James Green, former Minister Counselor for Trade Affairs at the U.S. Embassy in Beijing, gave a talk titled “U.S.-China Diplomacy: 40 Years of What’s Worked and What has Not” before a Stanford China Program audience on May 6. Green is currently Senior Research Fellow at Georgetown University and is the creator of the new U.S.-China Dialogue Podcast, which features in-depth interviews with approximately two dozen former U.S. ambassadors, cabinet-level secretaries and other senior officials who were at the forefront of U.S.-China negotiations.

He recounts salient takeaways from these conversations regarding pivotal moments in U.S.-China relations, including normalization of relations, anti-Soviet cooperation in the 1980s, Tiananmen Square crackdown in 1989, Taiwan Strait crisis of 1995-1996, WTO accession in 2001, Belgrade bombing and EP-3 incident in 1999 and 2001, respectively; global financial crisis of 2008, the Beijing Olympics and the current U.S.-China trade tensions.  Among his many motivations for beginning this podcast series include his desire to question the notion circulating among U.S. foreign policy experts today that U.S. policy of engagement towards China had somehow failed. To Green, who has been active in U.S.-China relations since the mid-1990’s, U.S. policy had never been about transforming China from a one-Party, authoritarian system into a liberal democracy. In order to more accurately pinpoint what U.S. goals have been, Green stated, he undertook the project and interviewed those who had played key roles during pivotal moments in U.S.-China bilateral relations.

His interviewees have included, among others, such luminaries as Ambassador J. Stapleton Roy, who in 1978 participated in secret negotiations that led to the establishment of U.S.-P.R.C. diplomatic relations; John Negroponte, first director of national intelligence and deputy secretary of state in the late 2000s during China’s rise; and Ambassador Michael Froman, former U.S. Trade Representative under President Obama. His talk at the Stanford China Program includes key lessons he has derived from these interviews even as we enter into one of the most volatile times in U.S.-China bilateral relations.

The recording and transcript are available below.  

Formed in 1979, the National Intelligence Council (NIC) works to provide policymakers with the U.S. intelligence community’s best judgments on crucial international issues. As a locus for coordinated intelligence analysis, the NIC’s work reflects the coordinated judgments of multiple agencies and departments in the broader intelligence community. But while it may be less shrouded in secrecy than many other intelligence offices, in some respects it is less well known.

In Truth to Power, published by Oxford University Press, editors Robert Hitchings and Gregory Treverton shed light on this little-understood intelligence agency. The volume provides the first-ever history of the NIC as recounted through the reflections of its eight chairs in the period from the end of the Cold War until 2017. APARC Fellow Thomas Fingar, who chaired the NIC from 2005 to 2008, is one of the contributors to the book.

In his chapter “New Mission, New Challenges”, Fingar discusses some of the challenges during his service with the agency. In particular, he reflects on two specific obstacles he faced during his tenure: executing the intelligence reforms drafted in the wake of 9/11, and repairing damage done to the NIC’s credibility by the failures of the National Intelligence Estimate (NIE) on Iraqi weapons of mass destruction (WMD).

During his tenure, Fingar wore not one but two hats; along with the NIC chairmanship, he concurrently served as deputy director of national intelligence for analysis (DDNI/A). He describes actions taken not only to restore confidence in the intelligence community, but also to effectively execute its expanded brief. For instance, having national intelligence officers take the DDNI’s seat at meetings afforded senior officials the opportunity to perceive their value and thereby rebuild confidence in the broader intelligence community.

The Council’s reforms would soon be put to the test by way of the production of an NIE on Iranian WMD. Fingar recognized that the estimate would be a strong indicator of whether the NIC had learned its lessons following the flawed 2002 Iraq WMD estimate, and that policymakers were certain to finely examine the end product for flaws (whether made unintentionally or with political purposes in mind). As such, Fingar needed to produce an NIE that was accurate, timely, and non-political, all while handling and incorporating newly received intelligence. Through the Iran NIE, Fingar found an opportunity to redress the often-fraught relationship between Congress and the intelligence community.

Fingar closes with a review of the NIC’s pathbreaking work in the area of climate change. At the behest of a U.S. senator, the NIC took on the task of producing an NIE on the strategic implications of climate change. The resulting study categorized countries according to both their vulnerabilities and ability to manage impacts, as well as the broader implications it had for U.S. national security over the next twenty years. And while policymakers ultimately did not use the report as Fingar had hoped, he takes justified comfort in pointing out how it laid the groundwork for additional reports that followed, such as the National Research Council’s 2013 report Climate Change and Social Stress: Implications for Security Analysis.

Read Fingar's Chapter

Karl Eikenberry, director of the U.S.-Asia Security Initiative, spoke with "Bloomberg Markets: Asia" about the ongoing trade disputes between the U.S. and China. Video of his interview—conducted on the sidelines of the Morgan Stanley China Summit in Beijing—is posted below.

People today can generally expect to live longer and, in some parts of the world, healthier lives. The substantial increases in life expectancy underlying these global demographic shifts represent a human triumph over disease, hunger, and deprivation, but also pose difficult challenges across multiple sectors. Population aging will have dramatic effects on labor supply, patterns of work and retirement, family and social structures, healthcare services, savings, and, of course, pension systems and other social support programs used by older adults. Individuals, communities, and nations around the world must adapt quickly to the demographic reality facing us and design new approaches to financing the many needs that come with longer lives.

This imperative is the focus of a newly published special issue of The Journal of the Economics of Ageing, entitled Financing Longevity: The Economics of Pensions, Health and Long-term Care. The special issue collects articles originally written for and discussed at a conference that was dedicated to the same topic and held at Stanford in April 2017 to mark the tenth anniversary of APARC’s Asia Health Policy Program (AHPP). The conference convened top experts in health economics and policy to examine empirical and theoretical research on a range of problems pertinent to the economics of aging from the perspective of sustainable financing for long lives. The economics of the demographic transition is one of the research areas that Karen Eggleston, APARC’s deputy director and AHPP director, studies. She co-edited the special issue with Anita Mukherjee, a Stanford graduate now assistant professor in the Department of Risk and Insurance at the Wisconsin School of Business, University of Wisconsin-Madison.

The Financing Longevity conference was organized by The Next World Program, a Consortium composed of partners from Harvard University, Fudan University, Stanford University, and the World Demographic and Aging Forum, and was cosponsored by AHPP, the Stanford Institute for Economic Policy Research, and the Stanford Center on the Demography and Economics of Aging.

The contributions that originated from the conference and are collected in the Journal’s special issue cover comparative research on more than 30 European countries and 17 Latin American countries, as well as studies on Australia, the United States, India, China, and Japan. They analyze a variety of questions pertinent to financing longevity, including how pension structures may exacerbate existing social inequalities; how formal and informal insurance interact in securing long-term care needs; the ways in which the elderly cope with caregiving and cognitive decline; and what new approaches might help extend old-age financial security to those working outside the formal sector, which is a major concern in low-income countries.

Another challenge of utmost importance is the global pension crisis, caused due to committed payments that far exceed the saved resources. It is a problem that Eggleston and Mukherjee highlight in their introduction to the special issue. By 2050, they note, the pension gap facing the world’s eight largest pension systems is expected to reach nearly US $400 trillion. The problem cannot be ignored, as “the financial security of people leading longer lives is in serious jeopardy.” Indeed four of the eight research papers in the special issue shed light on pensions and inequality in income support for older adults. The other four research papers focus on health and its interaction with labor force participation, savings, and long-term care.

The issue also features two special contributions. The first is an interview with Olivia S. Mitchell, a professor at the University of Pennsylvania’s Wharton School and worldwide expert on pensions and ageing. Mitchell explains the areas offering the most promise and excitement in her field; discusses ways to encourage delayed retirement and spur more saving; and suggests several priority areas for future research. The latter include applying behavioral insights to questions about retirement planning, improving financial literacy, and advancing innovations to help people imagine themselves at older ages and save more for their future selves.

The second unique contribution is a perspective on the challenges of financing longevity in Japan, based on the keynote address delivered at the 2017 Stanford conference by Mr. Hirotaka Unami, then senior Director for policy planning and research of the Minister’s secretariat of the Japan Ministry of Finance and currently deputy director general with the Ministry’s Budget Bureau.

In Japan, decades of improving life expectancy and falling birth rates have produced a rapidly aging and now shrinking population. Data released by Japan’s Statistics Bureau ahead of Children's Day on May 5, 2019 reveal that Japan’s child population (those younger than 15) ranks lowest among countries with a total population exceeding 40 million. In his piece, Unami focuses on the difficult tradeoffs Japan faces in responding to the increase in oldest-old population (people aged 75 and over) and the overall population decline. Japan aspires to do so through policies that are designed to restore financial sustainability for the country’s social security system, including the medical care and long-term care insurance systems.

Unami argues that Japan must simultaneously pursue a combination of increased tax revenues, reduced benefit growth, and accelerated economic growth. He notes that these three-pronged efforts require action in five areas: review Japan’s pension policies; reduce the scope of insurance coverage in low-risk areas; increase the effectiveness of health service providers; increase a beneficiary’s burden according to their means; and enhance policies for preventive health care for the elderly.

The aging of our world’s population is a defining issue of our time and there is pressing need for research to inform policies intended to improve the financial well-being of present and future generations. The articles collected in the Financing Longevity special issue and the ongoing work by APARC’s Asia Health Policy Program point to multiple areas ripe for such future research.

View the complete special issue >>

Learn more about Dr. Karen Eggleston’s work in the area of innovation for healthy aging >>

Does the current trade-talk stalemate between the U.S. and China portend a larger confrontation? Oksenberg-Rohlen Fellow David Lampton says yes, and shared with VOA Asia reasons for why the two countries find themselves so much at odds. Listen below (first 8 minutes):

“We are now entering not just a post-American but post-Western era.  In many ways the contours of the emerging world order are unclear.  But one aspect of them is certain: China will play a larger and the U.S. a lesser role than before in global and regional governance.” -   Ambassador Freeman

On May 3, the China Program’s colloquia series “A New Cold War?: Sharp Power, Strategic Competition, and the Future of U.S.-China Relations” closed with a seminar by Ambassador Chas W. Freeman. Ambassador Freeman discussed how President Trump’s trade war has impacted Sino-American relations on multiple levels, and how—for better or ill—Washington appears poised to dismantle China’s interdependence with the American economy, limit its role in global governance, counter its investments, and block its technological advances.

Audio from the event, as well as copy of the ambassador’s prepared remarks, is now available:

Ambassador Chas W. Freeman, Jr. is a senior fellow at Brown University's Watson Institute for International and Public Affairs. He is the former assistant secretary of defense for international security affairs (1993–1994), ambassador to Saudi Arabia (1989–1992), principal deputy assistant secretary of state for African affairs (1986–1989), and chargé d'affaires at Bangkok (1984–1986) and Beijing (1981–1984). He served as vice chair of the Atlantic Council (1996-2008); co-chair of the United States China Policy Foundation (1996–2009); and president of the Middle East Policy Council (1997–2009). He was the principal American interpreter during President Nixon's path-breaking 1972 visit to Beijing, the editor of the Encyclopedia Britannica article on diplomacy, and the author of America’s Continuing Misadventures in the Middle East; Interesting Times: China, America, and the Shifting Balance of Prestige; America’s Misadventures in the Middle East; The Diplomat’s Dictionary; and Arts of Power: Statecraft and Diplomacy. A compendium of his speeches is available at chasfreeman.net. 

By 1978, after the “epic impoverishment” borne of Mao’s non-market, ideologically-driven economy, China was almost like “a hot air balloon [that had been held] ten feet underwater” and suddenly let go, described Daniel Rosen, founding partner of the Rhodium Group, before an audience at a recent colloquium organized by Shorenstein APARC’s China Program.

Rosen—who leads the Rhodium Group’s work in China, India, and Asia—drew on his 26 years of professional experience analyzing China’s economy, commercial sector, and external interactions, to share his insights on the implications of China’s recent divergence from liberal market norms even as the U.S. and China are trying to reach an agreement that could end a protracted trade war.

With its explosive rise, increasing U.S.-China economic tensions, argued Rosen, were inevitable. By reverting to non-market principles under Xi Jinping, however, China’s divergence from advanced economic norms has triggered a hostile reaction from the United States.  He acknowledged that China has “the sovereign right to choose the system it thinks best for itself,” including reverting to non-market principles.  But, he noted, “as an old adage goes, paraphrased, China’s freedom to swing its fists stops where other noses begin.”

China, with its thirteen trillion-dollar economy is now the world’s second largest economy.  China’s economic footprint, too—as trader, foreign investor, and lender, among others—is enormous around the world.  Thus, Rosen pointed out, now when “China sneezes, the rest of the world can catch a cold or pneumonia.”  By disavowing the primacy of market principles, furthermore, China’s decisions will now have spillover consequences for not only the way the rest of the global economy functions but also for economic prospects of the United States.

Rosen highlighted, in particular, three aspects of China’s divergence from market norms:  its financial markets, competitive regimes; and IP protection rules.  China’s capital markets give preferential treatment to its domestic state firms and discriminates against not only foreign firms but also its private firms.  He also stressed China’s uneven competition policies—as most dramatically epitomized in its “Made in 2025” policy—that establish asymmetric market access for foreign firms in China versus Chinese firms abroad; China’s state and sub-state financial subsidies set up to advantage domestic firms; and China’s domestic control of intellectual property in large swathes of critical industries.  China’s “Made in 2025” policy thereby, for example, distorts the innovation ecosystem of the world and the United States.  As Rosen asserted, “We depend for our vitality on structural conditions that non-market policy choices by a systemically important national could disrupt.”

In Rosen’s assessment, President Xi Jinping had begun his tenure with a far-reaching set of economic reforms called the “60 Decisions” of the Third Plenum Resolution in 2013.  But these market-centered initiatives, many of which Xi’s administration did push initially, led to “mini” (and “many”) crises, he stated.  These reforms, therefore, have stalled.  “The shadow over U.S.-China economic engagement comes not because China refused to reform in the Xi Jinping years,” Rosen asserted, “but because lately it has stumbled in attempting to do so.”

NEW YORK, NY - MAY 6: Traders and financial professionals work at the opening bell on the floor of the New York Stock Exchange (NYSE), May 6, 2019 in New York City. The Dow Jones Industrial Average dropped over 360 points at the open on Monday morning after U.S. President Donald Trump said that the U.S. will raise tariffs on goods imported from China. China also threatened to skip upcoming trade talks following tariff threats from President Trump.

According to Rosen, hardening U.S. approach to Chinese trade policy and the current discussion of possible “disengagement” with China are the result of U.S. recognition that China had changed course away from convergence with the liberal international economic order.  It, in fact, stems from the U.S.’s valid need to protect its economic welfare and the welfare of other market economies from the deleterious effects of China’s illiberal policies.  In the same way, he claimed, that the U.S. is not as deeply engaged with Italy as it is with Germany, and that we are not as deeply engaged with Germany as we are with Great Britain, it is not “heresy” to say that nations that do not share the same basic economic framework cannot be as engaged together—or as interoperable—as nations that do.  

But, Rosen predicted, China’s own turn away from market principles is bound to fail.  Liberal market reforms delivered double-digit growth for China since Deng Xiaoping’s Opening and Reform.  And “[u]nless everything we think we know about the relative efficiency and dynamism of free markets over politically controlled economies is wrong, the present Chinese policy turn will be, in the end, a dead-end,” Rosen remarked.  According to his prediction, therefore, we will either see a weakened China that poses less of an economic and national security threat to the U.S. or a China that eventually returns to market norms (i.e., “a reversion back to what will work.”).

In the meantime, therefore, he suggested that the American response must be “provisional,” “partial,” and “peaceful.”  American policy must be adaptable and readily reversible such that our ability to reengage to the maximum with China is carefully protected.  Secondly, it must be “partial” rather than absolute.  And, lastly, it must be “peaceful.”  When Beijing’s non-market policies fail, as it will, Rosen averred, and China re-orients itself towards economic convergence with advanced economy norms once more, we must ensure a “foundation of good will” between the U.S. and China to which China can return.

Rosen also cautioned against the U.S. abandoning its own source of national strength—i.e., its openness.  Arguing that economic protectionism has too often been confused with national security, Rosen argued that primary threats to U.S. national security now stem more from new causes like climate change, pandemics, migration pressures and access to weapons of mass destruction.  “Economic protection will do little to nothing to address those risks,” Rosen pointed out.

Rosen spoke at Shorenstein APARC as part of the China Program’s Colloquia Series “A New Cold War?: Sharp Power, Strategic Competition, and the Future of U.S.-China Relations.”  The series continues on May 3 with Ambassador Chas W. Freeman, Jr.’s seminar “On Hostile Coexistence with China.”

On Thursday, the third Asia-Pacific Geo-Economic Strategy Forum (APGEO) saw discussion on issues of international strategic cooperation in the Asia-Pacific with a particular focus on the U.S.-Japan relationship. Speakers included experts on defense and foreign affairs, including former U.S. National Security Advisor H.R. McMaster and former Japanese Ministers of Defense.

Organized by the Hoover Institution, Nikkei Inc. and the Freeman Spogli Institute of International Studies (FSI), the talks occurred within the context of the United State’s Free and Open Indo-Pacific Strategy (FOIP) and Japan’s Medium Term Defense Program, both recently updated to outline the U.S. and Japan’s respective regional commitments.

The forum’s speakers focused on the rise of China as a common theme underscoring the importance of the U.S.-Japan alliance. Particularly, the speakers shared a general consensus that China’s attempts to increase its economic and political influence and its initiatives to drive progress on technological frontiers such as 5G networks and artificial intelligence pose a threat to the current international order...

Read the full article in The Stanford Daily

On March 4, Brent Christensen, Director of the American Institute in Taiwan’s Taipei office, delivered the keynote speech at the Taiwan Democracy and Security Project's annual workshop. A video recording of the event is available below for 30 days (additionally, a transcript of Mr. Christensen's prepared remarks is available on the American Institute in Taiwan website).