's minds. secondly, there are divisions on
the number of these issues. there's not a consensus. people think just because because it's in a third train government that someone at the top can make an order and it all gets done. i think it's going to take hitting a lot of things done but to get the more difficult things then it's going to take years and getting key people in important positions. i believe a secondary purpose of this campaign, he has amassed and concentrated more power quickly than any leader a can think of since dawn but it's going to take more and get more people in key positions. this campaign also by striking at sections of the state-owned economy and vested interest i think is a tool in the toolkit to help get some of these things
done. but when xi was driving reforms it was in the economic area and i think what he did was extraordinary. xi is trying to reform big parts of society, make all sorts of changes and given the size of the economy he's got his hands full. i think the biggest challenge and the best opportunity is to open up parts of the economy that haven't been opened to competition by the private sector so opening this up because 70% of the jobs come from the private sector now. opening up those but again there are vested interests and i write about the importance. andrea asked about the tpp which i see as very important the transpacific ricochet. i think the bilateral investment
treaty we are negotiating with china's hugely important because it's helping to fight to open up these markets for u.s. companies and workers will benefit. it helps the reformers in china did do the things they need to do. >> thank you. julie rose, i'm an attorney. my question is to part. one, what would you say about our relationship in terms of the u.s. deficit in terms of china and the other part is having read 1 billion customers in china and could and knowing how under those authors u.s. companies really were taking a beating especially cellular companies and companies like at&t and motorola that establish the infrastructure but then they were kicked out in terms of maintenance contracts and it was kind of a mess. i know, i think there is one
company recently that was fined $155 billion. so doing business is very difficult and i just wondered you know what your perspective is unchanged. >> you can see after my last question brevity is not my virtue here. it's funny but not that funny. [laughter] so let's start with the deficit. i say dealing with our deficit problem and fixing our entitlements is hugely important to the comments earlier in terms of the restoring our economic strife ends i think if we want to continue to be a superpower years into the future that's something we need to do. in the short term i have people all the time say to me aren't you concerned that the chinese are the largest foreign creditor?
japan has moved ahead of china but that was by a tiny bit. they are essentially the same and i said i wouldn't bother me. i would be grateful. i'm concerned about the amount of our debt that we have not the fact that china is a creditor. as important as china serving as a creditor to us is, our situation is much more from it they should be more concerned than we are. they have a bigger, larger percentage of their foreign reserves are invested in our debt and a portion of our debt goes to them. so in terms of u.s. businesses, u.s. companies doing business in china you are right, it's difficult. and that is one of the reasons why i would like to see a bilateral investment treaty.
as difficult for a number of reasons. the technology companies you are referring to are having problems it looks like this is going to be something we are dealing with for a while. now this national security element did we say we won't take yahweh equipment. and so the question is how much of these technology products can get walled off? i think i would be very dangerous. you are reading today in the papers about the chinese have backed off for a while on their rule which have prohibited ibm were other equipment going to their megs systems. that's something to watch carefully and something i think is very important. your other questions really get
to the reason why we need to bilateral investment treaty. on the positive side china is our fastest growing export market. u.s. companies have more investments in china by far than they have here and u.s. companies tend to do very well in the china market that's growing. but what the bilateral investment treaty does with right now, every foreign company investing in chinese to get approval for coming in. the bilateral investment treaty by coming up with the negative list for those industries that are precluded and theoretically everything else is available and you can come in and compete on a level playing field. the aspects of a level playing field in china, these positions the state-owned enterprises have is not just hurting u.s.
companies. it hurts china's private sector companies. these regulatory advantages and special preferences. andrea asked me about some of the early deals. i think if he had continued leading the country they would have continued to reform these enterprises, opened up the competition but the reform stopped and a lot of these companies have special advantages, preferences, subsidies, rao tory preferences and those need to go. so i should have just said it's challenging. third. check to arcata we need to work harder to open up to us companies. >> how concerned should we be about the slowdown in their gdp? >> i think we should be concerned not by the slowdown but we should be concerned and watching some of the challenges they have andrea. this is a country that grew
double digits for a good while. the premier talked in terms of during a role in terms to 7% growth. i think that's even being optimistic but the key thing to look at is not the growth rate. the key thing to look at is the source of the growth. if they have an economic model they can be as reliant on exports and as i said municipal investment in infrastructure which is leading to increases in municipal debt. so what i look at and say how are they getting their growth, because if they go back to stimulus and investing in infrastructure which leads to bad debts, then i think there's more of a danger that they will
have when the reckoning comes it will be serious and it can spread over to the overall economy, the underlying economy. i take comfort from the fact that the leaders understand this and they have been talking about the new normal and they are working to fix the municipal finance system. again people that are surprised that growth is coming down shouldn't be. when you are as big as tiny can keep growing at the rate they have been growing. but you can -- should be concerned about is do they have a good rate of sustainable growth? >> time for one more question. >> this is diane had enough been a former "washington post" reporter and press club member. we are seeing dramatic photographs of china's industrial centers, shanghai, beijing of air pollution and poor air quality. what evidence do we have at the
chinese are transitioning away from coal consumption for energy production due to effects on chinese labor productivity and other concerns about the economic impact on our economy and also you're a risky business colleague michael bloomberg recently allocated a lot of funds to try to replace coal production in the united states that. you mentioned the chinese really respects strength and leadership. what can the u.s. government to to strengthen chinese commitment at the table the climate negotiation table in paris at -- in december. >> hank paulson as many of you know is a lifelong committed along with wendy with wendy and his wife conservationists and environmentalists so this hits him in an area where he is tremendous knowledge. then i think you andrea. the paulson institute the
biggest programs we have our air quality and climate and a u.s.-china ceo council focused on sustainable urbanization. and they see where the question comes from because if you had asked me going back, if i was sitting here today and i didn't know how bad the air was, which i sure do i was a couple of weeks ago at ground zero this problem. he could hardly see come he couldn't see the sun and everything was just a dark haze. a chapter in my book is called darkness at noon. of the chinese would do it
is all been blown away by this breakneck growth what gives me hope? what gives me hope are several things. first, the leaders understand the problem big-time because the chinese people. the chinese people are demanding action. i think the survival of the party depends upon making progress. they have changed the way mayors and governors are evaluated. if you visit with any senior official they would reel off
theyrealize they gdp and economic statistics because they knew if they did that now they are being evaluated and the performance is being evaluated. so they will give you the progress. it just looked terrible. seventy-three out of 73 provinces, unique problems. the upside of the reason my we are focused on this area is energy efficiency. 40 percent of carbon emissions come from buildings.
one of the things the paulson institution is working on the upside. the most difficult issue is the mix of coal. the projections in the deal of the obama administration came to, the agreement with that requires them to do the things they say they are going to do, there going to have to change that. so there is -- it is difficult, important, but i would say that the obama administration's agreement is usually important because 1st of all the demonstration that the
chinese care a lot about our relationship with the us. they didn't have to do that but they did. they don't announce these things lightly. they really enhances it. i think it would have been hard to see much progress there without this and having done this it creates a better environment for getting things done. >> i just want to -- our time is up, but this book is a wonderful read. we have been talking about tough issues of the economy today. just read what hank paulson writes about where he was on september 11 and personal engagements with these people. it is an insider's account
triangles gone awry in the men who lit himself on fire while drunk on whiskey. >> saturday evening at 6:00 o'clock author and historian james watson highlighting similarities and differences between both tragedies. at 10:00 o'clock the 1965 mvc meet the press interview who is assistant labor secretary authored a report on the causes a black poverty. >> i believe that what president johnson said, you cannot keep a man in chains and take the chains off them and say your free. they have to be made, people have to be given the opportunity to compete. i believe that we should make a special effort.