Zhang Xin - Chief Executive, Soho China HARDtalk


Zhang Xin - Chief Executive, Soho China

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World Championships. It is now time for HARDtalk.

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Welcome to HARDtalk. My guess is one of only 24 self-made female

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billionaires in the world. Hers is a true rags to riches story. As a

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teenager Zhang Xin worked in a sweatshop in China. By her 20s she

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worked for Goldman Sachs and, disillusioned by Wall Street,

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returned to China to make a fortune in property development. What kind

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of China, a country heading for economic problems or an emerging

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democracy as well as an emerging personal story is quite

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extraordinary. Your parents were purged in the cultural Revolution.

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Your teenage years were spent partly in a sweatshop in Hong Kong. How was

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that? How did that seem to you? Did it seem like punishment or did it

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seem like this was the real world you are going to live in? I was born

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during the cultural Revolution in China, so I did not know any other

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way. Everybody grew up in China in those days were poor, deprived of

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any material means and wearing the same clothes, living in the same

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kind of apartments. We would go to schools and we learnt the same way

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of speaking. Even ideological, we were kind of guided in a certain

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way. Those were the days when before China was opened. By the time I

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moved to Hong Kong, even though I was working in the factory, it was

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an eye opening experience for me because the colours, the freedom,

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the noise, everything is so different. So it was a happy time?

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When I say working in a sweatshop you think it must have been

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terrible, but it was something you remember as enjoyable. I don't know

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I was that unhappy in China. Even when I was living in the cultural

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Revolution environment, it was a simple life that I as a child

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enjoyed. One of the observations of that time stuck with me. The workers

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in the short sharp -- sweatshop woodwork elsewhere for a slight

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increase in pay. Why did they do that? Because those were the days

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when Hong Kong was the manufacturer in China. -- manufacturing centre.

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That has now moved to China. Factories are not like what we

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imagine a big factory would be. The factory was in a high-rise building.

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One floor was a factory. One factory would be making the sleeves, another

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would be selling the zippers, another putting the collar on. If

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you are a worker and somebody above you pays you - because they pay by

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the peace dashed just pay by the peace - and want to pay you more,

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then you go. You studied at Cambridge. Your observations about

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the left-wing observations -- intellectuals and your professors

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had an interesting view of communism which didn't correlate with what you

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had seen. Not so much the professors, it was the students. I

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went to a club and a group of leftie students were very idealistic. They

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were idealising Marxism, socialism. I was sitting there and thinking,

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you have not been to a real country that is a socialist country. You

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really ought to be there and get a sense of what it is really like.

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This was the period with the slogan to get rich is glorious. Did you

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feel that this was a real period of change, that the Maoist past was

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being broken up? I came to this country in the 80s, just at the

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beginning of the opendoor policies. Very few have alleged Chinese like

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me were able to leave China. I came via Hong Kong. On the one hand I was

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fascinated in the Western world. On the other hand I was also very much

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focused on where China is leading to because everybody in China was

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talking about the future, the reforms, the open doors. What it

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meant to modernise China. That was also the beginning of the paradox,

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which we will get onto later, which is it was open and liberating, but

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he also kept a lid on. It was the period of Tiananmen Square as well

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as the openness. Two things going on in parallel. This is the thing about

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open doors. You open the door and people see something and they want

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more. There is no way back. You cannot say I open the door, opened

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as part and don't open another part. It is hard. It is still hard. You

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ended up in Wall Street. You are headhunted. This was the time people

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really wanted to invest in China. You didn't entirely like Wall

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Street, did you? I had a great training with Wall Street banks. I

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learned a lot about financial markets. I eventually benefited from

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a knowledge of the capital markets. It was also the kind of style of

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work that I did not enjoy so much. It was very hierarchical. It was one

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way of thinking only. You work on Wall Street, this is a glorious

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place and everything that you are supposed to subscribe to. As much as

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I enjoyed it, I was also dying to leave. You said, people spoke

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crassly that, treated each other badly, look down on the poor and

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adored the rich. It does sound like important of the greed is good

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generation. Wall Street bankers are undoubtably cutthroat and

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aggressive. I have seen a lot of that. Was there something about the

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amorality of it that really irritated you? Even though you are a

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very rich woman now, you are quite correct in your daily life. You

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don't give your kids a kitchenette of money. You don't travel first

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class. Is there something about that you just didn't like? I didn't feel

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it was a moral, I just felt it was very aggressive. The general

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environment was aggressive and competitive to the point that I felt

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that it was suffocating. I didn't feel that... I didn't attach any

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moral values to that. You went back to China, you make your husband, you

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became business partners as well as marital partners. The China that you

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live in now, the President talks about the China dream. What does

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that mean for you? To be honest, I don't know what the China dream

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means. People talk about it in China so much because every president in

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China, every generation of leaders will come and they will have some

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things that belong to them. For the President now it is the China dream.

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I don't know what it is in the eyes of the government. I know what the

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China dream is in the eyes of the Chinese people. It is to live

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better, to modernise, to live freely, to speak freely. That is the

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dream of everybody. Is it a dream that has not quite been met,

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particularly on the live and speak freely aspects? Freer than my days.

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This is the thing about the character of freedom. People only

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want more and more and more. That is unstoppable? That is unstoppable.In

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terms of the economics, part of the miracle is that more people have

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been pulled out of poverty in China in the past 20 years than in any

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other country in history. Do you worry that the boom bust eventually?

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That the property boom that you have been riding on robust? China at the

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moment is going into a challenging time. In the early stage, when it

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was relatively easy to just grow, exploit and open eyes. They lot of

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that has been exhausted. The migrants are moving from rural China

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into the cities. That has largely been exhausted, that surplus of

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labour. Also, urbanising cities and most of the cities in China are open

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eyes. -- urbanised. Clearly China is no longer growing like this. It has

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some challenges. People like us, who build buildings, are wondering what

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will be the next stage because you have built a lot. Someone who runs a

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-- an enormous property company says that if the bubble busts the result

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will be catastrophic. It seems as if he and you what he managed to slow

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down, rather than the inflation to just pop. I think China's growth has

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been previously driven by investment. A lot of it is

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government investment. Investment needs to have a return. When you see

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building standing there not being used, that is not giving a return to

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investors. That is when investments should slow down. That is what we

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face now. That is a very difficult decision for the government, isn't

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it? Your generation have certain expectations. It was pretty rough

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and it has got a lot better. The young generation, the teenagers now,

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may have varied different expectations. I think people want

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opportunities. I think there are plenty of opportunities in China. If

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you live in China and come to London you will see the vast difference. In

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nearly every effort -- in nearly every industry, we do not have it in

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China and we should do that. Some clever person will think about it as

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a business and as a profit. One of the problems with doing business in

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China, one of the works at every foreign businessmen loans, is

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connections. Some people equate that that

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that a difficult problem with full China? I think there is no doubt

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that there is a degree of corruption in China and a degree of

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relationship of connections that brings opportunities and profits to

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people. Bear in mind that we have also been given a tremendous

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technology today with social media and everything else. Things are so

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quickly exposed. That itself is the check and balance of the powers.

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Relationships in the matter when someone has absolute power. One

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person has the power and duty to benefit from it, then you make the

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relationship. A novelist once said that China used to be 70 70% talent

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and 30% and actions. As money made it worse? I operate in China and I

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can say that you can still operate without connections. I am not the

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daughter of anybody. I don't have a close relationship with any

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politicians. We still operate as a publicly listed company in China.

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The market is becoming more and more open. If I were to compare ten or 20

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years ago, yes there is corruption. Because of the openness, we are able

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to see the corruption. We find out more about it but it may not be any

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worse than it was before? You get so quickly exposed through the social

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media. You have 6 million followers on the Chinese equivalent of

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Twitter? Yes. Why? I write every day and people just like to read about

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stories of people. I think this is pushing the Chinese society to

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become progressive and open. Remember, 530 million people

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registered on Chinese Twitter. Anything you write will be instantly

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published. That itself is giving the grassroots incredible power.

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there. It has helped the government to regulate itself. It puts a lot of

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pressure on the government. One example. There was a local public

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security and there was an accident happened. The head of the police

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went down to see the accident and somebody took a photo of, he smiled

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and this tragedy. People said why is he smiling? He should be serious and

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worrying. And then people immediately start searching about

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his background. They found out he owned 14 different watchers

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different watchers, roll it is. He is a public servant who could not

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afford Rolex. Within hours, photos of him wearing these different

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things came out. He was dubbed the watch uncle. Within 24 days, he was

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prosecuted. Where do you think this openness will lead? There is still

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the Chinese fire well -- firewall on all these things. Where do you think

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the will lead the government to go to? Is China going to be an emerging

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democracy? China is going to become more open. It is not something

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anyone can stop. We have been given this incredible to knowledge he,

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this is what is available for humanity. Anyone can Twitter, can be

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online, information is instantly available. That is a great check and

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balance the power. But is it? One Chinese diplomats described this as

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flies coming in. Things that are not entirely welcome. But what can you

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do? The only way you can do is to close the door you cannot close the

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door. One writer says that if China was to move towards democracy, it

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would become catastrophic. It is to big. It would be as if the river is

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flooding and people were drowned because democracy would not work in

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China. I think we would look back in this period of history in humanity

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and realise that from the 20th century to now, humanity, in

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countries around the world, are embracing democracy. China is no

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different. The Chinese people are no different to any other people.

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have talked about socialism with Chinese characteristics. Could it be

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a democracy with Chinese characteristics? Could it be very

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slow because it has to go through the party. I do think that one thing

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is that the demand is there. The public desire is there. The tools

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are there. In terms of voicing the public through the online social

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media. The government, the way the government needs to deal with it is

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to respond to it. Not to deal with it pretending it won't come. It is

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precisely this question with Tiananmen Square. You have an

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economic slowdown. It may not be the bubble busting. But you have

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questions about economic reform. In the past that has led to the

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opposite of what you are talking about. Everybody keep in mind, that

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is where our prosperity will take us. Not the freedom and chaos that

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we saw in Russia when they moved from communism. That is a long time

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ago. That is pre- information time. Every bit thing is -- everything is

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moving in a different direction now. You are very optimistic aren't you?

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Yes. You mentioned that everybody looked the same in Mao 's China. Is

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there a place for women in Chinese business? I would say that being an

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entrepreneur in China is probably easier than in many other

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countries. Passe this because I have seen a lot of successful Chinese

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women -- I say this because I have seen a lot of successful Chinese

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women entrepreneurs. If you look at China, if you are just given man and

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women and equal opportunity, you would very often see women do quite

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well. I do not know the exact number, but I do know that for

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instance, the Olympic gold-medallists for China, there

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were far more women than men. This was a free competition. This is not

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about relationship is there is no glass ceiling. When women are given

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free and equal opportunities, in China they tend to perform better.

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But in politics. In politics, no. All addicts excels not been open to

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anybody. Men women. -- in politics not has been -- politics has not

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been open to anybody. It has to change. It is inevitable. We are

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seeing it around the world. Let us talk about the future. What would be

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the good scenario that you would like to see, in terms of the

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economy. You think that the slower rate of growth can be managed? What

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do you think that there is a bubble and it will burst? I think that the

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economy is getting into a very difficult time and I think that the

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change, because the exports, the economy cannot rely on exports and

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investment alone. There has to be a different way of managing the

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economy. We have not seen anything coming out from this new government

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yet. But I am optimistic in thinking, I don't believe that

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moving from high growth to relatively solid growth means a

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collapse of the economy. I don't believe that. I think companies,

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governments, individuals will adjust to that. It is a matter of

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certainty. Governments need to come out with a clear idea of where it

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where it is guiding the economy. Have you got idea of what that

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should be? It will be domestic consumption driven. Empowering the

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Chinese consumer to spend more? Do you think that is not the new

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government will consider? That will be something they have to do. If you

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are not relying on export, it has to be consumption. Consumption is so

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small as a percentage of GDP. Compared to the UK or the US there

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is huge room for growth. So for the ordinary Chinese person to spend

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their money wisely. And in terms of politics, trust the ordinary Chinese

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person to express what they believe freely, even if it is critical?

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And it is already happening. And is it being tolerated? Yes. It has been

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quite tolerated. I think it is also giving the government pressure to

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change for the better. Do you trust the government to react positively

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to this? I do not know. But it is a general public desire. The

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government has to respond to it. Ignoring it is not the way. So the

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big lesson is, the wealth will trickle down to ordinary people, who

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will have more say in how their country is one. That will be the

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Chinese dream. Right. And if the 14 -year-old sewing away in the switch

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at -- sweatshop in Hong Kong, what would see so? Different what would

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she say? I think she would want the same opportunities. The single

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element that changed my life is education. If I did not have the

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opportunity to live -- leave the Hong Kong sweatshop, to go to the UK

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and get an education, I would not have the opportunity to go to Wall

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Street and do what I do. If we look at Chinese society, it is so

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important, education. The government is doing quite well in terms of

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providing enough education. Everybody gets free education up to

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nine years in China. The quality of the education is still not quite

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