MR. GEORGE LITTLE: Good afternoon, everyone. Thanks for joining us. The secretary will start with brief opening remarks, and then we'll go to questions.
SECRETARY OF DEFENSE LEON E. PANETTA: Good afternoon. Let me just -- just to recap a few of the highlights of the visit before I take your questions, as I -- as I said, this is my first trip to China as secretary of defense. And over the past two days, I really believe we've had a series of very productive meetings with some of China's key military and civilian leaders.
As you know, yesterday I met with General Liang, General Xu, and State Councilor Dai. And this morning, I met with Vice President Xi, who I had the honor of hosting at the Pentagon last year -- this year -- this year.
And for those of you that had the opportunity, I was able to visit the engineering academy of the PLA Armed Forces, where I had -- had the honor of speaking to a lot of young officers and cadets. And tomorrow, I'm looking forward to traveling to Qingdao and having the opportunity to visit the headquarters of China's North Sea Fleet and tour several PLA naval vessels. And I just might point out, that's the first time a secretary of defense has had that opportunity.
So I'm -- I'm very pleased to have the opportunity to visit the facility. And I guess I'm particularly pleased, because I announced yesterday that the United States will invite China to send a ship to our largest multilateral naval exercise in the Pacific, RIMPAC.
All told, I believe this has been a very substantive visit. And it comes at a very important moment for the U.S.-China relationship. And as I told the officers and cadets, the U.S. is renewing and revitalizing its role in the Asia Pacific in a very broad way, through increased diplomatic efforts, through increased economic efforts, and through strengthening our security engagement, as well.
And what I hope this visit has made clear is that engagement with China is a critical part of that effort. And I believe we're making real progress towards building a military-to-military relationship with China that is, in fact, healthy, stable, reliable, and continuous.
The bottom line is, I do -- I do feel very good about the progress we've been able to make. You know, the -- the meetings have gone very well. We've had very good, frank, and candid exchanges. And, you know, I believe we've laid a good foundation for the future to try to continue the effort to improve our relations.
There's -- there's really two things that -- that impressed me the most. One is that, you know, we -- we will have our differences. We have areas we agree on, but we'll have our differences. That's the reality.
But the key is that -- and it's the key to, frankly, the ability to have good relations elsewhere as well. The key is, if we can have open communications and the ability to express our views in a candid way, in an honest way with each other, that almost more than anything else is what can lead to improved relations between the United States and China. And we've begun those kinds of meetings, and we really have had very candid and frank discussions, which I think bode well for the future.
The second thing is the young people I met today. You know, the future rests with them. And my impression was that these young officers do understand the implications of a U.S.-China relationship and that they also understand what it means for their future and for the future of China. And I guess that -- that also encourages me, that -- that this isn't just a question of dealing with senior leaders. This is something that's impacting at the -- you know, cadet level, the officer level, and that -- that tells me that -- that there is a lot of hope that we can -- we can move forward with this relationship into the future.
So, with that, happy to --
MR. LITTLE: All right. Thank you very much. We'll start with Craig.
Q: Mr. Secretary, you raised a couple of questions on the issue of cyber warfare – and that it’s one of the issues on your agenda with Chinese diplomats. Can you tell us there’s been (inaudible) a number of attacks that are coming from Chinese sources, particularly traced back to PLA and universities and researchers. The question of attacks, is that something you raised with your counterparts? And what exactly did you say? And what was your response?
SEC. PANETTA: We -- that was part of these candid discussions we had. I did raise the area of cyber. Raised it in the context of, you know, this is -- this is now an area that, you know, is -- is the potential battlefield for the future and that the technology that's developing in cyber has the potential to cripple a country, paralyze a country.
And that in addition to that, cyber is now, you know, being used in order to exploit information, important economic information, from one country to the next, and that the United States has concerns about what China has been doing, in terms of exploiting information.
And so what I -- what I urged in that context is that it was really important for the United States and China to -- to have a dialogue with regards to cyber. And there was -- there was concurrence with that, with the people I talked about, that in the context of the -- of the security dialogue that we have, that -- that we raise the issue of cyber and discuss it, talk about trying to develop, you know, kind of international standards and rules, and in addition to that, also discuss space. So I thought -- I thought that was a very good step to, you know, at least beginning the discussion about dealing with this issue.
MR. LITTLE: At the end of the table?
Q: Thank you. Mr. Secretary, I was wondering, how do you see the issue of the Diaoyu Islands? And have you talked about this issue with your Chinese counterparts -- (inaudible) -- will there be a war? And if there's a war, will the U.S. be part of it? And are you worried about the rise of -- (inaudible) -- in China? Thank you.
SEC. PANETTA: At each meeting that I had, I raised the issue of, you know, the maritime issues that have been -- have been raised and -- not only in the South China Sea, but now in the East -- East China Sea, as well, with these islands, and emphasized, as I -- as I've been saying, that while the United States does not take a position with regards to these territorial disputes, that we strongly urge the parties to exercise restraint and to work together to find a peaceful resolution to these issues.
And I think all of the leaders I've spoken with -- those in Japan, as well as those here in China -- recognize that they have a responsibility to try to see if there isn't a peaceful way to resolve it. There are a lot of emotions involved here on both sides, but I think they also recognize that it's important not to let this kind of dispute get out of hand.
MR. LITTLE: Lita?
Q: Mr. Secretary, if I can turn your attention to Afghanistan, I was wondering if you can answer a couple questions about the recent change from the operations there. Did you -- have you spoken to General Allen about this specifically in the last day or two? Did you have to approve these changes?
And then, there's a lot of discussion about them being temporary and some linkage to the anti-Islam film. There were a lot of insider attacks, as you know, before this ever came out, so I'm wondering, how much of this change is actually really related to the protests and the film? And how much is related to this problem that's been going on for -- for quite some time? And how long is -- do you think temporary should be?
SEC. PANETTA: Well, you know, I think we have to, you know, continue to put this in context. The fact is that we have had terrorist attacks against our forces in -- in Afghanistan, you know, for a long period of time. This is really not -- not something new. It's what, you know, we've been -- we’ve had IED attacks. We've had other terrorist attacks. We've had, you know, some of the car bombs attacks that have -- that have gone on, and we've had insider attacks.
And, you know, the important thing is that this is -- this is a matter of tactics. It's not -- and changing tactics. It's not a matter of changing strategy. As you deal with these kinds of issues, you've got to confront them and, obviously, take steps to do whatever we can to protect our forces.
I talked to General Allen about this. We have SVTS [secure video teleconferences] every week to discuss the situation in Afghanistan. And we had long conversations with regards to the steps being taken to try to deal with insider attacks. And I'm confident in General Allen and his approach to what he's doing there.
And as I said, the commander in the field is the one who's best able to determine what steps need to be taken in order to quickly deal with that situation. But it is about tactics. It isn't about changing strategy. And our fundamental strategy remains the same.
These tactics and what -- and what's occurring here is aimed at one thing. It's aimed at trying to break the relationship between the United States and the Afghan army, which is critical to our ability to ultimately move towards security in the future in Afghanistan. That's what they're trying to do. We understand that. But we also understand that we have made very good progress in Afghanistan.
As I said, the reality is that sometime in the fall, 75 percent of the provinces in Afghanistan will be under Afghan security and governance. And our goal is to complete that transition sometime in 2013, as we move towards a drawdown by the end of 2014. We are on track with General Allen's plan. And nothing is going to divert us from completing that mission.
Q: But temporary, how long?
SEC. PANETTA: I think that depends, again, on the commander in the field. And, you know, as -- as the -- what judgments he makes as to, you know, how long -- how long and what kind of tactics he ought to continue to implement in order to deal with -- with the immediate situation.
MR. LITTLE: Okay, we'll go to Tom.
Q: Mr. Secretary – today O.J. Cathidy explains rightly that (inaudible) Asia is not a strategy of containment. It’s an American and military -- (inaudible) – if you look at countries around the world, you look at capabilities, not intentions -- (inaudible) – the capabilities, depending on training in the region, certainly could interfere with Chinese interests. Were you able to convince your counterpart -- (inaudible) – not affect China?
SEC. PANETTA: Again, we had very good and candid discussions about the rebalance issue. The one thing I was very pleased to hear from the leaders I talked to is that they -- they acknowledge that the United States presence in the Pacific is not something they viewed as a threat. They viewed it as important to the future prosperity and security of the Pacific region. And the key for them is that, as we develop and strengthen our presence here, that we do it in conjunction with developing a strong U.S.-China relationship and that, you know, both nations work together in the effort to develop the capabilities of other countries and develop security for the region.
And that -- that gave me a lot of hope that they understand exactly what our -- what our whole intent is here. And, you know, they -- they understand that we've had a presence in the Pacific going back 70 years and that our goal is to try to do everything we can to ensure that the nations in the Asia Pacific region can prosper and can achieve better security.
And if I think China understanding that means that we really do have a chance here to do something that I think can truly strengthen the Asia Pacific region for the future. If -- if China will work with the United States, in working with other countries in the region to not only develop their security, but operate under a set of rules and standards here, I think that that is a great investment in the future of this region.
MR. LITTLE: (off mic)
Q: (off mic) Japan -- (inaudible) -- in Asia -- (inaudible) -- start of a new level (off mic)
SEC. PANETTA: What was your first question? I'm sorry.
Q: What's the red line for Japan -- (inaudible) -- by taking -- (inaudible) -- Diaoyu Islands -- (inaudible) -- Japan -- (inaudible) -- aggressive (off mic)
SEC. PANETTA: Well, I -- you know, I don't -- you know, I don't know exactly what, you know, all of the -- all of the motivations are here for -- you know, for what led to the differences with regards to the island. There's obviously, as I -- as I pointed out, there's a lot of wounds here that go back a long way that are involved in this dispute. And in many ways, it's understandable from both sides, the nature of these wounds.
But it's really important that we not be trapped by the past and that we move forward. And what I encouraged leaders both in Japan and China to do is to sit down and to try to resolve these issues peacefully.
There -- you know, there's no question that, you know, one side or the other, if it engages in provocation here, it could result in, you know, a serious miscalculation that could produce violence and conflict.
Q: (off mic)
SEC. PANETTA: Framework?
Q: (off mic)
SEC. PANETTA: Well, I think -- yeah, I think -- look, I think that it is important to think about how we develop some kind of framework or format here to resolve these kinds of issues. We're going to have -- I mean, as we've seen, we're having territorial disputes in the South China Sea, now in the East China Sea. And as -- as each nation looks for new resources, I think, you know, these disputes are going to continue.
And it's for that reason that I was encouraged that the ASEAN nations came together to try to develop a code of conduct with regards to how to handle these kinds of maritime issues. And I encourage China to engage in that effort. I think it's very important that China participate in the ASEAN effort to develop a format, a framework for dealing with these kinds of disputes. And, you know, I'm encouraged that China understands that ultimately there does have to be a framework here to be able to resolve these issues.
MR. LITTLE: (off mic)
Q: Mr. Secretary, with regard to the current tension between Japan and China, I think the role of U.S. is very -- (inaudible) -- sometimes -- (inaudible) -- what kind of role do you think U.S. should take or the U.S. is taking at the moment?
SEC. PANETTA: Well, I -- I think, you know, it's the role of a friend, trying to encourage both sides to try to resolve these issues peacefully. And I think the United States, obviously, you know, we -- we are dealing with an ally in Japan. At the same time, I think we are dealing with, you know, a country that -- in which we are trying to develop a closer relationship with in China.
And by virtue of that, and by virtue of both countries understanding how important that relationship is with the United States, that if we can encourage both of them to move forward and not have this dispute get out of hand, that we can play a positive role in hopefully getting them to resolve this peacefully.
MR. LITTLE: (off mic)
Q: Mr. Secretary, I’d like to follow on to Tom’s question a little bit. Do you feel that you have -- (inaudible) -- concerns of the Chinese leadership about encirclement or containment and did they directly express any of those concerns to you in the exchanges?
SEC. PANETTA: No one -- no one mentioned the words containment or that -- that our efforts were -- were aimed at China. At the same time, you know, what they did raise were concerns about, you know, the -- the military emphasis of our -- of our rebalancing to the Pacific.
What they urged and, frankly, I think what we would agree with is that it be a balanced approach, that -- that the approach ought to emphasize improving diplomatic relations, improving economic relations, improving developmental aid to the area, and -- and also, obviously, improving security in the area, as well, and that -- that it be a balanced approach.
And I emphasize that, you know, the United States, our approach is -- we have had a significant presence in the Pacific for years and that our goal is, frankly, to work with other nations to develop their capabilities. I made clear, this is not -- this is not a United States that is interested in establishing permanent bases around -- around the Asia Pacific region. Our goal is, rather, to work with these countries to develop their capabilities and to use this kind of new rotational presence to provide training and assistance to those countries.
And that -- I made that point to the leaders I met with, and I think they understand that -- that our goal is to try to improve the security situation in the Asia Pacific region and that this is the approach that we're taking.
Q: (off mic) a lot of -- (inaudible) -- politically -- (inaudible) -- what (off mic)
SEC. PANETTA: I noticed that -- (inaudible) -- trying to save a few. (Laughter.)
Q: What were your impressions? And do you have any insights as to why the vice president was (off mic)?
SEC. PANETTA: Frankly, my impression was that he was -- he was very healthy and very engaged. And, you know, I guess you'll -- you'll have to ask them what -- you know, what issues were involved here, in terms of how -- how that matter was handled. But I -- we had -- I mean, I think we were scheduled to go for about 45 minutes. We went a half-hour or more beyond in the discussion. And it was mainly because the vice president was very much engaged in the discussion.
And he -- you know, I had this impression when I met with him in Washington that he's someone who speaks frankly, speaks candidly. You don't -- you don't get the sense he's pulling his punches or -- or reading talking points, but that he's kind of speaking from the heart. And I had that impression today, that that's exactly what he was doing.
And I was, as always, very impressed with his -- his directness, but more importantly, I was impressed that he really does want to work towards a better relationship with the United States. He's, I think, you know, one of those that really does believe we can develop a new model here in the relationship between China and the United States that can improve -- I think not only improve the relations, but improve the security of both countries.
MR. LITTLE: (off mic)
Q: (off mic) Air-Sea and -- (inaudible) – at the Pentagon's briefing a senior defense official noted that, well the fleet highlighted the U.S. role in maintaining peace and security, but in support of (inaudible) -- Asia Pacific -- (inaudible) -- with other -- (inaudible) -- developed strategy -- (inaudible) -- Asia Pacific area? And how to explain the relations between the U.S. and the PLA (inaudible).
SEC. PANETTA: What's -- what's the question? (Laughter.)
Q: How do you explain the relations between the U.S. -- (inaudible) -- and the PLA (off mic)?
SEC. PANETTA: Yeah, well, you know, I mean, I -- that -- I mean, those -- one thing you have to understand about the Pentagon is they do all kinds of planning and all kinds of think-tanks and all kinds of strategizing about the future. And, you know, you should be careful not to draw any particular conclusions as a result of the various plans that are discussed at the Pentagon.
What I would refer you to, instead, is our defense strategy that we just put in place. And the defense strategy makes very clear what our approach is going to be around the world. I mean, we are -- we're interested in developing a smaller and leaner force that's more agile, that's more deployable, that's more flexible, that's more technologically advanced. We indicated that we do want to focus our presence in both the Pacific and the Middle East, but we also indicated that we want to advance a presence using a rotational presence approach, where we rotate into areas, provide exercises and assistance, and develop new alliances and new partners, and that we want to invest in areas that are important for the future in cyber and space and unmanned systems, as well as in new technologies.
I mean, that -- focus on the defense strategy, because that tells you where the United States wants to go for the future. I wouldn't focus on, you know, the various planning efforts that are done either by the Air Force or the Navy that -- that engage in all kinds of exercises to think about different approaches. The strategy that we have put in place, the defense strategy that we've put in place, is the heart and soul of what America's defense will be for the future.
MR. LITTLE: (off mic)
Q: Mr. Secretary, I wonder if you could tell us a little bit about what your discussions were with the Chinese on North Korea nuclear program (inaudible)?
SEC. PANETTA: Yeah, that was another issue that I raised at almost every meeting, was the issue of concerns about North Korea. And, I think we all acknowledge that there is new leadership there, that I think many are still in the process of trying to determine what the new leadership will mean, in terms of the future of North Korea and the future of our ability to -- to be able to work with North Korea to try to resolve these issues peacefully.
I -- I think we -- you know, we agreed that there are changes that are taking place and that we have to keep track of those changes, but at the same time, what I said was that we continue to be concerned about their efforts to -- to test nuclear weapons, to continue to emphasize their missile capabilities, and they're -- they're developing new ways to try to deploy these missiles, and then, thirdly, the fact that they continue to enrich at a secret facility that -- you know, that doesn't abide by international laws.
All of that concerns us. And, you know, we -- what we urged and what I urged is that China engage with North Korea to persuade them to engage with us on a diplomatic basis to try to find ways to resolve these issues.
And I think -- you know, I think their feeling is that they -- they would -- they would encourage us to pursue our differences with North Korea on a diplomatic basis. And I think they understand -- I explained our missile defense approach and the fact that it's -- it's designed to focus on what we consider to be a real threat from North Korea. I think they understand that. But they also want to strongly encourage us to try to resolve the issues we have with North Korea peacefully, as well.
So I think -- I think we had some very good discussions, understanding the position of both countries with regards to North Korea.
MR. LITTLE: Luis.
Q: Mr. Secretary, after the meetings you've had here -- (inaudible) -- Chinese officials, what is your assessment of why China is developing its military capabilities at the rate that it's doing so? We're talking about a country that although is developing economically very quickly, is at the same time not under threat from -- from anyone.
SEC. PANETTA: Well, I mean, I think -- I think it's pretty clear that -- that China, as it advances economically, also wants to modernize its military. And that's -- that's understandable that they would want to do that. And the point -- the point I made is that, you know, it's very important, as they modernize, that -- that we maintain a transparent relationship, where we talk to one another about these kinds of investments for the future.
Part and parcel of a good military-to-military relationship is the ability to discuss what each country is doing, in terms of modernization and the development of -- you know, of new weapons and new approaches. And I hope that as part of our mil-to-mil relationship we can engage on that issue.
MR. LITTLE: All right. Karen and then Julian, and then we'll have to wrap it up.
Q: Mr. Secretary, you said several times that you encouraged the Chinese and all other countries in this region to resolve territorial disputes and other disputes multilaterally and you -- (inaudible). Did you get a specific response from the Chinese on that particular recommendation and did they offer any other suggestions as to possible multilateral reform?
SEC. PANETTA: I -- what I -- what I received in the discussions on this issue is that I think the Chinese are themselves looking for what would be a good format in which to try to resolve these issues for the future. And, you know, they -- I think they do understand that the ASEAN nations have -- have taken an important step in trying to develop this code of conduct.
And my sense is that -- you know, that they're -- they're willing to see if -- if that holds a possibility for developing the kind of standards and -- and rules and format for being able to resolve these issues in the future. So, you know, I -- I felt that -- that they, too, have a concern that these issues can't just be resolved on the fly, that there's got to be a process to try to deal with them.
MR. LITTLE: Final question from Julian.
Q: I wanted to follow up, Mr. Panetta, on Craig's initial question about the cyber and whether -- you know, how far apart you thought the two sides were on sort of rules of the road. And, Mr. Ambassador, since you're here and sitting in front of us, I wonder if I could sneak in a question about the protest around you last night and whether you were in danger, and if that signaled that the Chinese public doesn't think that the U.S. is being an honest broker in this island dispute.
U.S. AMBASSADOR TO CHINA GARY LOCKE: Well, this is Secretary Panetta's press conference. (Laughter.)
Q: Well, you -- you showed up and sat down in front of the press.
SEC. PANETTA: I'll yield to the ambassador on the question you've -- you've posed to him. On -- on the cyber stuff, you know, I think it's -- it's obvious that, you know, this is an area that's rapidly developing here in China, as well as in the United States, and that I think there is -- there is a sense that -- and it was interesting. I think in a couple of the meetings, there was a sense that there has to be an effort to look at the larger picture here and whether or not we can develop international rules and standards with regards to the whole cyber area.
They -- I think -- you know, I think it's clear that -- that they -- they want to engage in a dialogue on this issue. And I guess that's the most important thing. That's the beginning of trying to perhaps be -- you know, be able to develop an approach to -- to dealing with cyber issues that -- that has some -- some semblance -- some semblance of order here, as opposed to having countries basically, you know, all flying in the dark as to how we approach the cyber issue.
This is -- you know, this is technology that is rapidly developing from day to day. And if we don't get ahead of it, the reality is that it's a technology that could -- could get out of control, could get out of control. And I think -- I think we do have to make the effort to try to sit down with China and with other countries to discuss how we can approach cyber in a way that can -- that can hopefully bring not only better order, but better security for the future.
MR. LITTLE: And the final word, we'll go to the ambassador.
AMB. LOCKE: Well, let me just say that our embassy personnel just met with the Ministry of Foreign Affairs to -- this afternoon to express our concern, but also to urge them to do everything possible to protect our personnel, as well as our facilities in China. The MFA promised a thorough review and to make any adjustments to procedures and protocols to ensure that a similar incident does not occur.
I can just tell you that, from what I can see, there were a few dozen demonstrators who apparently had come from the demonstrations outside the Japanese embassy. They surrounded our car as we were about to enter the embassy. The Chinese police were very quick to move the demonstrators away and were able to enter the embassy. It was all over in a matter of minutes, and I never felt in any danger.
I could not hear what they were saying. But, again, as Secretary Panetta indicated, we take no position on the dispute involving the islands there. And the secretary has stated his view of what the position of the United States government is and what he said to the Japanese leaders, as well as the Chinese leaders.
MR. LITTLE: With that, thanks very much. Appreciate it.
SEC. PANETTA: Okay. Thanks very much.