>> charlie: welcome to our program. tonight two interesting views on our changing world both economically and politically. first, jim o'neill of goldman sachs in london talks about emerging nations and the impact they're having. >> i don't think we should call these big emerging places emerging economies anymore. >> charlie: we should call them developed economies. >> i think we should call them, i don't know what -- sometimes feels like this is how it must have been in the californian gold rush. we're living through a special era. people often look back and say well that was a period of big change. i know that we're living through a really privileged person in that sense, we're living throu this change and you can see it.

all these places emerging in a traditional sense kind of nuts. >> charlie: we conclude with lionel barber the editor of the financial times just returned from china and talks about china as well as europe. >> we need to preserve at the top a global perspective to knit that world together, to connect the dots. because you know one of the great messages of the last few years charlie, and i think it started with the financial crises is just how much more interconnected, if you'd like, correlated the world is. this is one of the messages out of the arab awakening in the middle east. it's not just a story of the search for human freedom in that particular volatile area of the world. it's also how american technology amassing or hard nesting that technology for change. >> jim o'neill and lionel barber up next.

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>> charlie: jim o'neill is here. he's the chairman of goldman sachs asset management. he's known for coining the term bricks comprising brazil, russia, india and china. there are many differences between the country the acronym has now become widely used to describe the shift in global economic power. they have accounted for half of global growth since the financial crises in 2007. we'll hear more about that from jim o'neill, i'm pleased to have him here at this table for the first time. welcome. >> thank you very much. >> charlie: tell me how you decided and came up with this idea because i want to leap forward from 2001 to 2011. >> i was quite lucky. from 95 to 2001, i was the cohead of the economics department at goldman sachs. goldman through its credit always put enormous a lot of resource and efforts into its economics research. so it was a very privileged job.

my cohead in september 2001 left to become chairman of the bbc. so i was left to do this thing on my own. so i was searching for what was going to be my sort of guiding influence to have the responsibility i felt slightly intimidated. i just kind of hung out with the traders and here was me having to be series. and i'd always been a bit intrigued by china and its role if i believe helping to solve the asian crises. in particular the persuasive influence on -- blah blah. i always follow that. and i thought about what we've done and we've been masters of the economic cycle analysis in the developed world. we haven't really thought about how the world might change.

i thought this is interesting. and right on to of that we had 9/11. and i was actually in the world trade center two days before. there's enough association of the business economy and i actually for some strange reason decided to leave to get back to london. so like everybody else in the world probably the most powerful thing that's happened, awful thing that's happened in my lifetime. but strangely below it, i sort of thought to myself if this is kind of the emotion and anger of how some people can kind of be, you know, how can globalization become a better force for everybody. and my crude simple answer was maybe americanization has become too synonymous with globalization. the globalization to thrive it has to be different. and that was kind of the beginning. >> charlie: go ahead. >> so i kind of thought what we

need to do is encourage the state of globalization in which people can be what they choose to be socially in their own countries. we just have to engage with each other in many so common accepted ways of international trade and diplomacy. and if we can do that, the world would be a better place for it. that's what started it off. >> charlie: gives you wind around the world as you looked at it from then. so you end up by looking at emerging markets, places where there was growth. and you've looked for what separates them how the. >> yes. the other thing i was very aware of, and i started my so-called professional career in the early 80's and i've grown up and so this is what, close to 20 years where the u.s. outperforms europe. i got involved in debates and stood in great detail. and the truth in the matter the reason why the u.s. invested in

europe was one simple thing. 100 million people over that period entered the world place. so it's really the number of people that were working. nothing else. >> charlie: people make a difference. >> people make a difference. so i started to think okay, what big countries in terms of population are there around the world, and are they wanting to engage in globalization to extract some benefit for themselves. i thought the answer's yes. and in some ways at the time it was perceived to be the obvious was not the way people say today. people thought one of the great stories, i remember being invited soon after to a big event in rio. there were a thousand guests. someone whispered in my ear. we all know the reason the bees know because without it there's no face. literally as i was going to the

podium. and i reflected on it afterwards. people don't get it. what really hit me -- >> charlie: it was the latest framework. >> yes. they realized in you could keep inflation low and engage with the rest of the world, you could almost immediately become a different place than it has been most of my career. >> charlie: because it had a model for globalization, because it had the population. >> it had a lot of people that wanted more and they haven't had proper economic leadership or guidance and with it stability. for them, that was a really powerful thing, i'm thinking so each of the places have slightly different things. >> charlie: and they had to have under developed economies. >> completely, yes. potential for major products. the two things that drive, economics as we've seen with the global credit crises is a

subject that overpromises and it's the social which a lot of my profession, so-called profession can't miss. but that being said, long term economic growth is driven by the number of people that work and their productivity. so if you start from a very low base and you get a lot of people answering the work force and they do things for their productivity. >> charlie: so hello india, hello china, hello russia. >> hello russia. russia is much more controversial now than people thought it was. >> charlie: it was easy then to put it in. >> it was easy. don't forget the g.a. partly because of yeltsin, the u.s. in particular -- >> charlie: raised the g.a. >> yes. they embraced russia. here was yeltsin turning it into a great democracy, blah blah blah. russia was ironically and still today the g.a. hangs on. everybody's embarrassed about russia being there. russia was embraced so russia

was an easy one to say. the more controversial was almost definitely brazil and to some extent india because india was always this country that had a lot of people but what did they ever deliver. >> charlie: so the fun story that you thought about bricks would be the right sound and that someone came to you and said since china's the biggest one, i would call it cribs and you said ... >> i said in a woody allenesque way. after we stopped laughing i said look you don't get it. cribs has a connotation of babies. it's bricks because the fundamental thing is this has to be the call of the new modern world. a brick. >> charlie: okay. the so come the economic collapse, 2007 to 2008. what's happened since in testing time. >> it was very fashionable for,

the e-mails i got from naysayers were like ha ha ha that's the end of your relevance in the world. >> charlie: we don't want to hear from you again. >> yes. see you later. what was all that rubbish about bricks. and of course collectively and individually most of russia had the most serious issues but they all handled it relatively easily. in a strange way i would say perhaps again brazil was the particular best example. every global crises in my proceeding 20, what was it 26 years by then, global crises brazil would always get really bubbly hit. the and yet here was this global shark. brazil could actually reduce inches. very quick me told me this is different because if people had lost faith in brazil in the way that they always did, no way brazil could do that. >> charlie: but they showed they had a model for the future.

>> it's very telling. of course the chinese in a bigger, let's not forget in the middle of all this, the sea and brick is a dump site. how the chinese responded was critical. >> charlie: how they responded to the economic collapse. >> to the collapse. >> charlie: they responded by a huge stimulus package. >> huge stimulus. i find myself arguing and understandably many common people outside of finance and economics get annoyed when they hear me say this but from 40,000 feet, maybe this crises was a good thing for the balance because china at one stage going into this collapse i think it had something like 12% of its gdp in exports just to the u.s. >> charlie: 12% of gdp was to the united states. >> so anybody that understood this stuff knew that china was a model. but as with anything else when you kind of feel it's a

beginning you know it's risky, you need to be forced to stop it. and i would argue it's been good for china because it's told china don't rely -- >> charlie: on foreign markets. you better develop your internal consumption and you better move from a saving to a -- >> exactly. so china is on a different path. if not for the crises, it would not be for that. probably the u.s. is on a different path as well. >> charlie: a path of saving rather than consumption. >> yes. the month before the crises the u.s. personal crises was 8%. today it's close to 6. >> charlie: the n11 who are they. >> i'm slightly embarrassed by it. early on, brazil, russia india china, why not korea, why not

mexico, why not indonesia. after a couple years or so, okay, why don't we have a lot and all these other countries that perhaps should have been a brick and see what it looks like. so we decided to look at the next 11 largest population countries in the emerging world and we called it the n11. all it is, is a group of 11 countries with lots of people. very diverse. very different than the brick thing but diverse bunch. but it's become quite a big thing. >> charlie: is there any common denominator. >> lots of people. >> charlie: lots of people. it's again people. what's stunning to me is at the beginning of the 20th century, what changed the world was industrialization. and now what's changing in the 20th century, 21st century is population. >> i think -- >> charlie: can you make that case? >> i think very definitely so. and there's another simple thing in the middle of all this urbanization. you know, when i listen and

balance and read in some cases highly articulate explanations as to why china's going to fail, ultimately china might. but what a lot of them miss is china is going through this remarkable urbanization which the u.s. went through, the u.k. and industrial revolution went through. and it's exceptionally powerful phone actual in terms of generating economic growth, you know. and we all know. you're living in a, particularly in this town, if you're living in an apartment and you can see next door, look at that flat screen tv. they go i want one of those. so urbanization. >> charlie: where do you get those. >> yes, it's a big thing. >> look at this in terms of china. because you have forecast 2027. you've taken a year. how did you get to 2027? >> this is what we've suggested could happen. >> charlie: it could be or likely? >> i actually increasingly think

particularly given china's crises, it is now reasonably probable. you look at what china overtook japan five years quicker than i originally thought it could. >> charlie: as the second largest country. >> today it's $6 trillion. and with a momentum they still have, compounding effect is just enormous. china this year if it does what the consensus thinks, no reason why it won't. >> charlie: 8%. >> in dollar terms it rises in the way the consensus thinks. china will create another trillion dollars. it will create another career in one year. >> charlie: another career. >> another career in one year. it's extraordinary. these no phenomena like it in what i can see unless you go about hundreds of years. >> charlie: there are people who listen to you carefully who look smart and wise and it made the right bets. they say have you never heard of the word bubble.

>> ha ha ha. there are some days i think what have i created for this damn thing. i worry about that. i worry about that. >> charlie: let's assume for a moment. >> i've been doing this 30 years i've seen a few. by the way in contrast to alan greenspan i personally do think you can identify some aspects of global advancements. >> charlie: you do? >> yes, i do. >> charlie: he said a rational exuberance. >> he did? i happened to be in china the day that speech was made at an event. >> charlie: and. >> i thought he was kind of right. >> charlie: but he was in that case. he was less right in terms of the markets will take care of everything. >> he certainly was. but when it comes to china in this -- >> charlie: if there is a bubble what will its make-up be? >> some kind of excess. >> charlie: okay sure of course that. but could commercial real estate pull down the entire chinese

economy? >> let me give you -- of course it could. normally real estate bubbles -- you kind of see it 15 years or so. let me give you a strange anecdote, unless you touch people you can't miss these things. >> charlie: you can't read it, you have to feel it. >> i was at an event in beijing with a mid level policy makers, regulators, about china's connection with the world. this would be, oh september 09. at the end of my speech, three of these guys come up to me and say aren't you worried about a china bubble. in facetious way i say i am now.

>> charlie: because you asked. >> but when i thought about it afterwards? fact on the contrary, the very fact that they were raising that, somebody like me told me it was highly likely they would do things to stop the bubble. >> charlie: that's the operative idea. so they have stopped. >> in my opinion. >> charlie: so there's no worry. so if it's not that, what could it be? >> i think the ultimate dilemma for china is that some level of prosperity, individual chinese people are going to want to choose and think for themself including how many kids they can have. at some stage that's going to be quite a problem because you can't have a sense of control things turn. >> charlie: do you think they do and this operative idea is we get it but we need to do this for a while. >> i think i'm balanced. >> charlie: say it. >> we do say it, but you see if

you go now, i'm not sure how often you trouble that. >> charlie: i just got that. >> i was in this detroit thing two or three weeks ago and i'm often in another place -- you can see in the hotels, parents with two kids. when you cruise around in the more prosperous urban areas, in shanghai it's particularly prevalent. they're already allowing wealthy people to kind of choose for themself. they have to pay some of the social costs that go with it. and what is clear to me that when i go there, what chinese people want better standard of living, they want to eat better and they want to have a tv and certainly want to have at least one car if not more. well, maybe i only see a superficial side. i don't think chinese people mind being guided by the states.

it's weird for us to understand that. another great anecdote -- >> charlie: in other words they have a sense of paternalism by the state. >> a little bet. i always encourage people that don't know china or beijing, to really do this. a visit around chairman mao's mausoleum to me is a fascinating thing as you probably know. here is a person who most of us think held china back at least for 50 years. >> charlie: and took them through the cultural revolution. >> 25,000 people stood there to pay homage to this guy. poor people. >> charlie: i've always had -- >> incredible. and they don't seem unhappy people. >> charlie: i have an instinct there may be a dose of insurism. >> they are very proud to be

chinese. >> charlie: they look at long years of culture and civilization they think may not have been on top always but it always has certain things that would give it an opportunity to come back. >> something often goes badly wrong somewhere and so there will be some things that happens really bad for china and it will feel like the whole thing is over. it won't be but something, i don't know what it will be. >> charlie: but the interesting thing and i talk about this with you right before you sat down. the notion of population with a potential of becoming a middle class and a potential therefore of having huge consumption appetite is the determining factor of the economic arena in the world today. >> yes. this is the big story and i often get really quite irritated

to be honest with you with a lot of western commentators that focus on inequality and within our own developed countries, of course, this is understandably and justifiably being a major issue in some ways the crises perhaps is solving it in a strange way. but on a truly global basis, the rise of so many people in the great countries because it's not, this is not just china. china's the biggest into the middle classes. i believe it's actually on a global basis narrowing inequality in a way that is just -- i've also thought certainly decades maybe centuries. the number of people that are being taken is the middle around the world is hundreds of millions. we did some work specifically looking at this and that by 2030 we think we could have over 25 year period 2 billion people

taken into the middle classes. and of course you see it, anything to do with major concerns really well rounded global continents from the west. it's kind of like thank you god. >> charlie: so every manufacturer in the united states and every manufacturer in europe ought to be saying we want to know what those consumers want. >> correct. you go and spend a bit of time in munich like bmw, this thing is huge for them. i often think when i go on great trips there, what's going on in china is more important for munich than anything else going on for the rest of europe. for example, and i suspect, and it's really against the mood of the political masses down in congress, with a little bit of a bigger delight the same thing's going to happen here. i remember 13 months about when

president obama announced his goal of doubling exports over five years. the people i knew said we don't do that that u.s., we don't export, we import. right now u.s. exports are growing at a rate that is consistent with them doubling in five years. >> charlie: and it's key to our economic. >> absolutely key. >> charlie: future. >> absolute key. >> charlie: does that mean that the united states which has lost its manufacturing base to a degree can regain that manufacturing base? >> i think in many so areas. in many so areas. areas where labor's not so intensive. >> right. in higher value added areas in the some way that germans are a great role model in this. how can the germans produce so many cars from germany and send them around the world? it's because of the technology and the quality. >> charlie: because they do quality work. >> yes. that's the key. the u.s. can do that. there were some signs of it. >> charlie: when you look at 2050, are you saying that 50% of the gdp of the world will come

from four countries? >> quite conceivable. >> charlie: is that what you think or not? >> certainly if we carry on the way we are. >> charlie: if you interpolate and look where it's going, 50% of the gdp. >> yes, china will be -- china will be twice the size of the u.s. by then. india will be the same size as the u.s. if we carry on at the same right. >> charlie: in terms of agri economy. >> yes. and of course i never had the pleasure of -- madison a great economic historian pointing out that was the case at one time in history. so it wouldn't be a first. >> charlie: this is just a turn. after emerging markets, what's next. >> i don't think we should call some of these big emerging places emerging economies anymore. >> charlie: we should call them developed economies. >> i don't know what --

sometimes feels like this is how it must have been in the californian gold rush. we're living through a special era. people often look back and say well that was the period of big change. i know that we're living through a really privileged person in that sense because i'm feeling the sense of it. we're living through this change and you can see it. all of these places emerging in the traditional sense is kind of nuts. >> charlie: they have emerged. >> well they are not fully emerged which is why it's so complex. of course they have different style of doing things which really freaks people out that come from our generation. so i call them growth economies. i think they are really big, four bricks and some of the next 1 1, mexico, indonesia, i'm trying to get somor our clients to call these places growth economies. i think it is from a business perspective, it is inopportune. it still lives a good 120 plus countries that i think should actual be regarded as emerging

economies. they're not in charge of their own destiny so much and they don't have influence like everybody else. >> charlie: what will be the ticket for them to be an emerging nation. >> i think the most simple way of shifting from emerging to growth is you have to cross some kind of size barrier. my crude conclusion for now, and no doubt i'll refine it through time, is to be at least 1% of global gdp. when you get to that size things that you do influences. >> charlie: you want to get to 1 percent percent of global gdp. tell me one country that's at 1% of gdp. >> there's a few others bubbling. saudi arabia i poland, south africa. in the concept of so of the major issues going around on in the world. down the road from the middle east and north africa, a just -t

is a very interesting place. people said to me from the middle east taking offense. how come you never include the middle east when you talk about great things. they immediately think i deliberately, i don't like the middle east. the answer's pretty straightforward. the two population, large population countries in the middle east that matter iran and egypt. when i see evidence of things changing the leaders or the people want to engage with the rest of the world, then i start to get interested in it. and that's partly how i'm looking at this remarkable short period that's evidence so far of what's started in tunisia and egypt. >> charlie: in previous political campaigns in the united states, a phrase has been used as cheap labor. what's the implication of the cost of labor. >> you know, two things. international trade is a win/win. most people don't believe it,

particularly those that are some in the disadvantaged areas. >> charlie: because factories close in their home towns. >> we all benefit. and the key is flexibility and education. the next phase of this is that china is not got cheap labor anymore. i already know some u.s. multinationals that were at the forefront of putting things in china to produce because of cheap labor. they are no longer doing it. >> charlie: where are they putting it. >> mexico is probably the biggest beneficiary of this. you could offer i think in hindsight argue that nafta was killed by china and didn't get the benefits it should have got. now that china is rising up the income scale, perhaps this is mexico's chance to reap some of those benefits. and at the margin in many so areas i think it's going to compare to the u.s. the whole idea with outsourcing to india which is big in parts

of the uk and europe and of course here in the u.s. that's probably not far finishing either. so we'll be out sourcing other places that we probably don't even know about anymore. this is another reason why north africa and the middle east are on my radar. if you're running a big manufacturing entity around the world, particularly if you're european and suddenly you've got 400 million people in the middle east and north africa may be engaging, maybe they're the next cheap labor. >> charlie: who are the victims in all this? >> the victims are broadly speaking, those nations that find it really difficult to change and advance. and struggle to have good education and adaptable labor forces. people say well that's easy for you to say but that's reality,

you can't change but i'm from a place called manchester and in my days of schooling when margaret thatcher appeared on the scene, people thought the north of england could never change and we would just have this slow death because of the end of shift building but it's not true. we have a very flexible labor force in the u.k. we've got a new challenge going on with our own post credit crises going on. the u.k. is a very flexible economy where the labor force is just to the sharks. that's what unfortunately needs to be done. of course it's a challenge for everybody to adjust it. that's what you have to do. nerd for -- in order for the world to progress we have to let some things go. >> charlie: what are the political implications for all this, especially for this country which has been on top so

long. >> i'd like to see president obama say how do we adjust before he says how do we compete. which is a simple difference. i will never forget having a rather lively exchange with larry summers in the days before larry became chief economic advisers. one of larry ups things to me was future u.s. policies are all going to be from michigan. and so i kind of thought okay. i heard him say. after a few minutes i said larry, you probably don't even know -- >> charlie: you're sitting in the whitehouse making economic policy. >> and i like to think of myself as, i'm proud of my manchester friend and i said to him kind of joking, i have friends that are from the equivalent of the u.k. and i'm not sure they are going to be told they're going to be protected on the hope this is

going to support them permanently. because in the u.k. that didn't work. i went to university with people from a very proud city of liverpool in the 1960's and 70's, it was protected, what seemed to be at the time for in finite time. and it didn't help them at all. it was only when the protection was taken away and it was a bit rootful but the hard reality of needing to adjust started to change. if you look at some of those american cities, i'll show you one of these friends at a 50's party, liverpool, different place. and that's what you have to do. ultimately -- so the people often think that the u.k., no british companies produce cars anymore. toyota and nissan have most of the plants in the world or in the u.k. >> charlie: because workers have adapted. >> yes. >> charlie: how would it change. >> it's up to the politicians. the politicians have got,

because of the short time period of the election cycle and the power of the media, it is so easy in my unsolicited judgment for them to go for the simple populous sound byte. and somehow we got to take away from that because they know. again, larry will be really upset with me saying all these things. here's the guy that's been the chief economist of the world bank. he understands about all of these, about relative advances in international trade. and that's the only way, because at the end of the day, if we're going to just protect all those things, what that actual me probably means we don't want to help china developed or india develop. india's despite all the great things that happen there, we mustn't lose sight of the fact that the average indian wealth today is what, $2,000 a head. there are still hundreds of millions of people in india in

poverty. >> charlie: china's only 4,000. >> exactly. so i think we owe them an opportunity to get more of what they've seen the beginnings of. and in order for them to be able to do that and behind them in bangladesh or pakistan or the place i find myself increasing thinking about and africa and nigeria. we've got to adapt and move on to different things. >> charlie: it's a pleasure having you on the broadcast. >> thank you very much for having me. >> charlie: lionel barber is here. he is as you know the editor of the financial times. he joined the ft25 years ago his newspaper is washington correspondent. he went on to become the editor for continental europe and the u.s. managing editor. under his watch the publication has generated profits in an industry upended by the digital revolution. the ft was one of the first traditional newspapers to successfully charge for on-line content. this is more and he'll tell you about it. i'm pleased to have lionel

barber back at this table. welcome. >> good to be here charlie. >> charlie: i get a note that's addressed to mara, whoever mara is. and it was your chinese travels. i thought this is a story. lionel barber through china. tell me about it. >> i thought your middle name was mara. she's a friend that lives in brussels. the i send a little note when i'm on travels to friends just to give impressions. i just wanted to sort of sum up some impressions after three days in china. and i think one of them was very much this. we think about china in terms of prosperous coast, big problems in the interior, migrating labor, looking for jobs. i think one of the stories in china today is that inland is beginning the transformation of the china interior. >> charlie: to the middle class. >> not to the middle class but

just moving off $10 a day or $10 a month. >> charlie: it's getting better. >> yes it's getting better. but this is now a instrumental state policy. second i think the fact that the chinese government is now reconciled to raising wages for ordinary, for labor. you know there was a wave of unrest after the suicides of -- just last summer under a year ago. that shocked the people in beijing, the party in beijing. after that they've come to the conclusion that they need to raise wages, even though that might hurt exports, this is part of the rebalancing of the chinese economy. of course what that means is goods will become more expensive. so china, which for the first part of this decay through cheap labor costs was exporting in effect deflation to the world. the story of the coming story is

that china's going to be exporting inflation. and you can see that in the rising commodities. >> charlie: they're paying more therefore they'll charge more therefore the inflation will go right through -- >> and you have tremendous demand for natural resources and commodities like oil and that's why you see these high prices. >> charlie: they're afraid to pay for whatever because they none. >> exactly. that's a big change for the world economy from china exporting deflation to china exporting inanalysis. >> talk to me about the personnel of some of the people. you met one of the presslinks you describe. they are? >> he's a prominent member of the ruling class. i'm not supposed to mention his name because that was the terms of the interview. >> charlie: fair enough. they are generally the sons and daughters of people who have the power from the party. >> yes. people who are very wealthy, and charlie you do remember that extract from that note because what struck me was being

lectured by the son of a very famous chinese communist party leader, sounding like the tea party members saying why are you debasing your currency in the states for a dollar. why are you inflating economy with these unconventional monetary policy measures. he gave me a real lecture and i think i have to tell you listen, i'm very close to the americans but i'm actually british. >> charlie: did he talk about this incurrency and the demand by the world that they let it appreciate? >> he did. but i think the issue really is that the chinese are not going to be brow beaten by the americans or anyone else into raising or reevaluating the currency. they are going to do this in turn partly when i was talking to you earlier about raising wages and therefore stimulating consumer demand in the economy which of course is one of the main american demands.

>> why are they paranoid? >> they've got a certain amount to be paranoid about. >> charlie: alexander hague. >> alexander hague. when you wake up in the morning do you wake up with a grand design to take over the world? i don't think so. what you do is you look at the prospect of 1.6 billion people. i think diversity in china. how do you keep it stable. china doesn't have a great track record in keeping this country together. there's been revolts, rebellions, every couple hundred years. and secondly you are trying to create a 21st century society with the very best educated people. >> charlie: coming from a

very different base. >> and you're trying to control it. they want to control the internet. i don't believe that it is compatible to control the internet and to want a 21 century society in the community, etcetera. >> charlie: if you had say that to them, what do they say? >> they come up with one word and they do this not just the party charlie. i interviewed -- >> charlie: stability. >> you got the word, stability. he is very careful. he talked about censorship. he didn't use that burden with you he talked about acknowledging the need for stability and that's really the country. >> charlie: what happens in 2030. what is china going to be like 20 years from now and 30 years from now? do we know. based on the history, do we know based on whatever we can understand on how they are acting today.

>> we do know they put a premium on stability and we do know that they are tremendously careful in terms of i think, i think taking an aggressive stand. if you are had territory el integrity -- they are very cautious. the people i talked to are conscious saying we don't want to provoke the americans. but china in 2030 charlie, china is going to be an increasingly important power, it will be a rival to the united states, california competitor, an economic competitor. but china also has significant internal problems. the legacy of the one child policy. you have 54% of the population

in china are mail. that's going to create, is already creating some problems, with marriages. it's a bit of a distortion with normal society and i think that's proper. >> charlie: they worry about the culture impact in terms of how are those people going to behave, the kind of social pressures on them and they bring to themselves. the developing middle class, will china be able to find a huge market for its own products and therefore be less dependent on an export market. >> that was again one of the impressions take aways that i came away with after a week in china. actually now the chinese talk about their internal market. so of course they are interested in the export market keeping, in fact that oversees markets that are open to their goods. they are a also buying off vast tracks of land in latin america,

in africa to secure natural resources. they do, before chinese corporations start to buy out other companies, for example, europe, there's tremendous opportunities in a vast internal market in china. and i wasn't around in the late 19th century in america but i suspect that some of the conversations that people have in the land grants, etcetera and they change the transformation of the american economy at that time is similar to today. >> charlie: one of the interesting things to watch is this investment in america in terms of corporations and that kind of thing. okay. so here's the financial times. so what is this. tell me what the financial time is. >> it is a snapshot of the world every day, the interception of priisms and finance globally. business politics finance and

economics. this is the crucial point that offers a global perspective. that's one of the reasons i was this asia for nearly 12 days. that's one of the reasons i'm in america. we need a global perspective to knit that world together, to connect the dots. because you know one of the great messages of the last few years charlie, and i think it started with the financial crises is just how much more interconnected, if you like, correlated. this is one of the messages in the arab awakening in the middle east. it's not just a story for the search of human freedom in that vict volatile area of the world. it's also how american technology. the has are hard nesting that technology to drive change. >> charlie: you can't keep them affected by what's going around in the world and not

participating in what a lot of the world is participating in because of their government. >> exactly, charlie. another example is the nuclear process in japan. i visited tokyo -- the message here is this is not just a japanese story. this is a story that's going to fundamentally affect how we view our image demands and sources because we get out of nuclear power as you like get out of jail free card. >> you gave a speech at london college of communications known as a lecture, correct. >> after the publisher, the tabloid. >> charlie: what was in the paper? >> the daily mirror. >> charlie: he had the daily mirror. all right the speech was right on. this is what it said. you had a five point plan that you're pursuing and we're all concerned about this, about a

sort of digital strategy and how do you get the world to pay for your content. tell me what you told them. what are the five points. >> the principal point is to say we have to challenge for content. we are not going to equivocate on this. we don't leave content or management to be free. if you're going to have more than a hundred correspondents around the world you've got the likes of martin wolf, economic economics commentator are creating something of value therefore we're going to charge. we're not giving it away for free. second we're going to actually raise prices in general to increase our module because that's very important for a sustainable business. the third point is that we are going to have an integrated news room where journal it's are going to work seamlessly in print and on-line. if you like, they have to walk and chew gum at the same time and occasionally swallow it. that means -- >> charlie: that's just an expression from your washington years, is it not. >> exactly. >> charlie: i've seen a zillion articles about american deklein.

what do you think? >> you have to distinguish between relevant tough deklein such as china, india brazil -- which ends up something like 412 a.d. if it's going to preserve the primary role in economy has to deal with these two things. one is the quality of its, not his hire education system but its high school education system. and you know secondly it's got to deal with the debts and deficits and entitlement programs which is out of control. at some point the bill -- >> charlie: that brings a new subject of today's conversation

in washington. do you have a feeling because the president is making a big speech on wednesday lake out how he feels about i assume about bow simpson and paul ryan and about his own ideas for dealing with the long term debt as well as debt issues in the current budget. >> the president is being on the sidelines watching, if you'd like, congress debate this issue for weeks. and i think it's now time, i think a lot of people, people i've spoken to including his own party supporters are expecting something substantive and it's a good time in response to paul ryan's bold production plans so i think it will be really striking if the president endorsed simpson as a credible medium term -- >> charlie: he won't endorse it but he will make a tip of his hand to it. is david cameron bold enough for

you? >> he's certainly being bold in getting into that libya conflict. >> charlie: leaving economics and os tear yeah. we'll come to libya in a minute. >> yes, it is bold. it is very bold. >> charlie: is it austere too? is it a growth budget. >> not initially. we're going to suffer and a have a consumer dip. 9 british government hasn't suffered the same kind of eruptions and turmoil in the bond market that european colleagues have ranking from portugal request -- >> charlie: has credibility. >> we voluntary to be bold. >> charlie: germany has been the strongest state in europe. >> we've got a two speed economy in europe. you've got them powering ahead sum me because it is so efficient, so, it's got competitive advantage and value

added engineering. >> charlie: they export like nobody does. >> it's hard to even california up. others have found this difficult particularly the hot periphery that benefited from lower interest rates. and that's a real problem for the euro area, two speed europe. >> charlie: what's the future of the euro? >> it's a huge political commitment from the particularly the french and the germans to keep this thing going. and i think that the innovations that they made in terms of debt financing, making available support for all governments including the greeks although the germans' fierce public opinion was absolutely antipathy to the greeks -- >> charlie: we're taking libya now because they're also in the news and there are some questions as to whether what nato can do and whether nato needs to whatever you might say

double down or needs to put more into the fight. >> i think that people are very cautious about that. it's extraordinary charlie that i know, say read obviously what mr. gates said about the merits of getting involved in the libyan conflict. i can tell you that the conversations i had with security, military people, they were all against. >> charlie: all the u.s. officials were against it. >> not just the u.s., the u.k. they did not want to get involved. this was a pure decision by the prime minister who at times have sounding i want to go down and talk to cameron or -- this is very similar -- he felt very strongly, morally that they needed to get, we needed to get involved to save the people and he felt scarred by the time he was in downing street and john major was prime minister when

the europeans watched the slaughter in the bosnia conflict. he was right there with the president. the problem is of course the europeans don't really have quite the effort to keep this going indefinitely. >> charlie: what do you think the world expects from the united states in 2011, 12? >> still leadership. we must not forget that what america says both by its examples and by its actions and words can really influence the rest of the world. >> charlie: is leadership defined by saying we'll go in -- >> leadership does not necessarily mean intervention. if you see one of the most significant events in the last six months was hillary clinton's speech saying america was the pacific's past. >> charlie: the hanoi one.

>> yes. >> charlie: it was also pick the up in beijing. >> the messenger was meant to go there. key to the administration and he key to congress is lead and leadership must also mean dealing with some of these long-term problems. >> charlie: get your own house in order so that you can be as strong as we would like you to be. >> exactly. >> charlie: lionel barber the editor of the financial times. thank you, a pleasure to see you.

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