You are talking about, sir. Lets hear from cheryl in florida, the independent line. Good morning. Caller good morning. Very glad to be here. I would like to ask the guests this morning if he thinks the United States of america is too dependant on chinas money . Go ahead. Its true that the largest external creditor for the government is china. If china had not been able and willing to lend a lot of money to the United States, who would have . Somehow the u. S. External deficits had to be financed . Its just so happened china had large surpluses and the credit to invest in the u. S. Treasuries so thats an uncomfortable situation where china is the largest creditor. How much debt does china hold now . Of the federal treasuries, its according to the latest treasury information that i have seen, about 1. 3 trillion worth of treasuries, but thats not the sum total. Chinese hold significant interests in freddie may and freddie mac, and and they hold significant amounts of Municipal Bonds and corporate debt. The money the u. S. Owes to china is much larger than the 1. 3 trillion. Mark from washington, d. C. Go ahead, mark. Caller i wanted to know how much of the financial free market economy thinking has china embraced, and has that contributed to the easy credit environment that china had in the last few years leading up to this crisis . Also, i wanted to make a quick comment, i remember hearing the strength of the American Economy was that we had different regions and doing Different Things, making Different Things and that was the strength of the American Economy, when one part was working or the other part was not working or being laid off, and so there was a diversity, but what i hear or what i see now, theres not that kind of Diverse Economic mechanism, and we have a lot of the financial as you just said, the large financial pot in one country and in one type of operation, so i think Going Forward thats a little bit scary, and i will take your answer off the line. Thank you. Okay. Well, with regard to your question, sir, about the Financial Sector developments in china, its important to remember the opening up process of chinas economy that began in the late 70s was focused for the first few decades, certainly until recently on commodity trade, not an investment from Foreign Countries and not in the Financial Sector, and the chinese kept their banks and Financial System which has grown quite big in the meantime, essentially close. This has indeed began to happen. But there is still a very relatively close situation. What is happening now is that u. S. Financial companies, brokerages, banks, investment companies, are beginning to be participants in chinas Financial Sector development in a very significant way, and now that the chinese economy is beginning to contract, the problems extend also to the Financial Sector in the u. S. This is jack from ohio. Jack, good morning. Go ahead. Caller hello, i am calling to ask if the gentleman sees unions forming in china . Also, what chinas governments position is srevisavis unions . Unions the way we know here in the u. S. Are unknown in china, and its illegal to form unions across the industries, and at the same time the chinese require individual enterprises to have trade unions but at the enterprise level and not beyond the enterprises, so collective bargaining, the kind we have in this country and europe and canada is virtually unknown in china, yet theres movement, and its illegal to strike but strikes are all over the place in china so theres a lot of emerging power in china. And helen in maine. Good morning. Caller good morning. I have a question about chinese investments in the United States, particularly in the area of real estate. I live in maine and we have slightly more than 1 Million People, and recently we learned that we have recruited almost 1,000 Chinese Students to come to maine to study and we also have old factories and nearby towns that the chinese are looking at purchasing for the purpose of opening up a shoe industry again and also purchasing buildings, old buildings, to refurbish to house individuals, medical terrorism with a local hospital complex. I am wondering what your guest thinks about this in terms of bringing the dollars here, but what impact this might have on our local economy and our own Unemployment Rate . Before you answer, theres a story from yahoo addressing this, it says worldwide chinese investors bought 6 billion invested in the United States and most of that going to properties in manhattan. Thats an important point. I am not sure that i know all the facts on that subject that is happening here now. The outflow of private capital from china often takes the form of investments in Real Estate Properties in the United States and in europe, but not only there but also in australia and new zealand, all over the world you see real estate in china, and its driven by the economy in china, they want to put part of their money in Foreign Countries and real estate is considered one of the safest investments. Thats from one of the private sources in china. In addition to that, you have a chinese direct investment in many industrials all overt world, including the u. S. And the chinese investments, the investments from china from enterprises, not individuals, has always become important. Maine happens to be part of the United States where the chinese are particularly interested, and its not only maine, but california and the northwest and northeast. We have brokerages focusing on chinese investments in real estate. Theres a large amount of investable resources, not only the Chinese Government but the private sector and we only have the beginning of the process until we get a financial crisis in china which is possible but not likely, in my opinion, this outflow of investment from china is to increase in the years ahe ahead. What are the liabilities for the whose liability . The liability for the u. S. . I dont think china is different in that respect from other sources of Foreign Investment in the u. S. The u. S. , invests enormous amounts of private money from europe and the arab countries and new zealand and canada and also from mexico, and china is the new major new source of investment in the u. S. Economy, which will create many which may create many legal problems and liability problems, depe depending on how all this is evolving, and its a industry for the law firms. Timothy from california, you are next for our guest. Hello. Caller yeah, i guess trump made his 5 billion from the chinese, but my main question is what about terrorism . There seems like theres going to be a lot of explosions, one last week and one last night, and it seems like 140 some six people died in the first explosion and we dont know how many died last night. How bad is terrorism in china right now . Is it worst than what we think or is it just normal . I dont know if theres such a thing of normal terrorism. You are asking about terrorism in china and industrial safety, which is a big problem illustrated by the major explosions. Ten days ago in the large port city of beijing, and i believe there was another Major Industrial explosion in china yesterday or the day before. Terrorism in china is different from what it is in many parts of the world. The weaker population, turkishspeaking population, china is much more concerned about the weaker population, and terrorism emanating from other minority groups, including tibetan elements and they are from the muslim middle east isisrelated terrorism. Its a serious problem. The chinese are very, very alert to this problem, and protecting themselves in many, many different ways, but its unrelated to the industrial explosions that you mention. That has no link to terrorism whatsoever in my opinion. Cnbc says one of the things that came out of it exposed lax safety regulations within the country. Yes, this is an illustration of one of the problems that have emerged as a result of the extremely rapid growth in the last 3 1 2 decades. As a result of it growing, many aspects of the governments capability to supervise the economy in the society have lagged behind the output gross, and that is also reflected in many problems regarding industrial safety, food safety is another aspect of this, and many food safety problems in china, but the industrial explosions that we have seen in recent weeks are an illustration of the relatively slow enforcement, lax enforcement of industrial safety regulations. And the former chief World Bank Resident here as four guests. Michael, go ahead. Caller is it true the Bush Administration is the reason we ow owe so much debt to china . I dont think its fair or realistic to put the blame at the foot of any particular u. S. Administration. The u. S. Debt to china is mainly the result of very large trade surpluses by china. This started well before the Bush Administration, and it was already big under the clinton administration, and china became the cheapest source of supply for many u. S. Emports, and china had a relative comparative advantage in exports as many countries were able to develop large expert services, and developing huge amounts of liquidity in the hands of the government, some of which were lent out to finance the deficits in the u. S. , so its unrealistic and fair in my opinion to put to make the Bush Administration or any particular administration responsible for that. These are longterm Economic Developments that go from administration to administration, and its still going today under obama. There are stories theres the potential to expose hacking. What is the longterm impact on both countries . My knowledge is limited to what i am reading about it in the newspapers, and the possibility of u. S. Sanctions as against china related to the hacking that we have heard about in recent weeks, particularly from the office of personnel administration, are very serious, and if we are sure the source of those hackings is china and if we are sure those hackings are sanctioned or condoned by china, and the timing is sensitive because we are expecting the chinese president in washington in the next three weeks, so if the u. S. Administration comes to the political conclusion that they have to impose sanctions and announce that in the next few days or weeks, there will be a serious problem in the relationship with china. Do you think during the visit the topic of the stock market will come up as far as the discussions between the two leaders tph leaders . I think it has two. Its an important aspect of the bilateral relationship. The Obama Administration will be well advised to not only put the trade relationship and the currency relationship, and also the hacking, the internet safety issues on the table. Whaeufplt kind of posture do you think the conversations will they will probably deny the source of the hacking and certainly deny if theres chinesesource hacking that the government is condoning or sanctioning it, but how that will evolve, i have no idea. Here is hurbie from mississippi. Good morning and go ahead. Caller good morning. Listening to the conversation, sounds like communism is trumping capitalism, and the trouble in america is capitalism, and were selling out our country and with the communism being able to do for more in china with their middle class rising when in america the middle class is declining, i think that capitalism is the problem and america should try to rebirth more of a Socialism Program in order to help many instead of a few. I would like him to shed light on the difference between capitalism and communism when it comes to the stock market and whos benefiting out of it . I think if we want to seriously discuss the issues socialism versus communism and capitalism, we need more time than we have. The word communism is useful or accurate to describe the system in china. There are very few genuine communist lefts in china. Capitalism, its increasingly becoming a huge thing with the state retaining the decisionmaking on processes on large parts of the economy, land ownership, and significant ownership of the Financial System. Whether the u. S. Should move more in socialists direction as many people are beginning to contemplate now is beyond my capability to discuss in the limited time available. If you look at the u. S. Economy in the first few decades after the second world war, the federal government had a much greater role in the economy than it has today, and even today we should not dismiss the influence and the impact of the u. S. Federal government participation in the economy, we often forget that we still have fannie mae and freddie mac, and thats after 2008, the 3 out of 4 houses in the United States are indirectly or owned or guaranteed by the u. S. Government. The u. S. Economy is in some way more socialists than we realized and whether we should go further in that direction or retract and have a more capitalists model is way beyond my brief at this point. From arizona, here is i think its race from arizona. Caller yes, thats correct. Good morning, buddy. My question is, i believe you can probably clear it up for me is that roths are controlling i am talking about roth child and build aburger. A lot of the representatives are on the payroll, so to speak, and i cant think of a better word, and they are not representing the American People. Thank you. I am not sure, sir, i understand the implication of your question. Are you suggesting the roth which i wills could you sharpen your question . He is no longer with us. Oh. Lets go to ivan from new jersey, the democrats line. Good morning. Caller yes, my question is, how politically feasible is it in china to tax the wealthy and redistribute the income so there could be an increase in demand and the economy can become more modern . How politically feasible is it that it has been next to impossible to do it here in the u. S. . I will take my question off the air. Could you point a picture between what the comparison of those wealthy in china and middle class, and what is the difference . It would take us a lot of time to explore that issue. There was no middle class in china to speak of 30 years ago, and today we have a large and rapidly growing middle class and the rich part of the middle class is really rich, about a million millionaires in china, and even a substantial number of billionaires. The tax problem is a serious problem. There was never a significant personal income tax in china introduced at the first time at the National Level in 1994, and the systems you need to effectively tax and control the taxes, supervise it, and audit it, the time you need to build such systems is very significant, and china is nowhere near the point where they have a truly efficient tax system. Taxing the rich in china is a problem because tax evasion is very large, its not very different from what it is in the u. S. Income inequality in china has become a very serious problem in the last several decades as part of this the enormous distortions that developed as a result of the super charged gross in the last three decades. I think the current financial minister is focused on the problem of social inequality and addressing some of the inequality for a more efficient tax system including the taxation of the very rich in china. Democrats, 2027488000, and republicans, 2027488001, and independents, 2027488002. They were not initially invited to join the negotiating partners to which it was politically motivated by the u. S. Is very hard to say. The u. S. Officially claims china would eventually be welcomed to join, and when the chinese realize how important the negotiations were, they began to make noises to the effect that at some point they might be willing to join. How serious they are or were about that, we dont know. Time will tell. Ppp is not the reality as you know, but this is a very important issue. I think there are a little nervous about the ppp initiative, and they have launched their own trade initiative in the form of regional apecbased and nonapecbased nonregional strayed initiatives, and the a speckbased initiative involves the chinese trump card, and if they get enough interests in the proposals, the u. S. May be faced with the very difficult choice whether to join the Chinese Initiative or put all of the eggs in the ptb basket. I would think it would be good for the u. S. To join the chinese apecbased initiative, the specific trade initiative, which is still in the early stage of proposals rather than ignore it, so this is a huge issue for the Obama Administration, and its a huge issue for china and for the u. S. Is the tpp effort gaining leverage over china . Obviously. Because if japan joins tpp and the other Nine Countries sorry, the other 11 countries, if they all join tpp you have a pretty massive trade block, which is all around china and china, by not being included tpheurblgly in the tpp tends to suffer trade loss eupbeslosses. Tpp, as we know, its not a reality yet, and it still has a way to go. This is a work in progress, and i think the chinese response to tpp and the future u. S. Response to the chinese trade policy initiatives, some involving apec and some involving other countries, very important. Our caller. Hi, there. Caller i wanted to question regarding the counterfeit going on in china, and its called the counterfeit culture which developed in china, and a lot of the people in china from generation to generation to generation is learning how to replicate product