:00:00. > :00:09.Now on the BBC, it's time for HARDtalk.
:00:10. > :00:15.White Welcome to HARDtalk from Beijing. Since the financial
:00:16. > :00:23.meltdown of 2008, China has been the key hive of global economic growth.
:00:24. > :00:25.Here in Beijing, it is easy to see how China's brand of capitalism has
:00:26. > :00:35.transformed infrastructure and generated unprecedented wealth.
:00:36. > :00:48.Visit any Beijing mall and you see China is fast becoming a consumer
:00:49. > :00:57.society. This is where those with cash to splash conduct their love
:00:58. > :01:10.affair with luxury. How do you feel about the Chinese economy right now?
:01:11. > :01:14.I think it is growing very fast, and it is very good. I am already
:01:15. > :01:17.45`years`old. When I was young, it was not like this. Beijing was
:01:18. > :01:33.quiet, very traditional, with a small house. For me, it has become
:01:34. > :01:36.very modern. If you have money, you can have anything. Do you feel
:01:37. > :01:43.confident that this growth in Beijing and then China can continue?
:01:44. > :01:47.Yes, I am very confident about that. The gap between the rich and the
:01:48. > :01:50.poor in this country is wider than ever before, and no doubt the
:01:51. > :01:53.biggest winners in this society profit from their access to power.
:01:54. > :01:55.Cronyism and corruption threatened to have a corrosive impact on public
:01:56. > :02:07.perceptions of China's rulers. If you want to have a good job, or a
:02:08. > :02:18.better life, you have to know people. That is my perspective. You
:02:19. > :02:21.have to know people to help you to get that, or you work really,
:02:22. > :02:24.really, really hard. Like, you have no life yourself, and then maybe you
:02:25. > :02:30.can get a better position, if you're lucky. So you definitely need
:02:31. > :02:35.connections. It is a human network here. It all depends on who you
:02:36. > :02:38.know. And a lot of that is to do with the party, and also the people
:02:39. > :02:46.around the party who have the money? Yes, absolutely. It is all about the
:02:47. > :02:50.game power, the money. So if you have money, you can have some power.
:02:51. > :02:53.If you have some power, you can have a lot of money. Ultimately, China's
:02:54. > :02:55.stability and the supremacy of the Communist Party depends on the
:02:56. > :02:58.soundness of the economic foundations here. Right now,
:02:59. > :03:07.confidence is giving way to insecurity.
:03:08. > :03:14.At the heart of it is a fear of a debt`driven property bubble. If that
:03:15. > :03:19.debt turns toxic, than the whole world economy will feel the impact.
:03:20. > :03:25.My guest today is leading Chinese financier Jin Liqun. How worried
:03:26. > :03:43.should we all be about the Chinese economy?
:03:44. > :03:46.From his 38th floor executive suite, Mr Jin Liqun has a bird's`eye view
:03:47. > :03:57.of Beijing's unstoppable growth. The 30 years ago, it was a suburban
:03:58. > :04:02.area with virtually nothing. If he is worried, he hides it well. Jin
:04:03. > :04:07.Liqun, welcome to HARDtalk. Thank you. China is in a transitional
:04:08. > :04:09.phase. No longer the economy committed to breakneck double`digit
:04:10. > :04:19.growth, looking for a pass to sustainability. But that is not
:04:20. > :04:24.easy, is it? Of course. I would rather say the transition will be
:04:25. > :04:28.tough, formidable, daunting. You can have different kind of adjectives to
:04:29. > :04:39.describe this. It is really tough, after almost two decades of faster
:04:40. > :04:45.growth. We really need to do a restructuring in a serious way. One
:04:46. > :04:49.of the most important global investors, George Soros, has lost
:04:50. > :04:53.faith in China. He says that one of the Chinese growth model has run out
:04:54. > :04:59.of steam. Well, first of all, I would say China is a country which
:05:00. > :05:01.defies prediction. I remember, many years ago, right after the outbreak
:05:02. > :05:04.of the Asian financial crisis, economists had a cover photo, a
:05:05. > :05:12.picture, with a big headline about sick China. It did not happen. Also
:05:13. > :05:14.after the outbreak of this financial crisis, some people predicted
:05:15. > :05:23.China's economy would be losing steam and suffering major setbacks
:05:24. > :05:26.in our growth. This did not happen. This is because the Chinese growth
:05:27. > :05:33.pattern is not something static, it is dynamic. We change, we adapt.
:05:34. > :05:37.Well, you have to change and adapt, because you have some very obvious
:05:38. > :05:40.problems. Right now, I think many people in Beijing are particularly
:05:41. > :05:42.focused on one problem, which comes out of the old economic model, and
:05:43. > :05:44.that is massive industrial pollution, which produces the smog
:05:45. > :06:03.that overhangs this city right now. It is a product of economic growth,
:06:04. > :06:09.which has been dirty. How do you change that? This could have been
:06:10. > :06:11.resolved. As you know, the Chinese government has declared war on
:06:12. > :06:25.pollution, as it declared war on poverty 20 years ago. If you look at
:06:26. > :06:29.the history of Western countries, this smog, this kind of thing, was
:06:30. > :06:32.pretty common. London was a case in point. But this kind of problem was
:06:33. > :06:37.resolved in the course of economic and social development, and we have
:06:38. > :06:40.every confidence we can handle that. Why are you so confident, when the
:06:41. > :06:42.Chinese government set out rules, for example, about closing certain
:06:43. > :06:44.sectors of industry, shutting off traffic and closing schools if
:06:45. > :06:47.pollution reached certain levels, and then when the pollution reached
:06:48. > :06:49.those levels, just weeks ago, those rules were ignored and the public
:06:50. > :07:15.was infuriated? In some cases, yes. That is why it
:07:16. > :07:18.is very tough to keep environmental standards intact. When we move
:07:19. > :07:21.forward in continuing growth, in pushing forward the transition of
:07:22. > :07:27.the economy. Let me tell you you this. I don't think it is realistic
:07:28. > :07:29.to expect every locality, every local government, every institution,
:07:30. > :07:35.to come up to standard at the same time. Violations of the rules would
:07:36. > :07:38.happen, but I'm sure we would toughen up our stance on this issue.
:07:39. > :07:41.Perhaps a less visible way in which there is the concern about the
:07:42. > :07:44.status quo in the economy is, moving away from pollution, an invisible
:07:45. > :07:54.problem, and that is of a rotten core to the system of finance. That
:07:55. > :07:56.is a massive problem of debt in the shadow banking system, as it is
:07:57. > :08:07.called, which again threatens to undermine China's economic
:08:08. > :08:22.stability. Is there a danger of a toxic debt crisis in China today? I
:08:23. > :08:26.don't think so. I think debt level is a big issue. We need to deal with
:08:27. > :08:30.the debt problems in a very serious manner, but I don't think there is
:08:31. > :08:33.an impending debt crisis in China. Let me give you the reason why this
:08:34. > :08:39.is not going to happen. First of all, it is wrong to talk
:08:40. > :08:41.categorically about the debt. Most of the debt incurred by the local
:08:42. > :08:44.governments happened in coastal areas, and those governments are
:08:45. > :08:47.pretty good in dealing with this kind of issue, because these are
:08:48. > :08:52.fast`growing areas, and the government's coffers are pretty
:08:53. > :08:56.strong, so they can handle that. But if you go to to the lower levels of
:08:57. > :09:00.government, the western part of the country, which is not as advanced, I
:09:01. > :09:13.think the debt burden could be a big issue. But only handle that? First
:09:14. > :09:26.of all, it is very important to cope with the new debts. We should not
:09:27. > :09:29.allow it to blow up. But we have to differentiate between the different
:09:30. > :09:34.kind of investments on the basis of this debt. If the project financed
:09:35. > :09:38.by the debt is a good one, allow it to be completed. If there are some
:09:39. > :09:42.projects which are really bad, you can shut them down. If you look at
:09:43. > :09:49.the central government, our budget deficit is very, very low, 2.1%. Way
:09:50. > :09:57.below master treaty, even though we're not part of it. The economy
:09:58. > :10:06.would be going forward, and will be generating new resources to deal
:10:07. > :10:09.with this. So if you notice these kind of factors, the government
:10:10. > :10:12.would keep the economy going, and we would curtail the continued growth
:10:13. > :10:16.of the debt, and we would take a step`by`step approach to deal with
:10:17. > :10:21.the debt. The crisis would not be happening. If it is not handled
:10:22. > :10:24.well, it could be a real crisis. Is it time for the state in this
:10:25. > :10:27.country to radically disengage from the economy, from all of the key
:10:28. > :10:31.economic levers, including the financial system, manufacturing,
:10:32. > :10:47.production? Because right now, the state is in the thick of everything.
:10:48. > :10:50.The word radically may not be the right word. I would say steady
:10:51. > :10:57.progress towards the redefinition of the role of the government and the
:10:58. > :11:01.role of the businesses. I cannot predict what is going to happen 20
:11:02. > :11:04.or 30 years down the road, but I'm pretty sure, as you can see from the
:11:05. > :11:06.decision`making of the central government, the government would
:11:07. > :11:09.keep it at arm's length with these business operations. The government
:11:10. > :11:16.role would be redefined and the market would play a decisive role.
:11:17. > :11:25.All this indicates that government would keep its hands of the
:11:26. > :11:29.operations of the business. Except, people have talked about this sort
:11:30. > :11:32.of change for a long time now in China, and yet, the latest Heritage
:11:33. > :11:34.Foundation Index of Economic Freedom report has China in 130 Seventh
:11:35. > :11:37.Place, and they talk continually over reliance on public investment,
:11:38. > :11:46.the dominance of the party within the economic system, which they say
:11:47. > :11:48.undermines the rule of law. They say the judicial system is highly
:11:49. > :12:02.vulnerable to political influence and corruption. That is the reality
:12:03. > :12:05.today. You know, 30 years ago, if anybody tells you what is going to
:12:06. > :12:08.happen in China, what would have been done, given a particular time
:12:09. > :12:12.frame, probably a lot of people would not believe it. If you look at
:12:13. > :12:24.China today and compare it to the China of 30 years ago, it was such a
:12:25. > :12:30.drastic change. After 30 years of reform, we certainly have
:12:31. > :12:35.accumulated a lot of problems. Corruption is a big issue. How big,
:12:36. > :12:39.in your view? I think it is very hard to quantify. But I would like
:12:40. > :12:47.to say, the government is very, very serious, cracking down on
:12:48. > :12:52.corruption. As you can see, the leadership take it very seriously.
:12:53. > :12:58.And I am very confident we can deal with this problem. But the problem
:12:59. > :13:06.is, the leadership itself is a part of the problem. The Financial Times
:13:07. > :13:08.just last year ran this fascinating analysis of the legislatures in
:13:09. > :13:10.China, the National People's Congress, the consultative people's
:13:11. > :13:13.committees, and there are more billionaires at the top of Chinese
:13:14. > :13:15.politics than in any other country in the world, and this is supposedly
:13:16. > :13:31.a Communist system. What you have here is power and
:13:32. > :13:33.money married together. I would like to say, you have to differentiate
:13:34. > :13:34.between the leadership and individual members in the
:13:35. > :13:43.leadership. You have to differentiate the
:13:44. > :13:51.Chinese Communist Party, the Chinese government, from individuals who
:13:52. > :13:54.serve in this party and government. Now, I agree with you, this
:13:55. > :13:56.corruption is a serious issue and problems has to be dealt with very
:13:57. > :14:03.seriously. But, you see, in the course of
:14:04. > :14:06.development, when we shifted from this economy 30 years ago, under
:14:07. > :14:08.that kind of system there was nothing, virtually nothing for
:14:09. > :14:12.people to lay their hands on and the new system based on a market
:14:13. > :14:15.economy, I think it is not a surprise that you have to look at
:14:16. > :14:54.the determination of the new leadership in cracking corruption.
:14:55. > :14:59.What you have here is power and money married together. I would like
:15:00. > :15:01.to say, you have to differentiate between the leadership and
:15:02. > :15:03.individual members in the leadership. You have to
:15:04. > :15:06.differentiate the Chinese Communist Party, the Chinese government, from
:15:07. > :15:09.individuals who serve in this party and government. Now, I agree with
:15:10. > :15:12.you, this corruption is a serious issue and problems has to be dealt
:15:13. > :15:15.with very seriously. But, you see, in the course of development, when
:15:16. > :15:18.we shifted from this economy 30 years ago, under that kind of system
:15:19. > :15:22.there was nothing, virtually nothing for people to lay their hands on and
:15:23. > :15:25.the new system based on a market economy, I think it is not a
:15:26. > :15:27.surprise that you have to look at the determination of the new
:15:28. > :15:31.leadership in cracking corruption. Well, we will judge them on results,
:15:32. > :15:34.won't we? I think President Xi Jinping developed this phrase, we
:15:35. > :15:37.are going after the tigers as well as the flies within the system.
:15:38. > :15:39.There are tens of thousands of officials who have been disciplined.
:15:40. > :15:42.There are 10,000, apparently, who have been fired from their jobs, but
:15:43. > :15:45.these are mostly flies. Not necessarily flies, I think the
:15:46. > :15:47.ministers, governors are pretty senior officials. Hang on, there is
:15:48. > :15:50.a serious point. One activist, campaigner called for every senior
:15:51. > :15:53.member of the Communist Party to be fully transparent about their own
:15:54. > :15:57.personal assets, and he got locked up. I am not very clear about this.
:15:58. > :15:59.Let me ask you one question. How many governments in this world who
:16:00. > :16:02.could be so decisively anti`corruption? How many countries
:16:03. > :16:05.in this world could tell the rest of the world we have put so many people
:16:06. > :16:09.in prison because of corruption? This happens only in China. And if
:16:10. > :16:11.you look at the number of developing countries in the early stage of
:16:12. > :16:15.industrialisation, corruption was a rampant. If you could do this, why
:16:16. > :16:17.not China? I firmly believe that this new leadership is really
:16:18. > :16:20.serious about that. You cannot have a whole bunch of your so`called
:16:21. > :16:23.tigers. Tigers are more or less limited. You can also say that
:16:24. > :16:27.senior leaders are also a big problem for us to deal with. But, in
:16:28. > :16:31.the end, it seems the party will tell the people it is going to clean
:16:32. > :16:34.out of the stable, it is going to tackle corruption, just as it is
:16:35. > :16:37.tackling, as we discussed, the pollution issue. But what it will
:16:38. > :16:40.not allow and will never allow is a challenge to its own supremacy, and
:16:41. > :16:47.surely as China develops and transitions that has to come, too,
:16:48. > :16:50.doesn't it? Probably I think the outside world may not understand
:16:51. > :17:14.fully the operations of the Chinese system. First of all, at this stage,
:17:15. > :17:17.most of the Chinese people acknowledge the Communist Party
:17:18. > :17:20.should be the leading party, because the most of talents are in this
:17:21. > :17:26.party. I am very much proud to be associated with this party, I am one
:17:27. > :17:29.of the members. I have been devoting my life... If I may say so, you have
:17:30. > :17:33.been a huge beneficiary, you have been a winner from the system and I
:17:34. > :17:37.understand why you feel a debt of gratitude and loyalty to the party.
:17:38. > :17:42.I dare say there are some in China who do not feel way about the party.
:17:43. > :17:45.The point is, they are not able, they are not allowed to express an
:17:46. > :17:48.alternative view, a view which says we no longer want a one`party
:17:49. > :17:51.system, we want a multiparty system, we want to vote for people who want
:17:52. > :17:54.to kick the communists out. They are not allowed to do that, whereas in
:17:55. > :17:57.another developing country, comparable, maybe, India, they are
:17:58. > :18:04.most certainly allowed to kick out the powers that be if they feel they
:18:05. > :18:07.have not done the job. I am not surprised you tell me there may be
:18:08. > :18:10.some Chinese that want to kick out the Communist Party. But I can tell
:18:11. > :18:13.you the Communist Party enjoys the broadest support of the people,
:18:14. > :18:16.otherwise we would not have peace and harmony in this country.
:18:17. > :18:19.Otherwise we would not be able to implement all of these policies. But
:18:20. > :18:22.we have to define democracy in different ways. Democracy is not a
:18:23. > :18:31.something for the people to enjoy, simply go to the ballot box.
:18:32. > :18:36.Beyond the ballot box you have nothing to do. In China, we may not
:18:37. > :18:39.have everybody going to the ballot box at this moment, but beyond the
:18:40. > :18:50.ballot box, decision`making is not simply the purview of the top
:18:51. > :18:54.leadership. Look at the twin conferences. I do wish you could
:18:55. > :18:57.understand Chinese. If you read all of this, bloggers and newspapers or
:18:58. > :19:05.something, all of those petitions and critical comments are really
:19:06. > :19:08.very, very sharp. Can you imagine that in a country which is supposed
:19:09. > :19:11.not to be democratic, which I certainly would dispute that
:19:12. > :19:13.concept, how come in a non`democracy the people raise so many sharp
:19:14. > :19:28.questions, criticising government from bottom to top? They can do it
:19:29. > :19:32.as long as they do not cross the line and as soon as they cross that
:19:33. > :19:34.line, and are seeing to be challenging the party itself, their
:19:35. > :19:47.access to the internet and indeed their access to freedom, is cut off.
:19:48. > :19:52.``are seen. I am not defending this, but I am going to tell you one very
:19:53. > :19:55.important point. In a country at a particular stage, people would not
:19:56. > :19:58.really enjoy a very good life, we would not really enjoy peace if the
:19:59. > :20:00.country is thrown into chaos. The Communist Party of China made
:20:01. > :20:03.mistakes in history, particularly, for instance, in the late 1950s and
:20:04. > :20:13.1960s, during the Cultural Revolution. But the Communist Party
:20:14. > :20:20.had the guts to acknowledge we did something wrong, and we want to
:20:21. > :20:24.correct all of those problems. This is what the party did over the last
:20:25. > :20:26.three decades. It is really true the Communist Party enjoys broad support
:20:27. > :20:35.of the people, otherwise we cannot have this kind of talk in my office!
:20:36. > :20:38.I had a very interesting discussion on similar themes in the office of
:20:39. > :20:45.the Indian Finance Minister a couple of weeks ago. I know him well. I
:20:46. > :20:48.said to him, you have failed on all sorts of counts compared with China,
:20:49. > :20:51.China's infrastructure, their nature of urbanisation, China's lifting of
:20:52. > :21:00.people out of poverty is so much more successful than yours in India.
:21:01. > :21:04.And you know what he said to me? He said, in the end, the Indian people
:21:05. > :21:06.would rather live in a noisy democracy than under the
:21:07. > :21:18.dictatorship, the authoritarian rule of the Communist Party in Beijing.
:21:19. > :21:21.My answer to you is that the majority of the Chinese people would
:21:22. > :21:24.enjoy living in China, enjoy the peace and prosperity in a country
:21:25. > :21:27.where the Communist Party plays a big role, rather than put themselves
:21:28. > :21:31.in a different country and to suffer. In your heart, do you think
:21:32. > :21:42.the next 30 years will be as good for China as the last 30? China can
:21:43. > :21:45.be doing better in virtually every respect, because our nation is one
:21:46. > :22:04.which is always taking care of soul`searching. Our nation believes
:22:05. > :22:07.that self`criticism is important. We have to know what goes wrong in our
:22:08. > :22:11.system, in our personal behaviour. Just don't look at what you have
:22:12. > :22:14.achieved. That is why, as you know, we openly confess we have made
:22:15. > :22:24.mistakes in our economic policies, social policies, we need to adjust
:22:25. > :22:32.and change. It is very hard to find any other nation in this world which
:22:33. > :22:35.openly says, we did something wrong. Probably the UK is close, because I
:22:36. > :22:38.follow your history very closely. With regards to your history, I
:22:39. > :22:41.would say a lot of your people, academics, the government, both
:22:42. > :22:51.parties, you had a review of your history in the 19th century and you
:22:52. > :22:55.want to adjust this kind of thing. That is something. We are doing it.
:22:56. > :23:02.I can tell you, we will have a better education for the younger
:23:03. > :23:05.generation. The new leadership and the leadership who are going to be
:23:06. > :23:18.taking over from now on will be able to manage and handle very tough
:23:19. > :23:21.issues faced by our nation. You just said, probably I am part of the
:23:22. > :23:26.system, I am privileged. Actually, I was not privileged. I am not from a
:23:27. > :23:28.privileged family. A lot of people who take senior positions in
:23:29. > :23:36.government worked all the way to these positions. Our system will
:23:37. > :23:39.give people the opportunity of learning hard, working hard, and if
:23:40. > :23:49.you do a good job you will be recognised. We have to end there.
:23:50. > :23:51.Jin Liqun, thank you very much for being on HARDtalk. Thank you so
:23:52. > :24:30.much. It is turning much colder. It is
:24:31. > :24:32.fairly mild and wet across the south`east. The mild air is being