WEBVTT - Has China peaked?

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<v Speaker 1>I'm Ruby Jones and you're listening to seven AM. After

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<v Speaker 1>decades of spectacular growth built on property and heavy industry,

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<v Speaker 1>China has tried to chart a new path, one driven

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<v Speaker 1>by electric vehicles, green technology and AI. But as those

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<v Speaker 1>bets begin to falter, there are questions about whether China

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<v Speaker 1>has reached its peak, with stubborn problems like high youth

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<v Speaker 1>unemployment and an aging population seemingly intractable. So as the

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<v Speaker 1>new year begins, what is Shei Jinpin's plan to course

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<v Speaker 1>correct and if he can't pull it off, what does

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<v Speaker 1>that mean for Australia Today. Essayist, translator and author of

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<v Speaker 1>eleven books on China, Linda Javin and What's next for

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<v Speaker 1>one of the world's great superpowers. It's Thursday, January one, Linda.

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<v Speaker 1>Right now China is facing a whole raft of challenges, economic, diplomatic.

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<v Speaker 1>But I want to start with the electric vehicle industry

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<v Speaker 1>because it seems to tell us something about the way

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<v Speaker 1>the Chinese Communist Party goes all in on certain industries.

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<v Speaker 1>So can you tell me about that?

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<v Speaker 2>So it will set goals. So about ten years ago

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<v Speaker 2>it said we have to develop electric vehicles.

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<v Speaker 3>Thanks the heavy government subsidies. The former nation of bicycles

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<v Speaker 3>has become the world's leader in electric vehicles. Whether you're

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<v Speaker 3>buying the car or building the car, providing the electricity,

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<v Speaker 3>or assembling the battery, everyone in China is entitled to

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<v Speaker 3>government money and assistance.

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<v Speaker 2>You know. And five years ago China had five hundred

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<v Speaker 2>electric vehicle manufacturers. So five hundred manufacturers, that's unsustainable. They

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<v Speaker 2>began to compete. There were many, many, too many electric

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<v Speaker 2>vehicles made. But the overcapacity is such that there's just

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<v Speaker 2>incredible amounts of unsold vehicles, and price deflation has been

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<v Speaker 2>a problem for the manufacturers because there's so much availability,

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<v Speaker 2>there's so much supply. Over supply as a result of

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<v Speaker 2>government policy is a continuous problem. It happened in the

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<v Speaker 2>steel industry, which is one of the reasons they started

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<v Speaker 2>Belton Road to use excess steel capacity. But when you

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<v Speaker 2>have private enterprise with over capacity, it's not as easy

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<v Speaker 2>to fix.

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<v Speaker 1>So you've got this key industry with a lot of problems.

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<v Speaker 1>But can we talk about the economy from the perspective

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<v Speaker 1>of workers. What is the reality of the job market

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<v Speaker 1>in China right now?

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<v Speaker 2>Well, the majority of wealth, generationally speaking, is held by

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<v Speaker 2>older generations in China with very frugal habits. They were

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<v Speaker 2>brought up in a different age, you know, when I'm

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<v Speaker 2>talking about people who are in their sixties or or older,

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<v Speaker 2>and they tend to save or invest in something like

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<v Speaker 2>real estate, which is a whole nother problem. And young people,

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<v Speaker 2>a lot of them don't see a clear future ahead,

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<v Speaker 2>including college graduates, university graduates. They are now being encouraged

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<v Speaker 2>to take up jobs that they shouldn't look down on,

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<v Speaker 2>jobs in the rural sector and all that kind of thing.

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<v Speaker 4>China's jobless rate for sixteen to twenty four year olds

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<v Speaker 4>hit twenty one point three percent in June. That's nearly

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<v Speaker 4>four times the national rate. Beijing officials suspended the publication

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<v Speaker 4>of the July number, coinciding with a graduation season. With

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<v Speaker 4>an estimator.

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<v Speaker 2>There was a woman and a couple of years ago,

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<v Speaker 2>she went viral on social media because she put in

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<v Speaker 2>something like eight hundred applications for jobs, and she'd had

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<v Speaker 2>thirty interviews and she still couldn't get a job, and

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<v Speaker 2>she had a good degree. And this prompted a lot

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<v Speaker 2>of young people to start talking about a character in

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<v Speaker 2>an early twentieth century novel called Koid Koid was this

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<v Speaker 2>character who still wore his scholar robes in the early

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<v Speaker 2>twentieth century, like an old fashioned scholar. And he was

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<v Speaker 2>a young guy and he could never quite get a job.

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<v Speaker 2>He could never quite pass these civil service examinations to

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<v Speaker 2>get the job. But he had all of the pretensions of,

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<v Speaker 2>you know, the educated class, and he would sit in

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<v Speaker 2>the tavern and he would quote Confucius and young people

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<v Speaker 2>began ironically liking themselves to Kongig, and the government didn't

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<v Speaker 2>like that at all. So at that point there was

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<v Speaker 2>this person who wrote something like sunny Happy Kongig, kind

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<v Speaker 2>of responding to the government's call for positive energy. But

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<v Speaker 2>it is difficult being young, having not great prospects and

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<v Speaker 2>not really being able to afford a place, or as

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<v Speaker 2>with another viral couple on social media, they bought a

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<v Speaker 2>place in one of these new developments by Evergrand or something,

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<v Speaker 2>and the company went bankrupt and they've lost their life savings,

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<v Speaker 2>their nest egg. It's difficult.

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<v Speaker 1>Yeah, And so I mean, obviously the CCP is highly

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<v Speaker 1>aware of how the economy is impacting people. Tell me

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<v Speaker 1>about what they're doing to try and turn it around.

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<v Speaker 2>So the government is constantly examining the options and responding

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<v Speaker 2>to situations, not always quickly enough, but that's true of

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<v Speaker 2>most governments. So, for example, the thing with ev is

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<v Speaker 2>just to go back to that simple example that was

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<v Speaker 2>promoted in previous five year plans. But the five year

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<v Speaker 2>plan that's going to be announced and approved in March

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<v Speaker 2>doesn't include evs, and it puts a stronger emphasis on

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<v Speaker 2>AI and green technology and all of that kind of thing.

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<v Speaker 2>So it tries to rebalance as best as it can.

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<v Speaker 2>That's one of the ways that the government does is

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<v Speaker 2>they put down certain goals and one of them, for example,

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<v Speaker 2>was elimination of poverty by twenty twenty. Of course, they

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<v Speaker 2>had to announce that they had achieved that goal, and

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<v Speaker 2>I have no doubt that they will announce at a

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<v Speaker 2>certain point that they have achieved peak carbon and net

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<v Speaker 2>zero when those times come up. It's very important. It's

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<v Speaker 2>the way the Communist Party has always worked. So how

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<v Speaker 2>does that work in practice? It means that at the

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<v Speaker 2>grassroots level, where they actually know what's going on, is

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<v Speaker 2>their poverty is there not if they report up, oh

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<v Speaker 2>we have it actually eliminated poverty, there's still a lot

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<v Speaker 2>of people living very very abject circumstances. That doesn't look

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<v Speaker 2>good for the local officials. There's a lot of incentive

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<v Speaker 2>to lie, and again a very complex situation. The Chinese

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<v Speaker 2>Communist Party and government have acknowledged that this is an

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<v Speaker 2>inbuilt problem of the system. They need good information, you know,

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<v Speaker 2>bad data in, bad data out, and they know that.

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<v Speaker 2>But the way the system works, by the time the

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<v Speaker 2>information gets to the top, it's what the government wants

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<v Speaker 2>to hear. It is what sheetin Ping wants to hear.

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<v Speaker 1>Coming up Chi Jinping's plan to turn the economy around,

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<v Speaker 1>and so talk to me about the roadmap we're on

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<v Speaker 1>right now. Then what's being set out? What are the

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<v Speaker 1>goals that you know, she's expecting to be met.

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<v Speaker 2>Okay, So one of the big things that they're talking

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<v Speaker 2>about in terms of a transition in the economy is

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<v Speaker 2>to a people's centered economy. The Communist Party loves expressions

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<v Speaker 2>like this, but what does that actually mean. It means

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<v Speaker 2>that they want to invest more in things like education

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<v Speaker 2>and health and a service economy and that kind of thing.

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<v Speaker 2>So they have these ideas about where it should be going.

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<v Speaker 2>You have less people living in rural areas. That's been

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<v Speaker 2>a long term demographic shift. So what's happening is people

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<v Speaker 2>are leaving the rural areas, and yet so much of

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<v Speaker 2>the infrastructure and the planning has to do with connecting

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<v Speaker 2>those places. So they're spending a lot on roads to villages.

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<v Speaker 2>Now does that make sense? So they're looking at problems

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<v Speaker 2>like that, you know, how do you rebalance your investment.

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<v Speaker 2>They want to tame over capacity in things like steel

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<v Speaker 2>by shutting down outdated and inefficient plant, transitioning to green

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<v Speaker 2>steel and obviously green technologies in general. They want greater

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<v Speaker 2>technological and scientific self reliance. That's a huge goal and

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<v Speaker 2>it has been for some time. They're also very much

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<v Speaker 2>looking ahead, looking to invest in the security, the architecture

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<v Speaker 2>of national security.

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<v Speaker 1>Yeah, tell me a little more about that.

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<v Speaker 2>Well, that's all areas of security. So on the one hand,

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<v Speaker 2>it's building up a defense capacity and on the other

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<v Speaker 2>it's also looking after things like cyber security and everything else,

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<v Speaker 2>which I think a lot of people will find a

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<v Speaker 2>bit ironic considering some of the things that the Chinese

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<v Speaker 2>Communist Party and government have been accused of with regard

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<v Speaker 2>to other countries. But the security includes surveillance and policing,

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<v Speaker 2>energy security obviously, all these things get slowly added into

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<v Speaker 2>this big picture of what it means for national security.

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<v Speaker 2>And I don't think China in that sense is that

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<v Speaker 2>different from other places. You know, we've all had to

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<v Speaker 2>expand our thinking on the idea of national security.

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<v Speaker 1>Yeah, And so when you look at g and his leadership,

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<v Speaker 1>I mean, I'm not suggesting it's under threaten anyway, but

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<v Speaker 1>I suppose what are your thoughts on what is at

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<v Speaker 1>stake here for him?

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<v Speaker 2>Because everything, Yeah.

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<v Speaker 1>I mean, if the economy can't be turned around, what

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<v Speaker 1>happens for she?

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<v Speaker 2>So essentially it's not just she, it's the Communist Party's

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<v Speaker 2>own legitimate if you think about it, the Communist Party

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<v Speaker 2>came to power, its legitimacy was that it helped to

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<v Speaker 2>defeat the Japanese, or they say it defeated the Japanese.

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<v Speaker 2>It fought the Japanese invasion, it won the revolution against

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<v Speaker 2>a corrupt, self serving government, and it was the legitimate

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<v Speaker 2>MAO is like the legitimate savior of the nation in

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<v Speaker 2>that sense. So that was where it staked its legitimacy.

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<v Speaker 2>Then over time it obviously made some big mistakes and

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<v Speaker 2>the Great Famine of nineteen fifty eight to sixty one

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<v Speaker 2>in which conservatively thirty forty million people died. You know,

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<v Speaker 2>that's a generally agreed number that was man made, that

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<v Speaker 2>was caused by policy. So China then has to in

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<v Speaker 2>the post mail period figure out a new formula for legitimacy,

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<v Speaker 2>and that new formula is we are making people's lives better.

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<v Speaker 2>They are the people who have given China the chance

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<v Speaker 2>to get rich. People's lives have gotten better, China has

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<v Speaker 2>become stronger and more respected internationally. That is what it

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<v Speaker 2>stakes its legitimacy on. Now, if people's lives aren't getting better,

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<v Speaker 2>if the economy tanks, then that part of the legitimacy

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<v Speaker 2>equation starts to fall apart.

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<v Speaker 1>Okay, and China is obviously Australia's biggest trading partner. So

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<v Speaker 1>how do you think the government here should be looking

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<v Speaker 1>at what's happening in China right now and thinking about it.

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<v Speaker 2>I think we have under capacity in China watching a

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<v Speaker 2>long term thing before I speak of the short term.

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<v Speaker 2>I think we really need to invest more in our universities,

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<v Speaker 2>in our humanities departments. You can't understand China unless you

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<v Speaker 2>understand Chinese history. You have to have language. You know,

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<v Speaker 2>we have to build up that capacity because China is

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<v Speaker 2>such a complex place. It's a puzzle with lots of parts,

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<v Speaker 2>and if we can't look at it, if we don't

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<v Speaker 2>have enough people with eyes on it, you know, and

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<v Speaker 2>really understanding it, then we're in trouble. But in the

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<v Speaker 2>short term, I think we always have to be aware,

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<v Speaker 2>of course, of the tensions and monitor things like with Japan.

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<v Speaker 2>Right now, it's so angry with Japan that Japanese pop

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<v Speaker 2>star concerts have all been canceled. There's a lot of

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<v Speaker 2>things like that, you know. And we've seen Australians arrested

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<v Speaker 2>and used as pawns. Basically, we've seen that with Canadians,

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<v Speaker 2>and so we have to be always aware of what's

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<v Speaker 2>going on with China and the rest of the world.

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<v Speaker 2>But in terms of actual new opportunities, say we invest

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<v Speaker 2>over thirty percent, significantly over thirty I think like thirty

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<v Speaker 2>six percent of our foreign investment I think goes to America,

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<v Speaker 2>something like one point three percent of our foreign investment

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<v Speaker 2>goes to China. There are huge risks. Obviously I'm not

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<v Speaker 2>underplaying the risks, but it seems to me that when

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<v Speaker 2>they say they want to open up the economy Further,

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<v Speaker 2>they want to open up to foreign in value added telecommunication,

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<v Speaker 2>biotechnology and also the possibility of wholly foreign owned hospitals.

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<v Speaker 2>I think perhaps there is room for Australian business to

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<v Speaker 2>move in to those areas in China. I think we

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<v Speaker 2>can take a little bit more creative advantage of what

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<v Speaker 2>China can possibly offer us as market and investment than

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<v Speaker 2>we have in the past. You know, just dig up Australia,

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<v Speaker 2>sell the rocks.

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<v Speaker 1>Well, thank you so much for your time.

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<v Speaker 2>Thank you, Ruby, it's been a pleasure. Thanks for listening.

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<v Speaker 1>Tomorrow on the show, we're taking an in depth book

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<v Speaker 1>at how Donald Trump has actually changed America beyond the

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<v Speaker 1>wild rhetoric and attention grabbing announcements. What are the ways

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<v Speaker 1>he's reshaped the country and its place in the world,

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<v Speaker 1>and from immigration to healthcare and the economy, which changes

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<v Speaker 1>will last. That's seven am tomorrow with doctor Emma shortis

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<v Speaker 1>US politics expert at the Australian Institute. I'm Ruby Jones.

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<v Speaker 1>This is seven am. Happy New Year.