Africa. So, i think we are seeing a perhaps unplanned, but none the less, an expansion of the chinese ability to deploy ships far beyond regional wars. But not necessarily to the indian ocean or persian gulf. No, they are doing some of that. Since december 2008 of course, theyve had to Counter Piracy formations in the gulf of aden. They are slowly beginning to deploy more and more ships into the indian ocean. The fact that earlier i guess last year, they sent a conventionally powered submarine, certainly has gotten the indian navys attention. The indian navy tends to take an exaggerated view but none the less we are seeing increased distance deployment by the chinese navy. On mikes question, if i remember my World History correctly, there actually arent too many cases of a continental power becoming maritime power. Soviet yoon ontried, failed. Were the only one. So, what china is setting for itself is not a small goal. On allens question, i agree that once you have the capabilities, theres the temptation to use them. And i think that temptation b sbt isnt just in the minds of the pla. A friend of mine was vacationing in hainin island where the naval base is and he actually was taking him to his hotel and they were going by the naval base and the taxi driver was complaining about how the fact about the fact that china had spent all the money on the ships but wasnt using them. Why dont we use them for something. More seriously i think its impossible to make a sort of general prediction about this. We are going to have to be on the lookout for cases as we go forward of exactly how china decides to use military power to deal with a specific problem and here, we get into something buds mentioned and ive mentioned, the quality of chinese Decision Making and its confidence or lack of confidence in the ability to control managed risks. Another round. Further back. Here in the front row. These two over here, then well work back. Please. Thank you. My name is jeannie win. Thank you for the opportunity and for all the presentations. Ive heard all panelists mention the South China Sea would be the most risky and dangerous point even of the factors you brought up and ive also heard about the geography and the message that that i would like to ask about the role of vietnam and as a yan in the big pictures. Both economically and politically and militariwise. So, we are expecting a code of conduct. So when you see for the code of conduct to be effective, we have to have a mechanism to enforce it. Where would u. S. Be in that enforcement . And right now, we talking about chinas building islands and if we let that proceed, that would undermine not only the u. S. , but the whole International Community and asean as well and most of all, it undermine the international law, which we had tried to reenforce in the code of conduct. So, where do you see that u. S. Can rally the United NationsSecurity Council to have something so say in it . Thank you. Back to the panel. Im a recent graduate from Syracuse University and i love this topic. My questions for david. We talk about how chinas economy has been slowing, but last year, 7. 4 , i believe and i just recently read from the wall street journal that there was some type of restructureing within the peoples bank of china and they were able to free up about 100 billion u. S. Dollars for lendinging. What do you think the limb takes would be for their military and for us as well. The u. S. David would you like to start . Yes. Chinas economys slowing. Mostly for natural reasons. There have been overinvestment, particularly in real estate, but also heavy manufacturing and i would argue in local government, the structure, so its natural for the economy to be slowing down and basically its a healthy thing thats been managed well but the authorities dont want the economy to grow too much, so the most recent move they got some disappointing data the first coming in at the beginning of 2015 was disappointing in terms of easing rule to reduce the requirement and free up as you say, something around 100 billion equivalent of additional lending, so thats the shortterm macro move. I think the, for this discussion, i think really the important issue is more the kind of medium term and longterm growth of the economy. Closed sectors would benefit from structural measures were more and more important in terms of taken sustaining the economy overall. Its very interesting because it seems to me that if theres some sort of clash between vietnam and china where the land features and drilling rights on monday, on wednesday, they had a Vietnamese Communist Party and the head of the communist were having a love fest. So, hanoi is obviously tryinging to keep a balanced view which goes back to the point of geography. China is right there. You know the chinese army the walk to vietnam and the u. S. Is a long away way, but i think this idea of balance also explains why hanoi is striking up such a much closer relationship with india. Indian navy guys are training the First Submarine crews in vietnam, for instance, and theres an agreement that Indian Navy Ships have been repaired in vietnamese shipyards but vietnam is going to be very wise about this i think, as a balance goes forward. As far as the code of conduct is concerned, the 2002 decision to design a code of conduct has made sporadic progress at best and i dont know that the u. S. Is ever going to have any role in enforcing that. Im not sure who would be available to enforce it. I think beijing is going to maintain this position that even within a general code of conduct that the bilateral relationships are going to have to decide whos right and wrong. I think malaysia was the first to do this on swallow reef and the philippines and taiwan have also dredged dirt and expanded island facilities. Certainly, china is doing it on a much greater scale than anybody else has. The interesting point will come when under the conventional law of the sea, should china try to claim unclosed rights for these structures while theyre clear manmade structures dont qualify as islands thats something in the future that will have to be decided. I reread the unclosed this morning before coming down here. Was once again struck how a treaty, an International Treat thety can be so indefinite with so many gray areas. Just to supplement im not holding my breath about the inclusion of a binding code of conduct. I think china at least may not want to restrict its flexibility by accepting rules. I think that if we ever get to it the enforcement will have top among the countrys concern. But i do think the United States believes it is, it will be very useful in the countrys concern can have a binding code of conduct. On vietnam, i think, i agree with what bob has said. Another thing to be said about vietnam is that it, it does have a capable military. And that can be a force for stability and you can contrast the capability of the vietnamese military with the military of another Southeast Asian nation that i wont name. Can i say one word on vietnam . I just have to add that i think vietnam has this great opportunity because its one of the initial negotiators of the Trans Pacific nart they are ship so if it can be implemented and vietnam can meet the standards, vietnam will be the biggest winner relative to its gdp, so this will be a very important measure for vietnam to tie it more closely to the United States and japan economically. Now, it would be good if china joins a successful tpp. That will be great for the whole region, but its a great opportunity for vietnam. By the way, they look to the next round, speaking of other countries, we havent talk eded a lot about australia today. They have a very good fis tall position and yet, theyre only spending about 1. 6 of their gdp on the military, so it gives you some gauge of their relative concern about china. Its real, but not through the roof. Likewise, theres a lot of talk about Prime Minister abe, remilitarizing japan. There are a lot of interesting things going on in japan, some of which i support, some of which im concerned about, but i would note that japans military budget is still plus or minus 1. 0 of gdp and its virtually not moved from that very low post world war ii ceiling despite all the talk of japan doing more. Its interesting as people talk sometimes about arms races in asia et cetera if there are, theyre within certain constraints. Pat malloy, then the gentleman in the blue vest. Im a trade lawyer, but im also a former member of the u. S. China commission. And my question is to mr. Dollar. Means you build your economic strength and upon that, you will build your military and your political strength. The title of the program is about chinas rise and why we need to increase our Defense Budget or deal with that. My understanding is since china joined the wto, the United States has run about three trillion worth of trade deficits with china. Last year, it was 30 340 billion. Some would say this is contributing very much to chinas growth at the expense of our own growth and jobs in this country and economic strength in the country. Would it make sense to begin to rebalance this economic relationship rather than feeding chinas growth at our own expense. My names martin apple from california. My discussion point is very straightforward. That is the cyber connection. Threats and super agents and all these things developed on both sides of the ocean. Just as much as all the others because it really underlines their success. Toupt start then well get to the cyber question . Yes, i share the sentiment behind your question and certainly f we go back a number of years to the period before the Global Financial crisis, the imbalance between the United States and china and just more generally, imbalances in the world have really reaches extreme levels. Chinas surplus got above 10 of gdp. U. S. Overall trade deficit was around 7 in gdp and lots of people were warning that was un unable and that proved to be true. I would argue weve mad a lot of progress with rebalancing since the crisis. It really makes sense to look at the overall imbalances. If the u. S. Has a deficit with china, if that were balanced with others, it wouldnt be such a concern. Our deficit has come down to about 3 of gdp. Chinas overall surplus has come dounl below 3 of gdp. Those are sustainable numbers and there are reasons why that may not be disadvantageous for the United States. My worry now is that those imbalances are going to start rising again. U. S. Economy is finally starting to perform in a healthy way and our trade deficit is widening. Probably say the December Numbers were somewhat disturbing, so its definitely an issue we need to focus on. One aspect is the Exchange Rate where we have an intense dialogue with china and theres been a certain amount of progress in terms of china letting its currency appreciate. At this point i feel the bigger issue is market access. China remains closed in many important sectors, both in terms of trade and foreign investment. I think its in chinas interest to open up those sectors. It would have a significant effect on the United States economy and the United States would benefit from being able to export more and investment in china. So, i think thats where the dialogue is now and thats why things like Trans Pacific partnership and potential by lateral treaty these are very important because they would signal china is serious about opening up and Meeting International standards. That are appropriate for its level of development. So, i think things are are kind of hanging in the balance now as to whether we make that progress in terms of market access. If we dont, then i think theres a danger those big imbalances are going to come back and the u. S. Will then have to think about other potential strategies. Richard on cyber. Thank you for the question. I think you make a good point. If only the most difficult security domains to manage are the new ones where you dont have an experience and i think cyber is doubly tricky because the attribution problem is so severe. If there were problems with the Pla Air Force or missiles we would probably be able to figure out pretty quickly that china was involved. Sigh Cyber Attacks are a different story. This deserves all the attention its getting. And should probably get more. Second is for our institutions to build up their defenses. In a serious way. Whether its u. S. Government, u. S. Critical infrastructure. U. S. Corporations. It probably doesnt hurt if we also build up fairly robust capabilities. To remind china that were not just going to play defense. Ultimately the management of this new domain is going to require diplomacy and creation of rules where rules dont exist. Now, that may be a tall order. But its certainly something to try and achieve. Okay, another round of questions here. One more time in the back. And then well go to the gentleman standing against the wall. Thank you. Im mark wall. Recently former university of wyoming u. S. Pacific command. First, how would you say chinas reading the situation in the ukraine and what lessons may be drawing or not from the west response there for it approach in the three cs. And secondly, taiwan may not be the focus of chinas military build up these days, but taiwans facing new elections. What should we. My question is for david, but appreciate once or if china catches up with the u. S. , what will it contribute to the world order and how would that look like . Just specifically in terms of institutions and power structure . As i see it, china is pretty well embedded in the set of global institutions. Its a Security Council veto country. An important member of the imf, world bank, world trade organization. Now, within those groups, the economic groupings, which is im more qualified to talk about, theres broad agreement that the power, the voting shares, et cetera they should be shifting away from developed economies towards the developing. I emphasize the point that the u. S. Can aspire to keep roughly its share of gdp, which i think is a realistic aspiration, but thats not realistic for europe or japan because of their demographics and other factors, europe and japan are likely to be a slightly declining share of the World Economy and likely to be a gradually increasing share of the World Economy and that has a lot of positives. Because you remember, most of the developing people in the world live in the country. So, in terms of those institution, it makes sense from the voting shares for the power to be shifting and thats for the accepted. In the imf, there was an agreement about reallocating shares. Now now, unfortunately, the u. S. Congress has not ratified this agreement and i dont know see prospects in the good to ratify this, so from the point of view of the chinese its fair to say there seems to be some reluctance on the part of the United States and the existing powers to let china kind of take its natural place in these institutions. So i see china now hedging to some extent. Its still starting a new investment bank, a silk road fund. I see that as chinese hedging behavior that makes a lot of sense. I think its the galvanize existing powers except that the power should be shifting. I would relate this also to the Trans Pacific partnership. The chinese perceive that as an effort on the part of the u. S. To exclude them. I see it on a part of the u. S. To set new high standards for trade in the 21st century. I hope that it succeeds and i hope china joins so i think this is an interesting moment in history where over the next decade or so it will not be clear if chinas really throwing its weight into strengthening the existing institutions and having a kind of a well agreed set of economic rules. Or if china will gradually be shifting more toward the developing an alternative set of institutions, which is not likely to be a good thing. I think there are a lot of things we can do to encourage china and bolstering those. A lot of economics is win win, so on the economics side, it would be good if we could agree with china and economic rules that lead to more trade and more investment. Sometime ago at the American Institute of taiwan its really nice to see you. I havent studied chinas view of ukraine closely, but i would suspect they would have a mixed view. First of all there would be deep concern about what they perceive, unz line perceive, as the u. S. Stimulating this quote unquote, revolution, from at least some chinese views. The situation we have today was started by the United States and theres not they dont focus as much on the internal reasons why the intraukraine dispute occurred. We see this they may see a couple of opportunities. One is if the United States gets deeply involved in the dispute between ukraine and russia, that may distract us and diverse ut from paying so much attention to east asia and so much attention to them. Similarly, there may be sort of a view that if we can strengthen our relationship with russia, its a useful card to play against the United States. I hope they would think twice about moving too close to russia, which after all, its a country that violated an International Treaty. In i think they should worry about the precedent russia has set by stimulating accept ra advertise m in a small empty particularly through a referendum. At least some people in china with maybe a sense of humor would see the an analogy there. Thanks. I certainly think richard hit that nail on the head and i just add with respect that taiwan does not lead to taiwans importance have