Koppel on Discovery: The People's Republic of Capitalism

Thursday, June 26, 2008

New York City, New York

DAVID SANGER: Well, those excerpts gave us a beginning good taste. And I can tell you that the parts you haven't seen today, including the scenes inside the karaoke bars, which may be more than the Council on Foreign Relations is yet ready for -- (laughter) -- are --

TED KOPPEL: We had you in mind, David.

SANGER: Thank you.

Let me start with your interview with Alan there at the end. This wasn't the way the development of capitalism and then political freedom was supposed to happen in the American imaginings.

In 1998, and then I think again in 2000, I traveled with President Clinton to China; gave a great series of speeches, one I remember in particular at Beijing University, where he made the argument that as more and more western-style business came in, as the Internet came in, the Chinese government would not be able to put its fingers in the dike. Political freedom would come as naturally as it came to South Korea when it reached this stage in development, that democracy would take off as it took off in other corners of Asia, including Japan, including the Philippines.

When you watch your documentary, when you go back to China and you see what's happened today, you discover a system that has figured out how to make authoritarianism live quite nicely with this level of development. What were we missing?

KOPPEL: I'm not sure we've missed anything. I mean, one of the -- first of all, one of the points that needs to be made is that China is hardly unique in the sense of having an authoritarian government and one that is committed to capitalism. Saudi Arabia is an example that springs to mind -- every bit as authoritarian, if not more so, than China, and yet certainly a capitalist system.

I think there is a tendency to confuse the economic theory of capitalism with a political evolution of freedom. The two are clearly not interchangeable. I think there is also a tendency to assume that with the advent of capitalism, it will only be a matter of, what, 10-20 years before freedom and democracy take over?

How long did it take South Korea? I mean, I still remember the regime of Syngman Rhee, and it was not a very democratic regime. It took many years before South Korea evolved into the kind of political system that we see today. And I think, probably 30 to 50 years from now, China, if indeed it is able to maintain this economic development -- I might say that's a key "if" -- will be a far more democratic country than it is now.

The fact that it didn't happen in 20 years -- I mean, let's face it, Deng Xiaoping took over, what, 20 years ago or -- yeah, about 1989. So we have come from, in your lifetime and mine, the Cultural Revolution in which every youngster that you approached and asked -- you as a print reporter or I with a microphone -- "What do you want to do? What do you want to be when you grow up?" -- "I want to serve the mother land." That would be the answer, the only answer, the ubiquitous answer.

Now you ask them, "What do you want to do? What do you want to be?" -- "I want to get rich" -- all of them. That's an evolution. It's not the end. It's not even the middle. But I think China has come a long, long way. And I must confess, after the time that Tom and I spent covering this story, I don't reject out of hand what Vincent Lo and Ben Wood (sp) have to say. I'm not sure that democracy, if it came too quickly and too completely to China right now, would be a good thing.

SANGER: Let me bring into this conversation Adam Segal, who's the Maurice Greenberg senior fellow for China studies here at the Council and the man on every reporter's speed dial when we are working on China stories.

Adam, there was a sense in the interviews that we saw that Ted and Tom conducted among the Chinese, particularly the Chinese billionaire who was interviewed, that China has been running down this rushing river, avoiding every rock in the way of its growth, and that their biggest fear is that, sooner or later, they're going to hit one of those rocks, the growth will stop, maybe just temporarily, but that all of the stability, the happiness that has been built around this, the willingness never to question the government that you saw in those last interviews, could collapse if the growth slows or is reversed. Is it a legitimate fear? Is it a likely fear?

ADAM SEGAL: I think it's worth noting that Vincent Lo actually is from Hong Kong. So for him to be able to say that he doesn't really care about democracy or free speech, he's coming from Hong Kong, where he has some of those things. So it strikes me as a little bit disingenuous that he can kind of rule out all of these things for the people of Chongqing. And the Chinese have already hit a lot of bumps, right? In Chongqing, as the report mentions, there have been huge protests. Tagang (sp) Steel, which is one of the largest employers in the city, laid off tens of thousands of workers and they protested in the city.

So my feeling is that this argument that somehow any type of political reform, any type of greater transparency, any type of greater accountability, in fact, would probably go in reverse -- it could, in fact, be a type of relief, some type of exit valve. And when they do hit the bump, it's going to be even worse because they haven't made any progress on this point.

SANGER: There's a section in the documentary which we didn't see today where you follow some American workers who worked at Briggs & Stratton in the United States. They get laid off. You show the Briggs & Stratton motors being made now, engines being made in China. And obviously they say this is a system that isn't working for them.

And then you catch them as they're driving off to Wal-Mart to do their weekly shopping run at the one store where they're buying nothing but Chinese goods. And you say to one of the women who you're interviewing in that case, "Do you see a contradiction in this?" She basically said, "I don't see a choice."

Did you emerge from the interviews that you did in China and the United States believing that, in the end, the movement of the jobs that we have seen to China is a subject that politicians in America can talk about endlessly during a political campaign and have absolutely no power to change? Or did you see anything in the system that we can moderate that would relieve some of the political pressure here on this issue?

I think the politicians are discussing it as you would expect politicians to discuss it -- by oversimplifying. It becomes more complex when you realize that Briggs & Stratton, which was facing economic difficulties, has been able to maintain the vast majority of its American plants in some measure because it has moved an unprofitable plant from Rolla, Missouri to Chongqing, China, where it is now making a good profit. And the profits that it's making in China are helping to sustain plants in the United States.

The Ford Motor Company, which has a gigantic plant in Chongqing, is hemorrhaging money in Dearborn and Detroit and making money hand over fist in China. There is an interview I do with the man who is now the chairman of Ford China in which I say to him, "You know, it doesn't strike me that Ford is really acting like a very good American company." And he says, "Well, it's not an American company. It's a global company." I can see folks in Dearborn getting a little upset when they hear that, but he was being remarkably honest.

By virtue of the money that Ford is making in Brazil, by virtue of the money that they're making in Europe, by virtue of the money that they're making in China, which did, yes, cost a great many American jobs, they're enabling other plants in the United States to stay in business where otherwise they might not have been able to.

SANGER: Adam, on President Bush's trips to China -- and I think I've covered just about each one of them -- he never did what Ted did. He never visited an American factory there, because it would be politically just way too difficult to have the image of Chinese workers making an American product or even getting into a discussion about a global company instead of an American company.

So you're getting this widening gap between the political discourse here and the reality on the ground we're seeing in this documentary. Does that gap just get wider and wider over the next few years, and is there a breaking point on it?

SEGAL: I mean, I think that's a key point, right, is we have an expectation that American companies are American. And it's not just American companies, right. It's also at the universities. Universities now are increasingly looking at students abroad, educating students in China. So two of the major engines of the American economy, universities and companies, are increasingly global.

That said, I don't think it goes -- the world isn't completely flat. We don't move everything there. Prices go up. Wage prices have gone up in China. One-hundred-and-forty-dollars-a-barrel oil makes it more and more expensive to ship it from China. And as Ted mentioned, a lot of these companies are moving up. They send it the lower labor capital -- lower capital, high-labor-intensive work to China, and they themselves move up and they hire more people. But can you say any of this in an election year? I don't think so.

SANGER: Ted, when we first met, I was living in Japan and we were all trying to figure out in the late '80s whether or not the Japanese economy was, in fact, going to overtake the United States. And it seemed almost taken as a given at that time --

KOPPEL: That it would.

SANGER: -- that it would. There used to be these great charts in the Nikkei that would show the Japanese -- sort of equivalent to The Wall Street Journal -- would show the growth of the Japanese economy, the growth of the American economy. It had a crossover point in about -- probably about 2003 or 2004 that they never hit. They still run the chart, but now it's the Japanese economy and the Chinese economy.

Are there things that you saw in China in the course of this reporting that reminded you of the arrogance of the Japanese in the late '80s that they had devised a system that was unbreakable? And did you sort of hint at this with the corruption element? Could this be to the Chinese what economic mismanagement became years later to the Japanese?

KOPPEL: I'm not sure, David, if I see arrogance in that. The Chinese -- what's the population of Japan?

SANGER: The population of Japan is probably about 150 (million), 160 million. Do I have that right?

KOPPEL: So China's population is roughly 10 times the size.

SANGER: Right.

KOPPEL: And you've got approximately a billion people in China today who live in abject poverty. And what the Chinese government is doing is worthy, I think, of some respect. They are actually trying, after God knows how many decades of mismanagement under Mao, of years in which tens of millions of people died of starvation because of these idiotic economic programs that Mao put into place, you now finally have a system in place that has pulled roughly the population of the United States -- a little bit less, but almost 300 million people -- out of poverty over the last 20 years. That's quite extraordinary.

I wouldn't say it's arrogance. If the Chinese are guilty of anything, it is of an excess of optimism. They are trying to do now what President Eisenhower did back in the 1950s when he created the interstate highway system. You now have 25,000 new cars being put on the Chinese streets every day, 9 million new cars every year, 33,000 miles of highways that have been built in China. Within -- as Tom said in his introduction before, within the next 10 years or so, the Chinese expect to have as many cars on the road as we do now.

What I see as this colossal train wreck coming down the road is the fact that, on the one hand, you have the United States with 5 percent of the world's population using 25 percent of the world's energy, and on the other hand, you have China, with 20 percent of the world's population, using how much energy?

Are they entitled to -- I mean, if we're entitled to a five-to-one ratio, are they entitled to a one-to-one ratio? And if they have it, what that means is that the United States and China alone will be consuming 50 percent of the world's energy. You think there might be a few countries out there that say, "No, we don't think that's fair"?

I mean, we have a colossal economic train wreck that's going to happen sometime in the next five to 10 years. That's the issue. And I think the question is whether China and the United States are going to resolve these problems in a collaborative fashion or in a confrontational fashion. That's the big issue.

SANGER: Let me ask Adam something about that, and then we're going to open it up to all of you.

Adam, we've had eight years here where we have been wrapped up in terror attack, a war in Afghanistan, a war in Iraq. The discussion in Washington about China has largely been one about currency valuations, which strikes me as sort of the least interesting question that we could be dealing with here, especially if you believe, as Ted said, that we could be headed to this kind of confrontation.

What opportunities have we lost in the past few years to manage this, and what opportunities does the next president have if they could start up a new series of initiatives?

SEGAL: Well, I think that slightly misunderestimates what the Bush administration accomplished with Asia. And I think, to some extent, in fact, especially when you look at what President Bush was saying about China when he came into office up until the EP-3 plane incident --

SANGER: When he talked about it as a --

SEGAL: Strategic competitor and the kind of very confrontational view he had of China. And then after 9/11, that all completely changed. And when you look at the discussions about China as a stakeholder and how would we bring China into international governance -- how do we bring them into international institutions, how do we work with them on global climate change, how do we work with them on energy -- I think that starts getting us to the point that Ted had mentioned.

And I think, you know, the Bush administration probably could have pushed harder on a lot of these things. It could have perhaps been more of a presence in Asia, given all of the other distractions. But I think, given that we have good relations with China, Japan and India all at the same time, that did go a long way towards kind of pushing us down that road to building that system.

But, that said, any new president, I think, is going to have to make a pivot. You know, the first 18 months is clearly going to be about Iraq and the Middle East, but they're going to have to, I think, make some type of symbolic gesture or some type of rhetorical gesture towards China and how we're going to continue this relationship, which I think is basically integrating China, working with China. And I think energy or global climate change is probably the most likely place where we're going to do that.

SANGER: Likely because it is a place where we have a lot of room to work together, or likely because it's a place where we could persuade the Chinese that, in fact, they've got not only the most to gain environmentally but the most to gain politically. So many of these protests that you alluded to in the documentary have been about environmental degradation -- (inaudible).

SEGAL: I think likely for those two reasons. I think the Chinese themselves, if you look at the internal discussion, they are worried about this incredibly capital-intensive, energy-intensive growth themselves, and they are beginning to talk about "How do we shift from that to a more innovative, more technology-intensive development?"

But I think probably the largest change is just going to be the United States. I think that domestic politics in the United States has shifted so massively towards these issues that any president -- and we've already seen it with McCain and Obama; their language is much different than President Bush's. And they're going to be able to, I think, reach their hand to the Chinese and be able to, I think, convincingly say that this right now is still a win-win for both of us to work together.

SANGER: Maybe an easier case with them. I was in China in late March, and immediately after that went to India. You hear much more discussion of the environmental issues in China than you do in India at this point.

Well, I'd like to open this up to all of you. We have about 20 or 25 minutes for discussion. I think there are some people around with microphones. When you stand up, if you would just identify who you are and who you want to address the question to.

Let's start over here.

QUESTIONER: Edwin Wesely, long-time member of this Council.

What, if any, wellsprings of popular control, if any, are there in China today?

KOPPEL: I'm not sure I know what you mean by popular control.

QUESTIONER: (Off mike.)

KOPPEL: I'm sorry?

QUESTIONER: The emergence of any kind of control by the people at large rather than just the government acting on its own.

KOPPEL: As we try to demonstrate in these -- it's four hours, and the good news is you get to watch it over four separate evenings; it's a lot to swallow at one time. But as long as there is no suspicion on the part of the government that the freedoms that you're discussing in any way cross the line into politics, there's a lot of room.

The minute, though -- I mean, what's most interesting is, after the recent earthquake in Chengdu, there were reports of motor clubs carried in your newspaper from Chongqing, where people -- 20, 30, 40 cars in a convoy -- would load their SUVs up with supplies and take them to Chengdu to distribute them among the people who needed help so desperately. And that was permitted to go on for about two or three weeks. And then the government cracked down.

And you have to ask yourself, why? What could they possibly object to? And my answer -- and I'd be interested, Adam, in hearing your thoughts on it -- my answer is that anything that suggests spontaneity, volunteerism, the possibility that a group might form around even something as beneficent as just taking supplies to earthquake victims, scares the hell out of the Chinese government.

SEGAL: I think that's right. And I think if you look at the reporting in China, they very quickly wanted to get out ahead. It was the party that was leading the volunteers, not the volunteers leading the party.

I'll just give one other example which I think actually speaks to the point that Ted made about when does democracy come in China. You know, China's per capita is $1,700, $2,000. And when Korea hit it in 1988, per capita was in the $20,000, much higher. But the two largest kind of social protests that have been kind of self-organizing or spontaneous have been these homeowner associations, urban-dwellers in Xiamen. There's concern about the chemical plant that they wanted to build, and then in Shanghai about the Maglev -- the train.

So here you have these kind of homeowner associations that have a stake in the system that are organizing. They didn't call it a protest. They called it a stroll. They organized a stroll through (SMS ?) and technology. It wasn't a protest walk. It wasn't a demonstration. It was just a stroll they were all taking at the same time.

So I think clearly you see this process where you are beginning to have a whole range of -- again, to use the stakeholder word, but shareholders or homeowners, property owners in the Chinese system, that are clearly going to push things forward.

QUESTIONER: Thank you. Jeff Wang here from Asia Society. I'm not yet a member of the Council, but I may be. (Laughter.)

It's more of probably a comment rather than a question. I hope that's okay. I'm recently rereading a book by John Kenneth Galbraith talking about -- titled "The Good Society." And one of the things he said in the opening chapter was what defined a good society. And one of the two criteria was -- two of the many criteria were freedom and opportunities to a rewarding life.

And subsequently he immediately said, you know -- I'm not sure if I'm quoting this verbatim, but he said "I'm not sure if East Berlin residents without freedom would happily exchange their lives with the lives of" -- I believe it's South Bronx; I didn't make this up. And so he's certainly making a comment there, and that's one thing I'd like to see if you have any comments on, especially the little interview that you did with this artist friend who had no clue, or refused to say that he had any idea or would make any comments on the lack of freedom to do a lot of things.

And another thing is -- it's more of a mundane question. I would say, you know, I was born and raised in China. I've only been here for eight years. And I realized that in the presidential politics or any electoral politics, the attention span is very short among the voters; you know, usually four years, whatever the term is. So you look back four years of the past incumbent and say, "What happened in four years?" And if you did well, if things went well in these four years, I think you should do it again. But if things didn't go well, it must be your fault.

So the question I have is, if the Chinese have done well for 30 years or so, what would it take for the Chinese people to say, "No, I don't think you're doing it right; I want a completely new system"? Thank you. Sorry for taking so much time.

KOPPEL: Adam, do you want to take a crack, or do you think that's -- (laughter) --

SEGAL: I'll take the last question.

KOPPEL: Oh, I wanted that part. (Laughter.)

SEGAL: Oh, okay. (Laughs.) Everybody wants that part.

My sense is that the system keeps running because, as I think the piece demonstrates really effectively, is everyone thinks their life is getting better. Everyone has this dream that they're going to get better. And the part we didn't see, but there's a part with -- there's a family in the countryside. The father is always drunk and the mother insists on sending the daughter to school, even though the father doesn't want to send the girl; it's a waste of your money to send the girl. But she's clear that their lives are going to be better.

And I think as long as that continues, as long as the vast majority of Chinese think that their lives are getting better, then the system will continue. Is it going to take a major economic downturn? Is it going to take having no air to breathe? Those, I think, are serious stresses on the system. But right now I think it can run this way for quite a long time.

KOPPEL: And I think the -- what should seem familiar to us and what surely must seem familiar to you, after your eight years of living here in the United States, is that there are a lot of very well-to-do people in the United States, and not all of them are happy. Most of them, in fact, have this sort of gnawing discontent.

And what I found most interesting about Alan Chung (sp) is his search for meaning in life through Christianity. And it's a search in meaning for a young man who's doing just fine. He's making a lot of money by Chongqing standards and is extraordinarily successful, but he feels an emptiness in life. And, you know, that's a luxury you can only afford when you're not hungry and you have a roof over your head and you do have a job and money keeps coming in and you have every expectation that if you get sick, you're going to be treated and you'll get medical care.

But what we found time after time after time, even in the poorest -- when we went and visited a village near that coal mine in Datong, and the village is essentially made up of old people and children, because all the young people are off in the city making money. But I talked to a 93-year-old woman who is now confined to her bed, and I said, "You've lived a very, very long life. When was the best time to be alive in China?" And she said, "Absolutely now. We have enough food. We have enough clothing." And that seems to be the sense.

Now, does that mean that people are all content with their lot? Not at all. Eighty-some-odd-thousand -- I think it was 87,000 -- these are the Chinese government's own statistics, which probably means that you can double the number -- but in 2006, 87,000 demonstrations having to do with corruption, pollution, job complaints, plants that are being shut down. You know, this is not a uniformly happy society. But I think the question that we, as outside critics, need to ask ourselves is, you know, can anyone remember a better time in our lifetime in China? And I've been covering China for 40 years now, and certainly my answer to that would be "Absolutely not." These are the best times I've known in China.

SANGER: Way in the back there.

QUESTIONER: Herb London, Hudson Institute.

You quite readily asserted that the United States represents 4 percent of the population and uses 25 percent of the energy. It also generates 30 percent of the world's wealth. So one of the questions that has to be asked is if China -- assuming the level of growth that it has at the moment -- reaches a point where it also has 30 percent of the world's wealth, how much energy would be required?

KOPPEL: If this is a quiz, I just flunked. (Laughter.)

QUESTIONER: It's a quiz only because the assertion is often made that 4 percent -- 25 percent of the energy. But the last part of the equation is very rarely mentioned, and that is 30 percent of the world's wealth.

SANGER: Some other hands were -- thank you. Yeah.

QUESTIONER: Jason Chapman, Project Renewal.  

I spent 20 years living in Hong Kong, watching much of China's growth. China has to grow something like 7 (percent) to 8 percent a year just to accommodate people coming into the workforce. Its population will peak, I think, somewhere around 2025, 2030, 2035; Japan's peaked last year or the year before. My question is a security question, but it has an economic component. What happens when China's population has peaked -- when it doesn't need to grow at 7 (percent) or 8 percent, when it doesn't need to keep the train running as fast as it is on the tracks -- what happens security-wise at that point? And what does the U.S. need to do about it to make sure it maintains enough of a stake in Asia?

KOPPEL: May I ask you to take your question one step further, because clearly there is an implication that you think you know and -- or that you think you have a sense of where it may go, and I'd love to hear what that is.

QUESTIONER: I'm not sure I do have a sense, actually. I think -- my question is I think that the region will be in flux. I think the region is in transition in that sense, a transition that probably is 10, 20, 30 years in the making from a security perspective, with implications for Japan, Korea, the U.S. and China. And to a certain extent, China at this point is not interested too much in exerting a security role beyond Korea and a few places. It's interested in not having a crisis in East Asia because a crisis in East Asia would take away and jeopardize what it needs to do to keep the train on the tracks. What happens when it doesn't have to keep the train on the tracks quite as much, given a fairly -- I won't say torturous, but interesting relationship with Korea and Japan over all the -- over the many years?

SEGAL: I mean, it strikes me that there's an assumption that once the working population starts declining, then they're no longer so focused on internal or domestic kind of development, which then makes them more likely to be more assertive or aggressive in foreign policy; the argument being, "Well, right now -- you know, we have been able to work with them regionally and globally because they're so focused domestically."

But I'm not sure that changes, right? 2020 -- the working population starts declining -- they go from having six workers to supporting every one retiree to -- you know, close to three or 2-to-1. They still have to fund all of that, right? No pensions, no welfare support and so there's still plenty of domestic issues that all of that money starts going into, and environmental situation's clearly not going to be solved. It strikes me that 20 years from now, even if they're not worried about 8 percent growth, they can go -- drop to 6 percent growth or 4 percent growth, they still have plenty of things on their plate that the leadership is probably still addressing the domestic problems first.

KOPPEL: And I think you also have to take into account the projection of what is usually referred to as soft power. While I think you're correct that the Chinese are not going to be projecting militarily way beyond their own region, they have for years now been projecting both diplomatically and economically in terms of investment and development throughout Africa, throughout Latin America. They have known for a long time that this competition with the First World is barreling down the tracks, and that's why you found a great deal of Chinese activity in Africa and a great deal of Chinese activity in the Persian Gulf and a great deal of Chinese activity in Latin America. They do it pretty much below the radar. But I think we would all be shocked to realize how pervasive it is.

SANGER: Ted, let me press you on that for just a moment.

When you read the national security strategy of the U.S. that came out in 2006 -- this was the update of the one that we all know for preemption and so forth in 2002 -- there was one major difference and it had to do with China. And it basically had to do with exactly what you described -- going to places like the Sudan, going throughout Africa, signing up what the Chinese hope are exclusive oil deals where they would have a direct channel to get the oil that they believe they need for their growth. And the warning that the Bush administration sent was (a) this won't work; and (b) even if it doesn't work -- it does work, it leads us to confrontation over time.

Is it your sense the Chinese believe that it will work -- that they can sign up around the world exclusive suppliers who will not put product out on the market, but instead send it right to them?

KOPPEL: I don't know what the Chinese believe, David. But it's my instinct that they have projected to the point where they realize -- I mean, China, for the first time in the last year or two -- I'm sure Adam has precise statistics -- but China has been unable to meet its own requirements for coal. They have enormous capacity for producing coal. Coal satisfies the need of, I think, 70 -- 70 (percent) to 75 percent of Chinese energy requirements. They have begun importing coal over the last year or two. I don't think the Chinese are going to pay a whole lot of attention to what America thinks or cares about their activities in Africa or Latin America or the Middle East. I think the Chinese perception is they have no alternative but to develop these sources.

SANGER: Adam, you were going to add?

SEGAL: I think there's two issues. I think one, they might not care about us but they are eventually growing to care about what the Africans and the Latin Americans and the people in the Middle East are saying. And I think the Chinese are learning that there's going to be some pushback there -- that in fact that they have been saying, "You know, you're not a very good partner. You say you're coming without all of these other requirements, but in fact you -- you know, you pollute, you bring your own workers" -- all these other things.

I think the second is I don't think the Chinese know, right? When we talk about Chinese -- going to go to China, get mercantile -- mercantile policies or to get all this oil -- there's a debate in China, right? And they haven't figured it out themselves if they think that, you know, the Japanese model in the '80s is going to somehow work for them. And so to the extent that -- you know, this next four years is very important for the next president, it's to send the message that, "Look, there's -- we know there's two paths. There's a more mercantilist kind of competitive path and then there's one that's more open. We're hoping you're going to take the second." When we have to send the right signals, right? So the CNOOK deal for Unocal probably sent the wrong signal, which is that, you know, you wanted to buy some stakes in a U.S. company but we said no. So that means that you have to go to Sudan or other places where we don't really want them to be.

So I don't think they know and I think there's these kind of constantly shifting debates that we don't have a great deal of say over, but we can send the right signals.

SANGER: We're running short on time, so what we're going to do is we're just going to take two questions more and then divide them up among -- the young lady in the back there?

QUESTIONER: Nancy Yao (sp).

Mr. Koppel, I was wondering -- there are no excerpts that feature female Chinese capitalists and I'm wondering if you had a chance to interview any. And if so, if there was any difference or anything you can expound on with regard to a sense of equal opportunity.


SANGER: And we'll take one more question and then we'll do them both.

Right down here.

QUESTIONER: Hi, I'm Cordelia Diamond.

I just have a question about -- I know there's -- in my history class at my school, we learned about how there's hundreds of thousands of migrant workers just moving into these big cities and taking illegal jobs or enrolling their children in illegal schools. Is this -- the government doesn't seem to be doing much about this because at -- at the same time that it's illegal, it's benefitting them by providing them with workers that are willing to work at a very low wage. How do you think this is benefitting their economy?

SANGER: Ted, do you want to take the first question, and Adam, do you want to take the second?


We focus of some -- at some length on a woman by the name of Madame He. Madame He some years ago -- she is known as the Hotpot Queen of Chongqing. Madame He some years ago took her -- she and her husband took a couple of woks and they whipped up this particularly devilish hot Sichuanese kind of food which they sold from the back of their kitchen, and they made enough money to build a restaurant. And now she is one of the wealthiest people in Chongqing and has a complex overlooking the Xiaoqing River that would do Disney proud. (Laughter.) I mean, it is immense. And she is rich a proud of it and unashamed of what she has. She drives a brand new Jaguar despite the fact that she doesn't have a license. She bought it -- (laughter) -- and she is a -- she's a pistol. And yes, she is one of the -- she is one of the main characters in one of our broadcasts.

SANGER: She may not be the role model --


SANGER: -- that I think Nancy had in mind -- (laughter) -- but that's okay.

Adam, on migrant workers.

SEGAL: My daughter's only 5, so my initial impulse is to ask you where you go to school. But -- (laughter) -- it's a -- you know, it's one of these questions that clearly economically, the local government -- it works for them, right? So the hukou system, which is the old system that tied people to where they were born, has broken down. The migrants come in and they live illegally.

It differs in China. Some local governments actually try to do things, right? They try to build schools, they try to get the students into schools. Some local governments ignore them. You can see in Beijing now as the run-up to the Olympics, they're sending most of the migrant workers back out because they don't want them there during the Olympics. And this is actually one of the areas where you see civil society starting to bubble up. There are a number of NGOs working on getting migrant workers' rights. And we're waiting -- you keep on hearing these rumors that they're going to abolish this hukou system and that they're going to kind of move into this free labor market. But that -- we could keep on hearing that in the future.

SANGER: Well, Ted, Adam, all of you, thank you very much for a wonderful evening of -- (applause) --

KOPPEL: Thank you.

SANGER: -- documentaries and answers. I really enjoyed the piece. I watched all four of them.

SEGAL: Thank you.

KOPPEL: Thank you very much. I appreciate that.









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