I would like to express，first of all，my appreciation to Mr.Yan and Nanjing University for the invitation to be here today and for their leadership in promoting a better understanding between the East and West.Creating a new type of great power relationship between the US and China depends critically on that.It also requires a great vision and superb execution.I want to talk today in detail about that vision and execution because we are at a critical crossroads.

I believe the United States has for several decades had a strong vision of what the U.S.－China relationship should be.Virtually everyone in the U.S.understands the significance of engaging China—it is the elephant in the fastest growing region of the world that represents half of the world’s GDP.

But there are at least two traps that threaten the vision of a harmonious US－China relationship.

The first is the Thucydides trap，named for the ancient historian who ascribed the cause of the Peloponnesian War of the 5 ^th Century BC，which destroyed both states，to the rise of Athens and the fear it inspired in Sparta.Ever since，historians have focused on the potential danger created when a rising power rivals a ruling power.

The second challenge we face is what I call“the convergence trap.”

U.S.policy has always assumed the desirability，even the necessity，of convergence－the process by which other nations evolve politically and economically to be more like the U.S.

Since Nixon，the U.S.has sought to engage China through the pursuit of convergence，believing that it offers the best future for both nations.Convergence has proven to be a dynamic process that has yielded great divid ends in the bilateral relationship.China has adeptly imported key features of the U.S.system to transform its economy.It has selectively used our system of market capitalism to lift 600 million people out of extreme poverty in the last 30 years，an unprecedented achievement.And its entry into WTO has served to further integrate our two economies.Bilateral trade has increased from ＄2.5 billion in 1979 to over＄500 billion today.

China has prospered while creating a new ideological dynamic—one vastly more competitive than the old dynamic between the U.S.and the Soviet Union.Instead of a flawed Communism competing with Capitalism，it is the far more challenging dynamic of state－directed capitalism competing with democratic capitalism.

But when the foundation of a relationship—its yardstick—is based on the need for continuous convergence，you end up with what we have today—inevitable fits and starts.Sometimes you get one step forward and two big steps back，when American policymakers feel forced to confront those aspects of China that are foreign to Western democracies.

It may be that while convergence has historically served to accelerate the integration of the two economies，helping us steer clear of the Thucydides trap，it has now reached a point of diminishing returns，perhaps even negative returns，where further pressure towards convergence will increase rather than decrease the odds of falling into that trap.History shows that convergence is not an inexorable process that can be relied on as the basis of policy.Nations do evolve，but still remain true to their historical roots even while changing significantly.

Most of what we see in Putin’s Russia—the rejuvenation of the Orthodox religion，the economic alliances with former Soviet republics，the oligarchy—is a return to traditional Czarist notions.The Arab Spring two years ago was mistakenly seen as the blossoming of Western democracy；it is quickly proving to be nothing of the sort.

It may be that what happened in Russia in the 1990s and in the Arab world most recently is that these nations moved too quickly away from their established sociopolitical structures，and doing so may drive societies back to their comfort zone，to their essential character.

I am not in any way suggesting the United States should give up on its ideals or even compromise on its principles.But it may be that a more solid foundation for our relationship going forward—one that has a better chance of furthering the integration of our economies—would be one built on our differences，rather than our similarities—or in the Taoist perception of the world，“the harmony of opposites”.

This new vision seeks not only to navigate around our differences but also to explicitly capitalize on them to further our codependence.

Now，visions are great，but as Thomas Edison said，vision without execution is hallucination.And I maintain the reason we have not made more progress on shifting to this new paradigm for our relationship is not just because there is resistance to it in some quarters in our two countries but because no one has spelled out a clear path on how to execute on it.

I want to outline today two big ideas that take us down this new path.If we can begin to move forward on them，I believe this new vision will fall rather seamlessly into place，and we may move faster and with less risk towards a path of shared values.

In the last thirty years，China and the U.S.have become the perfect economic complements.While China saves，America consumes；while China exports，America imports；while China lends，America borrows.And while this has catalyzed a fantastic integration of our economies，it has also led to a big imbalance，a day of reckoning we are fast approaching.

China has built up an astounding mountain of monetary reserves，more than half of which is comprised of U.S.government securities.The U.S.，in turn，has accumulated the world’s largest stockpile of international debt.The Chinese fear a collapse in the global purchasing power its dollar hoard，while the Americans fear a collapse in the funding of their debt.Some people have referred to this as“mutually assured economic destruction”.

The two countries need a more solid economic grand bargain，a new framework that puts an end to this“economic stalemate”once and for all.How we resolve this，perhaps more than anything else， will determine the future course of the China－U.S.relationship for years to come.

There is a fairly obvious exchange that aligns China’s need to protect its reserves with America’s need to reduce its debt while renovating its infrastructure.And it’s a trade that doesn’t depend on China’s long term sociopolitical evolution，that is，on a further convergence of our systems.To the contrary，it takes advantage of the uniqueness of the present Chinese system－specifically，on the scale and speed that state directed capitalism can achieve.Under this scenario，China would over time convert its holdings of US debt into a more inflation protected stake in U.S.infrastructure，providing the crucial capital to rebuild its rival.

If the opportunity is obvious，so are the obstacles.Neither country will achieve its goal—China in protecting its established wealth or the U.S.in reinvigorating its infrastructure in a debt free way—unless both adopt a dramatically different approach to alter the political dynamics in the U.S..

The U.S.，for its part，needs to create a rational non－controlling architecture for foreign investments in its infrastructure，as large parts of the rest of the world have successfully done.Unless it does this，it will never be able to placate domestic political factions justifiably concerned about foreign control over critical U.S.institutions.

China，on the other hand，must get off the sidelines and start taking responsibility for changing the political calculation of local U.S.political leaders so that it becomes logical for them to promote China.I know this is not easy for China，but it is absolutely essential.China’s approach to Africa is a good model.Every five years the Chinese announce with great fanfare their goal for investment in the continent，and public opinion towards Chinese investment in Africa，while off its peak，has remained remarkably positive.China has created a beauty contest of sorts，with African countries vying for the fixed pool of capital allocated to the continent.There is no reason China couldn’t create a similar dynamic in the United States.It just requires the same type of upfront，bold commitment China has made to Africa.

There is a second major opportunity—this one in clean tech—for U.S.－Chinese cooperation.This may be the most important hinge for a new model of public－private partnership between the U.S.and China，and it too does not depend on further Chinese evolution towards important shared western standards；rather，it depends crucially on our differences.

Both nations should be working together to drive the development and commercialization of technologies that keep the planet livable and facilitate the growth needed to meet human needs.Matching China’s resources，scale and incentives with the intellectual，technological，and managerial resources of U.S.companies could be a Chinese，American and global win.

America’s innovation capacity，start－up culture，and open society were big advantages in the creation of the clean tech industry.But much of that early success is now at risk.U.S.public investment is dwindling，and with it the private funding that a longer term public commitment would have secured.The result can be big write offs and shutdowns of promising technologies，vanishing jobs，and a huge loss for society.

China has the political ability to focus huge resources quickly，recently pushing its clean－tech goals from a planned investment of＄375 billion through 2015 to a new level of＄735 billion.China may be better than the U.S.at mustering the patient，long term，strategic capital needed to confront very long－term environmental challenges.

China’s environmental needs and investment reserves have created a major opportunity to save endangered U.S.companies and game－changing technologies.But while U.S.companies in China are accustomed to the need to operate with Chinese partners，the reverse isn’t standard.Chinese companies often do a poor job of navigating our business and political culture.This often inhibits sound business and investment decisions.

What is needed is a new framework to facilitate clean tech investment and cooperation.It’s not rocket science—dedicated Chinese government fund meets seasoned U.S.—based venture capitalists with core competencies in clean tech.Instead of companies failing before they can bring new products to market，a Chinese fund could acquire a controlling interest in individual distressed companies，while leaving a minority position for the original investors.The founders would then agree to relocate to China as part of the transaction，preserving continuity and allowing the Chinese to “import”the innovation they are so sorely seeking.

This would be amongst the boldest ways our two nations could bet on each other.We cannot forget that there are strong forces in both of our countries pushing for less integration of our economies，eliminating the insurance policy that has distinguished the U.S.－China relationship from other historical power conflicts.Many are calling for a retrenchment，a retreat from deeper engagement in the face of lingering disagreements.But it is arguably this “insurance policy”that has been crucial in allowing us to avoid the Thucydides trap—that deadly combination of calculation and emotion that，over the years can turn healthy rivalry into antagonism or worse.

And if we can go a step farther，and move from striving for convergence to embracing the harmony of opposites，we can perhaps preserve and even increase this insurance policy and in the process reach for something unparalleled in history.

By adopting a proactive approach based on our differences，we can prevent the rise of China from hampering the incumbent power.By escaping the convergence trap，we can successfully escape the Thucydides trap as well.For the first time in history，two rival powers could develop together，and the U.S.—aided development of China could be responsible for the redevelopment of America. huRKppU+iDLNgraxUnmPli0noK/TlXvcEExMss9v965LSwZ64Mm/7E9oMdjVVU77