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Reforms Needed in China?

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    Authors Peter Kiernan and Gordon Chang on the social and economic problems affecting China.

  • Duration 7:12
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Secretary of state Hillary Clinton and Treasury Secretary Tim Geithner went to China for talks about trade but.

The media attention.

Well it focused on the blind dissident but the purpose of the trip.

Was not derailed concerns and they've held there meetings in that concerns about China's currency the theft of intellectual property -- still subjects that the two sides met with in China but.

Can we make headway.

On these economic issues and all the military issues regarding our country's when human rights are still handles -- differently between our two nations.

Joining me now the author -- the coming collapse of China Gordon Chang.

And the author of becoming China's bitch in nine more catastrophes we must avoid right now Peter Kiernan.

-- to Peter let's start with you.

Human rights.

They have their rules we have -- Should their rules interfere with our abilities to sit down and negotiate under -- thing well.

The truth is we've been every president going back of probably as far as Nixon -- had some complaint about human rights in China.

I can remember President Bill Clinton president elect Bill Clinton being very dogmatic about it before he got to office but each time we sort of compromise our position as we.

Came into view of just how important that China is to our economy into.

Our interaction world trade.

Gordon it it is what's your reaction to -- because again.

They say leave us alone we have our own rules here I couldn't imagine.

Cause -- -- to China if we had somebody in this country that was pro China and and wanted to make a stake.

-- you just can't put human rights over here and trade insecurity in another side of the table.

Because what makes China's such -- human rights abuser at home also -- accident air responsible partner in the international community you know Ronald Reagan was right.

The nature of these regimes do matter you know we've tried to balance human rights with -- other concerns.

The White House said it was gonna try and do that last Sunday that's just really a -- formulation of what Secretary Clinton tried in February 2009.

The Chinese saw that as a capitulation.

And so therefore they went on a Bender roiling relations with Washington in the region so we tried to balance human rights with other concerns it doesn't work.

So.

With that with the fact that they have a different view of all of this.

What we start talking to them about all these intellectual properties to -- of that the currency manipulation and everything else.

Can we make headway.

And pretend that we're ignoring human rights.

Well I think the real question is can they take it seriously and I think there and off a lot of incursions we've made.

Where we've -- rattled our savers but we've really done very little with any key.

Whether -- respect to human rights intellectual property.

Manipulation of currency any of these things we we'd do the opposite of talk softly carry big step we talk loudly and carry no stick whatsoever but -- Gordon haven't they haven't they've basically created their own problem because one of the that the things that I've always believed.

Is the fact that you cannot have.

Economic freedom and they set up these economic free zones for a lot of the young people to move to -- got to do things the way we do things you can't do that.

And can expect people to do not want to have freedom when it comes to.

Other liberty so you're you're absolutely right you know you can't separate the two and the Chinese understand that I think that most Chinese believe that the country's progressed about as far as it can within its existing political framework.

-- most people there want the same things and everybody else in the world wants you know more say in their lives may be a little bit more economic freedom.

And of the congress party isn't willing to give it that's created these tensions in society and that is really limited China's progress so you can't separate the -- aren't.

-- let me start with you one on the business of the fragile political system that they have are we going to see the Communist system fall apart.

Well we've already seen it started to fall apart -- -- since the beginning of February where we had one provincial boss invade another province with an army.

We saw on surround the US consulate -- -- opposing forces of different leaders.

You know attempted defection.

We've seen these -- assassination rumors military coups see you know rumors always things in the last 23 months.

And it shows I think a deterioration in the political system and with this -- dissident Jenn -- trend.

You know it really is has the possibility of further splintering the -- Alright then we get to the business side of it.

And we and we see -- lot of people have not trusted the numbers that come out of China.

They're numbers -- where were are slowing but there's still dramatic growth in their economy compared to what we ever what most of the rest of the world -- what's going on.

With the real numbers in China.

Well the first thing you've said is so true that Chinese have what you might call an aversion to transparency.

And so -- the difficulty is whenever you're trying to evaluate things.

The numbers always feel kind of manufactured so yeah.

Yes their growth -- slowed to a in their respect somewhat tepid seven and a half percent.

But the facts are they are -- still an export monster.

And as long as the Euro -- of the United States are importing less from China that's gonna have direct impact on their business.

And the notion that they can suddenly turn that engine.

That's been exporting to feed a local consumer market that is is still not in in.

Anything like that that that they are there planes land right it did to get their middle class build so they don't have to rely upon us but that's what they say but they're not doing it.

You know they've been talking about increasing domestic consumption for more than -- half decade.

But during that time the role of consumption and China's economy has declined to about 34% today the lowest rate in the world.

And now that the Chinese economy is slowing and I think it's only growing and most single digits right now if you start to look at things like electricity consumption.

Bellwether car sales other indicators it really means China's got a challenge right now where their economy is not growing that much faster than ours if it is if it is at all.

And you know they have an economy which is still structure because they are still export dominated.

In and global environment where Europe is buying a lot less and you know we're not robust either so there are drilled -- total.

And their expenses of -- and things like that are going up enough people to complain about the job to -- -- went to China it seems like instead we're.

They -- -- should be concerned about the fact that jobs are now going to places like Vietnam.

No question what part and parcel creating a middle class and I think is exactly what they're trying to do is to lift wages.

But another piece of it is that until there's some sort of social safety net the Chinese are gonna continue to be.

Major savers they are not major spenders so that just as you say -- if our economy via a consumer spending is something like seventy plus percent.

They're not even half that in the economy of China and they're not on any kind of trajectory to get there and I think people are gonna continue to save.

Aggressively because there is no safety net to help them if something goes wrong about shortage for an.

Other stories not an end to anytime soon -- -- Gordon Chang thank you gentlemen great to be with you think you up.

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