both back here with r.t. a look at the top stories the british prime minister powers ahead with his arms sales pitch in asia opening up the u.k.'s war arsenal to the nation's surrounding china. there's still a chance of a truce says the special envoy to syria while u.s. congress hawks cozy up with syrian rebels can step up calls to supply them with arms. plus critics say spanish plans for a vegas style gambling empire to make money and jobs could actually end up boosting

the sex industry more than the economy. china's high powered industrial machine to displace the u.s. from the top of the global comic podium but just how quickly will this happen now this matter is discussed but carol bellamy is just in today's edition of crosstalk next. you can. still get. into. a low in welcome to crossfire crime rising and surpassing this is one way to describe china's truly amazing ascent on the international stage but with success comes challenges is the u.s. ready to be second best in china and as china becomes number one put demanded a change of the rules that have benefited the west for decades even centuries. can. still live. cross talk

china is number one i'm joined by you and alan in orlando he is director of the china center at roland's college and author of chinese international investments in hong kong we go to martin henniker he is an associate director at the tight group and in chicago we have joshua littman he's an associate with the boston consulting group and has done prior research on the chinese currency i gentlemen this is cross-legged means you can jump in anytime you want martin if i go to you in hong kong first the international monetary fund says that china will equal the u.s. economy in two thousand and sixteen but others are even saying that the chinese economy has already surpassed the american one how do you look at it. well yes as you are saying that the most optimistic viewpoint of their time is economy may already be twenty of us and largest in the united states one so we aren't entirely sure where it is but certainly from our point of view the perspective of anyone from the united states and europe is generally

a that still china is letting far behind and we think that's clearly not true and apart from the i.m.f. study by the economists really is just now saying was a lie the i.m.f. that china will be surpassing the u.s. as the number one economy in two thousand and sixteen the purchasing power parity terms and two thousand and eighteen a nominal g.d.p. terms or when you would think if they have not already overtaken the u.s. which is quite possible then to the and sixteen to those nations that's probably the latest date so clearly from an investor's perspective you better look at china gaining some exposure in some way from a geopolitical perspective clearly it's. gaining influence quite strongly and it's probably a good thing that this is happening you know china and russia have been criticizing a lot in the west but then as we all know there are different perspectives on this and the eastern countries often say that the western interests are stabilizing the world and not the other way around so generally yes china very be probably number

one so we think it's a good saying ok josh when you your priorities are you not disagreeing ok. you can react with more in just. yeah martin i mean i think no one can deny the rapid growth of china seen in the last few years but the fact of the matter is that just in nominal g.d.p. terms the u.s. has more than double china now are just around fifteen trillion u.s. dollars with china around six trillion u.s. dollars i don't see i don't see that imbalance changing anytime soon my firm has done some research on a productivity and you know there are a lot of factors contributing to manufacturing in jobs and going back to the u.s. from china i think this is all contribute to you know a slow in the growth of china and ny research i want to make clear that my research is separate i'm not here representing my firm but the research that i've seen of the evidence i've seen all point to you know china's growth slowing and so i mean

just about every maybe even to seventy percent maybe it's seventy percent that's that sterling growth isn't it at seven percent for economy that's nice. and even if . it is ok marty want to jump in there i want to go to were allowed to go ahead mark here just to get there so just where really there's so much of what shine as opposed to snow in your time i mean if you're just looking at the most recent indicators that p.m.i. index is strong fifty three point one. fifty three point three the economy is still quite strong and as you say it's you know many multiples of the rest the story and it's it's not a theory i mean just on the present projected grows even in the norm figures if anything like. that is going to continue then said fred china really what i'm going to say ten dollars an eighteen it's not an opinion so i asked if somebody has a saying in the u.s. where time is economy is just about to collapse there would be you know one thing

that will stop it but if nothing fundamentally changes the fact that china really all are taking the united states so if you're saying is there were times i was in like some hedge fund managers their product is going to collapse and then that may be different but otherwise i'm sorry that's just not the reality of the way things are going out on the property just briefly are we one this the prices are quite high but that's one sector and other sectors are very strong in china and beating really. being a great challenge for the rest and economies and ephedrine there which is. ok i'm trying to you know i do want to counter the differences here because i mean i came across a report it's a good decade it's possible the chinese economy be twice the size of the u.s. and we hear from josh would you disagree with him on an economist on china but saying it's much smaller i mean why the different numbers so i actually think our focus has been misdirected because looking. or purchasing power parity g.d.p.

simply means that the overall economy is larger in china and with a billion people a billion plus people of course the economy is going to be larger. in a country with three hundred million people such as the united states but i think what we really need to focus on is the ability of china to sustain it for a prolonged period of time and to achieve the quality of life their people and the united states have if you look at the g.d.p. per capita in the united states it's significantly higher than that of china and will continue to be soul for years to come furthermore if we look at other quality of life indicators such as pollution political risk control of corruption those are all issues that china is still struggling with in this simply focus on g.d.p. i think is misdirected well i'm joshua if i go to you i mean it's this not just focusing on g.d.p. i mean we're looking at different sectors the economy in china that are excel

meanwhile they're dying in the united states we just don't have to look at g.d.p. . yeah one hundred percent i really don't know how it's going to be capita g.d.p. per capita in the us is ten times greater than g.d.p. per capita in china and if even my point is that even if you look at g.d.p. overall i still think the china has a long way to go no i'm not denying that china is growing a lot it is but it has a long way to go before it can get close to even thinking about passing us ok martin. i mean i think ok anything is going to. go ahead martin yeah i would say six years isn't that you know you know even if you are saying you know i mean even if you are saying the property market may slow down if you actually know for sure that there is the former comptroller of the united states the guy who is in charge of auditing the books of the u.s. government walker has been saying earlier this year that the u.s.

is now where greece was two years ago in terms of instead crisis or even you know if you're saying there's some problems slowdown in china you know the u.s. debt problem is the also just the road to explode that we're probably all grow as big as somewhat or so again you know that this is an all the time with all the big the west i find it quite funny because again just under present numbers in six years it's not really that on the future you know if i got if i got i didn't even bring. up and so i don't even bring up the fact of the property situation in china but that's definitely one factor contributing to a decrease in the rate of growth in china i think additionally you have to think about the pressures on chinese currency and the advantage the cost of labor that china has had is going to be decreasing with the appreciation of the currency and with the increase in demand for wages by chinese workers my firm came out with statistics that says you know by two thousand and sixteen chinese coastal workers

may only have a ten to fifteen percent cost advantage of. labor against us workers and with that kind of energy in factoring in things like transportation costs and inventory costs you're almost not seeing any benefit to producing things in china it's. the i design but you know you're right if i go to you i mean that's one of the reasons why the chinese are going to start getting more of their own domestic economy because they have domestic consumption i mean we may not have the cutting edge for exports in the near future whatever that means but they have a huge domestic market to begin work on that's a huge advantage yeah i mean i think there's no question about it but i think also when we look at the growth numbers we have to be very careful because if we grow from one to two. hundred percent for growth from one hundred to one hundred and one we grow by one percent in both cases we've added one unit of value but in one case we've grown one hundred percent and the other to the other place we're growing

one percent so i think we have to take that into account on the china is starting at a much lower place now in terms of china's investment china is now looking to invest not only in china itself but really throughout the world in africa and in latin america in areas that were traditionally the backyard of the united states and they're seeking resources and technologies to continue to fuel the economic growth ok it's very interesting you kind of jumped ahead of me i want to do the second part of the program but margaret i think i'd go to you i mean they try to with three trillion dollars in hard currency reserves they're turning into the lender of the most favored lender right now because china can loan money without conditionality but the i.m.f. is criticized for. yeah and bedsteads really one of the reason as of us just mentioned it china is so successful in other countries because you know where they're willing to lend and they're dead on our way as far as the country's lobby

and i am i prefer as close to have hospitals and schools before the money is flowing in and as a condition that it just goes back to repay loans from major international banks who have you know lend money at twelve percent or fifteen percent or twenty percent rate but don't want to take the risks but that's a bit of a political story but basically if you're looking at the effect of china has had in africa and the developments there since are really more of the in there quite substantially. would could have bell of infrastructure there and in addition to obviously they're going the wrong materials are that has had really quite a significant development impact i don't think anybody can deny this and that's really also i hope we would sing for china the asian economies in general that the exports to the emerging markets and the integration with other emerging markets are growing because the u.s. and also as we see in yours it's going deeper into a debt crisis but on one other point that i should just mention you were saying well because if you keep our capital in the u.s. it's there ten times higher than china on the other end china supposed to so on only have a cost advantage of ten to fifteen percent that doesn't really seem to have thought

out only perhaps if you assume they're always exports call their position you as a very far away but in the future that's going to be less and less the case as there was a fire to go to other emerging markets ok doing a job and you're going to show britain after lunch everything be genuine is go to china is number one state party. thank you. ily thank you and if you want to get. mum. mum says. her. mother her mother. her.

mother mother her. sister. this is true still keeps its secrets but now it's time to move feel up to something that follows on oxys the the. wealthy british style. that's not on such. a good. market so why not. find out what's really happening to the global economy in the cause a report on r.t. . if. would be soo much brighter than

a few of the songs from things to transition. from stunts on t.v. don't succumb. to the luck of the kitchen sisters. come up to come up welcome across the table welcome to remind you we're talking about you continue to rise of china. good luck to the kitchen sisters mum. ok wonderful we want to break you want to respond to martin's rapid fire comments about the chinese economy go right ahead. yeah i think we're we were talking about china being able to lend countries some of their foreign reserves actually some of the reason the chinese are actually able to lend

money to other countries is because the u.s. has allowed it to explore. under strict under most favored nation status and allowed the currency to continue to be lower so china was able to accumulate trillions of dollars of reserves as a result of this trade policy one of the things that we have to realize as we're talking about the chinese and american economy is that we really cannot be karpal these two economies that these two economies are sharing a bed and the success of one will affect the success of the other well ok but if we could you know if i could stay with you on i mean but the ills of the united states and its economy in the euro zone that's something the china doesn't want to get itself installed in come on let's you know it's the international order it's been established by washington the washington consensus in europe it's been that way for centuries the chinese don't like it and they want to move away from it and why not go ahead well in fact i'm not so sure they want to move away from

it i think the current system in place to trade system that we have in place is there actually the one that has allowed china to prosper because it has allowed china to export sometimes at the expense of western europe and american companies who couldn't compete on to sell or reason couldn't compete on cheap labor who couldn't compete on the cheap currency frankly so the united states and europe have had policies that allow developing countries through explore unrestricted with limited i mean once appearance very. very minimal our c i mean mark if i can go to you it sounds like we might even say it was that you know china is doing well because the americans allow them to do well. well it's a tricky question i mean to some extent it is true i would say that the currency has been undervalued i mean it's appreciating slowly but it's still under valued which is also why probably they're going to be number one for us in purchasing

power just that and then follow followed by a buys a nominal one and. it's tricky to say you know what what how to interpret history here if the americans and europeans just were so generous and of good will to all the neighbors to allow this to happen or what exactly what the reason i mean i would say today look at today what is a reality and there. is that china has become more powerful whatever exactly the reasons would have been maybe they just used as they did is the so-called you know that's the reason why china is controlling the us not because they only have the only ones who have them but they were the only ones to be bothered to give up those talks and all this hard you know poisoning polluting work nobody else wanted to do and so you can also argue that way but clearly now china is the major economy or soon to be the enemy is also on the valley and from an investor's perspective that means you you find good investment opportunities also there and since you briefly

talk about the property and troubles they also want to touch on banks because that's one thing the exciting i do miss are often saying the banking system is about to completely collapse because of property one thing to bear in mind they're trying is banks have the highest reserve ratio in the world almost only levanon it's still a bath i belive and they do pretty well and it was a very good reason for his naked enterprises what the reason absolutely as a result of the interest. margin is always encyclopedic of this program josh responds. no because i mean one of the things you want to get on the list if you think the u.s. house you are going to settle into second ok i mean i'm an american you're an american with you and also i mean we've been brought up it's always number one but in our lifetime that's going to change. so yeah i think there are a few points here first on mearns point about the chinese currency undervaluation i

think that's certainly case on with their own agrees the order of magnitude is a question but i think most people would agree on the order of thirty forty percent that you know the chinese renminbi is undervalued and that's something that actually has changed in the last few years so i wouldn't say that the u.s. and europe have just been stagnant on those policies i mean since two thousand and five when china decoupled its currency from fixed page to the u.s. dollar china's been steadily appreciating its currency over twenty percent in the last few years so i think this is going to be one factor that contributes to the decline in china's exports and slows the rate of growth and to peter your point about how the u.s. will deal i mean i think the u.s. is coming to terms of coming to grips with the fact that it is no longer the only superpower in the world and it will have to share that power but i think there are a lot like i just i mean every time you sure you've been remodeling the republican campaign that you've been following the republican campaign i don't get any sense from the republican party that you know that anyone should be more than number one

in the united states is always going to be that place particularly matelot military spending a lot of anger to you as one of the interesting things that analogy i came across in researching this program is that you know right now the united states is kind of like britain after the first world war the u.s. had was the largest economy in the world but britain was still the policeman of the world and fought all these ridiculous wars spent so much money on defense spending wow it sounds kind of like the united states to me and the president i mean the chinese are watching the united states tear itself to pieces ok and the chinese just keep slowly going up and up i mean it's remarkable to watch from a distance. yeah i think the chinese are going through an industrial revolution of sorts in a similar way that the united states has gone through it in the twentieth century taking over the power of europe and european in the nineteenth century so i think you're right that there is a lot of parallels to be drawn here between the declining power of the united states and the declining powers of europe but let us remember that even after the

decline in european quality of life g.d.p. per capita air quality. education level control over corruption are still much much better than then most of the emerging markets so to say that china . only needs the united states to grow is also i think an extreme point of view i believe that china you know i think there's now an just simply by growing internally in the same way that the united states were internally in the twentieth century ok joshua jump in go ahead. i think there's an important point to make here when reading this parallel if you look at post world war two me the us had about forty percent of the mean fracturing exports in the world and so to say that you know that the u.s. is in britain's place today i mean the u.s. economy today is relatively strong compared to that and china only has twenty percent of world exports and to me that's largely driven by exports so i wouldn't

say that you know the u.s. is headed towards decline in the same way that europe may have been after world war two and i think you are a good point that there are a lot of other factors quality of life. of living. that are favorable for developed countries or d.s. is going to mean tina improves ok martin but you know i think you we could spare to save the last thirty over the last thirty years we're going to martin and the quality of life for the chinese have been improved immensely i mean i think we tend to forget what it was like thirty years ago thirty five years ago go ahead martin. absolutely right a lot of people have come out of poverty by person x. and if you go to china you know the living space there and then compare that to you know what kind of housing living standard you can buy in the u.s. but that's because they have more lending doesn't mean a better education in fact if you have you know educated people you know supposedly talking about how the education is much better in america and then in asia for example that's that's a job because i'm just looking at the international part they always come in order

to obviously the education seems to me considerably better in asia and to say that this is not the case shows maybe there's something wrong because they think asian americans a lot of american see that we're still in our you very very u.s. centric and you just mentioned last thing the republican party isn't waking up to this but one part of the republican party is those ron paul supporters actually a lot more not and realizing that the best days and out of the crisis for us the best case may be a very nice chance to get other countries. stronger and stronger by the united states going to find out about you in orlando i mean this china grows in other emerging markets we're going to want to see a change of the way the world is run at least economically financially speaking because they want to a greater stake ok and we look at these in certain situations like the world bank the i.m.f. i mean this is all post world war two ok we're now in post cold war ok we're in the twenty first century now i mean one of those institutions are going to balance out

more to represent the majority of the people in the world not the americans not the europeans there are small small minority in the world right now in their economies are shrinking relative to the bric countries for example yes i think you're right but the system that is emerge after world war two is the current system of economic order political order so the chinese really in the russians and the brazilians and other emerging markets really have two choices or do they want to participate in the current systems to yield more influence in the in the systems that we currently have or do they want to create new systems based on what area and occasions i have i think the chinese are going to try to influence the current system and to create some new systems for example creating a monetary fund will be able to bail out developing countries and be able to give foreign aid but to simply say that we will shove aside all the systems that we've

developed and you know. if i get injured and we realized what about replacing the dollar with a fair currency unit for the world i mean that just benefits the united states at the detriment of everyone else in the world everyone. yes well you have to remember that immediately after world war two we did develop an instrumental a that was called special drawing rights as the r.'s and the reason we don't have as the us today is because nobody wanted to use them the dollar has become as good as gold in the central office where we pay to do that is we all don't know what is your theory of figure of speech ok ok josh i'm going to be the last one of those is going to change my point go ahead joshua yeah i think he's making important point that bretton woods taught us that you can't make an artificial currency and at the end of the day people trade what they have and and this economy people have dollars people trillion dollars and that means good news for the u.s. in the short term we'll see if the chinese from get rid of them one way or another

you guys go way over time maybe think some i guess a day in orlando hong kong and in chicago and base your viewers for watching us here are to see you next time member rostock. keep still.

it.

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