CAPP Events in 2007

December 2007

Chinese Delegation Representing the Taiwan Affairs Office of the State Council of China visits RAND - Dec. 21, 2007

On December 21, 2007, RAND welcomed a Chinese delegation representing the Taiwan Affairs Office of the State Council of China. They met with Executive Vice President Michael Rich, Director of International Programs Susan Everingham, and senior RAND researchers, Eric Larson, Greg Treverton and Charles Wolf. The delegation was led by Mr. Sun Yafu, Vice Minister for the Office.

Following introductions, Michael Rich gave the delegation a brief overview of RAND, highlighting the depth and breadth of RAND’s work and the backgrounds of its researchers. Michael emphasized that the U.S. government plays no part in the management of RAND nor in the work it publishes.

Mr. Sun began by posing three questions: did RAND have a judgment on China/Taiwan relations; how did RAND view Taiwan’s decision to hold a March referendum on U.N. Membership; and what policy suggestions did the group have for his colleagues in the State Council.

Michael began by emphasizing that there was no single RAND position on the complex issue of China and Taiwan. Prior work done on cross-straits relations by various RAND researchers contained the diverse backgrounds and perspectives necessary for any comprehensive study addressing China and Taiwan. Susan Everingham cited the recent work by Roger Cliff and David Shlapak, “U.S.-China Relations After Resolution of Taiwan’s Status,” saying that its presentation of ten possible scenarios was intended to explore the implications of different trajectories for U.S. China relations, with the main goal of avoiding rather than predicting conflict in the region.

Regarding the issue of Taiwan’s referendum for U.N. Membership in its own name (Taiwan, under its official name, the Republic of China, lost its seat in the United Nations to the Peoples Republic of China in 1979), the RAND participants believed the referendum unhelpful to the broader Chinese/Taiwan relationship. However, both Charles Wolf and Eric Larson pointed out that smaller expressions of asserting Taiwan’s identity - for example through membership to institutions within the UN like UNICEF or the World Health Organization - could provide a psychological boost for Taiwan and potentially mitigate tensions between the two countries.

As for policy suggestions regarding cross-straits relations, Greg Treverton summed up the short-term, long-term outlook by stating that the situation looked relatively easy in the long-term given the growing economic ties between China and Taiwan, but worrisome in the short-term as both countries oscillate between provocation and response. He added that at times, the bigger, more powerful country needed to exhibit the most restraint in order to preserve the long-term goal of peaceful resolution - a lesson with which even the United States grapples.

Regarding U.S./China relations, Mr. Sun noted that beginning with the 1979 recognition of the PRC, both countries now share many more things in common than at any other time and that the basic trajectory of relations was developing forward and should continue to do so. Despite its military build-up, Mr. Sun said China was committed to Deng Xiaoping’s policy of peaceful resolution on the Taiwan issue. He said that Taiwan should not interpret the build-up as a threat to its people, but rather, a counter to the independence movement. He also added that China was looking inward to improve its human-rights record and to promote democracy.

In closing, Mr. Sun said China was grateful for the U.S. government’s opposition to the Taiwanese referendum issue and added that China was not interested in co-managing the Taiwanese issue with the U.S. government. He said China was looking forward to the elections in March as a time to renew peaceful negotiations with Taiwan.

November 2007

Policy Forum Explores China's Changing Role in Geopolitics - Nov. 29, 2007

On November 29, RAND hosted a Policy Forum in Santa Monica to explore ideas from William Overholt's recent publication, Asia, America, and the Transformation of Geopolitics (Cambridge University Press). Overholt is director of the RAND Center for Asia Pacific Policy (CAPP).

The event included an introduction by Michael Rich and a discussion between Overholt and Donald Tang, a newly elected member of the RAND Board of Trustees, member of the CAPP Advisory Board, and vice chair of Bear Stearns and Co. It was cosponsored by the Asia Society of Southern California.

During the informal Q&A-style dialogue, Overholt and Tang discussed their views on China's changing role in foreign and economic affairs and the implications for the broader Asian region. Additional topics included perspectives on China's military growth, the resolution of Taiwan's status, and economic development in the region.

The event drew nearly 200 attendees, including RAND Policy Circle members; advisory board members from CAPP, the Center for Terrorism Risk Management Policy, RAND Health, and RAND Infrastructure, Safety, and Environment; members of the board of governors of the Pardee RAND Graduate School; congressional representatives; and media. Organized by the Office of External Affairs, the presentation was part of RAND's Policy Forum series. Policy Forums are public, nonpartisan programs designed to inform and inspire debate on specific, timely policy issues. A DVD of the event is available through the RAND Library.

September 2007

Chinese Ministry of Finance Delegation Visits RAND - September 18, 2007

On Sept . 18, Michael Hurd, Director for the RAND Center for the Study of Aging, welcomed a delegation from the Social Security Department of the Chinese Ministry of Finance. The delegation was interested in learning about how the United States labor market policies were shaped and specifically, how to address the issues of an aging population. Michael led the discussion with a presentation highlighting the breadth of expertise of the RAND L&P group and its use of world-wide data collection models to study and disseminate research on the issues of an aging population and the resulting strain on public pension systems.

In the course of Michael s presentation, he discussed the key socio-economic factors affecting workers as they near retirement and stressed the significant link between public pension systems and their effects on the behavior of workers. Like the United States, many countries are facing the reality of aging populations and the mismatch between those paying into and those drawing from existing pension systems. Michael expounded on ways to deal with this reality and while not favoring one approach over another, spoke of three alternatives to address the disparity: postponing retirement, raising the taxes on firms and workers, and cutting benefits to retirees. He spoke of a central question facing the L&P group: does wealth promote healthy populations or are healthy populations more predisposed toward acquiring wealth? He also compared the labor markets of the United States and with those of several European countries and demonstrated how regulatory environments contributed to unemployment rates and the overall ability of a country to compete in a global economy.

A Q&A session followed the presentation, at which time Michael was asked to posit suggestions on issues ranging from Chinese and American labor practices, to the different types of pension systems, to the million dollar question of how to adjust to an aging population. In tackling this difficult and important issue, Michael stressed several key points: the importance of flexible labor markets, the balance between social policy and labor policy, the difference between federally mandated policy and tax-based financial incentives for affecting changes in worker behavior and most importantly, implementing change slowly, to maximize well-being among populations and to reduce the impact of surprise and uncertainty in markets.

Central to free markets, Michael explained, is the ability of employers to have hiring/firing flexibility, as well as control over the type of worker (temporary, part-time) a company employs. He compared the labor markets of the United States and Britain, whose flexible labor environments coupled with the use of economic incentives based in the tax code proved advantageous over countries like France and Germany where stringent labor policies stifled competition. The inability of France to pass legislation allowing younger workers to join companies for a trial period before being tenured is an example of why employers shy away from huge pockets of a population. These undesirable conditions lead France and other European countries to continually have relatively high unemployment rates for developed nations.

To balance the flexibility in the labor markets, Michael cited the equally important need for federally mandated social policies to protect the individual worker. Disability insurance, age discrimination laws, workplace safety regulations are examples of such policies. These protections, often overlooked, help the individual in a structure such as a corporation where one has little control over their environment. Michael also noted that in America, the states take the lead in setting labor laws to account for the vast array of industry, population and geographic differences within the country.

In answer to how to affect change in workers behavior, especially with regards to postponing retirement, Michael discussed the use of financial incentives tied to American tax policy as a means of promoting strong and flexible labor markets. He used the examples of company-sponsored health care plans and retirement benefits which offer financial incentives to both the individual and the company as a way to ensure safe and well-intentioned behavior. By offering these benefits through the company vs. the government (as in more socialistic societies) monitoring and regulation burdens are eased but those without employment then fall through the cracks.

Key to adjusting to the aging population question was the need to introduce and implement labor market reforms slowly into the system. Michael noted that if people are forced to work longer because their benefits are being cut, they need ample opportunity to adjust spending habits, economic behavior and employment to account for the shortfall in savings at the end of their careers. Michael cited the example when in 1983, the United States changed the retirement age for Social Security from 65 years to 67 years. However, this law did not become effective for another twenty years allowing workers the necessary time to adjust to a changing economic future. Such care is essential to avoiding shocks to not only markets but to overall populations.

In conclusion, Michael stressed the importance of applying varying approaches to the critical issue of aging populations. While the L&P group has done numerous studies and collected vast amounts of data, there is no magic bullet to addressing the problems of an aging population. Care, deliberation and flexibility are tantamount to ensuring the overall well-being and economic sustainability of a population.

CAPP hosts a delegation from the Chinese People’s Institute of Foreign Affairs - September 10, 2007

On Sept. 10, a delegation from the Chinese People’s Institute of Foreign Affairs (CPIFA) visited RAND to discuss Sino-US affairs and China’s military role in the Pacific. The delegation was headed by Mr. Wang Yunxiang, the Vice President of CPIFA. Mr. Wang said that RAND is very famous in China and he was honored to be a guest. He went on to say that the Sino-US relationship is the most important bilateral relationship in the world.

Bill Overholt led the discussion by first introducing himself and other RAND colleagues that included Yong Kang, Kumiko Okazaki, and Charles Wolf, Jr. He highlighted RAND’s growing number of international research projects which were primarily focused on health, education, transportation and infrastucture. He also explained that RAND competes for its contracts and that it was not guaranteed a budget from the U.S. government.

Noting some of RAND’s collaborative relationships, Charles discussed topics from the recent China Reform Forum that included panel discussions with senior-ranking military officials from the People’s Liberation Army (PLA). Mr. Wang asked whether RAND focuses on the function or the power of the PLA. Bill said RAND covers both aspects, and its research reports were usually published on its public website. RAND has an extensive quality control process that involves both internal and external reviewers, he said. Mr. Wang later asked how RAND would compare the PLA to other strategic forces such as the US, India and Japan. Bill said the PLA was capable of defending China, but it had very limited capability to project power overseas. China was improving its capabilities for a Taiwan conflict, he said. He then gave specific examples such as China’s expanding military budget, the launching of an anti-satelite missile and hacking into defense computer systems. Mr. Wang said that China was not a “first strike” country. China generally takes a defensive posture. The world cannot catch up with America’s army, he said. Mr. Wang said there is a 100-year gap between the Chinese and US military, versus the 15 to 20 years that had been cited in various circles. He also added that China was a very hard country to manage. It has 14 borders and a number of internal conflicts. He said the geopolitics were very difficult and would take some time to stabilize.

Charles asked Mr. Wang about CPIFA’s size and structure. Mr. Wang explained that CPIFA was a non-governmental organization that worked closely with the Chinese Ministry of Affairs, but they received most of their funding from the Ministry of Finance. He said CPIFA consists of 96 staff members out of which 30 percent work abroad on foreign missions. CPIFA’s goal was to provide mutual understanding between China and foreign countries, he said.

As for Sino-US relations, Mr. Wang said that China offers high quality exports for a low price compared with the rest of the world. He disputed recent claims in the media reporting otherwise. Mr. Wang said these claims were small in comparison to China’s overall exports. According to him, America saves over 60 billion dollars annually, due to the low prices offered by China. He said the US had a huge trade deficit not only with China, but also with other parts of the world. Charles said the lack of US savings was the major contributing factor to the deficit. China had the opposite problem - its citizens saved more than what they invested in the local economy. Mr. Wang said the Chinese government was working on this issue. However, China does not see a real advantage to buying from the US with the exception of high-tech items, which were banned for export to China. Ultimately, China would have to rely on its own market for such items. In his opinion, trade between the US and China would remain unbalanced due to this inconsistency.

At the conclusion of the meeting, Charles asked why China was not a signatory of the Proliferation Security Initiative (PSI). He said the initiative was signed by 84 countries and comprised of two principles: opposition to trading or sharing the components and technology blueprints of Weapons of Mass Destruction (WMD) (to include biological, chemical and nuclear weapons), and reporting a breach of this agreement amongst the respective signatories. This would include streamlining customs procedures to identify WMD. Charles also said one goal of the signatories was to conduct sandbox exercises to improve the effectiveness of these principles. Mr. Wang said that he was not an expert on military affairs. However, China was a nonproliferation treaty member. He said if Taiwan was a signatory on the initiative, this may have something to do with China’s nonparticipation. He said he would clarify the PSI objectives with the ministry.

July 2007

Chairman Su-Hoon Lee of the Presidential Committee on Northeast Cooperation Initiative Visits RAND - July 2, 2007

CAPP hosted Mr. Su-Hoon Lee, the politically-appointed chairman of the Presidential Committee on Northeast Cooperation Initiative. The chairman was accompanied by fellow, committee member Lee Jeong Gwan and Consul Sangjin Park from the Korean Consulate. RAND participants included Bruce Bennett, Susan Everingham, Eric Larson, Kumiko Okazaki, Bill Overholt and Charles Wolf, Jr.

Mr. Lee wanted to know RAND’s assessment on the North Korean nuclear issue and the current US-Republic of Korea (ROK) alliance. Bill Overholt led the discussion by saying that we had recently broken out of a patter where Pyongyangwas determined to escalate until it got the attention of Washington (regarding its demand for recognition and security) and Washington was determined to escalate until it got the attention of Pyongyang (regarding its opposition nuclear proliferation). The agreement has problems and risks, but breaking out of this vicious circle was quite valuable. On the alliance, he said that different views of proper strategy toward North Korea together with the current administration’s heavy reliance on Japan poses problems for South Korea.

Addressing the nuclear issue, Bruce Bennett said the North Korean strategy is to deny outsiders information and this makes it virtually impossible to know the full extent of their nuclear weapons program. He said A. Q. Khan was shown three nuclear weapons in the early 1990s. In his assessment, they probably had more nuclear weapons at another site. He said these weapons were probably made from external sources possibly given to them by a foreign state.

Mr. Lee said South Korea no longer refers to North Korea’s nuclear program as HEU (highly enriched uranium), but as UEP (uranium erichment program), because the enrichment is believed to be of low quality. South Korea does not believe North Korea’s nuclear program is as advanced as many think.

Bruce went on to address Mr. Lee’s question regarding the US-ROK alliance. He said the question from the U.S. perspective is why the ROK does not pick up a larger portion of the defense cost of moving fully-equipped soldiers from the US to the Korean peninsula. Currently, the US contributes $60 billion to the ROK’s 22 trillion won. Mr. Lee said they had cleaned up a lot of issues in the alliance over the last four years - to include adjusting their position under a new U.S. global strategy. He said the US appreciated ROK moving 2nd Infantry Division away from the border and relocating US Forces from Yongsan to Pyongtaek (Camp Humphries). This was difficult, but they did it. Mr. Lee said that South Korea is the number three contributor of forces in the Iraq war. He also said the OPCOM transfer will take place in April 2012, even if an opposition party wins the elections in South Korea. In his personal opinion, the US-ROK alliance has evolved one step up.

Mr. Lee wanted to know if the US position toward North Korea would change if Democrats won power. Eric Larson, supported by the other RAND participants, said there are hardliners within both parties, so it would be difficult to assess. In fact, the Clinton administration initially took a much tougher line on North Korea than the Bush administration.

June 2007

CICIR President visits RAND - June 25, 2007

On June 25, Brent Bradley welcomed Dr. Liru Cui, the President of China Institutes of Contemporary International Relations (CICIR). Dr. Cui requested the meeting to discuss future meetings between CICIR and RAND, as well as US-China relations. Other RAND participants included Brian Chow, Yong Kang and Charles Wolf, Jr.

Dr. Cui said his primary goal was to develop collaborative meetings with RAND on an annual basis. As two of the largest think tanks in China and the US, collaboration on various projects would be an excellent means to promote understanding. He said an important area of CICIR’s studies is the perception of China. In some circles, he has heard that China is seen as a major challenge even over terrorism. Brent said the U.S. military is traditionally a more conservative branch of government and that part of their job was to anticipate risks even if those risks are not high probability. Dr. Cui said that he went to a meeting recently where someone said that China was not a “normal” power, because the Renminbi was not convertible. On the contrary, Dr. Cui believes China is an “emerging” power.

Dr. Cui asked if the US views Taiwan as a strategic asset. Charles said in a broad context, Taiwan is a political, strategic asset. An example of this would be Taiwan’s well-functioning democracy and economy. However, he does not see it as a military asset. In fact, the US and China are partners on most issues, specifically in the realms of terrorism and the leaking of nuclear weapons, he said.

At the conclusion of the meeting, Brian Chow asked if CICIR had any ongoing research on the proliferation security initiative (PSI). Brian and Charles are currently working on a project involving PSI and they would like to disscuss their work with researchers at CICIR. Dr. Cui said they have done some studies in this field and he said this could be a precursor to a regular exchange between CICIR and RAND. Dr. Cui said for future CICIR delegation visits to DC, he would like to incorporate a visit to RAND headquarters at the conclusion of their trip. Brent said an initial rapport could best be established on a researcher-to-researcher basis first. Charles also recommended a few more visits before moving to a more formal structure.

May 2007

CAPP Hosts Discussion on North Korea - May 3, 2007

On May 3, the RAND Center for Asia Pacific Policy (CAPP) hosted Dr. Won Bae Kim, Director of the Northeast Asia Regional Development Center of Korea Research Institute for Human Settlements in Dongan-gu, Korea. Dr. Kim requested the meeting to discuss infrastructure building and economic development assistance to the Democratic People’s Republic of Korea. His presentation, “Approaches and Design of Infrastructure Development in North Korea,” described an ambitious vision for development of the North Korean economy and led to a broader discussion about vision and potential challenges to its achievement, with Bruce Bennett, Eric Larson and Charles Wolf, Jr., and Pardee Graduate School fellows Elizabeth Brown and Sarah Gaillot.

April 2007

Former Ambassador Donald Gregg Discusses US-Korea Relations - April 26, 2007

CAPP invited former Ambassador Donald Gregg to give an off-record account of his recent discussions on US-Korea relations. Mr. Gregg was accompanied by the newly appointed president of The Korea Society, Mr. Evans J.R. Revere and his wife, Micah. Bill Overholt started the meeting with a brief introduction of Mr. Gregg, highlighting both his professional accomplishments and personal experiences with him. Mr. Gregg then discussed his recent meetings with senior ranking officials in North Korea, in which the general consensus was the need for a strategic relationship with the US. Mr. Revere also agreed this was the central theme in most of North Korea’s dialogue in ’98, ’99 and ’00. At present, he was concerned with the lack of dialogue between the current administration and North Korea.

At the conclusion of the meeting, there was an exchange between Mr. Gregg, Mr. Revere and various RANDites on the best way to deal with the North Korean government. All agreed that dialogue was important, but there was a difference of opinion on engagement. Specifically, some participants argued it was important not to reward bad behavior. RAND participants included Charles Wolf, Dick Neu, Rachel Swanger, Brian Chow and Yong Kang.

CAPP Welcomes the Korea-U.S. Journalism Exchange - April 20, 2007

On April 20, Charles Wolf welcomed a delegation of ten South Korean journalists as part of the annual Korea-U.S. Journalism Exchange, an event which is sponsored by the East-West Center (EWC) of Honolulu and the Pacific Century Institute. The journalists were particularly interested in RAND’s assessment of ongoing developments on the Korean peninsula and North Korea’s recent missile test. Charles led the discussion with his collaborative work on a North Korean moderization project, which analyzes alternative ways to do economic, political, security, social and cultural reforms in order to modernize the north. The journalists wanted to know about the potential fallout from potential collapse of the North Korea system. Charles said his collaborative group, which consists of members from South Korean, Japan, Russian and Chinese think tanks, have designed measures to keep the economy and society functioning in the event of a Kim regime collapse. Going along with this theme, Bruce Bennett said he had a conversation with a American businessman of North Korean descent who was interested in doing a study on turning the Kim family into a constitutional monarchy, something similar to the model used in Great Britian.

Addressing the delegation’s question on North Korea’s missile test, Bruce said he would give it two scores. North Korea told China it would launch a 100 kiloton missile and it only achieved a tenth of that. However, they did test something that could be considered expendable and therefore perfect for brinkmanship in a political escalation context, he said.

Bruce went on to discuss the recent demands of South Korea. He said the South Korean defense minister requested an enhanced nuclear umbrella from the US. However, he wanted to know why South Korea does not focus on deterrence. Currently, South Korea has a policy of retaliation, which means it would suffer great losses before it reacts against NK agression, he said.

The meeting concluded with Susan Kreifels, the Media Activities Coordinator of EWC, expressing gratitude for RAND’s participation in the exchange. Other RAND participants included Kumiko Okazaki and Yong Kang.