>> THE UNITED STATES AND CHINALOOKING TO RESET RELATIONS AS AU.

S. SECRETARY OF STATEPREPARES TO VISIT BEIJING THISWEEKEND.

THE TRIP COMES MONTHS AFTER THEMEETING WAS CANCELED WHEN THEYOU SHUT DOWN A CHINESE SPYBALLOON OVER ITS AIRSPACE.

OUR NEXT GUEST WAS BORN INCHINA, EDUCATED IN THE UNITEDSTATES AND SHE'S THE WORLDRENOWNED ECONOMIST.

SHE TRACES THE RISEANDRELATIONSHIP WITH THE WEST INHER NEW BOOK.

SHE'S JOINING WALTER ISAACSONWITH HER VALUABLE PERSPECTIVE.

>> THANK YOU.

WELCOME TO THE SHOW.

>> THANK YOU.

GREAT TO BE WITH YOU,WALTER.

>> THE NEWS IN THE PAST FEWDAYS HAS BEEN ABOUT CHINAPERHAPS DEVELOPING A LISTENINGOR SPY STATION IN CUBA THATCOMES ON THE HEELS OF THEBALLOON THAT PERHAPS CHINA SENTOVER THAT WASSURVEILLANCEBALLOONS.

AS SOMEONE BORN IN CHINA, HAS 3DEGREES AND HARDER AND LIVES INLONDON AND BASHAN, YOUUNDERSTAND THIS RELATIONSHIPWELL.

TO WHAT EXTENT IS THERESOMETHING ALARMING ABOUT THEINCREASE IN SURVEILLANCE OR ISTHAT A NORMAL ORDER OF BUSINESSBETWEEN THE TWO COUNTRIESTHATWE SHOULD LIVE WITH?

>> THERE ARE FEWPEOPLEDISAGREE WITH THE STATEMENTTHAT EVERYONE SPIES ONEVERYONE.

TO BE FAIR,IT ISCHINA ARISING NATION WITH RISINGASPIRATIONS.

AS WE SEE THROUGH HISTORY, ALLTHESE RISING NATIONS HAVE HADTHEIR GLOBAL AGENDA.

CHINA WANTS TO HAVE A GREATERSAY IN THE GLOBAL NORMS ANDORDER.

IT'S OFTEN INTERPRETEDASAGGRESSIVE TACTICS AND ACTS.

THE CHINESE HAVE THEIR OWNPERSPECTIVE.

THEY CONSIDER THEIR INFLUENCEIN THE REGION TO BEINCREASINGLY IMPORTANT.

THEY PROBABLY HAVE ASPIRATIONSTO DIMINISH U. S. POWER ANDINFLUENCE THAN WHAT THEYBELIEVE TO BE THERE SPHERE OFINFLUENCE.

AS WE KNOW FROM WAY BACK,THEU.

S. WASINTERESTED INEUROPEANPOWERS AS IT BECAME A MUCHSTRONGER NATION.

LEAVING ALL THAT ASIDE, IN THESHORT TERM THE CHINESE ANDAMERICANS ARE POINTING FINGERSAT EACH OTHER AND TALKING PASTEACH OTHER.

MOST RECENTLY THEY DO HAVE ADESIRE TO STABILIZE THERELATIONSHIP FOR THEIR OWN GOODAND TAKE THE TEMPERATURE DOWN.

>> THE BIG NEWS IN THE COMINGWEEKS WILL BE THE FACT THATSECRETARY OF STATE ANTONYBLINKEN IS TRAVELING TO CHINA.

A TRIP THAT WAS CANCELEDEARLIER ON BECAUSE OF THEBALLOON SURVEILLANCE ISSUE.

WHAT DO YOU THINK HE SHOULD SAYON THAT TRIP AND YOU HAVE HOPESTHAT WILL LOWER THE TEMPERATUREIN THIS CONFRONTATION?

>> THE DIALOGUE CHANNELS HAS TOBE OPEN AS IN ANY RELATIONSHIP.

COMMUNICATIONIS KEY.

THEY HAVE TO STARTHAVINGSUBSTANTIVE DIALOGUE.

THERE'S ALSO ACHINESEPERSPECTIVE.

FOR THE WHOLE LIST OF U. S. GRIEVANCE ON CHINA, THERE'S ASIMILAR ONE OF CHINESEGRIEVANCES AGAINSTTHE U. S. THEDIALOGUE NEEDS TO BE KEPT OPENBUT THE U. S. SHOULD ALSO FOCUSON SPECIFIC ISSUES.

SPECIFIC AREAS WERE CHINA ISPUSHED TO NEGOTIATE ORCHANGERATHER THAN HAVING ALL THISTENSION INTHE RELATIONSHIPSAND THE WORLD ECONOMY.

I THINK THATCHINA BELIEVES ITSNEW NORMAL WITH U. S. RESTRICTIONS ON TECHNOLOGY BUTTHEY DO HAVE HOPE THATTRADING,INVESTMENT RELATIONSHIPS CANRESUME NORMALITY.

AND FURTHER TALKS ABOUTCOLLABORATION.

CHINA HAS ACCEPTED ANEW NORMALTHE TECHNOLOGY RESTRICTIONSWILL BE AROUND.

FOR THE U. S. , WILL CHINA GOAWAY?

KNOW.

>> WHAT FUNDAMENTALMISUNDERSTANDING DO AMERICANSHAVE ABOUT CHINA?

>> HOW THE MODEL WORKS.

THE UNIQUE ECONOMIC SYSTEM.

THE FACT THERE'S A CENTRALIZEDSTATE WITHAN ALMIGHTY SYSTEM.

THEY OFTEN MISSTHE CREATIVEENTREPRENEURIAL, ONTHE GROUND,THE DECENTRALIZED MECHANISMSTHAT MAY CHINA SUCCESSFUL.

INNOVATIVE POWER.

WEALSO MISSA CULTURAL ANDHISTORIC LINES.

THIS IS WHY AMERICANS ANDCHINESE WILL LOOK AT THESAMEQUESTION AND COME TO DIFFERENTCONCLUSIONS.

THE TOLERANCE OF STATE.

IN SOME CASES THE CHINESESTATEINTERVENTIONIS NOT ONLYEXPECTED, THEY ARE ALSODESIRED.

THE SAME ACTIONS WOULD BEINTOLERABLE TO OTHER CULTURES.

WE COME BACK WITH ADIFFERENTTAKE ON THE SIMILAR ISSUES.

THIS IS WHY WE KEEP ON TALKINGPAST EACH OTHER.

NOT SEEING THE OTHER'SPERSPECTIVE.

>> DO YOU THINK THAT EXIST THEOTHER WAY WHICH IS THAT CHINA'SLEADERSHIP FOR THE CHINESEPEOPLEHAVE FUNDAMENTALUNDERSTANDINGS ABOUT THE U. S. ?

>> ABSOLUTELY.

THE FUNDAMENTAL UNDERSTANDINGOF THE U. S. WANTS TO SUPPRESSCHINA'S GROWTH, WANTS TO HOLDBACK CHINA'S GROWTH IS ALSOMISPLACED.

THE CHINESE GOVERNMENTUNDERESTIMATES THE SCOPE ANDROOM FOR DIALOGUE ANDTO EASETENSIONS WITH CHINA NEGOTIATINGAND GIVING UPSOME.

ALSO, THE HUGE IMPACT THATCHINA COULD HAVE BY OPENINGUPITS ECONOMY FURTHER ANDMUCHMORE ENTHUSIASTICALLY TOAMERICAN BUSINESSES.

LET THEM MAKE MONEY.

GIVINGTHEM LEVEL PLAYINGFIELD.

THIS COULD BE ACCOMPLISHMENTSANDAMERICAN BUSINESSMEN WILLGO ON TO LOBBY THEIRGOVERNMENTS.

THERE'S A LOT MORE TO DO.

FROM THE CHINESE PERSPECTIVE,IT'S ALMOST LIKE THIS IS IT.

THERE'S NOTHING WE CAN IMPROVEON.

THERE IS NO GROUND FORIMPROVING THE RELATIONSHIP.

I THINK THAT'S MISTAKEN.

>> ONE OF THE MISUNDERSTANDINGSWE HAD WASTHAT IF WE HAD AGREATER TRADE RELATIONSHIP WITHCHINA.

IF THEYWERE MOREPARTOF THEWORLD TRADE ORGANIZATION WHICHTHEY DID.

THAT WOULD LEAD TO A GRADUALLIBERALIZATION IN CHINA.

IT'S WORKED THE OTHER WAY.

IS THAT AMISUNDERSTANDING?

>> THE COMMON ASSUMPTION THATGLOBALIZATION WILL BRINGCONVERGENCE OF ALL SORTS APARTFROM ECONOMICCONVERSIONS WASPROBABLY A MISTAKE.

IT'S NOT JUST OF CHINA.

MANY OTHER COUNTRIES ANDCULTURES WHERE THE PEOPLE AREFIRMLY ROOTED TO THEIR LOCALCOMMUNITIES.

CHINA AFTER THE WTOIS STILLVERY MUCH CHINESE.

THAT HAS NOT CHANGED.

THERE'S LEVELS OF CONVERGENCE,THE NEW GENERATION.

THEY ASPIRED TO THE AMERICANLIFESTYLE TO A CERTAIN DEGREE.

THEYLIKE HOLLYWOOD MBA BUTTHEIR IDENTITY IS STILL LOCAL.

THE FACT THAT 80% OF HALF AMILLION STUDENTS SETTING ABROADEVERY YEAR WERE TURNING TONATIVE SOIL IS AN INDICATION OFTHAT.

EVEN THOUGH THEY HAVE GREATECONOMIC OPPORTUNITIESELSEWHERE.

YOU ARERIGHT.

POLITICAL HAS STALLED.

WHAT IS THE NEW GENERATIONWANTS?

THEY HAVE DIFFERENT APPETITEFOR CONSUMPTION COMPARED TOTHERISK OF THEIR PARENT'SGENERATION.

POLITICALLY.

WHAT ISTHE MENTALITY?

THERE ARE INTERNATIONALSERVICES THAT ARE OPEN-MINDEDAND SOCIALLY CONSCIOUS.

THERE IS MORE CONVERGENCE OFSOCIAL VALUES OF THE NEWGENERATION AROUND THE WORLDWITH THE CHINESE BUT THEYLOOKABROAD AND DO NOT FINDINSPIRATION.

THEY DON'T LOOK ATWESTERNLIBERAL DEMOCRACIES AS PARAGONSOF SUCCESS OR THE OTHERDEMOCRACIES TRANSPOSED ONTONATIVE SOIL AS MODELS THEYASPIREDTO.

INSTEAD, THE APPETITE FORSTABILITY, FOR GOVERNMENTACCOUNTABILITY, FORECONOMICOPPORTUNITIES IS STILL DOMINANTIN THEIR THINKING.

>> ONE OF THE VALUES OF THEUNITED STATES OF A MORALCOMPASS IS THATLIBERTIES, FREEPRESS, DEMOCRACY.

THESE ARE GOOD INAND OFTHEMSELVES.

ARE YOU SAYING THIS NEW MORECOSMOPOLITAN GENERATION OFCHINESE DON'T BELIEVE THAT?

>> NO.

I DON'T THINK THAT'S TRUE.

I'M NOT SUGGESTING THAT IN ANYWAY.

THEY WOULD WANTTO HAVE AFREERAND MORE OPEN SOCIETY.

THAT IS THE DESIRE THE GENERALPUBLIC HAVEFOR CHINA.

I THINK THESE VALUES AREEVOLVING.

I DON'T THINK ANYTHING WESHOULD TREAT TOTALLYCULTURAL,TOTALLY INDIGENOUS AND THINGSWON'T CHANGE.

THAT'S NOT THE CASE.

IF YOU LOOK AT CHINA IN THE1990S, THERE WAS ALIBERAL ERAAND PEOPLE WERE DEBATING ANDTALKING ABOUT ALL KINDSOFTHINGS.

I'M NOT SUGGESTING THESE AREFIXED UP PREFERENCES.

WHAT I'M SAYINGIS THAT, FIRSTOF ALL, IF THEY HAD TO CHOOSEAND I'M NOT SAYING THERE'SNECESSARILY A TRADE-OFF BETWEENFREEDOM AND SECURITY ASINTERNATIONAL SURVEYS SHOW.

95 % OF THE CHINESE POPULATIONTO SECURITY OVER FREEDOM.

IN THE U. S. 37 % WILL MAKE THESAME CHOICE.

>> YOU TALK ABOUT SURVEYS.

YOU TALK ABOUT THE OPINIONS THEYOUNGER GENERATIONS HAVE.

SOME OF THAT IS IN YOUR BOOK.

TO WHAT EXTENT ARE THOSESURVEYS THAT ARE RELIABLE?

WHAT WOULD A YOUNGERPERSONWANT TO SPEAK OUT AGAINSTTHESTATE?

>> THESE ARE WORLD VALUESURVEYS WHICH ARE WIDELYRECOGNIZED AND USED.

AS RANDOM LIST SELECTION ASPOSSIBLE, THEY AREALSOAMERICAN ECONOMISTORSOCIOLOGIST OWNED GATHERING OFDATA.

THERE'S A WIDE RANGE OF SOURCESTHAT SUGGESTTHE SAME.

IT'S TRUE THE NEW GENERATIONHAS ASPIRATIONS FOR MORELIBERALISM.

IT'S INTERESTING THERE'SSENTIMENT TOWARD THE U. S. ORWESTERN DEMOCRACIESDID ALSOMAKE A TURN IN 2017.

THAT'S DURING TRUMP ERA.

WE CAN'T UNDERESTIMATE HOW THEEXTERNAL ENVIRONMENT AND WHAT'SPERCEIVED TO BE GREATERPRESSURE ON CHINA.

THEKIND OFIDEA THAT SOMEHOWTHE WEST DOES NOT WANT CHINA TOBECOME A RICHARD NATION ANDOTHER DEVELOPING COUNTRIES.

THAT DOES THEIR SHIFT SENTIMENTAND SHAPE THEIR UNDERSTANDINGS.

WE CANNOT UNDERESTIMATE THAT.

WE CAN'T TAKE THESE PREFERENCESAS GIVEN BUTTHE EXTERNAL,OBSERVATIONS HAVE MADE THEMCOME TO A CONCLUSION THAT MAYBETHE WEST DEMOCRACY DOESN'T SUITCHINA.

>> YOU SAY SOME OFTHE REACTIONTHAT'S HAPPENED IN CHINAAGAINST THE LIBERALIZATION THATOCCURRED 20YEARS AGO OR SOHAPPENED AT A REACTION TODONALD TRUMP.

TO WHATEXTENT ISHIS VALUESCHANGING?

>> THE ONE THING THAT IS TRUEIS THAT CHINA HASBEEN EVOLVING, ADAPTING AND ADJUSTING.

MAYBE BECAUSE THE WEST HAS BEENSO FOCUSED ON THE SAME THREESET OF ISSUES THEY HAVE OFTENMISSED THE VAST CHANGESANDEVOLUTION.

YES, WE CAN MAYBE SAY THERESOME PREFERENCES ON THE TOPTHAT ARE IMPOSED ON THEGENERALPUBLIC.

CHINA FACES A REAL CHALLENGE.

IT'S NO LONGER THE COUNTRYWHERE THE ENTIRE POPULATIONREVOLVES AROUND ONE GOAL WHICHIS HIGHER INCOMEAND MORE GDP.

IT'S BECOMING A MORE COMPLEXNATION WITHINDIVIDUALPREFERENCES, DIVERSE OPINIONSAND HOW DO YOU MANAGE A GREATCOMPLEX SOCIETY IS THE KEYCRITICAL CHALLENGE FOR THELEADERSHIP GOING FORWARD.

IT'S NOT GOING TO BE EASY.

IF YOU LOOK AT THE YOUTHUNEMPLOYMENT RATE, 25 % OFPEOPLE WITH BACHELOR'S DEGREEWITHOUT A JOB IS SIGNALINGSOCIAL INSTABILITY ISSUES.

DON'T UNDERESTIMATE THECHINESEGOVERNMENT AND SWIFT ADJUSTMENTTO POLICIES.

IN THE U. S. , POLICIES TAKE ALONG TIMETO CHANGE.

IN CHINA, THE PARTY DOES NOTCHANGE BUT POLICIES CAN CHANGEVERY QUICKLY.

IF THE GOVERNMENT HAS A MIND OFSOMETHING I BELIEVE THAT'S THERIGHT THING TO DO, THINGS WILLHAPPEN SWIFTLY.

NEVER LEAVE ANYTHINGBEINGPERMANENT.

THE MESSAGES ARE NOT PERMANENT.

THEY'RE ALWAYS RECALIBRATED,FINE TUNED TO FIT THECIRCUMSTANCES THAT ACCOMMODATETHE REALITY.

>> YOU TALK ABOUT A 25 %UNEMPLOYMENT RATE AMONG YOUNGPEOPLE.

PEOPLE JUST GRADUATING FROMCOLLEGE.

THAT SEEMS EXPLOSIVE.

WHY IS THAT HAPPENING?

IS THAT A BASIC ECONOMICPROBLEM AND WHAT COULD THATMEAN?

>> IT ISVERY HIGH.

THE WORLD AVERAGE IS AROUND14.

5 % OF YOUTH UNEMPLOYMENT.

THERESOME SHORT-TERM ECONOMICREASONS.

THE ECONOMY IS DOING POORLY INCHINA.

MORE GENERAL PROBLEM ISDIPLOMAS HAVE RACED AHEAD OFTHE ECONOMY.

THE CHINESE ECONOMY STILLMANUFACTURING BASE.

THEY DON'T NEED THAT MANYBACHELOR DEGREES.

WHAT THEY NEED IS VOCATIONAL,TECHNICAL,SKILL TRAININGESPECIALLY WHEN CHINA ASPIRESTO BE A GIANT GERMANY WITH THISINDUSTRIAL POWER.

AT THE SAME TIME, THERE'S YOUTHUNEMPLOYMENT.

30 MILLIONMANUFACTURING JOBSTO BE FILLED BY 2025 AND EVERYYEAR 300,000 SKILLED GAP IN THESEMICONDUCTORS INDUSTRY.

IT'S ASKILL,EDUCATIONMISMATCH.

THE PROBLEM LIES IN THEEXPECTATIONS AND REALITY THEDIFFERENCE BETWEEN EXPECTATIONAND REALITY FOR THE YOUNGPEOPLE.

THEY WENT TO GET A COLLEGEDEGREE YET THEY ONLY HAVE JOBSAS NANNIES OR A WORKER INACIGARETTE MANUFACTURINGCOMPANY.

THAT LEADSTO DISAPPOINTMENT,REDUCED EXPECTATIONS AND THATAFFECTS THE FAMILIES.

THAT'S A SIGN TOBE AWARE OF.

>> THE CHINESE LIVED UNDERZEROCOVID POLICIES.

I THINK IT WAS ALMOST THREEYEARS.

THE GOVERNMENT SEEM TO BEGIN TOPIVOT AWAY FROM THAT FOLLOWINGTHE PROTEST.

TWO WEEKS OF PROTEST.

HOW DID THE COVID ZERO POLICYIMPACT THE RELATIONSHIP BETWEENTHE STATE AND THE PEOPLE ANDWHAT DOES IT SHOW ABOUT THECHINESE GOVERNMENTTHAT WOULDDO A PARA WET ON THIS ISSUE?

>> IN THE EARLY STAGES OF THEPANDEMIC THE CHINESE PUBLICWERE GENERALLY SUPPORTIVE OFTHE CONTROLS IN PLACE ANDSAWCHINA AS A SUCCESS.

AS THE VIRUS EVOLVED, THEPOLICIES DID NOT EVOLVE ANDTHAT BECAME A HUGEPROBLEM.

TOWARDS THE END, PEOPLE WERELOSING JOBS.

THEY WERE NOT HAVING INCOME ANDWERE PRETTY MUCH FED UP WITHTHE LOCKDOWNS.

IN A SURPRISING TURN, YOU SAWHOW THE PEOPLE'S VOICES ANDPEOPLE'S PREFERENCES ULTIMATELYYOU CAN SAY IT WAS TOO SLOW BUTIT DID MOVE THE GOVERNMENT.

IT DID CHANGE THE GOVERNMENTFASTER THAN ANYONE HADEXPECTED.

IT IS ONE EXAMPLE OF THISFEEDBACK.

THIS MOST IMPORTANT THING ISTHAT THE COMMUNIST PARTY,THEBOAT STAYS AFLOAT BECAUSE OFTHE SEA OF PEOPLE.

THAT'S SOMETHING THAT ISIMPORTANT IN CHINA.

THEY ALWAYS HAVE TO ANSWER TOTHEVAST MAJORITY AND NOT EVERYINDIVIDUAL CHINESE BUT THE VASTMAJORITY.

IF THEY ARE NOT HAPPY, ITWILLTOPPLE THE BOAT.

DO REMEMBER THAT ABOUTCHINA.

>> THE ME READ YOU A SENTENCETHAT I FOUND FASCINATING.

YOU SAID ABOUT CHINA.

ITS AMBITIONS DO NOT INCLUDEEXPORTING ITS IDEOLOGY ORFOISTING ITS DEVELOPMENT MODELON THE REST OFTHE WORLD.

THAT SETS IT APART FROM WHAT WETHOUGHT ABOUT RUSSIA FOR THEPAST WHATEVER, 400 YEARS.

IT WANTED TO SPREAD ITSIDEOLOGICAL MODELS.

THAT IS ALSO UNLIKE THE U. S. FROM THE DAYS OF WOODROW WILSONTO THE DAYS OF BUSH ANDBIDENFELT THEY WERE SUPPOSED TOSPREAD DEMOCRACY.

DO YOU SEE THAT AS AFUNDAMENTAL CLASH?

>> CHINA IS MOREPRACTICAL.

IT UNDERSTANDS ITS UNIQUE MODELIS IMPOSSIBLETO BE REPLICATEDELSEWHERE.

IT DOESN'T STRIVE TO DO SO.

IT DOES BELIEVE SOME OF THEDEVELOPMENTAL LESSONS IT CANIMPART ON DEVELOPING COUNTRIESCOULD BE IMPORTANT.

FOR INSTANCE, IF INSTRUCTEDDEVELOPMENT WHICH IT HAS AGREAT AMOUNT OF EXPERTISE.

I DON'T THINK SPREADINGIDEOLOGIES IS A GOAL FORCHINA.

THIS LEADERSHIP ESPECIALLY INPAST GENERATION HAVE BEENPRACTICAL.

80 %OF THE POPULATION STILLLIVES IN DEVELOPING COUNTRIES.

CHINA WANTS TO WORK MORE WITHDEVELOPING COUNTRIES.

CHINESE TECHNOLOGIES ARE MORESUITABLE FOR DEVELOPINGCOUNTRIES THEN AMERICAN OREUROPEAN ONES.

YOU CAN SAY THE LEADERSHIP ISMORE IDEOLOGICAL BUT MOREINTERNALLY DRIVEN RATHERTHANREPLICATE OR EXPORT SOME IDEALSINTO THE REST OF THEWORLD.

>> THANK YOU FOR JOINING US.

>> THANK YOU.