live from moscow this is r t with me will receive a few headlines now the british prime minister turns his a tour of asia into a weapons sales pitch seeking arms deals with nations in the pacific to move many see as an attempt to undermine china's growing clout now this comes on the heels of the united states building up its own military presence in the region. syria says government troops will stop all military operations on thursday morning in

accordance with the u.n. brokered deadline for a ceasefire with opposition fighters despite some western countries again lashing out of the assad regime for its alleged failure to stick to commit acts. and a powerful earthquake and subsequent aftershocks triggered tsunami warnings in indonesia and several other countries in the indian ocean there were no immediate reports of deaths or damage following the eight point six magnitude quake. china is poised to become the next global economic power player but just how soon will it happen and to find out right now are crossed. and you can. start. to. build. a low a welcome across the uk i.q. level 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 the man to change the rules that have benefited the west for decades even centuries. to cross china is number one i'm joined by you and alan in orlando he is director of the china center at rome'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-eyed 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 is already surpassed the american one how do you look at it. well yes

you are saying that the most optimistic viewpoint is china's economy may already be traders and largess and the united states once saw an entirely sure where it is but certainly from our point of view the perspective of europe and from the united states and europe is generally that still china is letting far behind and we think that's clearly not true and apart from the i.m.f. even a study by the economist 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 including sixteen in the purchasing power parity terms and put as an eighteen in one hundred g.d.p. terms so when you would think if they have not already overtaken the u.s. which is quite possible then two hundred sixteen was amazing that's probably the latest date so clearly from an investor's perspective you better look at china gaining some exposure in some way form or geopolitical perspective clearly it's. gaining influence quite strongly and it's probably

a good thing that this is happening you know the trend in russia i think criticize a lot in the u.s. 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 will be probably number one soon and we think it's a good say ok josh in new york are you nodding your disagreeing ok would you react to it more in just. yeah martin i mean i think no one can deny the rapid growth the trying it seems wise 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 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 in my research i want to make clear that my research is separate i'm not here representing my firm but the the research that i've seen in the evidence i've seen all point to you know china's growth slowing and well i mean i just love it i mean even if seven you are saying that even seven percent that's that's sterling growth isn't it it's seven percent for economy that's right. and even if i may jump in again. it is ok mark you want to jump in there i want to go to we're allowed to go ahead mark here just to get there so just wherever there's so much of what shine as opposed to snow in your time i mean if you are just looking at the most recent indicators that p.m.i. index is strong fifty three point one. fifty three point three the economy still is really quite strong and as you say it's you know many multiples of what the rest are screwing and it's it's not a theory i mean just on the present projected grows even in the nominee figures if

anything like the figures they need it is going to continue then said fred china real whatever united states into an eighteen it's not an opinion if somebody has a saying in the s.p.l. china's economy is just about to collapse there will 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 the right time so i was in like some hedge fund managers their property is going to collapse and that may be different but otherwise i'm sorry that's just not the reality of the way things are going on the property just briefly are we why this prices are quite high but that's one sector and other sectors are very strong in china and beating really. being a great challenge to the west and. going up in it ok and frankly you and i wonder what accounts for the differences here because i mean i came across a report that said within a decade it's possible the chinese are going to be twice the size of the u.s.

and we hear from joshua if you disagree with her my money on china but saying it's much smaller i mean why the different numbers so i actually think the focus has been misdirected because looking. g.d.p. 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's going to be large. 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 there people in 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 saw 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 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 you just don't have to look at g.d.p. . yeah. one hundred percent you don't know how it's going to be you're going to keep per 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 no denying that china's growing it is but it has a long way to go before it can get close to even think you are passing the u.s. ok mark. i mean i think ok anything is going to.

go ahead yeah i would say six years isn't deadline you know even if you are saying you know i mean even if you're saying the property market may slow down if you actually know. the former comptroller of the united states the guy who is in charge of auditing the books of the u.s. government david 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 property slowdown in china you know the u.s. problem is the also just the road to explode federal probably all across baghdad somewhat or so again you know that this is on all the time a lot of the us i find it funny because again just under present numbers it is six years it's not really that on the future i mean. i didn't even bring up. so i don't even bring up the fact of the property situation in china but that's definitely one factor contributing to decrease in the rate of growth in china i think additionally

if you think about the pressures on chinese currency and the advantage to cost advantage 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. leiber against us workers and with that kind of advantage in factoring in things like transportation costs and inventory costs and almost not seeing any benefit to producing things in china it's one of. the ideas language you know you're right if i go to he'll i mean that's one of the reasons why the chinese are going to start investing more in 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 and they can work on that's a huge advantage yeah i mean that 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 we grow by one hundred percent if we grow from one hundred to one hundred 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 and china is now looking to invest not only in china itself but really throughout the world in africa and in lead in american 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 a range of new kind of jumped ahead of me i want to do the second part of the program but martin and i don't need to go to you i mean they try to with three trillion dollars of hard currency reserves they're turning into the lender of the most favored lender right now because china can loan money without conditionality

if the i.m.f. is criticized for. yeah and that's really one of the reason as of us just mentioned bets china is so successful in other countries because you know they're very willing to lend and they're dead on always force the countries like them i.m.f. prefers close they have hospitals and schools before the money is flowing in and as a condition that just goes back to repay loans from a international banks who have you know lend money or purpose and what fifteen percent to 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 enough it i get of elements there since i really moved in there quite substantially to. put it well of infrastructure there and in addition to obviously getting the raw materials are good has had really quite a significant development in fact 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 the exports to the emerging markets and the integration with other emerging markets are

growing because the us and also as we see in the yard is going deeper into a debt crisis but on one other point at which you have just mentioned you're saying low because g.d.p. per capita in the u.s. is that ten times higher than china on the other in china supposed to solemnly have a cost of rounded of ten to fifteen percent that doesn't really seem to have thought out only perhaps if you assume that all those exports go back to see 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 called two other emerging markets ok joining a jump in here to get a short break an avalanche of rethinking jim you are just go to china is number one state department. the ok thank you. elaine thank you you thank

. there hasn't been anything yet on t.v. . it is to get the maximum political impact. and for the source material is. journalism we thought. we wanted to present. something i.

suppose the plant that was responsible for causing the world's worst industrial disaster and now it had been abandoned in a condition where it had become a source of pollution and the most recent study that was done shows that this water pollution and spreading. more than hundred thousand people. walking in a. city ten times more likely to be blown to banks and children interested. in the sea as little as five hundred dollars. and. unpunished.

welcome back across the capitol to remind you we're talking about the continued rise of china. before we went to the break you wanted 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 export. under strict under most favored nation status and allowed the currency to continue to be low 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 is we're

talking about a chinese american economy is that we really cannot be carport these two economies these two we can share in a bed and the success of one will affect the success of the other ok but if we could you know if i could say what you want to mean but the ills of the united states and its economy in the euro zone that's something that china doesn't want to get itself installed in come on let's you know it's the international order has been established by washington you're watching incenses and europe and 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 and i think the current system in place to trade system that we have in place is a 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 the salaries or couldn't compete on cheap labor who couldn't compete on the cheap currency frankly so the united states and europe have policies that allow developing countries to explore unrestricted with limited i mean it sounds very very made and that is very much and will always be i mean martin if i go to you it sounds like we might even sort of that you know china is doing well because the americans allow them to do well. right 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 on a ballot which is also why probably that they're going to be number one for us in purchasing power just. for a lot of a lot by a bias and. it's tricky to say. how to interpret history here if the americans and europeans just were so generous and of would we have all the neighbors to allow this to happen or what exactly was the reason i

mean i would just say today look at today what is a reality and. they're trying to has become more powerful or whatever exactly the reasons would have been maybe they just knew. that it is the. so-called red you know there's a reason why china is controlling us not because they only have the only ones who have them but they were the only ones to be bothered to dig up those minerals and all this hard poisoning polluting work nobody else wanted to go and so you can also argue that way but clearly now china is the major economy or soon to be the renminbi is also in the valley and from an investor's perspective that means to you find good investment opportunities also there and then to briefly talk about the property and they also want to touch on banks because that's one thing the china boom is are often saying the banking system is about to completely collapse because of property but one single minded chinese banks have the highest reserve ratio in the world almost only levanon it's still above the leaven and do pretty well and it

wasn't a reason to is now trying to cry about the reason it's because they really have a reason to interest them. martin is always encyclopedic of this program josh respond to the things we have to say so because i mean one of the things i want to get in this year is if you think the u.s. i was the u.s. going to settle into second place i mean i'm an american you're an american but 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 one's point about the chinese currency undervaluation i think that certainly on their own agrees the order of magnitude is a question but i think most people would agree in 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 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 of i just i mean every time you sure you've been really knowing the republican campaign 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 but the united states is always going to be that place and particularly matelot military spending you want to go 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 us that 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 in the present 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 europe in in the nineteenth century so i think you're right 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 european quality of live g.d.p. per capita air quality. education level control of corruption are still much much better than than most 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 i think there's now and just simply by growing internally in the same way that the united states grew internally in the twentieth century ok joshua jump in go ahead. i think there's an important point to make here when making this parallel if you look at post world war two me the us had about forty percent of the mean factoring 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 that are favorable for developed countries or vs is going to maintain or improve ok martin i

think you we could spare to say of the last thirty over the last thirty years we're going to martin the quality of life for the chinese is improved immensely i mean i think we tend to forget what it was like thirty years ago thirty five years ago go ahead martin. that's absolutely right a lot of people have come out of poverty but to some extent i do agree 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 us but that's because they have more lend it 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 report and how it's coming out and obviously the education seems to be considerably better in asia and then to say that this is not the case shows maybe there's something wrong based on education america's a lot of american see there's still a now we are 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 are actually

a lot more modest and realizing that the best days and out of the crisis for us the best case may be very much kaelin state saw and other countries you know. stronger and stronger by the united states and if i go back to you in orlando i mean if china grows in other emerging markets negative want to see a change of the way the world is run at least economically financially speaking because they want to get a greater stake ok and we look at these in certain situations like the world bank the i.m.f. i mean this was all post world war two ok we're now we're in post cold war ok we're in the twenty first century now i mean when are those institutions going to balance out more to represent the majority of the people in the world not the americans not the europeans they're a small small minority in the world right now and 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 or 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 one. occasion 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 i mean 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 arse today is because nobody wanted to use them the dollar has become gold central and so where we paid it good is we've all been away from it as you figure he was a figure of speech ok ok josh on the last one of those is going to change my point go ahead joshua well yeah i think he's make an 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 in this economy people have dollars people trade in dollars and that means good news for the u.s. in the short term ok ok we'll see if the chinese from get rid of them one way or another you guys go way over time a think so my guess would be in orlando and in chicago and take your viewers for watching us here are to see you next time remember rostock. can still. be.