In curious contrast, a "Volcker rule"—a ban on proprietary trading by commercial banks—would have done nothing to mitigate the worst financial crisis since the Great Depression. Yet implementing such a rule has become a domestic and international political miasma that is draining credibility from the postcrisis regulatory reform process in the United States. The effort should be abandoned. To make the U.S. banking sector more resilient and less dependent on taxpayer support, hard constraints on bank leverage should be implemented: banks should be prohibited from expanding their assets beyond a certain level without increasing shareholder common equity proportionately. To address the problem that banks find equity capital more expensive than debt, the massive incentives for debt financing in the tax code should be diluted, or preferably eliminated.

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The coauthors of this path-breaking study—one of America's leading China specialists and one of China's leading America specialists—lay out both the underlying concerns each leadership harbors about the other side and the reasons for those concerns. Each coauthor has written the narrative of his government’s views without any changes made by the other coauthor. Their purpose is to enable both leaderships to better fathom how the other thinks. The coauthors have together written the follow-on analysis and recommendations designed to improve the potential for a long-term normal major power U.S.-China relationship, rather than the adversarial relationship that might otherwise develop.

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"Educational failure puts the United States' future economic prosperity, global position, and physical safety at risk," warns the Task Force, chaired by Joel I. Klein, former head of New York City public schools, and Condoleezza Rice, former U.S. secretary of state. The country "will not be able to keep pace—much less lead—globally unless it moves to fix the problems it has allowed to fester for too long," argues the Task Force.

The report notes that while the United States invests more in K-12 public education than many other developed countries, its students are ill prepared to compete with their global peers. According to the results of the 2009 Program for International Student Assessment (PISA), an international assessment that measures the performance of 15-year-olds in reading, mathematics, and science every three years, U.S. students rank fourteenth in reading, twenty-fifth in math, and seventeenth in science compared to students in other industrialized countries.

Though there are many successful individual schools and promising reform efforts, the national statistics on educational outcomes are disheartening:

• More than 25 percent of students fail to graduate from high school in four years; for African-American and Hispanic students, this number is approaching 40 percent.
• In civics, only a quarter of U.S. students are proficient or better on the National Assessment of Educational Progress.
• Although the United States is a nation of immigrants, roughly eight in ten Americans speak only English and a decreasing number of schools are teaching foreign languages.
• A recent report by ACT, the not-for-profit testing organization, found that only 22 percent of U.S. high school students met "college ready" standards in all of their core subjects; these figures are even lower for African-American and Hispanic students.
• The College Board reported that even among college-bound seniors, only 43 percent met college-ready standards, meaning that more college students need to take remedial courses.

The lack of preparedness poses threats on five national security fronts: economic growth and competitiveness, physical safety, intellectual property, U.S. global awareness, and U.S. unity and cohesion, says the report. Too many young people are not employable in an increasingly high-skilled and global economy, and too many are not qualified to join the military because they are physically unfit, have criminal records, or have an inadequate level of education.

"Human capital will determine power in the current century, and the failure to produce that capital will undermine America's security," the report states. "Large, undereducated swaths of the population damage the ability of the United States to physically defend itself, protect its secure information, conduct diplomacy, and grow its economy."

The Task Force proposes three overarching policy recommendations:

• Implement educational expectations and assessments in subjects vital to protecting national security. "With the support of the federal government and industry partners, states should expand the Common Core State Standards, ensuring that students are mastering the skills and knowledge necessary to safeguard the country's national security."
• Make structural changes to provide students with good choices. "Enhanced choice and competition, in an environment of equitable resource allocation, will fuel the innovation necessary to transform results."
• Launch a "national security readiness audit" to hold schools and policymakers accountable for results and to raise public awareness. "There should be a coordinated, national effort to assess whether students are learning the skills and knowledge necessary to safeguard America's future security and prosperity. The results should be publicized to engage the American people in addressing problems and building on successes."

The Task Force includes thirty-one prominent education experts, national security authorities, and corporate leaders who reached consensus on a set of contentious issues. The report also includes a number of additional and dissenting views by Task Force members. The Task Force is directed by Julia Levy, an entrepreneur and former director of communications for the New York City Department of Education.

The Task Force believes that its message and recommendations "can reshape education in the United States and put this country on track to be an educational, economic, military, and diplomatic global leader."

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Over the past decade, China’s domestic coal output has more than doubled while its coal imports have increased by a factor of 60—the country’s dependence on other nations’ coal exports is growing. In 2009, the global coal market witnessed a dramatic realignment as China burst onto the scene, importing coal from as far away as Colombia and the United States. With 182 million tons (Mt) of coal sourced from overseas suppliers in 2011, China has overtaken Japan as the world’s top coal importer.Moreover, as the world’s top coal consumer, China’s imports could rise significantly again by 2015.

Given the enormous size of China’s domestic coal reserves, why is China moving to import coal from abroad instead of producing all its needs domestically? Might this phenomenon be as superfluous and foolhardy as carrying coals to Newcastle, England’s major exporter of coal in the fifteenth century? Newcastle, after all, had more coal than anywhere else.

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In the web of relationships that have built up between the U.S. and China, no issue has emerged of such importance, and generated such friction in so short a time span, as cybersecurity. Concerns over this domain have rapidly moved to the forefront of U.S.-China relations. While both senior policymakers and general publics are struggling to understand the cyber realm’s basic dynamics and implications, the issue of cybersecurity is looming ever larger in U.S.-China relations and is seriously affecting threat perceptions on both sides.

Given what is playing out, it is especially important that Washington and Beijing begin to build the bases for greater mutual understanding, cooperation, and development of common norms in how they deal with the many issues emerging in cybersecurity. The path will be a challenging one for both U.S. and Chinese experts and officials, but if these two nations are to set both the Internet domain and global order towards a more positive future, then facing the challenges of cybersecurity is an imperative today.

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President Barack Obama's meetings in February 2012 with Xi Jinping, China's vice president and soon-to-be leader, provide an opportunity to address this issue and establish an economic framework to help rebalance the global economy. Creating a positive economic framework will help mitigate the inevitable stresses on the U.S.-China relationship as leaders in both political parties sharpen their anti-China rhetoric during the 2012 U.S. election. China's outward investment has substantial room to grow, and the United States has the potential to capture a larger share of it—an outcome that would benefit the U.S. and Chinese economies and strengthen the bilateral economic relationship. China could be transformed into a large overseas investor, not just an exporter. At the core of that framework should be an unequivocal policy of fostering additional Chinese investment into the United States, so long as particular investments do not compromise U.S. national security interests.

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American ground forces will be essential for the most likely East Asia contingency, that arising from a Democratic People’s Republic of Korea (DPRK) collapse, but less so for the others. While China’s overall military capabilities will not equal those of the United States anytime soon, it will more quickly achieve local superiority in its immediate neighborhood, first in and around Taiwan and then at somewhat greater distances. In consequence, the direct defense of contested assets in that region will become progressively more diicult, eventually approaching impossible. he United States will therefore become increasingly dependent on escalatory options for defense and retaliatory capabilities for deterrence. American nuclear superiority is not likely to be much help in this regard, both because China will retain a second-strike capability and because the issues at stake in most potential crises are not of vital consequence to the United States. Conlict is likely to escalate into the cyber and economic realms. In both cases, U.S. vulnerabilities are such as to make this unattractively costly. Conventional strikes on mainland Chinese military targets may be the best escalatory option, but there is little reason to be conident that conlict could be so conined.

One means of improving the prospects for direct defense and reducing the risk of escalation is for the United States to enable the capabilities and buttress the resolve of China’s neighbors. Such a strategy should not be—or be seen—as a U.S. attempt to encircle or align the region against China, lest it produce greater Chinese hostility. Indeed, a parallel efort should be made to draw China into cooperative security endeavors, not only to avoid the appearance of an anti-China coalition but also to obtain greater contributions to international security from the world’s second-strongest power.

The economic consequences of a Sino-American conlict could be historically unparalleled, even if both sides avoid economic warfare. his is a powerful mutual deterrent, one marginally in the American favor at present. Strengthening the U.S. economy is the best way of ensuring that the balance of interdependence and of the associated deterrence does not shift dangerously against the United States over the next several decades.

While the risk of conlict with China cannot be ignored, neither should it be exaggerated. Any number of other conlicts are more likely. hese more likely conlicts will be with opponents quite diferent from China and will call for capabilities quite dissimilar from those required to deal with a real peer competitor. Individually, these contingencies will be less consequential than a conlict with China, but collectively they will shape the international environment in which both countries interact and fundamentally inluence Chinese perceptions of U.S. power and determination.

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At the same time, China’s progress and promise have been accompanied by increasingly serious problems and pitfalls. Enormous economic disparities are arguably the most daunting problem China faces. In addition, rampant official corruption, a high unemployment rate, environmental degradation, resource scarcity, frequent public health crises and recurrent industrial accidents, growing rural discontent and urban worker strikes, inflation and skyrocketing high prices for housing in major cities, worsening ethnic tensions in Tibet and Xinjiang, the absence of an overriding system of beliefs or values, harsh media censorship and brutal crackdowns on political dissidents and religious activists all seem to suggest that the Chinese regime is sitting atop a simmering volcano of mass social unrest ready to explode.

Not surprisingly, these paradoxical developments have often led students of China to reach starkly contrasting assessments of the country’s future trajectory and the abilities and intentions of its leadership. How can we reconcile the widely divergent phenomena mentioned above and reach a more accurate and balanced understanding of present-day China? How have U.S. perceptions of China changed in recent years and what factors tend to shape our perceptions of this rapidly changing country? What wisdom can we gain–and what lessons can we learn–from recent work in the field of China studies?

To a large extent, students of China must acquire the intellectual ability to live with complexity, tolerate ambiguity, and expect uncertainty. However, the immense complexity of our subject is no excuse for failing to use good judgment and to present well-grounded predictions. Rigorous, insightful assessments are particularly valuable today, when China has more influence on the world economy and regional security than perhaps at any other time in modern history. Misperceptions of China's socioeconomic conditions or misleading assessments of the quality and intentions of its leaders risk rendering our policies toward China ineffective.

This essay examines some of the prevailing U.S. perceptions of China over the past decade (2001-2010) with a focus on Chinese political and socioeconomic issues. This brief article, of course, does not aspire to present the “state-of-the-field,” nor is it based on comprehensive and quantitative research.2 Rather, it aims to provide a critical assessment of the problems and challenges in the way the United States perceives China’s political and socioeconomic developments as well as its future trajectory. In seeking to improve the quality of China watching in the United States in the coming years, this essay makes a concerted effort to explicate the field’s deficiencies, such as prevalent misperceptions, blind spots, topical obsessions or inadequacies, and methodological missteps, rather than showcase the field’s accomplishments.

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