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Mark Sullivan with The Atlantic. This is going to be a fun session. Question how many of an insightful how many of you have actually been to China. Okay four of you. There is no pressure on the two of you. I had the good fortune to go to China couple of years ago for only two weeks I am hardly a specialist but it was fascinated by and I came back and now I live in and die, breath whatever on every word at James Fallows writes because I find it so helpful to understand what's going on we have two extraordinary folks here Orville Schell who is Mr. China if you will has been writing about us since the 60s, I am sure you have read a number of his books. I love this Orville, how many books have you written, is it nine he says "I don't know, it's nine or ten on China". I love the casualness of that. He has been dean of the school of journalism at Berkley for a long - long time and he has just recently taken over program at the Asian society in New York running in new China program they have so we are happy to have Orville here. James Fallows as all of you know he is been a long time writer and correspondent for the Atlantic for well over 20 years. Since I published the Atlantic, I got a brag, what Jim has done in Atlantic during the last three or four years with regard to the Iraq war, three or four major pieces that he had and then and a book that he did. I think many of his colleagues in journalism think he has done the finest work on this particular subject so I get to brag about. Jim and his wife Deb have gone over are now living in Shanghai, some people like to cover, some people like to report. Jim immerses himself by literally moving to China with his family, with his wife Deb is here somewhere and they just got back two nights ago. And they are going to spend a year and a half or two years and will be writing about their experience in - virtually every issue of Atlantic. If you have not read this current issue, I really beg of you to do so. Why China has arisen is a good force by James fellows, as strict except for the coming nuclear arms risks. We also published another magazine "02138" which is of for and about Harvard graduates and they are going to be doing this there will be a piece coming out of this particular session for that magazine. So that let me just turn it - get off stage and turn it over. Well, thanks John, I know the spirit is strong and the flesh is weak and you are all testament to the strength of the spirit by arriving here at quarter of eight this morning. So thank you for coming. Would you one of the reasons I have really enjoy your writing on China is because I think even people who spent a long time looking at China have as just as many questions as people who spent a short time working in China and that's actually what makes it so interesting. So to watch you go through your peregrinations and try to come to terms with it is been really pleasurable experience for me. But tell us a little bit about your calculation when you first decided - well, I think Deb and I, are going to go to China. What what was in your head, and what did you see about the story that made you think that you want to spend a couple of years chasing it. There were some long wave theories of what we are doing in some shorter more mediate theories and that now I guess 25 plus years which I worked for The Atlantic, Deb and I have spent a little more than a half of the time in DC and half of the time other places. And we lived in that time in Tokyo and Kuala Lumpur, and Texas and Seattle and Berkley for couple of years stand and so we have been in DC for five years straight after moving back there on September 10th 2001 and had been immersed in all of this sort of ensuing events. So it's time to go some places else. Also I tried to place no emphasis on the fact that in the previous 149 years of it's existence, the Atlantic had been based in Boston and I had not and suddenly the Atlantic move to DC and I was living in the home office of the magazine which was wonderful in most ways but also I thought it was good time to see the world as well. So we wanted to go some place you know, other than DC, the reason for China in particular is that 20 years ago we moved to Japan, then we went to China a number of times. Our first visit 1986 to Beijing and Shanghai was as delegates to the world Esperanto Congress. This is a long story which I wrote about in the magazine but we had seen it a fair amount in through the late 80s but not since that. Does it still continue the - Esperanto Congress? It does, the reason I was in China is that there are two great reservoirs in Esperanto speakers in the world, one is Bulgaria and for reasons whatever that I know the other is China were, during the cultural evolution and afterwards it was an acceptable international language to teach as supposed to English. And the most imbedded people we saw on that trip in the 80s were the Chinese experts who have been forced to take Esperanto and now English and so they were this was the one ability - they kind of put into play. And as I pointed out in the Atlantic article, most of the discourse was in Esperanto which we actually want and it's not that hard. But whenever there was an announcement of where the food was or when the plane left. It was in English which was sort of peak on and heartbreaking moment for the Esperantists. But to just to have a chance to see, what China look and felt like now from some kind of mild previous introduction. How compared to places we knew better especially Japan and Korea and South East Asia that was the other thing. And how was it startled to or you because you have been there before but now you have been living there, going on a year what about that is really jumped out? You know, was actually from this event last year that went directly to Shanghai so and in Taiwan and other places in the vicinity. It's been a year since we have left here. In the first month or two, there were things which we were, we tried to help, tried to dismiss the startling events and the clichÃƒÆ’Ã†â€™Ãƒâ€šÃ‚Â©d fashion. Gee wiz there are all these skyscrapers in the Pudong side of Shanghai. I guess something which struck me initially related to our previous stages, how much more virulent anti Japanese feeling was than 20 years earlier. You know that I was doing some courses at Sudan University which is how I ended up getting a visa to get into China to be a lecturer there. And you have this 18 year old saying "we Chinese are students of history, there fore we hate Japan". And then also much we Chinese are students of history, therefore we have read the Cultural Revolution, therefore X, Y and Z that's why therefore we hate Japan. That was probably the single thing which was startling on the conceptual ground. I guess in the day by day ground, I am as sure many - anybody here who have spent time in China recently knows is the the contrast between the things that are controlled and everything else. You know, the media are often controlled and you will see, you know, the news has a certain slant and public gatherings are very kind of you know, as you know very controlled by the authorities. And the rest of the life just seems to be out of control. You know normally there is not enough police to control things, people do whatever they want in good ways, bad ways, the well, you are Mr. China. Thanks, John Sullivan my Mr. China who I talk about in this article. He has built this huge empire in Shanghai, so I think China. He says he has never talked to the local officials there. Has been entirely just setting up businesses and he has came up when I asked him, who should I talk to in the Shanghai party leadership or the provincial officials who will say, "how did this industrial empire grow" and he said he didn't really know because he hadn't hadn't met these guys. So the contrast between in control and out of control has been very interesting for us. There is a kind of I mean I don't think the world is experienced quite such a period of hyper growth and this is almost a mutant quality of and I wonder if, as you watch it do you feel that this is sustainable, I mean what's your analysis with the foundation of this whole enterprise? Here we come to a subject that I think you and I did discuss a year ago which is the catalogue of questions that in the mike is not working as so okay so I will talk more loudly and may be the microphone is okay - is the microphone working now I have both projecting case of we are not working into there is a whole catalogue of questions that in a way or resemble the questions we talk about in the US for the next year - of who is going to be the next president which is that fascinating to discuss and nobody can tell the answer at all and the sustainability of the economy is clearly one of those because we can all tick off the 16 different limits. There are about to encounter it number one environmental which is the overwhelming disaster and feature of our life every single day or the rich-poor gap or resource gaps or trade fletching with the US, so or whatever and so one I guess my sense is that you know, it's like somebody falling off a building and he don't know how many stories you know, so far it's been okay. So far the image That's a terrible analysis you just Well I was about to elaborate I was going to use some kind of understanding reference. So you just give me a chance. To use a different analogy, you often think of a boat going down a river full of big boulders. And so far just before it hitting each boulder, they have moved away. And you can see another big set of big boulders and while they keep moving, you will see that so far for 20 years I have done it. The building analogy is supposed in some Einsteinonian parallel universe you had a hole all way through the center of the earth or something. So they would fall down in a building in that hole. May be like an ice cream stick on which the earth rotates. So it would fall but never really hit anything they sort of yo yo up and down inside the core of the earth and I was so they are far like, so far so good, who knows what were they all in. That sounds like a pretty high risk analogy All these are happening in real time early in the morning so I mean one interesting question about China today is it's I mean it is a country which for the last several millennium put incredible emphasis on history. Turning backwards always for examples of how to you know, to find exemplars and to kind of see how to be in the present and you know now we find a tremendously ahistorical country. And I am wondering as you talk to people and move around, how do you assess China's ability or perhaps the advisability of forgetting the past? This also is a really intriguing and deep question which you have written about a lot recently and I was just thinking back for a second to what you said about things that were initially surprising and let me same way throw that into what you are asking now. Another thing which was initially surprising is how for a country so materially rich in a number of ways and not always or still has a kind of hesitant behavior about a lot of urban people, you know, that they are famed, behavior in line with the fame spitting the sense of you know, real people settling in the big city and taking a while to get get polished up is one of those. But I think in trying to explain the some what abrasive public manners in China which are real factor, which they are trying to clean up before the Olympics to avoid an embarrassment. You know, as you think of all of you probably know about stand in line day the 11th of each month in Beijing is a day you stand in line to get you in practice, I don't know if we are going to build up to two or three days per month by the Olympics but it's started about three months ago. June 1st was no honking your horn day in Shanghai and that seems to have worked and you know for who can explain. But now in looking for the sources of why public manners are so abrasive, one hypothesis would be that the cultural revolution era took away every thing that would moderate people's sort of seemly behavior in public of people mistrusting their parents, abusing their parents, mistrusting everyone, having a year zero sense of history and having essentially no religion. And it's interesting to me that the most senior party officials I have interviewed have talked about religion, much more than about democracy, as something which is, they have been talking about Buddhism. They were talking about something to inculcate some values and I should ask you, one hypothesis before the Cultural Revolution, people had some kind of manners to each other. Is that a true or a false hypothesis or explanation? Well, I think at some point before I mean the whole Confucian sort of construct and Confucian value system was very applicable in fact that's partially what propelled the revolution to resist it to break free from that gravity. And I guess you know, they did a very good job of that. And I think the cost was high, but in a curious way I mean throw it back to you with sort of the other end of that question. If we look at the Cultural Revolution and the whole Maoist revolution, as a kind of an exercise and demolition. Do you think that that in some way wasn't an essential antecedent, to be able to build the kind of amazing structure a little bit like Europe after the Second World War was bound to the ground and then it just got build up again in this new way. Didn't have to deal with the past. That certainly would be that would be an argument. You could use the case, I know better actually about Japan where World War II and the occupation left many things intact you know more intact than the US authorities hadn't any idea you know, where there are a sort of bring a lot of old bureaucracy right back in place. And the emperor And the emperor of course and about because they were able to change things in the land system in particularly and the few other areas they were able to have some of the dynamism for Japan's post war rise. I suppose you could argue that the clearing away of a lot of impediment and you know, ranging of ranging from you know, role of women to whatever else during the Cultural Revolution years did make some things possible like the huge boom in southern China. I guess the question then is was there some other way to do that the clearing exercise, because it seemed like a fairly brutal fashion which as you know too is in my mind, the hardest thing to get people to talk about there is a cultural revolution or Maoist years or just there is no sort of safe way for people to come out with the discussion of this topic, and so we find we are individually by we I mean you know, often Deb and me meeting people socially. If it's an individual Chinese person, we can get their story about the Cultural Revolution here is about in two or threes, that it's very difficult to do. I mean in the western scheme of things and in the case of Germany there is very much the presumption that the past inevitably weighs heavily on the present and unless you deal with the past, you can't actually come into the present in a healthy and constructive way. And yet every Chinese has some extraordinary nightmare and it isn't really talked about and in fact the presumption of the whole economic boom almost seems to be "let's pretend it didn't happen. And is that viable? And that's you know, I don't know but it is striking and I am thinking of you know, it's very very often the light motive in conversations with people in China say well we are a 5000 year old nation, we have this and that influence and then the next part of the sentence will be end of course we will for a long time, the strongest nation on earth and that will naturally overturn or you know, are leading city you know, Guangzhou was famous as a beautiful city and so we should think it's beautiful now even though it's covered with smog or this is why we have good relations with the Americans because of our alliance in World War II etcetera etcetera. And but the sentence never leads to the conclusion and that's why the 1960s were such a disaster because in years I at least have never heard someone volunteer that. You know, they can be extracted but not volunteered. So that is a difficult, we will see whether that look great huge doughnut and the otherwise you know, consistency theme of our seem of historical connection what do that what that means so long well I don't know now. And you just I think you sort of have to wonder as you look at China today and if you experience the past at all you know, what happened to it and what kind of society, kind of culture do with history that doesn't fit into the present scheme of things. You know, here is a a really lowbrow answer to that. one of the most interesting places we saw in Shanghai is the Propaganda Poster Museum, I don't know how many of you have been there, it's in this really hard to find it's like in the sort of superintendent's office room as some big New York apartment building, you have to go around the corner and down some stairs. But somebody has made a collection of hundreds of the Red Guard posters. And sort of the and - and post war posters too and they are really - really fascinating and - so that's one place where I have seen people trying to integrate the extremes of that time. I have spent a lot of time with university students you know and some high school students too. High school students simply are not giving any info about this whole era and the university students by extension don't have much info either. And I guess the main way the main acceptable real world implication of this awkward period is "we Chinese value stability; we do not want chaotic change". Well, in fact they they and you have probably seen a good deal of this say taken the past the Cultural Revolution and they have sort of turned it into nostalgia. So you get theme restaurants, you get bars, you get all kinds of fashions and sort of take off from this period but it misses the nightmare of it. Yes, and so all I can say is that as we journals like to say time or tell on how as the generation who is been raised with no knowledge of this academically but whose parents went through a lot of trauma. You know, the people who are today's university students, they were born in the early 80s. and so this was not perennial, their first consciousness was of the era of the opening up of the job opportunities, it what you describe, it may also account for the fact that so few of the university students seem to have explicit ideas other than I want to have a big car and I want to have a big apartment and I want to have a good job, a good paying job. May be not that different from university students anywhere but there isn't there is more really got overlay of I want to make China better in X,Y and Z way or I want to change this part of China. And yeah you know, Jim if you look at campuses in America now, you know, certainly at Berkeley the sort of the hood ornament for descent, if you look in Sproul Plaza, what you see is the campus crusade for Christ. You see, you know you don't see political organizations working. How do you assess sort of the need for that side of life, the spiritual side of life, evaluative side of life and what in your experience are people turning to in China? When they want to figure out, how do they relate to their wife? What's the proper relationship with a boss? How do you deport yourself with your children, your friends? What's the compass that ? You know I will take this opportunity to plug another wonderful article in this in this issue like a young man named Adam Mentor - and he has a it's about the catholic church in Shanghai about this bishop who is being hiding for you know 40 yard hiding slash solitary confinement for a long time. And so thanks to to Adam Mentor who has become a friend of ours, we spend a lot of time round the saint Ignatius cathedral in Shanghai and there is a kind of catholic renascence going on in in China you know all statistics or guesses you don't know if it is five million or fifty million people who are are being caught up there but the more evident sign of people working for some kind of spiritual guidance is of course the often comedic Confucian boom or you do see university students reading you know diagnoses or analyzes of the analects and there are all courses university and our TV shows all the time these costume dramas about about back in the day, and people have their their relationships so that's that's the main evidence I have been able to detect of a search for some kind of value or saying may be there is a way to reprocess Confucius. In studies of the class I have been teaching at the Leung university is being like US foreign policy, I found surprisingly little interest in Western political models or partly it's different from Europe I think where people are saying what's happened to the US political model right now that allows this kind of imbalance of power I think that's because from from the main stream Chinese point of view last five or six years has been okay for them because by construing on a Iraq, the US got of China's back. So This is sort of a paradox - that our relationship with China improves only we stop paying attention. And we attack some body else too yeah. Yeah, listen for those of you who haven't read Jims article, there it is read it. Let me just side a little scripture have your comment. Here is what Jim writes, it's a wonderful piece. The ultimate fear in the developed of course is that China creates millions of new factory jobs, unknown millions will loose such jobs in America, Canada, Germany, and even Japan. But these factories are both surprising and important in a less obvious, less obvious they are also fundamental way. Almost nothing about the way they work corresponds to the way they are discussed in the US. America's political debates about the quote, "China opportunity" and even more the China threat seem distant. Theoretical emphasize from the perspective of the factories where the out sourcing and exporting occur. Industrialists from the United States, Europe or Japan who are deciding how much of their production moved to China, talk about the process in a very different terms from those used in the American political discussion. So there is a discontinuity here that you are alluding to - talk a little bit about that You know the the real reward in journalism and I would argue in life too is finding things you didn't except and just being surprised by the reality of life and that was very much my experience. This is a picture of one of the leading docs in Shenzhen in southern China and one of these containers that shown on the cover comes to the US one per second, 24 hours a day every day of the year and the rate is is going up. They come back, they don't you know why I was asking what what's when they come back, I thought the answer was going to be dollars. But it is not actually that, it's actually scrap papers, scarp papers is a number one by volume export, number two scrap metal, lot of this come. Isn't the richest person in China a women who Export scrap papers from here? Scrap paper and so I had thought that I basically understood the Chinese factory economy and that it wouldn't be that interesting to learn about it. But in fact I spend I spend a whole lot of time in factories, the time I had enjoyed most in China foisting that I am is in these factories where they are making all kinds of stuffs, some of them are really horrible as you heard about in the slave labor scandal of the last two months which has had tremendous traction it seems to me China, where the actual Chinese presses on this in muckraking forms, even though the government has put out guidance that all discussions and online forms need to be steered away from from negative comments about party responsibility and it said towards more positive comments of what can be done to deal with the problem. but I will - I came across a man who this was this is the other Mr. China although being one, this is a man named Lee M K see he 41 years old he is a high school graduate from from Ireland and he has put together the place in China where if you are a US or European manufacturer and you have an idea, you can get it made by his factories in China faster and cheaper than any place else in earth. Including the Solio that many of you got in your that many of you find that in your bag this is some thing a solar power device to you know to power this kind of hand held device, I saw that thing go through its whole evolution in Mr. China's factory and what was interesting to me is both some of the mechanics I guess, I will say three things that were interesting and I hadn't expected it at all. One is the integration in a closed cycle, sort of consumer way. I spent time in one of the factories where people in the US, probably including many of you, would click on the ordering website of a very, very famous American electronics company that's known for the high style of its products. It recently released, like in the last week, a new communications device. I was not allowed to say more than that but I spent time were you order something from them, you click "buy it now" for an iPod or something and in Shenzhen there is a young woman sitting a screen, your order pops up, your home address, she prints out a barcode label, there is this kind of production system of getting your exact order and she works overnight, the DHL man comes at crack of dawn, he takes to the Hong Kong Airport and at max 48 hours after you clicked the button that thing was made in Shenzhen you know, the moment you clicked the button is at your house. And there is a kind of just integration which had not that was surprising to me. Second I was surprised by the young women themselves that these electronic factories and workers are overwhelmingly women in their 20s who have come from the provinces and they work there for three or four years, they net about a $100 a month, but they can save most of it, they live in these private dormitories, eat three meals a day and then they can go home after this three or four years with some money. I guess another thing that surprise me was the there will be two more and there there is all sort of comedy to this, what it means for America? How many of these how wide was the variation of automation and modernity in these factories. There are some factories I think I have a picture here which are very high-tech. The laptop computers we all use by different brand names, whether they are Apple or IBM you know Lenovo or or ThinkPad, they are essentially all made by five Taiwanese firms in Southern China. And those factories are quite quite advanced. They have all these pick and place devices for putting on the component. Most others ones I have seen are quite non-mechanized. This pan, no doubt was made in China and I haven't seen the literal woman but I can imagine the women who snaps on this part right here every two second you know for 12 hours shifts, and it's because partly it's cheap, you can do that, but partly you don't have to invest in the capital equipment, you can change the whole working place and those jobs are not going to come to the US because nobody would do them in the US, the machine would do them. This leads to the related surprise of these factories which is most of the political discourse I read in the US about dealing with china involves the value of the RMB which seems to me just completely beyond the point in most Chinese places. I cost out in this article a lot of leading Chinese products. You could take say a pair of Ethernet cables; very high end ones that might retail for $29.95 in especially stores in the US, the all inclusive price from China of those cables is $2 and all the rest is sort of processing, branding, everything else. So suppose the RMB doubled in value, you know they would cost $4 which is still a little share of the $29.95 they are going for in the US. And so I am thinking, save your time talking about the RMB and spent more time thinking how to keep US on the high end of the technology production level. You didn't ask that but this might go to speech. Well, of course all of this production uses an enormous amount of resources and what's transmitted to the environment, because it seems to me that there are many flexible edges of this developmental envelope but the environment is one which is really absolutely inflexible. How do you assess where China is in terms of you know coming to the brick wall what ultimately will constraint them in their economic growth and nothing else? You know this again we are mentioning earlier things that were surprising. Everybody here knows that China has an environmental problem. In my experience everybody who actually then goes and spends a couple of days especially in Beijing in a summer simply can't believe it. James Bennet is in the room, an editor The Atlantic; he were he not to be the editor of The Atlantic, he was going to go with his family and small children to Beijing as a correspondent for New York Times. I feel as if I have saved his children from being stunted in growth. Mine are there right now you know. Sorry, but they already got some size on them. So so I mean its the you know Shanghai is much less burdensomely polluted than a Beijing the first three weeks we were in Shanghai we thought, what's is the problem, you know the sky looks almost like this. We discovered that the reason was a huge belt of typhoons in Southern China. They were killing millions you know killing thousands of people; but they kept the air flow fresh so that the air was you know, okay in Shanghai for a while of summer but its the environmental situation I think is is as you know; just a disaster and is reported that way increasingly in the Chinese press and the question is what they can do about it. The limiting factors being these, you know the coal fired electric plants are of course coming on now at two a week or or three every two weeks. And 70 percent of all China's power comes from coal. Yes and its interesting for the to engage Chinese officials in this because they say, okay you like these products we make, we need electricity for these factories, we use some tiny fraction of the electricity you do I don't know what it is; you know one eighth, it's a very very small fraction, you want us to sit in the dark but you want to have your air conditioners on; well that's not fair. You don't want us to use coal, okay, how about more nuclear? You know how about if we make another three gorgeous dam, how about if get more oil from Darfur? You know that that it's there is not a great range of pleasant alternatives and and I think that that they have a case in saying they are wrong in sort of saying, "we are a developing country, you can't blame us for any thing." But right in saying "this is a big world problem." But I think the US with its technology needs to find some way to work out the Chinese. The water situation is is significant. I was the the first week over there, I was as sick as I have been in my entire life. And I think it's because I had a little drop of water unintentionally. I think Deb and I like many foreigners sort of feel bad all the time, as I think many Chinese do too. And I think there is a condition most people in China don't realize how bad that the burden actually is, because they haven't lived elsewhere, but it's significant. Well you know recently I had an occasion to drive from Beijing down to the Yellow River which just short of 300 miles, to where my wife had grown up, and there are many legendary rivers that you cross on this absolutely beautiful highway and I have you know, truly traveled on these; that make American freeways look really retrograde. But the interesting fact was although we crossed may be 10, 12, rivers there was not a drop of water in a single river. And when you got to the Yellow River of course the Yellow River now doesn't even debouch out in to the ocean in the lower regions because all the water is taken out of it for irrigation or whatever. I mean this strikes me as the kind of resource constriction that's going to really have dire consequences for China's ability to keep developing. Yes, I would agree and we were talking earlier about how long it can go and you can think all the various limiting factors. To my mind in environmental ones are the most likely and the ones that would sort of ripple in with other social effects too, because I think people are sensing that its not simply bad economically and it is that versus bad in life as well. So there is a related point I was going to make but I I will save it for later when I think of it again. Well one other while you are thinking you know, one other factor which just when I contemplated it's so alarming and it is this; that seven percent of the glacial ice mass on the Tibetan Plateau is now melting each year. Now if you think of all the great rivers of Asia which whose headwaters are on the Tibetan Plateau you suddenly realize that if the actuarial table on the ice mass of the Tibetan Plateau is whatever 10, 12, may be 15 years, what's going to happen to every river in Asia when that's all accomplished. And yes. And the one implication of that would be as as Americans talk more as I think they should about their relationship with China; which is always referred to in China as the you know, US-Chinese relationship is the one they want to cultivate. It's the most important access for them. And I think think it's actually true. The US should spend much less time talking about the RMB in my view. It should spend way, way less time talking about the threat of the Peoples Liberation Army as we can get into later if you want my view; this is way exaggerated, and much more talking about the way in which China actually can be the swing factor in the whole world of getting destroyed or not which is is the environmental effects of their inevitable growth. Now it's 1.3 billion people who are going to have electricity and they are going to have drinking water. Somebody told me in Shanghai when first I got there that if the average if the average person in Shanghai took even one shower per week you know they will have no water. It's just because the average level of showering is like you know; once per two months or something. That's that's so and people are going to take showers. And they are going to you know these things are going to happen and so I think the US the what would look good in retrospect would be as if the US had this as the main strategic engagement with China, how can we help them not kill them selves and every body else too? Okay, let's talk about that, because it seems to me this gets down to the heart of the matter. We take the economic miracle, we are in awe that its by and large good thing for China bringing more people out of poverty, has many dilemmas, but if we turn back to our country, how do you when you are sitting in Shanghai, if you could wave a wand, what elements of American policy would you change? What would you have the United States to do reassert a little bit ship role to get the relationship right, to save the Chinese, to save us; the whole menu. That's a very interesting question. So if I am putting aside so just from their point of view, of course number one would be at all times paying obeisance to the theory of national unification and not and not never giving any weapons to the government on Taiwan, of saying that of course you know having the Taiwan issue be served out exactly the way the Chinese want, that will be number one. Number two, being supportive and understanding of the Chinese regime and its you have to break eggs to make an omelet approach to sometime you got to clear people out of house, sometime you got arrest on you know to move forward. I am not saying this is my perspective, I am saying from the from the Chinese point of view. On a more agreeable or possibly agreeable situation would be the US recognizing that China's fate really does matter to everybody, most of the Chinese, but to its neighbors, everybody else and that it's fate should be viewed as a it's growth should be viewed as a basically positive phenomena. It's a rare rise of power that doesn't immediately threaten other powers, doesn't immediately threaten the US in any direct way, that where in partnership we can deal with the areas which are most important. So I would have I guess the two elements of my first day's announcement would be increasing the student and H1B visas for Chinese people to the US and having all sorts of high level collaboration on text solutions to the coal fired plant problem and all these other things. That's what the US has things they don't; of technological ways to deal with these environmental constraints. So I think that's that's a worthy sort of sputnik type project from our point of view in the minor reason is keeping China friendly and a partner, the major reason is avoiding catastrophe. Yeah and the truth the old definition of sort of foreign aid is you save the benighted foreigner. The new definition is you save yourself, because we are all in this together if you if you have an environmental agenda. You know it's really interesting; I will come to saving the benighted local foreigner. The Chinese have actually done a phenomenal job of that through these factories. Now people working in the factories are peasants by and large and while some of the factories are terrible, a lot of them aren't. And there has been a huge you know conveyer belt for a lot of people out of poverty. You know it's interesting to know that these factories workers and the construction workers, all of the peasants who have come in from the country side, nobody knows how many they are, 150 million but whatever number you describe to this movement, it is the largest migration in human history. But it is an internal migration, so we loose track of it. And can I interrupt there? One other point that contrast with India is really interesting. You know china and India are different sort of in all ways but the people who benefit it from the globalization boom India are mainly college graduates and it is a very small number you know a million or two versus many tens of millions and that is a huge contrast. Jim you have been at least peripherally involved in the beginnings, middles or ends of several other bubbles. Now you were in Japan in the 1980s and you wrote a book "Looking at the sun" as I recall you were also did extended Microsoft I guess it was shortly after Silicon Valley went off the rails? No. it was right on the crest Right on the, good for you. Right on the crest. And the you also spent some time in Malaysia before the south East Asia crack up but you at least had some acquaintance with bubbles. Now, let's talk about bubbles in china. Certainly there are bubble aspects that was going on china. I have that to me that the moment my heart really sank is I have a young graduate student assistant of one of the local Universities in Amsterdam who does a translation help for me and I say you know can you tell me what is blog discourses saying and so he is a person who's own family they were - he said a reason they didn't suffer in Shanghai in the Cultural Revolution as they had no education, they were just factory workers and so they were on the good side of the prestige curve. He is very nice and serious young man. He want some time to come to the US. His dissertation for his doctor right now is abou tPaul Wolfowitz much talk about but about a month ago I was having a beer with him, we discuss some project I was doing and he said that he has started, he and his mother has started putting money into the Shanghai stock exchange and you know when you have the Shanghai stock exchange, it is like tripled in the last year or some it has come to these preposterous heights and when you start having, I said what are you talking about you know the PE ratio on these stocks is you know many many times higher than any place from the rest of the world and he immediately said, this graduate student from a worker family said "Oh yes but that is not the moving average of the PE" In fact if we take the last quarter of the PE it supports these PE values is not the rest so you have this classic bubble phenomenon of everybody putting their money And borrowing money from banks to put into stock market. Yes exactly. So you have the stock market, you have the banks. You have a lot of sort of bubble sort of behavior and high end restaurants and I did a story in the Atlantic about a guy who has his own sort of Hearst castle out in Chen Shah with his own Palace of Versailles the pyramid of Egypt and air force of several planes by himself. So there is a lot of top of market behavior. But you get the feeling that there is underneath it something choking along to little bit that it's - the counter argument to this is that China depends so heavily on exports the serious world down turn that would hurt them or hurt everybody else too so there is a bubble. But one stanza there is something below the bubble too. We were talking yesterday and actually [0:41:27] ____ had this discussion in which their conclusion was inevitably in order for china the government to become more legitimate it must democratize. We were illuminating yesterday on the possibility that maybe what you see is what you get in China. Maybe they are there, maybe their development model is sort of complete and we have a kind of a Leninist capitalism. How do you imagine this? You know I was just fascinated to hear the conversation yesterday afternoon because unlike either of the two people who were speaking I am not a professor of Chinese studies at Harvard. So I don't have that background to bring to it. However, you know having watched I remember I was living in Japan 20 plus years ago. The argument was Japan inevitably had to open up and westernize in order to keep going and it turns out yes they had to do that, keep going and they chose not to do it. They chose instead to kind of keep this close model with all the 15 years worth of confluent and the LDP is still in power and there is still is all sort of structural elements past Japan. With China there is a logical argument that to keep going, it will have to lighten the hands of the state and give people more control and maybe so but it seems to me also maybe not. You know that you can look at the effects of prosperity as all straightness that perhaps as people become more prosperous they demand more rights. But perhaps as people become more prosperous they don't care about the other rights. You got a conservative middle class. That is not good enough Yes yeah exactly and so what it means for US policy in my view and I think is related to what you are saying and what you see as well we get. Yes you set aside any arguments or assumptions about the direction of which it is going you say this is the country you are dealing with now. It has parts of it that are opening up, it has parts of it that are controlled and that is the package we are dealing with. We criticize the stuff we don't like, you know the repression and all the rest to work with the parts so we can if it changes great. But for now, we will deal with what we say. You know one interesting sort of aspect of this whatever is happening in China that's incredible transition change is civil society and it certainly is growing and yet as if the president has still has no real legal basis for existence. So it is sort of powering in the middle of nowhere and yet it is becoming more and more robust. How do you imagine that will work out in the future? Yeah! There is interesting dilemma hear where the number of NGOs has a very very low sealing by the Chinese government. How many NGOs have to operate. That is sort of one per category in the country. But the main civil society counterpart is the internet based groups and my wife Deb works for a few internet projects and she deals all time with these blogging groups in China and so you have this informal civil society sort to springing up. Now you see that most internet activity in China is playing games and instant messaging but there are still you see these communities that take some route way and that is the main growth I have detected in civil society one that is sorted by the internet. And do you think - I mean the Chinese have actually done a pretty good job up to date in controlling the internet. Haven't they? I would yes and no. Yes, in that - you know there is also it is a website you simply can't get to unless you have a VPM to get around the firewall, technology is always blocked in the main site, Google is blocked sometimes. BBC is almost always blocked. Sometimes my atlantics site is blocked, sometimes not. So yes, there is a - How about this article? This article? Why Chinas rise is good for us? Somehow I don't imagine that going to be a pretty good [0:45:13] ____ on that - so who knows? One day it was brought I was you know the title articled inside is "China makes, the world takes" and I had a blog item around a lot talking about the Trenton presses for that. You know the famous bridge in Trenton, Trenton makes the world takes. For some reason they block that and maybe thought that Trenton's industrial rule in too much prefigured what was going to happen to them. But it's also true so there is a huge nuisance factor they can impose but number one you can get around it pretty easily with the VPN and number two, if you are 95% effective in blocking incoming news, the remaining 5 percent can sort of re-propagate itself very quickly. But still it is a consequence that 95 percent of people just I mean my experience in the internet there is that you don't always know that has happened