The Chinese Economy in the Next 30 Years: Political Reform vs. Status Quo?

please welcome your panel on the Chinese economy in the next thirty years political reform versus status quo moderated by author and co-founder of bull sky partners Sheryl WuDunn greetings everybody I'm sorry we're starting a little bit late but sit tight because we are charging back to the future we are talking about China and the economy in the next 30 years and there's a range of views something which that China's economy is in a bubble it's going to collapse others think that it will be the dominant economy in the world just as the US dominated the world from the late 1800s to now one of the biggest questions is will China take over that role we're gonna solve that here now so let me start with Michael to my right he is the he's at the Hudson Institute and author of the hundred year marathon we have Nick lardy who is at the Institute for International Economics and the author of the state Strikes Back to my left we have Sophie Richardson who is China director at Human Rights Watch and she is author of China Cambodia and the five principles of peaceful coexistence Steven wrote to my second left is at the Jackson Institute for Global Affairs and he is the author of unbalanced and to my far left is Perry Wang who is the managing director at the Milken Institute and he is author of best performing cities China 2018 so we have a wide roster of experts so Michael let me start with you but first let's show a few slides number three four five six can we show those okay this is just level setting so you get a sense of how far China has come in the last 30 years next slide please next slide please okay you can see before and after Tale of Two Cities on next slide and these are trains there gonna be a lot of trains in this in this presentation so you can see China's old trains and nutrients and finally the last slide the next slide yes this is the Belton Road so let me talk about the Belton Road when President Xi Michael he came into office in 2013 he had this idea of the China dream which is kind of like the American dream but China's dream and he basically launched the idea of this one belt one Road which is now the Benton Road initiative it was enshrined in the Communist Party Constitution 18 months ago just a few days ago President Xi brought in world leaders leaders from around the world to discuss the belton road so you're advising president Trump what do you tell him about China's intentions and whether it will dominate the world well President Trump actually knows a lot about China he's mentioned it in three different books he wrote before he was president he has pretty strong views about China he sees China in a very competitive way which you would expect given his New York real estate world he sees the chance to make a deal with China in terms that he's written about so what do you advise him to do what do I advise him to do well actually the way it works in the Oval Office usually is he asked me questions I don't say President Trump this is what you should do that's a good way to get yourself not invited back to the Oval Office no matter no matter who which president I've been advice you insinuate do why why do you insinuate your no no no what President Trump likes I'll give you a feel for his decision-making style he likes to sit behind the big desk himself he has a lot of chairs in the room for cabinet secretaries so we'll have Steve minuchin here and Larry Kudlow here and Peter Navarro vice president pence gets a very good front row seat the visiting expert in my case sits on the president's right and then there's and in the back usually would be the chief of staff would be Jared Kushner and as he staffers and there's a kind of a freewheeling seminar something like the way Steve Roach probably teaches economics at Yale where his students bicker among themselves and the president either listens or he sometimes actually instigates the debate to get worse so my only role as a research resource person who for example I'll give you an example of his interest or something I was able to answer why did China do so well over the last 30 or 40 years how who created this and I told him the story of President Nixon in an interview with Bill sapphire saying that I think I've created a Frankenstein's monster in China next is referring to his opening up the original investment in technology so it's actually a very complex story of how my wife the so-called Gang of Four had their economic policy they end up in jail they lose a very rough tough power struggle another group then reaches out to the World Bank and before long by 1980 the World Bank president at the time Bob McNamara came the World Bank loaned some economists one in particular is that sort of a hero in Chad there to actually see wha and Edwin Lim the World Bank opens its largest office in the world in China in Beijing and they have blueprints from other countries especially the way the Yugoslavs had done state-owned enterprises what are you so this predatory bank absolutely the World Bank plays a crucial role okay but the Chinese economists have their own debate going at the time as I mentioned some end up in jail some are accused of not being properly Marxist and a series of issues that are still with us today in Beijing get surfaced in the 80s and one thing the President Trump is doing I think in his trade I hate to say demands his requests of China there's a 24 points that the American side raised one year ago today in Beijing the Chinese side raised ten points trying to cling to their old system and a lot of this is like the debate back in the 80s in which the issue became subsidies we're gonna get into the actual trade talked a little bit later this is the old story 35 years okay well you wanted to know how to know how president makes decisions he has quite a near for nuance in detail and I think his trade strategy is part of a much larger approach that used to be called G to buy the big Brzezinski and others that he often talks about his friendship with Xi Jinping he's revealed they've had almost 30 phone calls now an hour long each they've had long sessions with each other and they've he's accepted a number of Chinese ideas to go over to the four dialogues to eliminate the old Hank Paulson system of the strategic and economic dialogue he's made quite a few changes he at first shocked the Chinese really shocked them by taking the phone call from saying one right right and then calling her the president of Taiwan this is like an enormous tempering we're all China experts we get our hands chopped off if we propose this kind of thing but he then I'll give you summarized in one sentence he then changed what the previous eight presidents had been saying instead of saying I accept the one China policy because other presidents have he said because president changed in pink called me and requested I'm going to abide by our one China policy this is a kind of negotiations that he got going from the very beginning that I'm going to rethink the basis of us-china relations but cooperation will be the key to it not a new Cold War he doesn't this sometimes the media gets crazy it says Oh Trump wants a new cold war with China no that's not correct so Nick can you talk about how a lot of people think that they're worried about China and that China is going to start dominating you know it does dominate in world trade and that it's going to become the dominant economy in the world but China is also very overextended has an enormous amount of debt the fastest growing debt that we've seen I mean we official figures say forty-seven percent of GDP but like who knows what the real level of debt is can you talk about you know is this going to actually really hurt the Chinese economy growing going forward well the debt level is very high 47% might be a good number for the the direct debt of the government but if you take all the corporate and household debt we're talking more like two hundred and fifty two hundred and seventy percent of GDP so they are highly indebted there are substantial financial risks but you know it's all financed in renminbi they're not borrowing anything significantly offshore so China is not going to have something like we saw in the Asian financial crisis where foreign firms foreign lenders got nervous and decided to withdraw their money and the state in China has a lot of policy tools to deal with financial risk and they're quite sensibly deleveraging now it's a slow process but it is underway and I think the risks are going down in the 1980's we were all scared of Japan Japan was growing and then it turned out it had this pile of debt and just sort of cope will collapsed onto itself is there a risk that China might have that kind of similar fate I think I think China's fate will be quite different remember in Japan at that time was already at roughly 75% of the u.s. level in terms of per capita income China's about 25 percent so China has enormous potential for further convergence towards the levels of advanced industrial economies I think they'll have to change policy to capture that but I think that means their growth potential is much greater than Japan's was back in the 90s they have there they've had some property inflation in China but it's much less than the Japanese had in the mid 90s and the other huge difference of course is China is much much more open to foreign investment foreign and foreign investment in Japan never produced more than 1% of industrial output in China it's been 25 percent for decades and it continues to be a very important factor in their economy an important source of productivity growth so I think there are enough differences that we should not anticipate that China is going to fall into the fate of Japan we're not right away maybe in a couple of decades when they're even richer than they are now but not when there are only a 25% the u.s. level is it possible to get a handle on the shadow banking system because there's also also a lot of hidden debt and there are some estimates of the debt levels at 300 percent of GDP what do you think of those but once you start getting into the details you have to worry about a lot of double counting in terms of the overall debt levels and where are the credits coming from I think a number of at the peak was probably something closer to 270 280 but they've made very substantial progress in reducing the size of the shadow banking system and in other words it's not just growing more slowly than it used to it's actually shrinking this was the riskiest part of the financial system because it's less well regulated and last year that you know the assets in the shadow banking system shrunk quite substantially now there's been collateral damage the private sector which relied a lot on shadow banking for financing is in pretty dire straits these days so there's been a cost so they've reduced financial risk to some extent it's partly at the cost of a less vibrant private sector which of course has been the main source of growth over the last 40 years great okay so I'd like to get back to the Bri that we opened with and show a video that talks a little bit about the breadth can we show that first video please the multitrillion-dollar Belton Road initiative or Bri they're also the two components of the plan there's an Overland economic belt of six corridors that deserve as new route state goods in in China like this railroad connecting China to London and these gas pipelines from the Caspian Sea to China and a high-speed train network in Southeast Asia then there's the maritime Silk Road a chain of seaports searching from the South China Sea to a compare that also directs trade to and from China the PRI also includes oil refineries industrial parks power plants mines and fiber optic networks all the time to make it easier for the world to trade in China so Michael you've written about the Bri as well I mean many of you have I mean is this China's attempt to sort of dominate the world you can look at the Bri in two different ways depending on your overall view of China the idea of dominating the world and this is the big octopus putting its tentacles out that usually fits if you think of China strategic intentions in the long term as evil if you I happen to advise against embracing the belt and road initiative but not because of Chinese long term intentions I think since the 1944-45 period the United States and allies have tried to have standards for loans around the world whether it's human rights the right to strike environmental issues not locking workers into a factory so they can all be burned up by accident the long list of these standards there's a set of institutions mainly in Geneva to enforce these standards the belton Road in the previous Asian infrastructure bank could have those standards in principle they could have paid homage to this effort since 1945 actually goes back even earlier to the League of Nations but they did it and some particularly egregious examples have come out about how Belton Road actually works the u.s. government uses the word debt trap to refer to it so I encourage you Sheryl to buy this you really can't afford it you default I say okay and now I'm taking your house you say I didn't really know you could take my house I say well too bad has happened with the number of small countries so the president Trump did not go to the belton road the first summit in 2017 his representative read off a short statement that American companies are welcome to benefit from this he didn't go to this summit you mentioned five days ago the number of foreign leaders who went it was much less five days ago and President Xi did something very clever he revised the belton Road initiative terms and he implied he'd heard some feedback it wasn't all positive so this is different but still I don't think the United States should sign up for a belt in road the Italians I think betrayed us the Italians were really bad to sign the memorandum that they signed they are now serving is a kind of an opening into the rest of Europe I noticed in London Berlin and Paris they didn't totally endorse the Italian approach but this is a matter of some debate and as I say it's really about China's long-term intentions and the standards of Alton Road is going to use Sophie what do you think about China and its intent and so far the progress it's made on the Bri do you think that you know there are obviously some problems that they've faced around around the South Southeast Asia around around other parts of Asia but what is your sense of the political ramifications of them progressing on the PRI I think it's very clear that that one of the Chinese government's intentions is to try to ensure tighter relationships with many of the countries along the Bri and to do business on their terms I agree with Mike's point about the lack of standards that have largely been built into multiple different international institutions that are really either not at play at all or are being undercut by these kinds of projects and research that we've done in countries ranging from Cambodia to Zambia show how you know kind of certain kinds of Chinese investment particularly in extractives in industry really not only failed to comply with establish Internet standards but in some cases even undercut the established local standards and I think that's that's a problematic phenomenon it's not clear you know who anybody goes to for recourse about those kinds of developments but I think you know the pathology is that we're seeing in VR I are not necessarily distinct from ones that you see in Chinese development generally but it is that lack of standards that's a really critical problem but you know standards actually work better when there's competition so China has no competition with some of these countries it's not like the u.s. is there you know you know saying oh what about us what about us try us and so that's why China can get away with it right because it has more negotiating leverage well it has it has enormous power in any of these countries you know it's not just about competition but it's also about enforcement and you know one of our greatest concerns at the moment is not necessarily in the realm of economic institutions but certainly of the ones that govern international law or human rights where the Chinese government I think is very steadily weakening of those institutions in ways that aren't immediately visible to the outside world but that wind up having enormous consequences for the people who rely on them to protect their rights or uphold certain kinds of standards Steve let's bring in let's talk a little bit more about us-china relations a lot of skeptics think that a deal that is coming out may result in more soybean sales from u.s. to China but can that really change the dynamic that we are seeing now you know Michael you've hinted at it but you know that we're going to have going forward with China will it fundamentally change market access I mean what are what's going on there right now well Cheryl there'll be a deal it's in the self-interest of both presidents having gone down this road to walk away with something that they can take back to their respective constituencies and say that you know they accomplished something it remains to be seen if the deal will be huge or the greatest deal in the history of deals Grandaddy granddad or more but I think you know what is going on here is that the focus of the deal will be on the least consequential aspect of the tensions between the countries on this bilateral trade deficit we have an enormous trade deficit with China right now but what your local politicians ladies and gentlemen don't tell you is that we have trade deficits with 102 countries and the reason we have what is economists would call a multilateral problem is because we in America don't save and when you want to grow without saving you import surplus capital from abroad and you run a big current account and a multilateral trade deficit and what the Trump administration is done with its tariffs is it tried to propose a bilateral solution for a multilateral problem and it won't work it's like whack-a-mole you you know you can knock down the Chinese piece but it'll shift to higher cost producers and end up taxing the American public so you know Michael says that the president knows a lot about China it's clear he knows nothing about economics despite the fact he went to Wharton so the next time you go in there Michael you might bring their economics textbook with them and you're waiting ordinary macroeconomic consequences you're willing to come with me to this meeting in the Oval Office I'm not going near that place well okay all of a sudden all of a sudden this is there's a lot of China bashing going on and so everybody's jumping on the bandwagon is this because a year ago President Xi decided that he was going to be a ruler for life what is going on here why of a sudden is this coalescing around China bashing all of you well Cheryl I just finished I mean if if I had a nickel for you know all the negative views on China you know I I'd be in better shape than Michael Milken I mean this has been going on forever it is now a tidal wave it's much larger than it's been before and you know I think we need in in this country to look at China critically and when there are things that they do that are not do not comport with what we think are fair standards of equity or reciprocal treatment we need to call them on that on the other hand we need to look at ourselves in the mirror to try to get a better understanding of why it is we have this knack for blaming others for our problems we did it with Japan in the 80s and we're doing again with China and we have some serious problems in this country with our long term saving and our productivity growth that we can best address ourselves rather than trying to pin the blame on China is there a competition that that is really now the new great game between the US and China are we actually you talked about we have to look into ourselves but is this an issue where we need to we feel kind of insecure because we're not as good as we used to be there there is a clear insecurity I just go back to the macro issue when countries are short of saving and the numbers are pretty clear you look at our domestic savings rate in the US adjusted for depreciation last year was 2.9 percent of national income 2.9 for a leading country is zip so we have to you know bring in surplus savings from abroad in China is a you know certainly a major source of that as is Germany Japan other surplus countries and when you don't save and you want to grow I mean you're gonna you're gonna ask yourself how do you fund our investment needs like expanding and modernizing capacity infrastructure human capital and you know the saving issue is a serious long-term source of our insecurities and here we are you know pounding on others for what without really addressing what we need to do at home like I just want to touch on something that you mentioned earlier that you were involved in the security cooperation between the US China years ago and so obviously we you know if you can talk a little bit about what kind of security secrets we gave to China and whether or not in hindsight that was a mistake it's coming back to haunt us well you have to buy a copy of a hundred year marathon which by the way is now the best-selling book on China and America that could be good or bad but there's a long chapter that the CIA and FBI and DOD made some cuts but they let the main chapters stand and in the Chinese military translation they keep all that story - it's a story of very intimate cooperation in terms of weapons intelligence covert action between the US and China that's been kind of the secret foundation for the leaders on both sides and their immediate staffs it was not shared inside our government was not shared inside the Chinese government certainly wasn't shared with NATO or Japan or our allies so this secret cooperation with China included the largest covert action in our country's history by more than three billion dollars with the weapons from Chinese factories secretly conveyed to be given to fight against the Soviet Union in Afghanistan this was about a six year program there was another program a little earlier to try to drive the Vietnamese army out of Cambodia remember they had invaded Cambodia they're going to stay forever CIA and the Chinese equivalent went together with Malaysia Singapore or hosted by Thailand and the secret base provided weapons and eventually drove the Vietnamese army out dr. Kissinger started this in a very famous top-secret eyes-only memo only recently released in November of 1973 in public dr. Kissinger still tends to give as he should the cover story he says oh yes China and the US wanted to have a hotline so we could contact each other in case of trouble but actually the memo is that for better or for worse I helped to write said you have all your bombers on one base this is strategically unwise the Soviets could take out your entire nuclear force in ten minutes you need radar warning you need to hook up to our satellite systems and we can help you in technology if you go to war with Russia we will help you with supplies this was all kept secret since that time and it helps to have a best-selling book if you tell these kinds of stories with footnotes and links to the declassified documents a last commercial but this the important thing now when President Trump learned about all this obviously it gives him a view of the potential of us-china cooperation it's not a story of fighting each other to death the Korean War is that kind of story but this is an evolution of us-china relations and I maintain in the in the book that I won't promote anymore that the economic cooperation in the 80s and the World Bank getting in there that also was a kind of secret collaboration if you will now this has all gone wrong in the last 10 or 15 years because I don't think the World Bank taught China to steal to lie to cheat to create espionage activities in the u.s. far beyond what the FBI director has ever seen before I don't think the World Bank did all this someone else did know how to correct that is the current problem okay well now we're gonna actually propel forward and so Perry I'd like to ask you a question about going forward and China's prowess but first I'd like to show the second video briefly to give us a sense of China's manufacturing prowess can we [Music] [Music] [Music] okay so Perry I don't think that we could build anywhere in the US a train station as large as that in nine hours could we but at the same years probably at the same time going forward China is going to have to you know continue to grow what do you think about the prospects for growth in China and what are some of the risks that you see I think the Chinese government where there is 100 year plan otherwise which I don't totally subscribe if they have a long term vision that 400 years ago in a surpassing us I don't think that's the intention but there's a slogan but communist government tend to have big slogans that's that's for one but I think the growth story in the next 5-10 years in China would be similar to the past we actually tend to give too much credit I think one way or the other whether the Chinese plan out their foul along how they want to grow or they have no idea what they want to do I think there's somewhere in between I believe the Chinese government have a long-term goal I think the long-term goal is very simple by a certain time benchmark that the household income should achieve the certain level and that's very vague actually so along with that and then they did learn something from World Bank and they did learn something from economists like Steven me and Nicholas or included by learning that okay technology's important science important education is important and I think those are simple ingredients and so if you look at the past 10 years the Chinese government without exceptions I was I would say no matter how their five-year plan printed out they do a lot of adjustments sometimes when you look at them you felt that some of the policies change pretty pathetic you know you have a central bank in 2015 for example just one one case in point in one of the critical juncture in in doing the financial market with reform and opening-up they have been short three weeks come up with three different policy directive on how they plan to open their capital markets and of course it was a big crash afterward now are they related no one can tell but as you can see the Chinese government sometimes they go out of their way to adjust they caught a fine-tuning but sometime they just have to do quick dance to change direction or to fix the problem so they'll say a more example so a better better one I think I like you and these are likely hold that hold that for a while to think about and maybe there would be a theme for the growth in China is that they know where they want to be but how to get there they have to deal with a lot of option now in the past 30 years it was simple the country was bankrupt they have to feed the people they have to provide jobs so it's simple you just produce produce produce whatever you can get you produce you have to feed all those mouths and provide job to the teenagers and youngsters that's a simple story it's no different than other developing economies but now the Chinese have the deal with the following question shrinking shrinking workforce ageing workforce horribly destroy environments so the Chinese government now I believe they have to look back and say gosh we need to fix those numbers I think I think our Chairman I should like to quote a number that the cancer or chronic diseases in China would be about the size of the United States population or could be about who knows so they have to go back in time to fix those now in that process we probably see I think I would call a normal period of time that in power consolidation is setting up a goal that how to protect the nation so to speak but I think the policy they are going to set go but they're going to change and I think further further the the concern I think in Chinese leadership smite I don't think is South China Sea I truly believe that if I look at a domestic condition in China and nowadays there are better better tasks to tackle and more urgent difficulty that they have to deal with day on a daily basis well so look at the manufacturing prowess that has actually achieved remarkable miraculous success in China going forward I mean they their labor is no longer cheap land is no longer cheap so they can't really use this same economic model it's kind of like the old economy can they actually transition to the new economy a newer economy a different model you know at the same time you know have tighter control tighter state controls you know tighter if you will repression yeah I think that's a contradiction there's another contradiction from the Chinese couple policy at least for me economists perspective and my colleague and I have done a lot of recognize that you trying to understand technology human capital and thing and and and systems how to make it work and one of the key elements in creating a a prosperous vibrant R&D or technology based economy is human capital now on human capital you have to allow the people to have dissenting opinions you have to allow people to have different type of thinking I may not be prevailing theme in a society those are the key ingredients so you can say I don't like IBM so someone a long time ago make that statement and move the company to to Silicon Valley and start their own firm so you have to allow the kind of leniency or the kind of space but the Chinese government policy now is that we try to build consensus which are the buter consensus that narrowly focus on where we should go and everything focus on this one of the most ridiculous policy is they look at the Chinese small by saying okay those small-timer so remote from the center of the of the industrial complex so we couldn't find way to grow them so what do we do we call them special cultural town they view thousands of them the problem is yeah Kim Jong is very different than Guangzhou and then sun-hi is very different than sensi yeah you have the differences but then can someone justify within a 300 kilometer miles kilometers you build two cultures and they're literally the element within one village so you are trying to attract tourists while I'm while the Chinese tourists actually favor more on Thailand and Philippines Japan Korea u.s. so those are the things that the total disconnect between policy and reality so they're going to do a lot the quick adjustment to answer those right okay so Sophie if you look at in the past we've always looked at the develop economic development of some of the Asian countries and as the middle class rises and becomes more affluent than we start morning I have to have a say in their own governance that so far hasn't happened in China and in fact they're getting tougher what do you think the chances are for political reform and can China continue to grow without without it look a couple of quick points I mean first I think on the occasions when anyone or at lots of different kinds of people in China have tried to assert a desire for a more lenient role or the ability to participate in politics or to share their views free of the prospect of being persecuted for it they get crushed pretty quickly I mean let's recall that we're heading towards the 30th anniversary of the 1989 Tiananmen Massacre you know and we're not any closer to a China in which you can start an opposition political party or go out and launch a new newspaper or you know even engage frankly an independent agreement with the government on certain kinds of topics without fear of persecution we knew that it was not going to play well for human rights under Xi Jinping when in the fall of 2014 a group of activists who called themselves and do citizens movement who were generally about public asset disclosure and anti-corruption campaigns who are essentially saying publicly the same thing that party officials were saying but they were saying it it dependently they all got locked up I think that's a pretty powerful indication of how hostile the state can be into this kind of engagement and that has enormous ramifications for the economy but let's also talk about areas where the Chinese government has invested very deliberately and heavily and demonstrated very alarming creativity which is in the high-tech surveillance sector and the ways that technology is being used to monitor all different kinds of behavior and penalizing people for it and keep an eye out we have a new piece coming out actually this afternoon in which we reverse engineered a police app that's being used in Shin Jang that shows you the hard-coding of repression through Chinese companies in ways that have horrific consequences for human rights and I think when you see a government literally invest in that I think the the hopes for any kind of political reform in the sense that we understand that term or even in the rationalization of bureaucracies as she didn't Pingree centralizes power to himself that the kind of professionalization or sort of bureaucratize ation that we saw taking place across the 1990s and the 2000s has largely been reversed and a lot of power essentially is being concentrated in the hands of the Chinese Communist Party well it seems interesting that you could have a you know an economy that is very so it's so centrally controlled and tightly controlled at the same time you know foster innovation I mean we have seen these pockets that you refer to I mean ping ping on insurance covering it has this very interesting AI arm where they're now creating these robotic retinas scans so and just in Chinese fashion they're at creating assembly lines where you know the Chinese can go through their health checks you know by there's no they go through these scans and there's no person there's no doctor or practitioner on the other side it's just basically a robot and they can actually you know test to see whether you have diabetes or I mean the use has a version of it too but we're not going to create assembly lines the way the Chinese are but that's a kind of innovation so Perry I know you you've worked on the sin so for you to what do you I just want to add to that it's a it's a kind of innovation but where is that data going do people know it's being gathered how do they get it back are they given the option to opt out or have any sort of privacy controls you know let's let's not treat this realm as an unmitigated good it's very clear that some of this technology is being used for very abusive purposes wait hold on second I was at a session yesterday at this conference called surveillance capitalism featuring Shoshanna Zubov and Roger McNamee and they tell a story about gathering of personal data in the United States of America that is every bit as comparable as what you get subscribed in China so you're by singling out China you're you're overlooking the fact that this is a much more pervasive trend now you you may want to come back at me and say well they have different motives than we do I wish I could run the videotape of that session where they raise serious questions about the motives of our large technology companies and what they're doing with our data and violating our privacy in a way that would be very comparable to the story you just told well if I can come back to the first point I would make in response that is to say I've had that human rights watch those work on this these issues all over the world including in the u.s. you know where we've written extensively about violations of privacy rights but I think the important point of comparison is that here there actually are privacy right and you could actually you know go to court elect a different government the fact that you and I can sit here and have a conversation about this you know without fear of you know running into problems once we walk out the door for having had this conversation right I mean these are these are very different operating I'm not that frightening I promise well let me ask this question though because you know in China they don't care about data privacy at least not now and there's nothing that the individual can do about it okay even if they did care actually showed that that is the issue in in China the culture in Rome III was shocked actually after working in this country I went back to visit relatives in Hong Kong and and in China and many that I don't know very well and the first question they ask me is how much do they pay you how much do you make and the next thing is what kind of house do you live now in United States your ask someone that even you know very well it does say very privileged information you should ask you should collect that kind of information but you know the funny thing about a Chinese household is has very little secrets I think if you ask people who live in in in beijing hutong or sun-hi somewhere you know the own amis in in those blocks they know everyone's movement this is this person come back home at 3:00 that person come back home he parties all night long I'm not saying I'm not I'm not giving a judgment on whether that's a good or bad culture but Chinese or Asian I just did in China I'm not sure about Hong Kong but is it in China that's something I think one felt that is entitled to know if they want to know so that is the attitude and then actually one one one quickly want one theme when we could critic on China's a lot of bad practices that I think from from our standpoint is is not enormous so it's also on so forth actually III thought a lot about that some many I think from government and policy Japan or the government guided in doing some of the things but one prompted me to think about you know some of the route behaviors I think if it's some of the traveler if you travel in China very frequent you probably don't want to ride in the same train as I did I did a couple times from writing a train in a high holiday season trust me you don't want to be on those are you gonna bump into some of the rudest people he would ever encounter so it's about geo should ever go to New York I Love New York okay I live for the food so so some of those I think it is a progression of policy setting and progression in adapting the global norm I think how we should look at individual rights and and that's for government and institutions in in China to consider further I think the Chinese citizens should understand there are standard behavior you cannot be rude to people when you get off the L airplane you cannot help with someone in front of you to try to get off first you stand in line so those are the things I think so you get into Social Development social cultural development those are the things I think not just the government but I think the entire society in that corner world I have to learn I know I believe a Chinese were learning very quickly it's not of a good or bad it's about all the sudden you know can you imagine for the audience the best part the wealthiest builder in China very similar to to President Trump he now is the largest builder in China private privately owned enterprise and before he was 18 or something he never owned a pair of shoes now can you imagine someone like that day one landing in JFK and try to get in the taxi cab I don't know how he's gonna hire you how he behaved so along the line there's a lot to catch up where to do well so if you look at China and the fact that they can get away with you know with not regarding people's data privacy and they will be able to use all that you know billion people's worth of data and you know the Leapfrog go far ahead in terms of data science AI machine learning is the u.s. going to be sucked in I mean we're gonna lose that race if right don't you Chinese does have the advantage on data collections but going back to ping Ghana's case five years ago or six years ago I was in Beijing attending a conference and they because at the time I work with my colleague poor Irving on Aging so they told me to this new facility three hours from the bangtong's as a team and they show me how they integrated the insurance policy with the retire retirees their medical treatments and potentially those people where they can travel to so they issue a court to - to the holder issues holder and also happen to be the residents of the retirement home so they can track this old couples literally 24 hours and and so now I think for me I probably don't like that because I would like to sneak out of smoke but for the old couple they have no problem is that we are being taken care of and so their bank account their health condition or in that Court now what's enabling peeing and to do this now what what unique about that is not necessary it's not necessary advanced programming or algorithm or AI but in fact is the very enriched database they would enable the machine to learn faster so you're talking about 30 million records you you know many insurance company in this country probably can have that access or you cannot collate that database together so that happened in China so verdict is out there which way is better but you know that's okay I want to go to Q&A but before we start tonight please start thinking about your questions I want to show this last video that gives you a sense of China's effort at you know a soft power we play that last video [Music] [Music] [Music] great [Music] okay shell can I just point out that you know sind yelling the western part of China is prime bri territory and i just like to point out that i think there are a million arbitrarily detained Turkic Muslims in that part of the country who would love to tell the world their stories let's just be clear okay okay so I think we have also microphones please here in the front the first question hi my name is max I have a question for Sophie since you'll be in China for how many years now a few more actually can you also state your name sorry you're known as yeah my name is max I was born in China and a study in Canada now working the US thank you so I have a question for Sophie you just do you think like human rights it's part of like what US will be asking in terms of you know developing future relationship with China is that a part of the consideration I think that's been that's been a part consistently of lots of different u.s. administration's policies but I think what's more important is that it is of interest to people across China you know who want to be able to have more of a say in how their lives are governed or you know how education policies are determined or how they're treated in their everyday lives so I think it's not just about you know what other governments do but rather demands from people in China themselves so this is now part of the u.s. foreign policy say I'm trying to get China better on Human Rights well it is I mean I guess I'm sorry let me corner in the question I wouldn't take more than five seconds if if Human Rights is part of the u.s. foreign policy requirements or personally why would you s do you have the wild Saudi Arabia's the closest ally for us in the Middle East oh I would love to put you in touch with my colleagues who work on Saudi they question for you I'm not very well equipped to do it but you know this is more like US side like from the US perspective why you choose solidi and then go against China right I mean look any government let me put it to you this way I think all of the governments that say the human rights is a priority for them around the world are in consistent and sometimes they're hypocritical and sometimes they're serious and sometimes they're not and sometimes you watch them being very tough on one abusive government and going very easy on another and it really undercuts you know in our view the efficacy of those interventions I think you know the kind of consistency that's needed across different countries in different kinds of situations is what makes that kind of diplomatic intervention credible and effective next question oh here can we get the microphone yes I had Michael Chui from the McKinsey Global Institute I would love to get a sense from the panelists in terms of the prospects for economic reform within China I mean I'm sure light has there has a list of things that's far beyond additional soybean sales but what are those prospects given their retrenchment that we've seen recently well this goes back to a question that Cheryl was asking why is there been such a change in US attitudes towards China and I think part of it is for several decades they were on the march towards a much more market oriented economy that seemed getting familiar standard practices and in the last seven or eight years maybe 10 you could debate that they move much more in a statist direction the state has been playing a much greater role in resource allocation private firms are getting squeezed out and that's one of the reasons growth has slowed down because private firms are so much more productive could this change may be I think Xi Jinping has been the big advocate of we need to have bigger state companies and they have gotten much bigger but they've gotten much less efficient at the same time the slowdown China's growth maybe Xi Jingping will decide he's paying too great a price I think his view is he's getting more political and controlled with a bigger state sector you have more instruments of control and he has emphasized repeatedly the party must control everything everywhere all the time well maybe he will decide that he's giving up too much growth and he'll go back towards a more market-oriented reforms strategy that would lead to more efficiency higher growth but maybe at the cost of some political control right I don't see many signs but I need I'd agree with you very much but I need to add something our panel hasn't done which is talked about the downside in us-china relations ambassador of light hyzers talked about me formers and then these pressure will help them but there's another very likely scenario China will sign the agreement and then proceed to cheat and there will be no changes if anything this will strengthen our Hawks in Washington DC who have recently formed a committee on the present danger from China they don't even want to have trade talks the Defense Department's already announced China is the number one military threat to America it's not Iran North Korea not terrorism anymore as the official strategy the Department of Justice had a speech recently rod Rosenstein the Deputy Attorney General really harsh attack on China and the rule of law having no chance and therefore the FBI has began to talk a lot about arrests inside the United States for economic espionage they want to change the foreign agents Registration Act so someone on this panel who talks in the very Pro China way if he receives benefits from China and doesn't report himself as a foreign agent which is easy to do but many people don't he goes to jail for five years each time he does this so military Department of Justice FBI crackdowns by USTR China refuses to compromise or agree to the trade agreement that's just the beginning of a really sharp move toward a what they call a wah in China a deterioration and us-china relations moving back toward a Cold War style approach we haven't talked much about that on this panel I'm trying to be nice to China but I need everybody to understand in the audience you're talking about really major friction in possible war we have two articles recently in international security and foreign affairs leading journals about nuclear escalation by China in the event of a conflict with the Americans so this is very scary and your question implies and I tend to agree with you wouldn't it be nice if China carry out reforms and if the trade deal helps that but if it doesn't work that way we're looking at a very serious downturn that's because they want to dominate the world right no it's because we have the president Trump said this many times our previous presidents have let them get away with it they're not stupid in Beijing if they can grow faster through theft and many other measures that they shouldn't have taken why not so now somebody saying standing up to them and the impressive thing is the congressional support Nancy Pelosi didn't vote for China to join the WTO seven senators have written to all Democrats written to trump warning him don't make a soft deal Chuck Schumer the second Trump did not put the 25 percent tariffs on March 2nd that afternoon senators Schumer important because he's the Democrat leader in the Senate tweeted this was a mistake you've let down American workers you should have gone for their full 25 percent tariffs but it never Kratz opposing all this and working for China know they're criticizing the president for being too soft but it has but it has escalated because China has ramped up not only the state you know states right back but also she didn't paying has now become ruler for life his life so I think things have changed too yes making false promises he promised President Obama I won't militarize the South China Sea then he did promise President Obama no more cyber attacks on American companies five indicted hackers no real change right so this is this is not happy Steve you wanted to see them do we have time for another session I mean look just a couple of things the question was asked about Chinese reforms China's about transition so it's it's definitely making important transitions from exports and investment to consumption from manufacturing to services from high levels of saving to absorbing that saving to fund it social safety net and from imported to indigenous innovation so reforms need to be measured against those transitions and the fact is that they are occur the the point that Michael just made about ambassador lighthouses are trying to negotiate tough terms on China and this has broad support across the political spectrum his report that he published a little over a year ago which contains all of these allegations about forced technology transfer innovation policy intellectual property rights cyber you name it is really a shoddy report it's it's done by a bunch of lawyers who really have not assembled good hard evidence and the one the poster child is this notion of forced technology transfer through joint venture agreements forcing and saying that American companies they want to business in China are coerced into turning over the crown jewels of what they can do he admits go read the report page 19 in the report he says I have no evidence of this I'm there's there I'm going to rely on proxy surveys to demonstrate that American companies are uncomfortable in doing business in China I know plenty of companies engaged in joint ventures who are not dumb enough to turn over their proprietary technologies to their Chinese partners and and the idea that this is forced is based on unsubstantiated evidence and this is unfortunately the way this these negotiations are taking place a lot of the issues are so important but they're not supported by good evidence and that's a key issue okay well thank you I think we'll have to end on that note and so I want to give great thanks to Nick Michael Sophie Steve and Perry thank you very much

Channel: Milken Institute

Views: 835,446

Rating: 4.1747956 out of 5

Keywords: Milken, Institute, china, chinese economy

Id: ga0ORrpu68w

Length: 60min 38sec (3638 seconds)

Published: Tue Jul 30 2019

Reddit Comments

[u/lurker4lyfe6969]

Pillsbury asks who taught China to lie, cheat and steal.

Maybe it was Pompeo : https://youtu.be/qfrhATD4nM0

Hur hur hur hur hur