♪ announcer: from our studios in new york city, this is "charlie rose." charlie: mohamed el-erian is here. he is chief economic advisor at allianz, the corporate parent of pimco, where he was previously the ceo. he is a columnist for bloomberg view and a contributing editor for the "financial times." his latest book examines the impact of central banks across the world since the financial crisis. it is called "the only game in town: central banks, instability, and avoiding the next collapse." i'm pleased to have him back at this table. welcome. mohamed: thank you. charlie: why the title?

mohamed: that is what has been happening in the policymaking side. there has only been one entity around the world -- central banks. they have taken a huge burden, well in excess of what they can deliver. politicians have stood on the sideline leaving it up to the banks. charlie: you're saying monetary policy and fiscal policy was not effective because nobody could make it happen. mohamed: correct. and now, we are going to live with the consequences of having pursued too many objectives with an imperfect policy tool. charlie: what is left on the monetary side for central banks to do? mohamed: they need to get out of being the only game in town. if they don't, they will go from being part of the solution to being part of the problem. this generation and future generations will have an economic outlook that is much more dire than now. charlie: you explain this "t" concept. tell me what it is. mohamed: the road you are on will end. there is no doubt the road we are on now which has been artificially supported by

central banks where we have borrowed growth from the future, that is going to end in the next three years. the exact timing is very hard, but i cannot see it last for more than three years. this is from someone who believed in the new normal, the concept that we can have a low growth world forever. i don't think we can. what is critical about it is there is nothing predestined. it is up to choices we make over the next months. charlie: is it simply the choice to use fiscal policy? mohamed: it is much more. there are four things that most economists would agree on. they would disagree what is most important. need allwill agree you four. part of it is structural reforms. making sure we grow on the basis of growth and not finance.

that is the big mistake we made a decade ago. charlie: what is the best example? mohamed: infrastructure spending. a tax system that promotes economic growth. being more serious about labor retooling and retraining in a world that is changing quickly. education reform. there is a whole set of things we need to do to create growth. the second element is fiscal policy. charlie: fiscal policy affects those, does it not? mohamed: it does. people have the wallet to spend don't have the will to spend. people who have the will to spend do not have the wallet to spend. what fiscal policy has been doing is making that worse. we need a fiscal policy that recognizes that it is in everybody's interest to match better will to wallet. then we have the problem of student loans here. too much debt in greece. when you have so much debt that it cripples you, we have to deal with that. charlie: a debt burden over their heads that impacts their choices. mohamed: if it is a country, nobody will put in new capital because they don't want to be contaminated. we have virtually no global

coordination going on. you are seeing china do its own thing and it disrupts the system. and we -- i have been around a long time and this is probably the lowest level of global coordination since the 1980's. charlie: there is some influence, isn't there? hasn't the chinese changed a little bit or said they intend to change currency issues? mohamed: think of an orchestra. the chinese basically when the instability gets too large, they put global responsibilities before their domestic responsibilities. they don't appreciate their currency. when financial markets calm down, they say we have to take care of domestic responsibilities and weaken their currency. that has been the cycle. in august, they surprised everybody with appreciation. that caused a lot of global instability. they did nothing after that.

when calm returned in november, they went back to pursuing a currency depreciation until we had another shock in december and january. that shows you china is trying to balance domestic responsibility with a global responsibility. you're are the second largest economy in the world. you have to act responsibly on the global stage. charlie: there is no coordination, yet there is interdependence. mohamed: think of the orchestra. you have different elements of the orchestra. they're interdependent but they don't have the same sheet of music to play with and they don't have a conductor to look up to. you don't want to listen to what that orchestra comes up with. once in a while, the strings will do well, the drums will do well, but over time, the whole orchestra -- charlie: who would be responsible for doing that? who is the engine for global coordination? mohamed: it is the imf. it has 188 members, incredible people.

for the imf to be powerful, a couple of things have to be happen. congress has the buy into the notion that the imf is important. second, the imf itself has to reflect the world of today, not the world of 50 years ago. charlie: how? mohamed: it would change the voting system. if you are china, you are looking at this, you have less voting power than belgium, luxembourg -- charlie: my understanding is they are interested in those reforms. mohamed: they are, but they need congress. the ones that would lose the most is europe. they are the most overrepresented and the hardest people to convince to give up power. nobody likes to give up power. it is in the interest of the whole system to have proper reform. charlie: what would the chinese do if they don't have voting to reflect their strength? mohamed: we know what they are going to do. they are going to build little pipes around the system.

they will say the system dominated by the west no longer serves the global economy. we cannot replace it, let's build a system. charlie: so the dollar may be the reserve currency, but? mohamed: we would have bilateral agreements with different countries. they created the asian infrastructure bank. charlie: should the u.s. have supported it? mohamed: i think they should. charlie: so we made a mistake and it was only after britain and other countries said yes that we finally -- mohamed: i think we did not quite understand the extent to which our allies would rush in and join the initiative. we overestimated the opposition. charlie: central bankers talk to each other all the time. mohamed: because in 1998, asia tried the same thing. they tried to create an asian monetary fund. the u.s. realize this would undermine the power of the imf and the u.s. said no and it did not happen. we had an example. charlie: if i was president of

the united states and somebody would tell me there is a debate going on at least at downing street about what to do about the asia infrastructure bank, and i pick up the phone and i call david cameron and i would say, what about this? he would say we make sure we do this. so then you know. why does that not happen? mohamed: i don't have enough insight into how the white house works. but, it came as a surprise to policymakers in the u.s. that so many people were willing to join. charlie: to the pundits, it came as a surprise. mohamed: i think it did. charlie: let me come back to the notion -- the imf has to be the engine of coordination. for it to be the engine, it has to have more strength and have to be more balanced and weighted participation and power by the the larger economies of the

world. europe has the give up something and people are not interested in giving up power. let's talk about the economy as it is today. do you think we will come to this "t" junction within three years? mohamed: i do. charlie: that is 2019-2020. mohamed: i think we are seeing the tensions today. we are seeing the tensions and people do not realize they are part of a bigger phenomenon. for example, we have had the worst start to the stock market. people are scratching their head because maybe china made a few mistakes on the policy front, but does it really warrant what has been happening? it does not. the reason why it is happening is because there is something much bigger going on. that is what this book is. charlie: oil prices or something else? mohamed: it is fascinating to me. oil traders ask what is going on with your market? it is because of the equity market. what is going wrong?

it is because of the oil market. well, both are reacting. charlie: why is it less about the market than it is about supply and demand? mohamed: we are losing three anchors right now. the first one is fundamentals -- growth. the global economy is having a terrible problem growing. even the good parts of the global economy that were growing, china, has been contaminated. second, the confidence of central banks have come down. why? the fed is going in a different direction from the other central banks and people realize there is a limit to the power of central banks. third, the dynamics of the market have changed. every time you get a small thing happening, it gets amplified by the lack of liquidity. people are very surprised by the enormous volatility. they should not be. that is what the future looks like. at a certain point, it will tip where bad markets become bad fundamentals. charlie: why isn't the price of

oil the result of so much supply that is out there that exceeds demand so the price is going down? why isn't that the economic reality? what is going on beyond that? mohamed: first, there is no doubt that there is less growth in the market because of china. there is a lot more supply. they demand less and they are inefficient users of energy. they use a lot more energy to produce one unit. on the supply side, there has been a dramatic change, but it does not justify oil in the 20's and 30's. something else has happened that very few people talk about. the paradigm, the operating ways of this market has changed. in the old days, when the prices went down, you can depend on opec and saudi arabia to cut production. they realized that is a terrible idea. charlie: they also realized they needed the money now.

that they have economic necessities that they need to spend money on and the way they generate money is to sell oil. mohamed: saudi arabia realized something more important. every time they reduced their output, they lost their market share in the long-term. everybody else would gain and they said that is not a great way for us to behave in terms of the oil market. charlie: what will be the impact of iranian oil coming into the market? mohamed: it makes the oil market more volatile and uncertain. having said that, you have massive supply destruction. in the old days, if i told you will prices will come down. that is great for the economy. today, you tell people oil prices are going down and they worry about what is happening with the economy. charlie: that means i can buy gasoline below two dollars in some places. why doesn't that give me more

consumer income to buy more products and accelerate the profit of corporate america? mohamed: it does. unambiguously, we are better off if we are consumers of energy. you are not spending that. charlie: the disposable income. mohamed: there are explanations. one is that you realize this time around the u.s. is not just a consumer, but a producer of energy. the net impact will not be as good. second, you are seeing the markets being very unstable. you want to be more risk averse. so you were not going out and spending because the world has become more uncertain. if you are in europe, you are worried about deflation, that prices will come down for everything. if that is the case, you might as well wait because you can buy the same goods cheaper in the

future. charlie: what is the impact you -- geopolitically on russia? mohamed: they don't have high reserves. venezuela, nigeria and russia. we should worry about russia's geopolitical adventures because the oldest trick in the book is if you have problems at home, go overseas. that unifies. charlie: it detracts attention from the problems at home. mohamed: those three countries we have to keep an eye on because they will find it more difficult to cope with the volatility. charlie: what are the best economies in the world today? first, the u.s.? our economy compared to china where they are trying to go through this transformation to a consumer demand economy. mohamed: the u.s. has a few

advantages starting with entrepreneurial. one should never bet against the u.s. long-term. india is really picking up. under the prime minister, they are doing reforms that is unleashing growth. they are now growing faster than china. charlie: american multinationals are looking into what could pick up the slack from china into india. seeing aand you are lot of indians going back to india from the u.s.

charlie: that has been happening for a while. mohamed: i sense it is accelerating. i believe this time around it is more durable. i would not give up on china. people mistook uncharacteristic policy slippages for something much bigger. china is navigating a very difficult transition. it is going into a middle income transition. very few countries have done it. no country has not done it without an occasional slippage. i think they will continue growing but at 5%. charlie: how much does europe owe to the european central bank? mohamed: a ton. charlie: mario draghi saved their butt. mohamed: the minute he said he would do whatever it takes and it worked. it was in london, in july of 2012. i was listening to him and he said that. that was a defining moment because he put the whole procedure of the central bank, with press in the basement, and set to the markets do not bet against me and it will work. i think that was critical in saving the eurozone. charlie: there is no doubt about it. mohamed: think about it as having taken the eurozone out of intensive care and move it into a hospital room.

it feels better. there was no longer the fear and threat but it is still structurally impaired. it cannot go out and work. charlie: you have a piece outlining the economic challenges for the presidential candidates and whoever may be the next president. how do you look and face the economic future and the challenges of making policies work? mohamed: i think that is a sad thing that the debate on what is needed has been overwhelmed by national security issues and immigration issues and other things. as important as they are, they should not crowd out discussion on the economy. charlie: the candidates and what they say they want to do on taxes. mohamed: we don't know enough about what they will do and we don't know how they will deal with congress. it is important for us to have

some feel as to how we will navigate. right now, we are basically relying on the fed. if you talk to officials, they are not comfortable. charlie: was it wrong to raise interest rates in december? mohamed: i would have done it earlier, to tell you the truth. i would have done it in the spring where domestic and global indicators were flashing green. charlie: the rates have been raised, does that have an impact on the global economy today? whatever we are going through, does fed policy have any negative impact? mohamed: there has been a short-term negative impact but it was inevitable. when you deal with financial markets, the last thing you want is to dictate what federal reserve's should do. believing the fed is their best

friend forever, their bff, every time we have had some stability, instability, they have put more pressure. that is not good for the system. i think it is important for the fed to conduct economic policy based on a broader sense of indicators and not just markets. charlie: here is what i think he would do. suppose you were advising a presidential candidate. you would say you have to figure out a way to create a program of pro-growth economic policy. you need to figure out how you can make the institutions work. you figure out what it is that will create growth in america. whether it is education, technology or encouraging entrepreneurship in terms of having the economy to have an incentive. all of that is what you would be

urging a candidate to do. mohamed: i would, but i would call it inclusive growth. charlie: what does that mean? mohamed: it means that the benefits of growth do not go to small parts of society. charlie: income inequality question? 99% issue? mohamed: correct. if you look at the numbers, they are horrific. absolutely, and we a recent report about the issue in every fact that some 60 richest people have as much money as the bottom half of the world population. mohamed: it is getting worse. charlie: what can we do about that? mohamed: delivering growth is the most important thing. charlie: inclusive means what in

this case? meeting growth that will be spread out across the population? mohamed: we have a tax system that benefits hedge funds and private equity firms because it taxes -- charlie: ok. mohamed: if you look at the tax system, there are lots of stuff that is not just antigrowth. we can fix that. secondly, investing in what helps production as opposed to what helps finance helps income distribution. thirdly, we have to deal with certain issues that are difficult, but if we don't do what them today, it will be a lot worse. student loans -- if we don't do something about it today, it will be harder to do something later. charlie: what about other entitlement issues? mohamed: the one thing i would say to the presidential candidate -- it is about the quest for growth, inclusive growth and being comprehensive in your policy approach, right? you don't need to know every single step for your first four years or eight years, but you need to know what you are going to do for the first 200 days.

there is a lot of clarity. charlie: look at china's market. do the financial markets affect their economy or not? or is it about the number of people that came to the market and how they handled their investment? mohamed: china made the same mistake we made with housing. we pursued homeownership and value kept going up. we created a whole industry that facilitated people. charlie: in china? people had enough money to invest in the market. mohamed: the government before that believes the more people we get involved in the stock market, the more that have a direct stake in the market based economy, the easier it will be to institute reforms. just like we went too far with housing, they went too far with the stock market and put a bubble on their head. charlie: how is your life now? mohamed: i love it.

i'm very privileged to be able to combine both family and professional issues. i feel very lucky. i realized that is not something that many other people can do and i feel very grateful every single day to do that. charlie: great to have you here. the book is called "the only game in town." mohamed el-erian. back in a moment. stay with us. ♪

♪ charlie: tung chee-hwa is here. he is the former chief executive and president of the executive council of hong kong. hold thee first to sovereignty in 1977. secretary of state john kerry embarked on his trip to asia this week. he is traveling to china on tuesday. he will be meeting president xi jinping and it is expected to address the nuclear issues. i'm please do have tung chee-hwa back at this table to talk about china. welcome. tung: thank you for having me. charlie: let's talk first about the chinese economy and then talk about chinese-american relationships. china, as we just know, a relationship with iran.

deal nowthis nuclear .ith china is meeting with president rouhani. they are having conversations. china is a player on the world's stage. first, the economy, because everybody is concerned about the economy. how good is it, what has changed and will they be able to implement the vision of changing china's economy to a domestic demand economy? tung: charlie, it needs to be looked at this way. years at 10%, they realized they could not go this way.

this is what is happening today. the economy is now being transformed from being overreliant on investment and cheap labor to one that is relying on innovation, technology. to one that is relying on consumption and the service sector industry. charlie: are there serious bubbles in the chinese economy? real estate for example? tung: there are serious bubbles in the second and third tiers. but not places like shanghai, beijing. charlie: places outside of beijing and shanghai. tung: that is correct. you would need the economy to grow at a healthy rate. of course, china's challenges as it goes through this new normal, which by the way is going quite well. between 6% and 7% -- that is the new normal. the figures came out last year, for the end of last year, it is

really what we expected. growing at 6% to 7%. job creation -- the government got 10 million jobs a year. it turned out to be 12 million jobs. the other thing which is very interesting and important is the household income that has been growing at 7.5% a year for quite a number of years. and new middle class is being created which is driving the consumption. you can see the service sector economy now for the first time going above 50% of the gdp. the industry that is agriculture and service sector. service sector now, it is now at the top of the three. charlie: that china now have

more of a consumption economy? tung: is beginning to have more. china's savings rate is about 50% of gdp which about 20% is corporate and the other 30% is personal. charlie: is part of that because there is no social safety net? tung: chinese people like saving. in hong kong, the savings rate is about 30%. charlie: is part of that because there is no safety net? tung: we like to save generally, but that is the other reason it tends to be higher. charlie: the chinese government, because of the way it is run, the president can pretty much say this is our policy. he's got a standing committee and they can make decisions as to how much stimulus there ought to be for the economy. almost any other major move -- the economy is so big that it has to be the right policy to move the economy, but they do what they want. tung: i think --

charlie: and it will be done tomorrow. tung: let me put it this way. there is the really incredible ability for chinese leadership to pass complicated economic or geopolitical policies and then crafted and make it happen step by step by step. over the last 30 odd years of reform, you see them doing these things. of course there were mistakes. by and large, it was very successful. charlie: do you agree that primarily with the leadership does is to protect the power of the party? tung: no. they want to create and build a new modern nation. charlie: with a long history. tung: with a long history.

they would like by 2049 which is the founding of the national people's republic of china the hundred year anniversary centennial, they would hope that by then china would have entered the ranks of the developed nations. try the so 2049 is the target date so china would be a full-fledged member with all the rights and privileges of being there? tung: just having the conditions and everything that -- charlie: what are the impediments to that? tung: we have many challenges. charlie: i will give you two, environmental and corruption. tung: on these points, on the

question of environment, china has made a major international commitment in the paris climate change meeting. december of last year. to turn the reliance of energy based on renewable energy -- that is now a huge effort by china to do this. it's not only the commitment to international community but people in china demand it because it is important to health and environmental protection. there is a huge effort now going on. climate change and the investment in the study of renewable energy is one of the new drivers of the economy. charlie: solar and the like. tung: exactly. on the corruption side, i have never seen the determination as

i have seen right now in fighting corruption. charlie: you have high-level officials being put on trial and in jail. huge. it came from a huge powerbase. especially in the national security field. tung: the depth and the width of which is enormous. the leadership is determined to clean out corruption to turn the country as it is now turning to a rule of law based country. charlie: do you think that xi jinping has the support of the committee and the people in charge of china? the policies that he has enacted, which in many cases are more authoritarian.

ofhas, from his judgment outsiders, assimilated more power to the presidency. tung: the western press often speculate on his accumulation of power. the fact is that he has a leadership style which is very persuasive, very reasonable and understand what people are concerned about. people are concerned about their livelihood and corruption and he understands these issues. charlie: freedom? tung: of course freedom and democracy but today, china is enjoying more democracy more freedom than ever before. it needs to be measured.

charlie: how far to come? tung: not only how far to come but needing a stable environment for the companies to develop rapidly. charlie: your president and others in china for goalie make china frequently make the point that no democracies are created overnight. you need to see clear progress. tung: i think the most important thing is that democracy means a lot of things to different people. but the most important things are the people being governed. are they happy? poll after poll shows over 80% of the chinese people -- charlie: because they are more prosperous? tung: they are more prosperous and have more hope for the future. charlie: it is true that in the west we cannot assume that our definition of democracy is the definition that should be adhered to by different cultures

in different places around the world. tung: because we have different culture and different history. many things are similar. the accountability of government officials. the transparency. charlie: is it? tung: it is being done. charlie: if you do not do that, there is a weakness at the core. tung: you just have to do it. you just have to do it. charlie: do you think he is more popular today than when he assumed the presidency? tung: definitely. definitely. charlie: when you look at china and its relationship, what is china doing in the south china sea? the certainly cause a lot of concern among yout neighbors. -- your neighbors. tung: i think the history of the

south china sea, you have to go back to president roosevelt's activities. he called for a cairo meeting just before the end of the second world war and outlined what the defeated nations should do on a territory and the point was made that all the territories taken away from the nations that japan or germany had occupied should be given back. in that cairo declaration, these areas were clearly defined as the territory of china. clearly defined. so from the chinese point of view, it is not only a long history about china -- charlie: from the american point of view and your neighbors they see it very differently. tung: they see it somewhat differently. and what china has done is despite strong feelings of

historic rights, china has not been assertive, they have not been aggressive because often these islets, or whatever you call them, over 30 of them are with the vietnamese. chinese only have eight and the others are with the rest of the other countries. so if china is very assertive china would have taken the islands back, but they have not done that. only have said is, let's find a peaceful way out. charlie: you need a definition of the way out on the part of china. tung: there is this ongoing discussion within the asian and china dialogue, there is some code of conduct about the freedom of navigation and there is some way that china has suggested as to how these disputes may be managed and settled. they had these discussions ongoing. ♪

♪ charlie: let's talk a two countries, north korea and iran. what is the chinese attitude about north korea? you have a long border. you worry about people coming across the border and destabilizing china. on the other hand, you are not thrilled to see the bellicosity of the north korean government and the claims to have about

-- they have about missiles and nuclear weapons. what are you going to do about it? >> it is very frustrating. very frustrating. we all want to see a nuclear free korean peninsula. we want to see a korean peninsula at peace and potentially -- charlie: you were the only country that has influence with the north koreans. when are you going to exercise that influence? tung: we have to exercise influence if we can produce the result. to produce the result, we need all the six parties to act. they must all be there to act. i want to say that there was a book written recently -- charlie: the former secretary of defense. tung: that's right. he was talking about how close the deal was almost going to be made in the final months of the clinton administration. we should be revisiting all of these things to see whether we can really get everybody

together. charlie: is that possible? tung: at that time it was about no more nuclear weapons. the deal was about no regime change. there were two separate korea's and they were not quite happy, but they were all right. unfortunately it didn't work out for some reason or another. charlie: do you worry about the north korean leader? do they seem stable? tung: obviously we are concerned because the actions of a hydrogen bomb is not very conducive.

charlie: [laughter] that is a nice word. it is not conducive. to say that you are developing a hydrogen bomb is not conducive. tehran, iran, after lifting the sanctions the first people to go to tehran were the chinese. what kind of relationship they want? do they approve of their behavior? tung: i think that what china would want to do globally -- china feels that to the extent that it can, china would want to be a force for good in the world and that china has no specific big agenda other than trying to create win-win situations within tehran and saudi arabia and egypt. to create win-win situations for these countries.

charlie: what can china do to creat a win-win solution? tung: what china is saying is that solutions will come through in relation with toronto or saudi arabia, china and saudi arabia all have things in common. they produce oil, china needs oil, china has the ability to develop and build infrastructure, they need infrastructure, it is a part of the one bell, one road initiative. this is we're talking through how to do it. infrastructure to help the economy to grow. charlie: is china using its

economic might and resources as a wedge into having more influence in africa and the middle east? tung: i think -- i cannot stop you looking at it that way. charlie: [laughter] i am asking questions. tung: what i would say is, china is looking at it -- it is a win-win situation. we work together. i can help you and you can help me, and then the most important thing for china is that china in the long run we have many years of nationbuilding to go. we need a peaceful world to do this. so china is trying to be forceful -- a force for good in the world. not to take size but to usher people together and say let's find some way because there is always a better way.

charlie: with respect to you. we have all looked at the number of occasions in which china exercises its veto in the security council. tung: not that many. charlie: [laughter] what is the status of the u.s.-chinese relationship today? is it better than it was seven years ago when president obama took office? tung: i think it is better. charlie: the presidents get along well? tung: as far as i can see, they get along well. what i want to say to you charlie is if you look at the things that they have done together, climate change, nobody would've thought possible that we would get away from paris with a climate change agreement. charlie: even before paris there

were bilateral relationships and then they worked together for two years and eventually the two of them got together and it reveals followed because both countries recognize and china recognizes that working together with america there is a much better chance of a solution that china also wants. charlie: are you telling me that is in fact the view of the chinese government? that when they were together with the united states to find solutions, that is win-win? tung: yes, yes. china, as i was saying earlier on, if you look at america, some american people think china will take over america as the leading power in the world.

let me tell you this. you are so fortunate. you have two wonderful neighbors in the north you have canada and the south you have mexico. you're separated from the rest of the world by the pacific ocean and the atlantic ocean. in china, we have 14 neighbors. charlie: you have been in conflict with some of them, like india. tung: with a few of them, we have a troubled history. so there you are. geographically. if you look at your country, the best universities. people like to come and live and work here. 300,000 chinese students. charlie: more than any other place. there should be 300,000 american students in china. tung: we would like you to come. then you have innovation, technology and science. you are leading everywhere.

for china, we have 20% of the world population but only 7% of the land. america is blessed by the natural resources you have. you have to remember, we have been very successful for the last 30 years for we have to keep running in order to stay. charlie: remember that it is not a zero-sum game. for china to grow should be in our interest. tung: if we work together, we can always come and work together. we would benefit, america would benefit. it is for that reason that we need to work very hard for good u.s. china relations and hope america will respond to that. and many of the areas, right now, china is sitting in the afghan reconstruction. we are participating, probably for selfish reasons but also because we want to work together.

in the united states of america, it's very important areas. see you can see the countries coming together more. the only thing i would say to you is, it is not enough. we have to do a lot more including having 300,000 american students visiting china. charlie: it's been proposed by perry and others that there should be much more coordination between the militaries of the country so that all cultural contradictions are understood. so that we understand each other's culture. that comes from the former secretary of defense. another issue of concern to both countries, especially the united states is at the top of the list of dialogue which takes place, cyber espionage. there is some agreement, there is a clear understanding that it is a tough issue for both parties. the united states believes that a lot of cyber espionage comes from china. the united states believes that

the chinese government helps chinese companies. where are we? tung: firstly, china herself is a victim of cyber attacks all the time. charlie: i would not be surprised and so is the united states. tung: there was a very good meeting a few months ago in washington where special representative came and discussed these issues, very comprehensively. i believe that there were agreements whereby that if there were evidences that there were individuals in china that were

attacking and taking and hacking the americans, the evidence should be known. and we go after these people. there have always been exchanges, but there's never been anything so specific to say let's go after them. charlie: are you suggesting that anything being done is not coming from the government with the consent of the government? tung: there are differences because government to government espionage has been going on since time immemorial. we put that aside. anything that is a private sector effort against another country is illegal in china and it can be pursued through the rule of law. it is up to the two to sit down, heart-to-heart, to try to find out where it is and how it is.

and go after them. charlie: do you think that is happening? tung: i think the dialogue is still going on. charlie: this is an economic question. what is the status of the government's attitude to making sure that state enterprises don't dominate everything? to make more of a level playing field between private and state. tung: charlie, you know that chinese people -- they are very entrepreneurial, like the americans. you give them a bit of space and they start doing things. in china today, because of the digital economy, because of the internet economy, the private sector citizens are everywhere in the economy. today, 60% of the gdp is already being produced by the private sector. the number is growing rapidly

because of the digital economy. you see this grow more and more as time goes on. it is what is happening. it's really incredible. i wish you would come to china. once every six months. and you take a tap on it. you would it's not just fight doing alibaba, tensing, it is a whole lot of them companies. charlie: it is a pleasure to have you, thank you for joining us, see you next time. ♪