My name is matthew goodman, i old the science chair year at csis. Welcome to our online viewers, we always have a good turnout online as well. Welcome to the event, building bridges, question mark, in u. S. China relations. This is brought to us with a kind sponsorship of the Carnegie Corporation of new york which has been a supporter of the dialog that lies behind this event which ill explain in just a second and ill introduce our terrific panel in a second and invite them up. First let me make a couple of administrative announcements. As usual, please silence your phones and if theres any kind of emergency, which is unlikely, weve never had that problem, just follow me. That are emergencies hears and at National Geographic one street down on m street. And i think that is all i need to say administratively. Let me just say that the actual narrow reason for this event is that were going to be rolling out a series, a collection of essays that have been written by u. S. And chinese scholars in parallel, separately produced by u. S. And chinese scholars, on the Global Economic order. Unfortunately, and its my fault because im not hard enough a task master, the actual essays are in publication and theyre going to be forth coming very soon. You can on this piece of paper on the back, you can see the list of what the essays are about and who wrote them and theres a link at the bottom yet get live, or the link is live, but the essays are not quite up there, but in another week or two they should be up there. So i commend those to you. These essays are a culmination of a semi annual track 1. 5, meaning officials and scholars, mostly scholars, dialogs weve been once against sponsored by carnegie, thank you. Weve been holding the past four plus year. Semiannual, twos over two years and cycled twice and so four years and this is the end of our second cycle. Weve been delighted to have been collaborating with this with our colleagues at shining High Institute of International Studies and one of the colleagues are there from shanghai. And we call this and starts with acknowledgment that the United States and china have some serious differences in their bilateral relationship, but we share an interest in the functioning of the Global Economy and we think its important to get scholars and officials together on both sides to discuss the problems that we see in the Global Economy to look at potential solutions to those problems, where we can agree on solutions. Where we cant agree on solutions. Look at the institutions and norms that support the solutions. Where we can agree, try to look at areas where there could be joint work to address those problems. Where we cant agree, how do we manage our differences because we need to do that as well. Honestly, the dialog has not always been easy. Logistically as well as substantively, but we still think it is and frankly, its gotten harder over the time weve done this because, you know, because of the nature of the changes in our relationship, but we still think its valuable and we think its actually still productive and we have are determined to continue it and carnegie has given us a grant and we think that they think that its important to have this dialog. So thats the context of todays event. And the agenda for the dialog has generally resolved around the three pillars of the original brentonwood system. That we always do a session on the macroeconomic, monetary, financial issues, sort of the imf pillar and we always do a conversation about developments and we always talk about infrastructure in that context, the world bank plus pillar, as it were, and then obviously trade and weve had the wto pillar and have talked about that a lot. And scholars who are experts in one or all of those issues. And the essays broadly follow that frame work as well. Again, theyre not quite ready, but when they are, you can see we have an interesting diversity of views about those issues. But today, i can offer Something Better than the papers, the essays, the pixels. The authors of at least three of the essays and plus one special guest, nancy lee, who has been involved in this dialog before. Didnt write an essay this time because shes got important things to do. Shes an expert in the issues were talking about today. With that let me invite our panelists to join me on stage and well start a conversation. Okay. Sit there and nancy okay. All right. So well, the delighted to be joined by friends and colleagues, ill introduce briefly, you have these, but mainly for the benefit of online. The director for World Economy studies for Shanghai Institute for siss as we like to call them. And her research is multilaterals and global banks and we met in the g20 circuit many yers ago before this started as we were following the g20 developments and met in a series of events held at sis, which is helpful. Shes a visiting fellow at csis for another week, shes sadly going back, but this is her second time as a fellow at csis and we had the pleasure of working with you in many contexts. Next to you nancy lee, a former colleague of mine at the u. S. Treasury department, currently Center Policy fellow, and a Senior Advisor nonresident here in our program at csis, nancy an an expert in banks and how they increase impact. And shes deputy ceo at Millennial Challenge Corporation and the ceo of Multilateral Development fun and she has Broad Development chops. And most importantly to me, she served in the Treasury Department and actually nancy is one of the rare people who have covered all the pillars of the brettonwood system. She and i started in the trade office in the Treasury Department in the late 1980s, shes then moved on, sensibly to the imf office and then moved on to Development Related issues. Slighted to have nancy with us. And next to her peter raymond, theres a theme here, nonresident at csis as well. And the leader for Capital Project and Infrastructure Team at pwc. He had a 30year career there working, as his bio says at the intersection of infrastructure and global basis. He has lived and worked in china and hes been an invaluable teacher, really, to us as weve looked at this infrastructure story. By the way, shameless advertising, reconnecting asia is our big project if you havent seen it on. And peter is an advisor to that project and weve got a lot of insight there and hopefully the infrastructure story. So, glad to have peter with us. And then at the end is a senior fellow in our csis, chair and stephanie only had to read this, had a 15 year career between the u. S. Treasury department and imf and covering various parts of the world and issues particularly in that sort of first pillar that i mentioned. So delighted to have stephanie as part of our team and also here today. Weve got a great group here, stephanie is the outlier in the essay sense because she wrote on reserve currency and the rmbs roles, and so forth and comments on the Development Infrastructure story we start out on before her specific essay. Let me start actually with peter, and im going to you wrote an essay on infrastructure and you say in your paper, quote, perhaps less understood has been the relationship between Infrastructure Development and the efficiency and effectiveness of Global Supply chains. Thats interesting to me because i dont think its something we think that infrastructure is connected to Global Supply chains. Before you talk about the recommendations of your paper, whats the importance of infrastructure . Whats the role of infrastructure . Why are we talking about this so much in washington these days . Sure thing, matt. Pleasure to be here and happy to have contributed to the compendium of terrific essays in this effort that csis has launched. I think its helpful to understand the context of asia. I think its not as well understood, particularly in the United States, perhaps in europe, how important asia is economically in the world. If we take a look at recent imf report on Global Economic outlook, asia represented 46 of global gdp on a purchasing power parity basis compared with 20 for europe and just 18 from north america. If you look at the growth rates in asia, 6. 6 subjective growth rate of gdp and asia compared with less than 2 for north america and europe in 2020. These are this is imf data. And then look at population, about 60 of the worlds population lives in asia. And asia is an incredible story of growth and Economic Development over the past couple of decades. And in particular, that has been aided and abetted by goods and economic policies, the global trade regimes and particularly by infrastructure. And the growth has enabled Economic Development and Poverty Alleviation in really dramatic fashion. And unfortunately the expectations for growth and asia over the coming decade, unfortunately, or fortunately is dependent on Infrastructure Investment. The unfortunate part is adb said Something Like 1. 7 trillion per year is needed. Trillion with a t . Trillion with a t. In asia over the next ten years to continue this trajectory of growth and only half is met to date. Into this breach steps china with arguably the best infrastructureled Development Story in the world. China, as most of you know, has invested heavily in infrastructure, its been a major driver of their economy and now its port of their significant Foreign Policy is the belt and road initiative. And that initiative could invest as much as a trillion or more dollars in asia and around the world in new Infrastructure Development. Well, to come back to your question, matt, about those Global Supply chains, one of the i think so that infrastructure enabled obviously is the specialization of investment in certain components of Global Supply chain and what has emerged in the past decade in particular is this competition between Global Supply chains. Who can source components and inputs most efficiently and effectively from a variety of different countries. The infrastructure in place in those countries and the competitive advantage of trade regimes, et cetera, with those countries. And one of the interesting dimensions of chinas Roads Program is china in effect building competing Global Economic supply chains through the bri projects that will compete with the western supply chains particularly around issues of the emerging technologies . Weve heard a lot about chinas 2025 plan, made in china, 2025 and the leading technologies china want today invest in. As china moves its economy from a Manufacturing Base to more of a services base, to a low cost Production Base to a high end valueadded base, how do these countries in asia contribute to its development of supply chains to feed those competing industries . And this is the point i was trying to make in the papers, that we often look at the belt and road program from kind of a military standpoint, through a political standpoint, but there are some deep economic supply chain issues also involved in the question about where china is going. If i can just i told you hes a good teacher. I already just learned something there and hope you did as well. If i can ask peter for you to continue by telling us because you say in your paper something that isnt necessarily intuitive in washington these days, that there is actually scope, unquestionably scope for u. S. China cooperation in that area, infrastructure and you have a few recommendations where we could cooperate. Could you quickly go through those . Yeah, i do and i think its important that we seek these areas of cooperation. Because where we can cooperate, it will were down to the benefit, particularly of the countries in which the infrastructure is being built and this is really important for those countries, obviously, but it also benefits the chinau. S. Relationship with china and the west relationship. The first area of cooperation is actually jointly undertaking projects together. There are tremendous number of projects that have been identified to be ri and other mechanisms where china and the u. S. Or the west could actively cooperate and there are distinct benefits to that. China is a world leader in Engineering Construction and we have wonderful people in the west. But there are things china is able to do much more quickly, modular construction, use of technology in delivering infrastructure, if you like, which would be a benefit to western companies as well. What i argue in the paper we need to do these in an open and transparent standard because that will allow both countries and those observing the projects being developed to understand theyre being done with environmental, social consequences taken fully into account. And labor taken fully into account. And thats the first area of cooperation. And the second is in sdatandard study. China argued the standards are not always in favor in Chinese Companies. And theres some developed by the Multilateral Development banks and by many other institutions in the world which are good and reliable standards. Id suggest that china and the west come together to look at the standards to see how a set of standards could be agreed upon between both china and the west for the design, development, procurement and financing of the project. And the third area is perhaps the most exciting and that is that there are literally trillions of dollars in Pension Funds and insurance funds that would be attracted to Infrastructure Investment around the world if some of the risks of those investments, particularly in emerging economies were better mitigated. And china has demonstrate add real aptitude for managing host country risks and some of the risks associated with infrastructure projects. If we could combine some of the risk techniques that china has employed with Financial Instruments from the west, i think we could probably unlock a significant amount of capital for Infrastructure Investment, not just in asia, but elsewhere around the world in emerging economies. So i think these three areas represent high impact for cooperation, its not necessarily going to be easy. Do them because theyre worthwhile for us to cooperate in. Thats a clear and cogent gaen a agenda and we are going to come back to several of the points. Let me bring you in the conversation. You said in your paper, Multilateral Development sorry the acronym speak, several banks aib, asia Infrastructure Investment bank have quote, more room to maneuver and youre comparing it to the wto and have more room to maneuver and play a role in bridging differences between two countries. Would you explain that and how you approached that in your paper . Thank you very much. Before i answer your questions i think i have some duty to thank all the chinese authors of the collection of essays. Firstly, theyre honored to be a part of the panelist discussion today. I am personally involved in the dialog, as mentioned in the beginning. Its a very rewarding experience for me and actually for there are five authors led by president and i would like to take this opportunity to thank all of them, professorpro in addition to the authors we have more chinese participants in the past years so i would like to thank all of them for their contribution to our dialog, and, but forgive me that i cannot cover all the papers that they wrote so i just focus on my own. And i was just come back to the question that was asked. On the rule of mbd. Thats the chinau. S. Relations currently seems to be facing great difficulties. Every morning we woke up, we saw more bad news, new bad news. So its really not a good period. I think there are many issues, but i think a fundamental one is through lack of trust between the two sides. So we need a third party that both sides can have more trust to act as a breach. Topic of our dialog today the breach, do we need a third party both can trust . And look at the international organizations. I think the multilateral banks are the third party that have more capacity and also more maneuver for the both sides to be to act as a bridge. Three major points about that. The first one is mbds rule, their function are actually very much related to the common interest of both sides as peter elaborated. I wont stress any more. The infrastructure issue is something that both east and west have concensus, with the United States and beyond the United States and china, of course. So, thats an issue that both countries face. And also, the mbds who actually are playing a bigger role in the infrastructure fansing, especially in developing countries and the second reason on that is related to the maneuver that was mentioned. I think that mbd is compared to the other international organizations. They have relatively big budgets and the budget actually relies more on Capital Market rather than on the big shareholders. So they are relatively more independent. More independent. And also, more importantly, they have a larger pool of expertise that cannot control by shareholders. So thats why i said they have more maneuver. They are relatively independent from the shareholders. And thirdly its also last, but not least, i think both countries have the sense of ownership and incentives to use mbd to rely on the mbds. For the United States, i think undoubtedly the United States is still the biggest shareholder of all the major mbds world bank, abd and the major regional ones, so the u. S. Still not necessarily testify can be to everything, but its still the most important shareholder and for china, actually, china is the Third Largest shareholder in the world bank, but after the successful launching he have the ai and mbd, china holds the two new institutions, i think for china, it feels much more encouraged by the success. So it is much more active to rely on mbds to cooperate with the world, including the United States, of course. And one example is the in 2016, when china hosted the g20 its actually very, very its been a lot of effort in trying to mobilize the mdbs in the eventual financing. So both sides have the ownership although china has ownership indirectly to the public. And thats why the main reason why i think that mdbs can play a specific role. If we look at the reality we see them expanded because of the competition, the actual competition. The mdbs their infrastructure financing actually expanded quite a lot like every year it increase 10 . Its the the average is higher than t the we do see the problems, actually especially in 2018 we have seen a lot of news highlighting mr. Malpass, the current banks president , was critical about the road and what mbd saying multilateralism went too far. He said that when he was with the u. S. Treasury not with the world bank. That time he was working for the u. S. Treasury, but now, i think after he became the world banks president , his tone changed, i mean quite a lot. He just visited china and had a very good dialog with premier. So everything looks like back to the normal. So we have seen quite so when the Trump Administration was criticized a lot on the multilateral institutions, i personally thing that mdb is area less affected. So, thats something that is where we can keep cautiously optimistic. So for the next step why dont i pause because i do want to ask you about your specific ideas, but if its okay. Sure. Let me just before i turn to nancy, let me just make a point about something you said, which is that the addition of the aib and the brick bank and the new Development Bank has provided some competition in this sort of stepped up the world bank and asian Development Bank and you didnt mention those, but thats what the implication was. I think thats important, because the competition in the world can actually raise the game. The competition in this town is talked about in zero sum terms, but its actually an Important Development and i want to stress that and come back to you. Nancy let me bring you in and if i can pull it up, New York Times top story this morning is Climate Change threatens the worlds food supply, the United Nations warns. And theres a report about food supply. Youre not an expert in food and i dont want you to comment on that, this is the challenge that the u. S. And china both have compelling or pressing interest in. Does that suggest that there is a possibility for the u. S. A china to Work Together on issues like that . If so, how . And what are the challenges to doing that or more broadly, what are the challenges in the Development World that you think theres a theres a need to move more quickly on . Thanks, matt. Actually, im quite a good cook, but you probably dont want to youre an expert in that way. First of all, im very happy to be participating in this discussion with such an excellent set of panelists and i can see already that there is a lot of complementary between what im about to say and what my colleagues have just said. What i will do is sort of talk about the landscape of finance from the perspective of low Income Countries, which are largely on the front lines of the Climate Change and the Food Security checks that matt just mentioned. So lets just briefly i want to talk about what the landscape looks like. Its not a lot of good news. There is some good news and then i want to make the case the multilateral approaches and multilateral institutions are central particularly for low Income Countries and i think im in agreement with what my colleagues have said. So, first of all, weve heard a lot about trillions of dollars of finance gaps. Let me make it sort of real from the perspective of low Income Countries. The imf estimates on average low Income Countries, in order to meet stgrelated investment needs, must mobilize 14 Percentage Points of gdp in additional expenditure. So they have to increase their expenditure by 14 Percentage Points of gdp. Clearly they have to increase their mobilization, their taxation. Lets say they can do five Percentage Points more, that would be ambitious as the imf indicated, that leaves a lot of finance that they have to mobilize. So if you look at infrastructure in particular, whats coming in from the private sector, and if you look at infrastructure globally for low Income Countries that has both private and public participation, you see that in 2018 the ida countries, the poorest countries, receive their lowest level of private investments in ten years. 47 lower than the average in the last five years. I apologize for throwing out a lot of numbers, but it gives you a sense of the size and depth of the problem. At the same time, you have a very rapid buildup in debt in low Income Countries. 40 are either in debt distress or at risk of debt distress as of 2018 according to the imf. The average debt in subsaharan africa, increased from 2012 to 2016, clearly an unsustainable pace of debt buildup. China is one of those major creditors of african countries, and an estimated 20 of african Government Debt is owed to china. Its not only china, which is credited with rapid rising and lending into africa, it is also private commercial lending sources. So its a little hard because of the lack of data and the transparency issues to get completely accurate figures. Okay, so thats so big gaps, big buildup in debt. Very little private financing for infrastructure. Okay. So whats the good news . The good news is according to research weve done at cgd on what happened to private capital flows to low Income Countries since the Global Financial crisis . And we expected to find not very good news, you know, investments much more risk averse after the crisis, actually the news is pretty good. Private capital flows to low Income Countries since the Global Financial crisis now for the median low income country are about 7 of gdp, which is about the same as the aid share of gdp. The aid share for the median country has fallen and private investment share has increased. So its not true to low Income Countries cannot attract private investment. And its not all about natural resources. Much of that finance is going to nonresource rich countries and most of that finance is actually Foreign Direct Investment so were talking about longterm stable Capital Formation inducing investment in low Income Countries. So, you have a bad news story on the kind of shortterm debt, or the size of debt related to gdp, but you have a good news story in terms of fdi, Foreign Direct Investment. Now, china, theres a lot of emphasis on chinas lending. China is also a rapidly growing foreign direct investor in africa, so china is contributing to these very significant longterm direct investment flows. It is now almost as large in terms of its fdi stock as the u. K. , the u. S. And france, the traditional big investors in africa. So its clear china is in africa for the longterm. It has a big stake in africas success and china is not only investing in resource extraction, i found a similar amount is actually investing in constructi construction, or and this is fdi investment. So this is productive capacity in construction. So, again, these are longterm flows for the purpose of building up capital stocks. So, okay, so you put that altogether and youve got good news and youve got some bad news, but you still have this enormous challenge of helping the low Income Countries avoid a debt trap on one hand and on the other hand, meet the sbg goals. So let me briefly make four points what the multilaterals can do and just building on what my colleagues have said. Transparency and sustainability. Actually the multilateral system is pretty good at that. China does not have to reinvent the wheel when it comes to transparency and sustainability. There are debt sustainability analysis that the imf and world bank do which are the gold standard, i think by anybodys estimation. There is the paris club, the official Creditors Group which has been operating for many years, transparently and collectively. Theres actually a new development on the part of thats been launched by the International Institute for finance on debt Transparency Principles for private lenders, bringing private lenders into the equation. So we know that china has just introduced the debt sustainability, and is puzzling to me, why introduce one when they already exist in a multilateral sense, but i think it would be great if china implemented sustainability analysis in consultation with the imf and world bank. Thats number one, transparency and sustainability. Number two, clearly more concessional finance is needed for low Income Countries. So china could decide to make more of its development sense concessional. One option. Another option which seems to me, at least as efficient and effective is to contribute more in cooperation with the United States, to the big concessional finance pool, which is the ida pool in the world bank, the pool of concessional finance report. T the donor to ida and increased its and nowhere near chinas role in the Global Economy. And were not seeing that ida is actually investing in infrastructure where private money is most scarce, transport a and they they could look at the size and allocation of that money for infrastructure. Very quickly, project selection, this is really, i think, the point that was already made, which is the mbds are very good at project selection standards. Esg standards, cross benefit analysis. China should do a lot itself, but i think in terms of project selection and design it could collaborate closely for mutual benefits with multilateralmulti and the point that matthew raised, theres not enough climate finance. If you look at Climate Investment funds at the world bank, they total Something Like ail billion. Its just not big enough. Eight billion. We seem to be going down the road of more trust funds or mobilize more and more money for trust funds. I would argue you need something, perhaps under the auspices of the world bank thats a selfcontained permanent entity with its own governance structure focused on climate finance, all aspect of climate finance. And i think china would have great benefit, if it took a leadership role in creating such a structure because it could dominate the governance of that new entity in a way thats difficult to do when its trying to increase its share in the existing governance structure of the world bank. So and there are many there are a number of ways, i think that it could be financed, but i think going more bold, almost creating a green bank within a bank in the world bank is something that needs to be considered at this point. Excellent, great. Well, that was a great, again, menu, the food metaphor again and well come back to some of that. I have specific questions. But let me bring stephanie into the conversation. You wrote as i mentioned on a different topic and i want you to introduce that, the reserve currency, but first, if you have thoughts on the discussion so far, including on this question of debt sustainability and sort of thinking in imf sensibility to that and that would be an interesting place it to start. Happy to do that and thanks for joining the panel even though i am a little bit, as you said, outlier. And the other points that the other panelists mean theres a theme of responsibility stake holder across the points made. Peter made the point of infrastructure and Global Growth and the fact that Global Growth obviously benefits the u. S. , china and third countries, but really, the kind of necessary element to have Sustainable Growth is really contingent on an open, transparent standard which also gets to the point that yu was making about the power of the independent third parties and their credibility. And their credibility really being dependent on this kind of transparency point and that there are responsible abbing force that are holding up the transparency and the technical standards of those institutions. Its really, in my view, the strength of those institutions, its the membership, of course, and the kind of buyin, but its also the faith that theres the Technical School in these institutions that you can trust the credibility of the work and i think that might go most directly to your question on debt sustainability that nancy had also mentioned. The credibility of the debt sustainability analysis, that the imf does and that the world bank does, is that its based on objective analysis conducted by economists and experts from all over the world based on the data that they have and their best assumptions about the future. And that kind of common standard is something that the recipient countries, as well as creditor countries that are financing Infrastructure Investment can believe in. And its that sort of credibility that then mobilizes the additional investments. So i think just to echo the points that youve all made and really kind of grounding it in that credibility and trust piece is really quite essential. Do i introduce you paper. And then to something thats quite different. Its actually linked a bit to nancys commentary in looking at fdi developments because were talking then about the Capital Accounts side of the equation for countries and what nancy mentioned about the increasing fdi flows from china to africa is reflective of increasing capital account integrations. And that does link, somewhat, to the topic of my stay which is on reserve currencies. A couple of things that ill just highlight. So as matt mentioned, the essays were ones where csis and ssis agreed on the headline topic that we would each write on. Thats the extent of the collaboration. And its interesting that the writer object the u. S. Side and the writer on the chinese side would then come back and read what the contribution was based on the common understanding of the topic, but then their own interpretation what they should be writing on the i would say i was really interested to see partner essay to mine was written at the Chinese Academy of social sciences. And there were some common themes between our two essays. To highlight two of them, we were focused on the International Monetary system and the dominant reserve currency. Currently the u. S. Dollar. We both made a comment on spillovers from a system where you had a dominant currency where domestic policies are driving decisions by the domestic policy maker, but there are spillovers from those policies and i think anyone just needs to follow movements and decisions by the fed to understand that those decisions are driven largely by domestic, Economic Conditions in the United States, but the spillovers from those decisions are clearly global. The largest economy in the next ten, 20 years, at its also the largest trade economy. The global linkages china has already quite evident, and if anything you would expect the rmb to have a larger role in the global system than it currently has. Those were two thinks between them. We also had different, when setpoints of the virgins but maybe different points of emphasis that we made in rsas. The first i would say i spent some time in mine just explaining how it was a dollar got to be in the dominant position that it is, at the point is the foundation for that is sound macroeconomic policies, Capital Markets, rule of law and currency convertibility. A currency doesnt just become a global currency by fiat. You have to have the enabling the conditions, and then the second point which also emphasized in my essay was that in order for the rmb to be a bigger presence globally, that there are certain policies that need to be implemented in first and foremost among them is increased current ability of the country. I will stop there. I suspect youre not going to get out of this room without talking about more immediate currency questions arisen today so thats a good sort of backdrop to the story which entre will come back to but thank you. Let me not to get a chance to talk more about your sort of specific ideas and let me maybe start by saying, you mentioned something im interested in at a dont know enough about, which is this new center, cooperation center, the Multilateral Cooperation Center for development finance, which is a Chinese Finance Ministry initiated idea that the Multilateral Development banks have all signed on to i think substantially and its a center that sort of housed in the to work on sort of a common standard approaches to Infrastructure Finance in the belt and road initiative, is that right . For the volcanic sling but that is is and why it significant . And then help us explain, because its in the aiib but its a belt and road initiative. I thought those were Different Things and china sort of what to paint initially to say the aiib was the Multilateral Development bank over here. Belt and road was a Different Initiative aimed at promoting Infrastructure Investments and now they seem to be sort of merging together. Are they now one thing . Thank you. Probably im not the best one to answer the specific question about the new multilateral financing center. So i think this news was not formally announced yet, which was basically aiib, and according to my personal knowledge, this center was originally to be located, to be based in the world bank but for some technical reasons probably aiib. But the function will not change. The basic function on the center is to be mainly about project preparation, information sharing, project preparation and also capacity building. As nancy said, its very important aspect, actually the center was mainly to help, or to mobilize altogether as a system to do things on the infrastructure. Details i think we need to see. Actually, there are many similar project preparation facilities were established in the past several years. So we hope this one can actually to help harmonize, or to join efforts on the different to Work Together. Im only referencing myself. The second part of your question about the relationship on the aiib i think its a specifically related to probaby should ask question more about just one of them. My understanding is that the president xi jinping himself come he didnt avoid that. He didnt say that it has nothing to do with it. Actually i think they should, people talk about the system, actually a bigger issue is the mdgs and all the bilateral initiatives as a system. So which one sought to link the bilateral one and the multilateral one is even a bigger issue because the infrastructure is even bigger. I think if the aiib and all others can Work Together better, i think thats a good thing. If you look at the marshall plan, the world bank was a bit marginalized by the marshall plan. So not the best scenario. I personally think they can Work Together and should Work Together for better. And also Work Together with the u. S. Initiatives, like the indopacific strategy. I think all the bilateral initiatives should be linked to the mdbs. At the country level. So the country level how to balance the Different Initiatives and maximize impact. Was or anything else in your paper you want to put an accent on . I did want to catch up employment in other points in your paper, or shall move on . We dont have a huge amount of time and what to give the audience a chance but a wanted to give you a chance to probably some suggestions for how the countries can go together to mdbs. The first one, the megapoint is both countries should support but not to intervene the operations of the mdbs. Like how to support. I think people talk a lot about mobilizing the private sector, but without increasing support of the Public Sector and the private sector will not be able to mobilize enough. So like the capital increase, and she knows a lot about that. I think u. S. Should get it support, the u. S. Congress should appropriate the package. Second, the other support, for example, i think i could talk more about later probably about both sides can standard issue. I personally think china is open to the standard of mtvs. On mtvs. Just examples on that. Yes, if you have done lets come back. Let me a speed about the standards question because you bent a practitioner and servicing the stuff on the ground. What is it about the standards that the u. S. Has traditionally deployed that are important and where have you seen a different approach from china . Were of those differences are significant, or is convergence in the approach to infrastructure on the grant . What you find with u. S. Firms in most western firms as a do follow procedures that are very much reflected in world bank, ifc and mdb guidelines. Its about how to select the right projects that are going to have the right economic, social, and environmental impacts on the country or how did you measure those impacts he can make a decision about which projects to build and which not to build . Along with that are issues of resettlement and downstream pollution and the sorts of things. Theres a whole set of standards and procedures that begin with how to identify projects, how do you conduct Due Diligence around these particular issues, and then how do you bring a project to market so that its either financed by the private sector or can be financed in a bilateral or multilateral way. Its a whole project preparation phase which frankly can take two years and sometimes five years, depending on the project, its complexity and the like. But the end result is you typically get projects that are pretty well selected with the issues are pretty well identified, where the financing is understood and theres a transparent process in which the project came to fruition. The criticism of chinas bri projects has been that they havent followed many of those standards, and that, in fact, projects are selected quickly. Some of these standards are done in a very superficial way if they are followed at all. Projects are secured for Chinese Companies and then they are built and delivered in a way that can have negative social and environmental as well as economic consequences from the debt and sustainability standpoint. And, but i think the interesting thing to note is that for many of these developing countries who have that projects like this on their books for years, suddenly chinese showing up at six okay, you want to have this hydroelectric facility for 20 years, and we can get done for you and two two to three years, whereas the standard process you havent have been able to get anything done in 20 years, or if they do launch a standard process, it will take three to five years before you get at a construction. China has been able to deliver infrastructure that many countries have desired in a much more rapid fashion but there have been consequences, environmental, social and economic. What were seeing now is that there is some convergence. China has been very responsive i think to some of the criticisms that have been raised around a projects have been developed and financed, and you see the release of this financial accountability standards on the part of china in concert with the imf. A set of the city with imf to try to develop fiscal stability, Sustainability Standards and other aspects. But bri is a massive effort that is being led or driven in large part by Stateowned Enterprises that are operating in countries around the world. Its not as centrally located as people think. I see more convergence happening and thats going to be a good thing, not just for china but particularly for the folks who are benefiting. President xi jinping did say at the belt and road forum in april that come touched on some of those points or Greater Transparency and sustainability from an apartment and a debt point of view. Plus, all leaders of the g20 signed on onto something callee quality infrastructure principles at the summit. We talked about the other day at into that here on the g20. Socket event. Those principles seem to be more in line with the kinds of things you been talking about and anybody signed onto that, china, u. S. , japan, everybody. So that does feel like theres a bit an attempt to bring convergence most of those are words and well see how they get rolled out in reality. I think thats the question whether the pudding is going to taste as good as as it looks on the menu. Okay. Nancy, i do want to bring the audience in but you mention in passing into her advocacy for Greater Transparency or your suggestion thats one thing that would be important the paris club. Can you in 30 seconds elevator terms tell us why its important and why china, its an observer in the paris club but not a full member and it is not bound, nobody is bound, sort of, its a nonbinding set of principles for transparency and for debt sustainability in how to unwind debt problems. China is not a member but an observer. Should china be a member and what would that do . I think china should be a member. I think its been a functional organization specifically for decades. Its purpose is essentially first and foremost to share official credit data to any country but particularly developing countries. There is a collective interest in knowing the credit landscape. You have free rider problems if people are lending into situations where they dont know the size of credits that of the people are offering. You have a free rider problem but you also have a risk if there isnt transparency about the extent of credit. If you are lending in situations where you dont know the indebtedness of the borrowing country. Theres an obvious transparency function of paris club. Paris club then in situations with our debt and sustainability problems as established by the imf, the imf is the arbiter of imminent threat of default, which is the trigger in paris club negotiations. The paris club is the place where the creditors come together and discuss what debt rescheduling or including reduction of principal. It is driven by an objective assessment of the debt sustainability situation, and then there is a collective negotiation among the creditors. All creditors are to be treated comparably. It addresses the interests that all creditors have, that no one is put ahead of the queue in terms of repayment, which is another reason, you know, it is good for china in a sense that it is treated the same as other creditors. China may believe in certain circumstances it as leverage and wants to be treated better than other creditors, but thats a doubleedged sword. They will be occasions where china will benefit from being a part of a collective creditor approach to debtor countries. And as i described earlier we now have a situation, we have a bunch of low Income Countries in serious debt distress. This is not an abstract issue. This is a train that is coming toward the creditor countries pretty rapidly and the last thing i would say is the paris club is also instrumental in the sort of Global Financial landscape because it sets the standard in many cases for what debt restructuring looks like, and that standard then applies to private creditors. So often the paris club goes first in the restructuring process, and then it sets a benchmark which the private creditors then follow. So that creates a system where there is a mechanism through which both public and private creditors can participate in helping a country return to debt sustainability, based on an objective analysis of what would make the country sustainable. There is not really any conceptual reason that china shouldnt be part of the paris club, a full participant. Just again to advertise for your esteemed institution, the center for global development, theres a great report you did last year on debt distress and looking at countries that were particularly had already had high depositions and were borrowing significantly to belt and road and identified eight countries in particular that were at the top level of risk for some debt distress. I commend the report to you. It was really interesting and very well written. My scott morris wrote, yes. Not a lot of time. You want to add anything to that before we turn to the audit . No. As you all know, and a note to the extent this group knows, this is been a topic of discussion for a number of years back in the kind of 20152016 timeframe. It look like china was getting much closer to joining and theres been a pullback from that but i agree 100 with nancy. Its a problem with the system when you have a large official creditor not part of the process that helps to reestablish debt sustainability for the countries under debt distress. The one other piece i would just lag and a lot of the work that has been happening at the International Financial institutions has emphasized transparency, but transparency on both sides. And so its transparency on the part of the creditor lender, who is providing the capital, but its also transparency on the part of recipients countries. And so i think as were talking about responsible actress year and whose responsibility and roll it is, i think this is very much a two way st. Transparency on both sides of the equation are really essential site just want to mention u. S. And china should have an interest in and should be working together to ensure that recipient countries are transparent, not corrupt doing all the things that are important here to ensuring that financing is, in fact, that is sought. 1000 other things would get into here, not enough time. I want to give the audience a a chance to ask a few questions. If you do have a question raised her hand. Identify yourself and ask a question. I will take three and a row. The gentleman here, the woman that there are, and the gentleman weight in the back. I was at [inaudible] south korea. What was interesting was sing 100 delegations debate basically two things. One was infrastructure and the gap on that, and the other was on sustainability developmental goals. As you listen to people you hear that those up to 300 trillion, csis has called 100 children but others call to 300 trillion of liquid finance in the west but it never gets to Investment Banking or others because they are not assets asset great. The question is, how could you change this . In asian this gets huge publicity, but you never see any of this discussed or ive never seen it discussed really in america because it is a huge gap both from infrastructure side, for the Global Supply chains and really how to get this capital welcome how to get between the really big Financial Institutions at the National Cyber level. The ones who control this 300 trillion or whatever it is so that everyone knows its part of the conflict of its globalization is a record to get better at the local and level r everyone . Got it. Yes, maam. Theres a woman in the front row. Here we go. The other mic. Thank you. I want to ask a broader question to your panelists here do you think there is a growing tendency into the International Relations u. S. China but also others, where economic interdependence as a political weapon . And if this is the case, what implication of the World Economy . Thank you. Good question. And then the gentleman in the back. Thank you very much for the conference and great ideas. Im marked with the south China Morning post, and so a lot of the issues around aiib have been about china developing a new model for transparency and a new kid on the block and the sort of thing. But it seems the big bulk of Chinese Development lindy can find us in to the china Development Bank and they tend to do thinks much more any old traditional way, of not workig with your communities, of being able to sign multibilliondollar deals with one flip of again instead of going through processes. Id be interested on how he see relationship between these and what do you think the aiib methods can change the really heart of power in beijing. Thank you. Great, we have three questions to answer to all or any any of the above. I dont know whether, peter, related i think your department, 300 trillion, why isnt that part of the story . It is part of the story and certainly there is increasing interest as we heard from nancy and others on the panel for Institutional Capital to flow into Infrastructure Investment. The challenge is that much of this capital is Pension Funds, right . Your teachers, firefighters, your Public Sector employees, and the question is do the Pension Funds have the permission to risk that money in what could be seen as speculative and high risk investments in emerging economies . What the Pension Funds and insurers generally will say is look, we need some Risk Mitigation instruments that allow us to get more comfortable in the event of a sovereign default come in the event of currency convertibility, in the event of the changes of law or contracts that we have an ability to recoup our investment from this particular project. And its those instruments, in fact, that the ngbs, aiib included, are hard at work at. And one of the things i mentioned in my comments is that china has demonstrated certain ability, aptitude to manage these risks of the fort on the counter so lets see if we cant bring some of the thinking together with some of the work of mdbs and others are doing and the Capital Markets to develop risk instruments that allow more capital to flow to Infrastructure Investment. Do you want to touch on that . Picking up on that, so if you look at the total amount of finance that mdbs provide to the private sector, not lending to government but to the private sector, its about 40 billioa year. Billion with a b. Billion. Trillions of dollars [inaudible] theres other investment. And they mobilize about 60 billion. So one and half dollars for every dollar they commit. Its marginal role. The mdbs are not playing the intermediary role that peter was just describing between connecting these infrastructure needs with big, largescale private investors. If you ask why, it is because their own Business Model limit the amount of risk that they can take. They are aaa related institutions, largely their shareholders want them way. Their shareholders want him to earn sort of market level returns, so the risk adjusted returns that you can expect from a lot of these investments, especially in low Income Countries, are not particularly attractive returns. So theres got to be an intermediary that can bridge that gap. And so i would argue, and have done some research or proposals on you have to create an offbalancesheet vehicle for these institutions for the mdbs thats much more risk tolerant and that has below market financial return the goal in order to make that gap pics i guess the point i would make is, this is not a small change in the system. This is a big change. Im not arguing you should throughout the ndp system. Im just saying you should give it another tool developed to make it much more catalytic candidate. Do you want to on that were also the cbd on the china Development Bank and is it being shaped at all by some of the broader conversation about standards . That has been the rap on the cdb that it does it the oldfashioned way. Is a change at all . Let me just mainly respond to this question, the second question. Basically about the standards that our panelists have already touched on. I think there are different standards from the social standards and the pricing, the debt issue, and also the procurement, whatever. So all the standards, and the third point is cdb has got a lot of attention. I think maybe because of its size. In terms of its standards, my reading of the literature is its not the best compared to the mdbs, but its simply not the worst. Its hobbled with above average. So thats the first point i mentioned. The second point i want to say, that if you talk to chinese banks including china Development Bank and also exim bank, actually probably they are too successful in the past. Really, they dont think they need to learn from everything. I learned everything from mdbs. They think into these are really too slow. They are too conservative, too cautious so its too slow. They think they dont need to learn everything. So chinese approach is the standards, the major issue is what should be the best standard . Is still angry a debate. I think that only within china but also internationally. So how to really accommodate come to learn from each other . Thats the second point. In some respects i think china itself, chinese policy banks, need to improve. For example, how to better use financing, china has established new Development Cooperation agency. How to really combine the aid with thats an issue i think china should learn. Thats also international issue. And for the environmental and social standard, i want to take this opportunity to actually, its not every aspect of Chinese Standards are the worst. Let me take an example. Even mdbs sometimes are learning, are actually see how china does it come like the hydropower. China has established the largest number of hydropower plants. Actually, its social policy about integration, how to do integration. Actually i learn from the they see Chinese Standards on this aspect is best in the world and Even World Bank and others, they are learning from chinese experience. I just tried to say whats the major point . Whats the chinese understanding of the concerns on that . And china does need to learn many things like the fiscal risk. I think its that the risk control. Because every standard are also about the risks. So how to control risks as a major incentive for the chinese policy banks to change to improve themselves . And i think on this, in addition to those technical standards, trust is a very important issue. I want to turn back to the paris club issue. I think chinau. S. On many issues they share common interests, trust. Thats something that i want to add. Okay. Can i emphasize a point here . Were talking a lot about standards and, you know, western standard versus Chinese Standards and the convergence of the standards. This was my second recommendation is that theres much to be learned on both sides, and that getting together and reviewing these standards and a green dress that a Global Standards would help not just china and the west that many of the countries that are involved in these projects also. Many of the topics we are touching on have to do with standards. I agree. Stephanie, i dont want to take on the other question mark im happy to take it on because i some thoughts on that. If i could add one thing into the question i think its an interesting question, aiib versus china Development Bank of china exim because then youre not making the u. S. Versus john figure talk about different models of policy banks within china. And i think to kind of echo what you just said, i think theres a question what are the operating mandates of those institutions here that really gets at the different Business Models. If the mandate is to just go and develop but not really worry about the viability of the project that your linking to, you will have a different reaction than if you are worried about your own viability in the project by billy and the Risk Assessment needs to reflect that. I think its a great question and an interesting thing for us to think about. As far as the question of economic interdependence, its also interesting, we were talking before we came out here to think about kind of the arc of the engagement in this geo dialogue and the five years its taken place because the world has changed and certainly they use china relationship has changed quite a bit over that time. I think previously there was a feeling that economic interdependence actually led to greater stability because you had common interests. Now it seems to be reframed as the economic interdependence actually creates vulnerabilities that can then be exploited. And so i think, to question, i think we are at least in some areas in that space, i think its that the dynamics of the discussion between the u. S. And china have changed more than kind of the reality that our economies are still very much interconnected. And as this panel has discussed theres lots of areas of common interest. I think that as a backdrop thats a great benediction and i hate to disruptive but ill just add to it by saying i think that, you know the story about if i owe the bank 100, then the bank, i have a problem here if i owe the bank 1 million, and the bank has a problem. Similarly, i think we should be careful about the risk, as stephanie said, we are interdependent and if the doubleedged sword as somebody said before, if we try to use that in an inappropriate or political weight and i think were discovering that in a lot of areas. With that sort of joint benediction, and hope for sort of broader perspectives, which is what we are trying to bring here today, also in this dialogue and thanks to you for brevity appear as the one partner representative here, but thanks to all the panelists. Please join me in thanking them for a great presentation. [applause] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] ukraines president has called for talks with the leaders of russia, germany and france to try in and the fiveyear war in eastern ukraine. Coming up this afternoon a former u. S. Ambassador to ukraine will talk about the political situation in the country. Posted by the center for the national interest, that is life at 12 15 p. M. Eastern here on cspan2. Later today democratic president ial candidates montana governor Steve Bullock and joe biden will be at the iowa state fair. Live coverage begins at 1 45 p. M. Eastern over on cspan and you can follow our coverage online at cspan. Org or with the free cspan radio app. This weekend on booktv, saturday at 5 55 p. M. Eastern, the boy crisis. Success is what makes boys feel, girls feel, that they are like, they have friends and thats what prevents them from going into depression. When boys dont have that success, they tend to go down the slippery slope that can in the worst case center, moving to alienation, withdrawal and mass shootings. And at 8 00, such a pretty girl, visibly rights activist who contracted polio as as a by talks about growing up with a disability. My mother told the women, all were talking at 16 months and walking on my own and i was never sick and never a fever until that fateful night when polio invaded our happy home and stole me from my family. Then sunday at 9 p. M. Eastern on after words, ormer virginia democratic Governor Terry mcauliffe talks about his book beyond charlottesville taking a stand against white nationalism. I think it sent a signal to people, wow, the president came out and set the stuff i can come to. Thats why they felt comfortable come to charlottesville. If he can say publicly, so can i. I make the point people use to do this at night. They dont think you have to wear hoods anymore. Charlottesville the came out. This was a big comingout party. They got hurt badly in charlottesville. Watch booktv every weekend on cspan2. Sunday night on q a. We were taken out of the hall and confronted this mob of angry people. Science professor allison singer talks about being physically attacked in 2017 after and appears author Charles Murray on campus. At the end of your discussion with the Charles Murray, left the room and went where and what happened . The fact of the matter is i dont really remember much of it. I couldnt even tell you what door and we went out but we were taken out of the hall and confronted this mob of angry people. Some Wearing Masks and they were shoving and jostling their target was Charles Murray. Sunday night at 8 p. M. Eastern on cspans q a. Now a conversation on medicare for all health care plans. We will hear from the administrator for the status for medicare and Medicaid Services and indiana senator mike braun at this event hosted by the heritage foundation. [inaudible conversations] so welcome to the heritage foundation. We are here today because americans are concerned about their health care. Health care remains a top priority for about 70 of voters to say it is our number one concern, they share with us their word about some very clear things that they think their costs are too high. They think they have reduced choices and to dont feel like they are in charge of their health care. And they want to know that when they or their loved ones get sick that they will b