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It's now my pleasure to introduce our speaker Dr. Susan Shirk. Since first travelling to the People's Republic of China in 1971 underline that 1971, that's early, Susan Shirk has become a prominent authority in Chinese politics and foreign policy. She founded and continues to lead the North East Asia Cooperation Dialogue an unofficial forum for discussion on security issues between Defense and Foreign ministry officials as well as academics from the United States, Japan, China, Russia, South Korea and North Korea. She has also served as Deputy Assistant Secretary of State in the Bureau of East Asia Pacific Affairs with responsibilities for US affairs with China, Taiwan, Hong Kong and Mongolia. It was during that period I first met Dr. Shirk when she testified several times before the US House Asia and pacific Sub Committee which I chaired. Currently professor Shirk is the director of the University of California's System Wide Institute on Global Conflict and Cooperation. She is a professor of political science at the School of International Relations and Pacific Studies at the University of California in San Diego. As a leading expert on China, Professor Shirk not captain Shirk sorry, Professor Shirk has written numerous books and articles on the country. Her most recent book "China: Fragile Superpower" provides insight into the thought processes and fears of China's leaders. She argues that situations with rising powers such as China often lead have led to war because other countries fail to understand the domestic, political and economic circumstances in such a rising power and react then appropriately. Therefore, in her book she builds a strong case for a better understanding of China's fragile internal politics and the various concerns that fears and fears that motivate its leaders. Former secretary of state Madeleine Albright called Dr. Shirk's latest book on China as fragile superpower, "the definitive book at the right time" an objective look at new China. James Liley, our former Ambassador to South Korea and China, now at the University of Maryland said Susan Shirk's latest work lifts the rug on China's severe internal problems. He also said that she has injected a dose of realism into a distorted vision of China which has been promoted by gushing China watchers who focus on Shanghai's skyline. So please join me now in welcoming Dr. Susan Shirk. Well, thank you very much Doug. It's really a privilege to have you introduce me, I have enjoyed grappling with China and Asia with you over the years and it's wonderful to be with you this evening. I know that China looms very large in San Francisco and in California and very important and that you are a very well informed audience. This is my second time here on this podium and so I am looking forward to the discussion. You know, there is an expression that is sometimes used to label China scholars in Washington. The critics of China also often call people like me "Panda Huggers". And so to have Jim Liley say that I am providing an objective view, I consider a great compliment. I do think that it's important to open up the black box of Chinese politics and understand what's going on in China, so Americans can respond appropriately to the rise of China and prevent a cataclysmic conflict that would be disastrous for all of us. You know when I went to Washington in 1997 to serve in the State Department, I was actually very worried about the possibility of war between the United States and China, because just the previous year in 1996 the United States and China had come into an eye ball to eye ball confrontation over the island of Taiwan, which Beijing claims as part of China but has ruled itself independently since 1949. The Chinese launched massive military exercises and missile tests outside of Taiwan's ports to show their anger because we had allowed the President of Taiwan Lee Teng-hui to visit his alma mater Cornell gave a speech there. And in Chinese eyed this signified that we were treating Taiwan as a sovereign independent state. So the United States sent two aircraft carrier battle groups to the vicinity and China backed down. But what would happen the next time? Crisis escalation has a life all its own. And most wars occur even though no one wants them to happen. So as I worked in government to try to lay a foundation for a decent relationship between the United States and China and prevent that kind of conflict I kept noticing how focused Chinese decision makers were on their own domestic politics. Now of course this was the Clinton administration, and I was doing China policy, so I was getting a pretty heavy dose of domestic politics myself; remember all that criticism of the Clinton White House for campaign contributions from China and for giving away our satellite secrets, our nuclear secrets. But even though there is plenty of domestic politics related to China policy in the United States, the big difference is that in America politicians are just worried about winning the next election. But in China they are worried about the survival of Communist Party rule. If the Communist Party were to fall, then of course they and their families would lose everything. You know I often tell my American friends and colleagues that I am writing a book about Chinese domestic politics in foreign policy called "China: Fragile Superpower" and they say what's fragile? But when I tell my Chinese friends that I am writing a book called Fragile Superpower, every single one of them has said, "What you mean superpower?" And not one of them has questioned the notion that China is internally fragile. Now this fragility came through most clearly to me in a very traumatic experience I had when I was in government. It was a May evening in 1999, I was driving home and I got a phone call from the Operations Center at the State Department to tell me that the Chinese Embassy in Belgrade had been struck by a bomb from a US bomber flying as part of the NATO mission in Yugoslavia. So I assumed it was a stray fragment, but I soon learned that we actually had, by mistake, targeted that building thinking it was a Yugoslav military facility and it turned out to be the Chinese Embassy. So we targeted directly with I believe three bombs, we killed three Chinese and injured 20 others. Well as I drove back to the State Department that night my instinct was that we had to apologize profusely from the President on down, because I knew that if we didn't show how sincerely sorry we were, that the Chinese would never let us forget it, just as they have never let the Japanese forget their failure to apologize adequately for the brutal occupation of China during World War II. So with this in mind we had President Clinton trying to call Jiang Zemin, President Jiang Zemin wouldn't take the call. Secretary Albright that night went to the Chinese Embassy to apologize. President Clinton went on television and apologized. We tried to send a special envoy to China, the Chinese said, "Don't come." We tried to have our Ambassador go to the airport to be there when the plane with the remains of the victims returned to Beijing they wouldn't let him go. President Jiang Zemin finally took the call, President Clinton apologized directly. He signed the condolence book from the Chinese Embassy and we paid compensation for to the victim's losses and for the building. But all these efforts were in vain. Soon protesters were swarming into the streets in Beijing and other Chinese cities where the US has consulates. The Chinese leaders, the Communist Party leaders informed people in China through the official media that this was what they call a brazen and intentional act on the part of the United States. They also provided buses so that college students could go to the US Embassy in Beijing and consulates in these other cities, to demonstrate and the police stood by while the students threw bricks and rocks and Molotov cocktails at the buildings. But they didn't let them enter the buildings. So what was going on here? Well, first of all the timing of this accident was unfortunate. Put yourself in the place of President Jiang Zemin and that's what I tried to do in this book, I tried to put the reader in the place of Chinese leaders so that you can see how they look at their domestic situation and how they look at the world. So just a few weeks before this terrible accident, in April president Jiang Zemin had awakened to find 10,000 adherents of the Falun Gong, a spiritual sect that wanted to be recognized as legitimate in China and had using cell phones and the internet with no warning, organize this demonstration of 10,000 people surrounding Zhongnanhai, the compound where Chinese leaders work and live. Well needless to say president Jiang freaked out. I mean he was very alarmed; how could this happen? And he I've been told by a couple of insiders that that night he stayed up late, writing a long memo not on how to handle the bombing of the Chinese Embassy in Belgrade, but on how to crush the Falun Gong, and I speculate that in his mind these two threats blurred together. It's also important in considering the timing to remember that just a few weeks after the May accident in which we bombed the Chinese Embassy in Belgrade, was going to be June 4th 1999. Now I know probably many of you in the audience recognize the significance of that date, the 10th anniversary of Tiananmen. In 1989 in Beijing Tiananmen square and more than a 130 other cities through out China, there were large scale pro democracy demonstrations, and the Chinese communist party almost fell. So the President Jiang and his colleagues were worried that on June 4th 1999, on this anniversary the students will come out on the streets again. In China it's a kind of a tradition that you do get demonstrations on anniversaries. So when the Belgrade embassy bombing occurred they thought well the students are organizing these protests they are just going to move them up a few weeks, and they have got to come to Tiananmen Square or they have got to come after us in Chung-nan-hai, because they are got to be furious at us that our government is so weak, feckless, that we allowed this humiliation of having the Chinese bomb or embassy. So that explains the buses. They were there to make sure the students went to the US embassy instead of coming after the Chinese leaders themselves. They deflected that tidal wave of protest away from themselves and towards the foreigners. In other words, think about the significance of this. They were willing to risk a confrontation with the powerful United States in order to protect themselves from domestic opposition. So based on this traumatic experience, and others not quite so traumatic but in the same pattern. I started to see this pattern of political insecurity on the part of China's leaders. You know, to us on the outside China's leaders looked like giants because the country has been so successful at reviving it's economic power, it's military power, it's political influence in the world. But in their own minds, I think they feel more or like scared children, trying to stay on top of the society that has roiled by all this economic change since the market reforms were introduced in 1978 and since China was opened to the world. So this insecurity drives everything they do. In foreign policy as well as domestic policy, and that's basically my argument. So today I would just like to talk a little bit about why Chinese leaders are so insecure, very briefly. You have to go back to Tiananmen first of all. This insecurity really starts to intensify after this very close call in 1989 when not only did you have demonstrations in more than a 130 cities, but the leadership split over how to respond to it, the demonstrations. And they the regime remains standing only because the military obey Deng Xiaoping orders that came in and forcibly put down the demonstration. So that close call is very much in the minds of Chinese leaders. Also remember in that same year, the Berlin Wall fall and communist regimes in the Soviet Union and Eastern Europe started to fall. So China's leaders ever since that time have worried that their own days and power are numbered. They also know that they to put it simply, they are no Mao Zedong and Deng Xiaoping. Today's leaders are you know, the current president Hu Jintao, the former president Jiang Zemin and their senior colleagues. They are they lack a personal following. They don't have much charisma. They are kind of organization men, technocrats. And this contributes to their insecurity because they know that people don't have a huge amount of respect for them. Most important they know that all these market reforms and opening have turned Chinese society upside down. I mean this is not the same China I visited in 1971. More than a hundred million people have moved from the country side to the cities. The majority of people work in the private sector with this very little political control of people. People travelled abroad now, and they never did before. The people also and I think this is really important, I devote a whole chapter to it. People have more information than they had in the past, about what's going on in their own country and in the world. That's because China now has a commercialized media and of course the internet, a 144 million people get their news, information through the internet in China now. And this means that China's leaders can longer keep people ignorant of what's going on you know, for a politician in Japan or Taiwan makes some remark that is viewed as provocative by people in China. People in China are going to expect the leaders to react, and they have there is no way to completely prevent this kind of information from reaching people anymore. It is true that there is extensive censorship the propaganda department still is a force to be reckon with, there is blocking of websites, filtering of keywords searches, but its not airtight and there is still a lot more information available to people. China is much more porous to information than it is used to be. The gap between the rich and poor has widened as a result of all this economic change. You know, in America we talk we are very concerned because the wealth gap is larger than it's been in more than a century. China's is worse and the reason the China's leaders talk a lot about this inequality, which they call polarization and they are very worried about the political consequences of it. Because people in China believe that the wealthy got their money not through ingenuity and hard work, but through official corruption and that's what makes it potentially, politically explosive. Now the current leaders of China President Hu Jintao and Wen Jiabao are trying to stave off unrest by showing how much they care about the poor. You know a kind of compassionate communism we might say. Which is, think about it communist party now has to really prove they care about the poor. Their slogan is the harmonious society. And premier Wen Jiabao is particularly affective at this on television. I was in China before the summer last summer and every night watching the 7 o clock news. Wen Jiabao at least once a week is seen visiting some poor village where the peasants have suffered some natural or man made disaster and put this armor around the farmer and to show how very much he sympathizes with her plight and a kind of tears up sort of like Chinese Bill Clinton. And he is very very effective at this. But despite all this talk about the harmonious society trying to show that the leaders care about the poor, there still our demonstrations everyday in China and in the cities laid off workers in the countryside farmers who are furious about corrupt local officials selling their land and not keeping the money not giving them what they believe they deserve. A lot of demonstrations nowadays over the China's severe environmental problems so great article in today's Washington post about this. About a big demonstration in Xiamen, Fujian province over a chemical factory that the local officials also are building in an urban area and the people use cell phones, internet to organize a large scale demonstration against the chemical plant. So protests occur and the leaders are very worried about that. When I have met with in fact I think it was one time that Doug Bereuter and I were in China together, we had a meeting with China's premier, and he got a question that wasn't about demonstration, so it was about something else. But clearly demonstrations were on his mind and he immediately had all the statistics about how many demonstrations had occurred in the last ninety days in China. Protests are the only thing that China's leaders worry about. Again let's go back to Tiananmen. This crisis at 1989, taught China's leaders three things, they took away three lessons that they learned from Tiananmen. One is prevent massive social protest. But second is prevent any public leadership splits, because Tiananmen the government almost fell because people saw that the leaders had a different attitude toward the protest. Some wanted to talk with them and have dialogue others wanted to take a tough line. And of course because of the splits, it encouraged people to come out and demonstrate. Because they felt it was safe. So the China's leaders want to maintain this public face of unanimity. Act like there isn't any competition, any daylight in their views between them. But managing to do that especially in the context of this information revolution to keep the competition within the party elite hidden from the public is very difficult. And China is right now in the mist of its own political campaign. In the fall, there will be a major party congress. President Hu Jintao will receive another term as president and head of the party. So that's not in doubt. But at least, four of the nine members of the standing committee, the Polit Bureau are going to retire because of age. And also so they have to decide who to replace them with. They also really should select Hu Jintao successor. Hu Jintao was chosen more than five years before the time he became the president and party had, so he could be prepped, he could sort of be a leader in waiting. So they should really decide and one person now. But most folks in China think that they will most of the political elite the people who watch these things think that they probably will not be able to agree on one person. Hu Jintao can not choose has successor. It has to be a collective decision of the Elite. So if they promote two or three people and let them compete over the next five years, it's going to be very interesting, very difficult to keep this public face of unanimity. Finally the third thing they worry about actually, not finally I have two more things to say and then we will move to the question session. Another lesson of Tiananmen is you have to keep the military loyal, because if there are protests and the leaders split, then you may still survive if the military follows orders and stands by the party leaders. So I think this really helps explain why Hu Jintao spends so much time trying to build support from the generals and also why the Chinese military has received double digit annual increases in the defense budget, since the early nineties. It's in part because China wants a military that a great power can be proud of but it also in part because of the need to basically by the support of the military. The last factor that has Chinese leaders worry is rise in nationalism. They recognized that the previous two dynasties the Ching dynasty that fell in 1911, and the Republic of China that was defeated by the communists in 1949. Both of them were overthrown by national movements in which the specific discontents of different rural and urban groups were fused together by this powerful emotional force of nationalism. And Chine's leaders therefore feel they have to stay out in front of rising nationalism especially on the issues of Japan and Taiwan. So the fears of Chinese leaders about their maintaining power at home their political survival, motivate everything they do in foreign policy as well as domestic policy. I know I believe that Chine's leaders really do want the country to rise peacefully and they try very hard to convince the world that they are a responsible power with peaceful intensions. But the question I have is will they be able to sustain that approach, the responsible approach domestically in the face of increasing protest nationalism and the fact that people have all these news about what's happening in Japan, Taiwan and the United States. So my book argues that we need to be aware of Chinese fragility when we make our own policy towards China. We have to realize that everything American say and do resonates through Chinese domestic politics. So I conclude the book with some suggestions to Americans and to Chinese too, I'm happy to give them advice about how would in view of this in turn of fragility how to manage our relations so that we avoid a disastrous conflict between us. So I will be happy to talk about those policy ideas or anything else in the discussion session. Thanks very much.