It is getting hard wading through the wall-to-wall happy news leading into the Party Congress, so the newsletter may be a bit boring over the next few days. There are some crazy rumors out there (see today’s Politics section for a fun one) and while I may post some because their mere existence is interesting I remain skeptical of most of them.
Readers in DC are welcome to attend Lenora Chu’s talk this evening about her new book Little Soldiers: An American Boy, a Chinese School, and the Global Race to Achieve. It is at 7PM on the main campus of Sidwell Friends School. The event is free and you can register here.
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The Essential Eight
1. Zhou Xiaochuan Talks Reform With Caijing Magazine
Comment: Central Bank Chief Zhou, likely to retire very soon, gave an interesting interview to Caijing magazine. It is unclear if Zhou is signaling an impending acceleration of financial reform, or if he is laying down markers for his legacy. Could the US help with that “bold” financial reform next step? There are rumors that Xi plans to give something big around financial market access to Trump when he visits Beijing next month.
Caijing was once a very influential magazine run by Zhou’s friend Wang Boming. HNA now controls it after buying 80% of the parent firm last year.
The interview -《财经》独家｜周小川谈人民币入篮SDR：对外开放进程的历史性进展
China must press on with a “trinity” of reforms to fully realise an open economy, Zhou Xiaochuan, the country’s central bank chief for the last decade-and-a-half, told influential financial magazine Caijing in what could be one of his last major interviews in the top job…
Zhou said China should not wait for “conditions” to be ripe to free up the exchange rate system, nor should China drag its feet for fear of mistiming other reforms.
“If a few ministries have different views over the time frame or conditions, then the likely outcome is to wait, to rely on others, and to request others to move first, which in turn leads to irresponsibility and deadlock,” he said.
“The main message of Zhou’s interview is that China has passed the point of no return,” said Raymond Yeung, chief economist for Greater China at Australia & New Zealand Banking Group Ltd. in Hong Kong. “After 40 years of opening-up policy, foreign participation in the financial industries has not been up to speed, requiring a bold reform to take it forward.”
2. Deepening Economic Reform While Strengthening Ideological Control To Revitalize Marxism
Comment: Li Jin nails it in the quote in the article below. Yes it seems like a massive contradiction but it does not seem to be to Xi and his team. The 2008 crash and the subsequent economic and political problems in the West discredited more extreme reformers and feeds the belief that there may really be a third way for China.
Li Jin, chief researcher with the China Enterprise Research Institute, said a lot of questions remained unresolved in reshaping SOEs and there were economic and political differences between the party leadership and corporate management…
“The first five years, the crackdown on corruption, military reform and the ‘Belt and Road Initiative’ were the highlights,” he said. “But in the second term, the state-owned enterprise reform will lead the overall economic reform meanwhile the party will strengthen ideological control to revitalise Marxism.”
The new economic team that will help Xi tackle these challenges will be revealed between the party congress and the annual meeting of the National People’s Congress, China’s legislature, next March.
Go Deeper: A recent People’s Daily Overseas Edition piece praised progress in SOE Reform says has started to directly address the deep contradictions, says leaders in Aerospace, Deep Sea Research, High Speed Rail, Mobile Telecom are all SOES–人民日报：国企改革开始直面深层矛盾_新闻_腾讯网 :
3. Massive Turnover Coming In Central Committee And Politburo
Comment: Cheng Li tells us that the Central Committee turnover rate could be a level not seen since the height of the Cultural Revolution. I remember hearing him early in Xi’s tenure explaining why Xi could have a hard time at the 19th Party Congress because the Central Committee was so stacked in favor of other factions, especially the Communist Youth League one. It just shows how successful Xi has been at taking control of the personnel mechanisms…
An extraordinary 90% of the 300 military delegates will be first-time attendees.
At most, only 17% (seven of 41) of the military representatives with full membership on the 18th Central Committee will retain their seats.
This would constitute the largest-ever turnover of military elite in the history of the PRC…
Of the 376 members of the 18th Central Committee, 38 (about 10%) have already been purged on corruption charges and other transgressions…
In addition, about 200 members (53% of the committee) have either retired or will soon retire and, so will not be considered for the 19th Central Committee.
So the turnover rate between the 18th and 19th Central Committees could be as high as 70%, making it the largest turnover since the 9th Party Congress in 1969 at the peak of the Cultural Revolution.
4. Air, Water And Soil Are The Trinity Of China’s Environmental Disaster
Comment: And soil may be the hardest to clean up.
China’s soil contamination is so great that it cannot adopt such a course (see map). The country is unusual in that it not only has many brownfield sites (contaminated areas near cities that were once used for industry) but large amounts of polluted farmland, too. In 2014 the government published a national soil survey which showed that 16.1% of all soil and 19.4% of farmland was contaminated by organic and inorganic chemical pollutants and by metals such as lead, cadmium and arsenic. That amounts to roughly 250,000 square kilometres of contaminated soil, equivalent to the arable farmland of Mexico. Cadmium and arsenic were found in 40% of the affected land. Officials say that 35,000 square kilometres of farmland is so polluted that no agriculture should be allowed on it at all.
This survey is controversial. Carried out in 2005-13, it was at first classified as a state secret, leading environmentalists to fear that the contamination might be even worse than the government let on. Not everyone, however, is as pessimistic. Chen Tongbin, head of the Institute of Geographic Sciences and Natural Resources Research in Beijing, thinks the figure of 19.4% is too high. Based on local studies, he says 10% is nearer the mark
5. Golden Week Not Golden For Real Estate Sales
Comment: The increasingly tight property measures are having an effect. Will the government stand firm as the economic pain spreads, in other words is this time different?
New homes sales slumped as much as 78 per cent and 64 per cent in Shanghai and Beijing respectively during the holidays, compared with a year earlier, data from real estate brokers 5I5J Group and Centaline Property Agency shows.
Southern city Guangzhou also saw a 78 per cent decline in sales volume, while Shenzhen, the country’s innovation hub, fell 13 per cent.
…the most powerful and fear-inducing curb so far has been the recent freeze on sales of newly bought flats, said Wong.
Starting from September, some 45 cities have followed suit, banning the resale of homes bought within three to five years.
China is formulating a set of property control measures that will have long-lasting effects, and will unveil the measures at an appropriate time, an official said Tuesday.
“The country’s opposition to real estate speculation will not change,” Ning Jizhe, deputy head of the National Development and Reform Commission and head of the National Bureau of Statistics (NBS), said at a press conference.
Sanya City in Hainan strengthens housing purchase restrictions – 三亚调控升级 外省人购房需2年社保且5年内限售 – 房产 – 新京报网
6. More On China’s AI Development
To explore China’s AI revolution and its implications, I’ve traveled to the heart of this boom and met with many of the key researchers, entrepreneurs, and executives. From China’s bustling capital to its factory-filled south, and from an ambitious new research center to a billion-dollar startup, one thing is clear: artificial intelligence may have been invented in the West, but you can see its future taking shape on the other side of the world…
Qing Luan, director of SenseTime’s augmented-reality group, previously developed office apps for Microsoft in Redmond, Washington. She says she returned to China because the opportunities just seemed much bigger. “We were struggling to get a thousand users; then I talked with my friend who was working at a startup in China, and she said, ‘Oh, a million users is nothing—we get that in several days,’” she recalls
Comment: Data, scale, few restraints on using the massive amounts of data are good for AI development.
The new Baidu office in downtown Bellevue, Wash., is starting with a small team that includes the leaders of Kitt.ai, the Seattle-based artificial intelligence startup acquired by Baidu this year. Baidu’s current space has room for as many as 40 people in the first year, depending on how quickly it’s able to recruit top engineers.
The new technology can also identify a person without their active cooperation. Even if they walk past the surveillance camera hiding their face, gait recognition algorithm can still unveil their identity.
Gait recognition can also estimate the density of large populations, as it incorporates real-time people counting technology. It is able to detect up to 1,000 people within an area of 1,000 square meters. The technique could be widely used in the fields of security and public transport, among others.
7. Naming And Shaming Of Debtors Gets A Propaganda Directive
The notice, jointly issued by the Publicity Department of the Communist Party of China (CPC) Central Committee, the Supreme People’s Court, and the China Banking Regulatory Commission (CBRC), told authorities to complete provincial-level online platforms by the end of this year and to make the public aware of these websites within two years…
The online platforms will be developed and maintained by local news organizations on the basis of a database provided by local courts, said the notice.
Comment: Seems logical to also integrate this into WeChat, so you know if you are connected to one of these defaulted debtors.
8. Five Year Plan For the Tibet Government-In-Exile
Comment: It looks like Washington Post columnist Josh Rogin went to Dharamsala.
The Tibet issue intersects three huge global trends: the surge of nationalism, the retreat of human rights and democracy promotion, and the rise of China. Thanks to the last two, the Tibetan people’s struggle for survival, dignity and autonomy is steadily losing visibility. That prompted the Tibetan government-in-exile here in northern India to convene a first-of-its-kind conference this weekend to determine the path forward.
Called the Five-Fifty Forum, the conference sought to chart a five-year plan for pursuing a return to dialogue and negotiations with China. If that’s unachievable, the Tibetans will plan for another 50 years of resistance to China’s occupation, systematic repression and attempted cultural genocide in Tibet.
Background: A recent CCTV News video report showed a Tibet security services mobilization and oath-swearing ceremony to ensure security through the 19th Party Congress. The idea of violent resistance seems suicidal and futile. –[西藏新闻联播]庄严出席自治区暨拉萨市党的十九大维稳安保誓师动员大会时强调：对党忠诚 勇于担当 攻坚克难 坚决打赢党的十九大维稳安保攻坚战
Business, Economy, Finance And Trade
China Reins In Stock Rally Before Leadership Reshuffle – Bloomberg: Chinese state-backed funds intervened to limit gains in the nation’s stock market on Monday, part of the government’s effort to restrain market swings before a key leadership reshuffle this month, according to people familiar with the matter.
China says will have no problem meeting 2017 growth target, may beat it – Reuters China will have no problem meeting its economic growth target of around 6.5 percent this year, and may even beat it, the head of the Statistics Bureau said on Tuesday, confirming widespread market expectations. 统计局局长宁吉喆介绍十八大以来经济领域进展成就(全文)
The Dr Seuss theory of China industrial policy – FT $$ But the unique combination of top-down planning with Beijing’s financial might makes schemes such as Made in China 2025 globally damaging to the industries it targets for reasons other than forced technology transfer. Take any product — let’s call it a thneed, after the useless knitted thing made by the greedy Once-ler in The Lorax, Dr Seuss’s environmental manifesto in rhyme.
PIMCO: China’s upcoming People’s Congress could have big economic impacts – Business Insider China’s specific 2018 policy objectives will be set by the new leadership closer to year-end at the annual Central Economic Work Conference. We expect that economic policy in the coming year will be a continuation of the current focus on “financial risk control and macro stability.” Somewhat slower growth (around 6%–6.5% growth during 2018–2020 would be enough to reach the goal set in 2010 of doubling GDP by 2020) will likely be the target, and monetary policy will likely maintain its hawkish bias. Financial regulation will be reinforced, property curbs could be further tightened, and loose fiscal policy could be reined in gradually.
China economy to hit wall despite recent strength: KC Fed report – Business Insider “Our analysis indicates that the momentum of Chinese growth is likely to slow in the near term,” Jun Nie, a senior economist at the Kansas City Fed, wrote alongside Yandong Jia, a researcher at the Research Bureau of the People’s Bank of China. // The paper– Has China’s Growth Reached a Turning Point?
How China Is Tackling Dangers in its Financial System: Q&A – Bloomberg President Xi Jinping chaired a gathering to discuss “safeguarding national financial-market security” in April, a day after the worst losses this year in Shanghai-traded shares. The meeting was attended by members of the 25-person politburo, made up of the top politicians in China. While the central bank governor and the various regulators were also there, the fact the Communist Party’s premier decision-making body met and decided to act on financial risk suggests there’s consensus at the very top.
人民日报：定向降准非放水信号 服务实体经济主题不变_新闻_腾讯网 定向降准政策的根本目的在于进一步优化信贷结构，为金融机构更好地服务实体经济提供正向激励，从而助力中国经济转型升级。因此，定向降准本身并未传递所谓的“放水信号”。
Micro-Lending Tycoon Set to Become China’s Latest IPO Billionaire – Bloomberg Luo, 34, founder and chief executive officer of online loan provider Qudian Inc., owns about a fifth of the company, which hopes to raise as much $825 million in a U.S. initial public offering this month. The price range values the business at a minimum of $6.3 billion based on the shares it will have outstanding after the offering, and gives Luo a net worth of at least $1.2 billion, according to the Bloomberg Billionaires Index.
Chinese firms rush to hedge as yuan swings begin to sting – Reuters Volatility has risen steadily since 2015 after the People’s Bank of China decided to let market forces have a bigger sway in the yuan’s direction, clamped down on capital flows and, more recently, introduced more opacity in the way it sets the currency’s value.
Editorial: In China, Entrepreneurs Get Much-Needed Seat at the Table – Caixin Editorial Top party and government authorities recently issued a document titled “A Guideline About Nurturing a Healthy Environment for the Growth of Entrepreneurs, Promoting Entrepreneurship and Letting Entrepreneurs Play a Bigger Role.” The document has drawn wide attention in business circles: It was the first time central authorities have affirmed the status of entrepreneurs and the value of entrepreneurship…The guideline is a precious document at the right time. The prospects for the Chinese economy will be closely related to how this guideline and its related policies can be carried out.
Politics, Law And Ideology
Compilation of CPC rules published – Xinhua The book, compiled by the general office of the CPC Central Committee and published by the Law Press, contains 260 CPC regulations and regulatory documents introduced between October 1949 and December 2016. This is the first time the CPC has comprehensively and systematically compiled its regulatory documents for the public since the founding of the People’s Republic of China. 中央办公厅编辑出版《中央党内法规和规范性文件汇编（1949年10月－2016年12月）》-新华网
Xinjiang university calls for promoting Putonghua – Global Times Professors at Kashgar University in Northwest China’s Xinjiang Uyghur Autonomous Region have called for the faculty and students there to speak Putonghua to promote social stability, in a letter published on the school’s WeChat account on Sunday. They asked that all members of the faculty and students from all ethnic groups use Putonghua to communicate as a common language, meaning they are asked to speak Putonghua both in and outside the classroom, and between teachers, students, friends and family.
中央纪委向十九大工作报告审议程序发生重大变化————头条——中央纪委监察部网站 Comment: On the change in the review process for the CCDI work report // 之前历届中央纪委向党的全国代表大会的工作报告，由中央纪委常委会单独征求党内意见，中央纪委全会进行审议，并直接同意将报告提请党的全国代表大会审查。十八届中央纪委向十九大的工作报告审议程序有了新变化：一是中央纪委工作报告稿先经中央政治局常委会会议、中央政治局会议审议后，和党的十九大报告稿、党章修正案一同在党内征求意见；二是中央纪委工作报告稿经十八届中央纪委八次全会审议通过后，先提请于10月11日召开的党的十八届七中全会审议，再由七中全会提请于10月18日召开的党的第十九次全国代表大会审查…十八届中央纪委牢固树立“四个意识”，时时处处事事向党中央看齐，自觉在思想上政治上行动上同以习近平同志为核心的党中央保持高度一致，坚决维护党中央权威和集中统一领导。中央纪委六次全会，一改以往会议议程，调整为先由习近平总书记发表重要讲话，之后由王岐山同志代表中央纪委常委会作工作报告。与会中央纪委委员指出：“总书记首先发表重要讲话，有利于我们更好地领会中央的精神，贯彻中央的要求，开好全会，做好新一年的工作。这看似是一个形式上的调整，实质反映了中央纪委同党中央保持一致的政治态度。”中央纪委七次全会，审议通过《中国共产党纪律检查机关监督执纪工作规则（试行）》，则是在内容和形式上对十八届六中全会精神的全面贯彻，体现了自觉地同以习近平同志为核心的党中央保持一致。
五年修炼中国经济新气质——人民日报集中展示31省区市五年成绩单_宏观_财经_经济网_国家一类新闻网站 文章导读： 党的十八大以来的五年，是党和国家发展进程中很不平凡的五年。近日，《人民日报》在“砥砺奋进的五年”专栏内推出“迎接党的十九大特别报道”，每天用八个版的篇幅，全面反映31个省区市和新疆生产建设兵团在“很不平凡”的五年里，坚决贯彻落实党中央重大决策部署的生动实践和不凡成就。
Fifty shades of Xi: scores of books praising president published in China |The Guardian Immediately inside the entrance to the state-run Beijing Book Building, one of the capital’s largest stores, a recently inaugurated display features at least 50 works by or about China’s scribbler-in-chief. “The language is simple and sincere – quite down-to-earth, I think,” said Wu, 43, who was perusing one of the latest publications, a 452-page paperback about Xi’s seven years of rural exile during the Cultural Revolution that sells for 76 yuan (£8.75).
Hotel in China’s Shenzhen Fined For Breaking Muslim Uyghur Guest Ban – RFA “According to rules set by the local police station, we had to pay a fine for accepting a guest from Xinjiang,” the employee said, in a euphemistic reference to the mostly Muslim, Turkic-speaking Uyghur ethnic group. “Security has been much tighter now that it’s the 19th party congress, and there is a ban on people from Xinjiang,” she said, adding that the hotel had been fined 15,000 yuan (U.S. $2,260) for breaking the rule.
重磅:胡锦涛因涉令计划、薄熙来案被调查 Comment: One of the more exciting pre-19th Party Congress rumors–Boxun claims that Hu Jintao is under investigation and Wen Jiabao is assisting the investigation. I am very skeptical
蔡奇：十九大各项服务保障要滴水不漏-千龙网·中国首都网 Beijing Party Secretary Cai Qi inspected Party Congress security preparations on October9
孟建柱：做好新形势下信访工作 依法维护人民群众合法权益–法制网 Meng Jianzhu’s speech from the July 18 8th National Petition Work Meeting
Foreign and Military Affairs
Russia, China call for restraint after Trump comment on North Korea – Reuters Speaking in Beijing, Chinese Foreign Ministry spokeswoman Hua Chunying reiterated a call for all parties involved with the standoff in North Korea to exercise restraint, describing the situation as extremely complex and serious. China hopes all sides do nothing to irritate each other or worsen the problem and speak and act cautiously, she told a daily news briefi
‘Fake general and colonel’ arrested as Chinese authorities target scammers posing as members of army | South China Morning Post A man, who posed as a general, and a woman, who pretended to be a senior colonel, had claimed that they could make a person a colonel as long as they donated 15 million yuan (US$2.3 million) to a special fund called “Royal Soldier”, China Central Television reported last week. The man, using a pseudonym and claiming to be the fund’s secretary general, was reported to have confessed that the pair had started the scam at the start of last year. // Comment: Believable because it used to be done this way…
North Korea: cargo ships tracked in Chinese waters after UN imposes all-ports ban for violating sanctions | AP The UN Security Council has banned all nations from allowing four ships that transported prohibited goods to and from North Korea to enter any port in their country.
Australia Seeks Power Over Businesses in National-Security Emergencies – WSJ The proposed laws, which include “last resort” powers allowing authorities to intervene in privately owned businesses if national security is deemed to be at risk, come as a government report showed cyberattacks rose by 15% last year. In one of the most serious incidents, hackers who government cyber experts think are in China are believed to have carried out an attack on the computer system of an Australian defense contractor, stealing a significant amount of data.
ROC President Tsai Ing-wen delivers 2017 National Day address: “Better Taiwan” – Foreign Press Liaison Office – Ministry of Foreign Affairs, Republic of China (Taiwan) 中華民國外交部 – 全球資訊網英文網 In her National Day address Oct. 10, President Tsai Ing-wen elaborated on her administration’s efforts to fulfill the government’s commitments and accelerate reform, safeguard Taiwan’s democracy and freedom, and find Taiwan’s place in the new international order.
Tech And Media
China’s Airbnb rival Tujia receives $300 million for online unit – TechNode China’s home rental unicorn Tujia.com, often dubbed the Airbnb of China, announced today that it just completed a $300 million Series E for its online arm at a valuation of over $1.5 billion. The current round marks the first independent financing for Tujia’s online unit since the separation of online and offline departments earlier this year.
China’s Google Checks 3 Billion ‘Fake News’ Claims Every Year – Bloomberg The spread of rumors and false information is a problem faced by companies around the world that requires technology and cooperation with external organizations to fix, President Zhang Yaqin told Bloomberg Television. Baidu, one of the country’s three largest internet players, employs technology to spot potentially spurious information before turning to local agencies such as the cyberspace administration to verify items
China’s Top Anime Streaming Site Is Said to Plan IPO in U.S. – Bloomberg Bilibili, China’s top online platform for streaming Japanese animation, is planning a U.S. initial public offering that could raise at least $200 million, according to people with knowledge of the matter.
Society, Art, Sports, Culture And History
Arcasia | The World of Chinese Long a boomtown for builders and developers, nestled in the chaparral-covered San Gabriel Valley, 13 miles northeast of Los Angeles, Arcadia is an ever-growing destination for mainland families. It’s where they can be assured their children will receive a quality education, where religion, land and gun ownership can be enjoyed without interference, where the air is clean, the water’s drinkable, and the food is safe. But a spate of burglary and violence in the area, along with accusations of corruption and gentrification by the new arrivals, suggest that relations in this wealthy community may fall short of Arcadian promises.
NBA — Warriors popular in China – ESPN Fans in both Chinese cities couldn’t get enough of Curry’s special talents during this trip. Chants of “MVP, MVP” rang out inside of both arenas as Curry rained down 3-pointers, including a 40-point performance on Sunday night in Shanghai. “It’s a totally different animal out here,” Warriors center JaVale McGee said. “People love Steph in the States, but in China, they obsess over him, it’s crazy.”
Three Chinese women stuck at South Korea airport unable to confirm identities after plastic surgery: Shanghaiist On Sunday, Jian Huahua, a Chinese TV anchor shared a photo on her Weibo account of the three women sitting at a South Korea airport, passports in hands, with their post-plastic surgery faces wrapped up in bandages and extremely swollen. According to the Jian, the poor women looked so completely different from their passport photos that they were barred from taking their flight back home, detained and questioned by authorities. She joked that even their mothers wouldn’t recognize them.
Beijing Winter Olympics high-speed train design unveiled – Xinhua The company said the new trains were designed specifically for the Winter Olympics, featuring a media carriage with WiFi service and TV screens for live broadcasting, an athlete drug testing area and and a storage area for winter sports equipment. CRRC Changchun also produced subway trains for the Rio Olympics and operated the system smoothly for the duration of the Games last year.
Energy, Environment, Science And Health
China to deepen reform with public hospitals – Xinhua China will carry forward public hospital reform to optimize medical care resources for public health, according to a decision at a State Council executive meeting chaired by Premier Li Keqiang on Monday. The reform on medical care pricing at public hospitals will continue toward dynamic price adjustment of medical services to make the knowledge expertise and efforts of medical workers better reflected in values. One or two cities in provincial regions where the comprehensive medical reform are piloted will be chosen for medical insurance payment reform, which covers all medical care institutions and services. The government will also designate over 100 disease categories for an insurance payment by-category reform.
China’s FAST telescope finds two pulsars during trial operation – Xinhua Peng Bo, deputy director of the FAST project, said three to five years are usually needed for trial operation for a radio telescope as large and complicated as FAST. “It is truly encouraging to have achieved such results within just one year,” said Peng
Agriculture And Rural Issues
农业部成立农药管理局，推进农药管理的科学化、制度化_绿政公署_澎湃新闻-The Paper Ministry of Agriculture sets up a pesticide management bureau
Food And Travel
Alibaba’s Latest Open Sesame: Live Crabs in Vending Machines – Caixin Global Alibaba was set to roll out the machine around the just-ended Oct. 1 National Day holiday in partnership with Yiguo, one of its main partners in selling fresh produce, according to local media reports. Yiguo’s own website features a variety of fresh seafood, including oysters and other shellfish.
Jobs And Events
The China Dashboard: Tracking China’s Economic Reform Program | Washington, DC | Asia Society This event will also serve as the D.C.-based unveiling of an Asia Society Policy Institute-Rhodium Group online, interactive web dashboard, which builds on the ASPI-Rhodium seminal analysis of the Xi economic agenda (released on its first anniversary in 2014) to assess the ongoing impact of economic reforms on Chinese growth potential. ,,Tune in Wednesday, Oct. 11, at 2 p.m. Washington, D.C. time for a free live video webcast
“U.S.-Taiwan relations under Trump and Tsai (and Xi) “ When: Thursday, October 12, 2017, 1:30 — 4:00 p.m. Where: The Brookings Institution, Falk Auditorium, 1775 Massachusetts Ave, NW, Washington, D
Liu Xiaobo’s Legacy and the Future of Chinese Democracy Registration, Thu, Oct 12, 2017 at 12:00 PM At the Hudson Institute in DC