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U.S. And Chinese Presidents to Hold Press Conference; China Going Through A Housing Bubble; China: Cars. Homes, Jobs, Energy

Aired January 19, 2011 - 13:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

ALI VELSHI, CNN ANCHOR: All right. Welcome to NEWSROOM. We're continuing our coverage, right now, with a live picture. That is the White House. We are getting ready for a joint press conference between the President of the United States and Hu Jintao of China. There will be American journalists there. There will be Chinese journalists there. Already, we've heard President Obama make a public appeal for the universal rights of every human being. That's a reference to human rights developments in China.

be waiting to see whether that question comes up during the conversations. They - the, I think, two questions on each side, from each country are going to be allowed. There will be translation. We will bring you all of that, momentarily.

But let me just tell you, first of all, what we are -- what we've been looking at. So, we did hear President Obama talk about human rights. We've heard some comments from President Hu Jintao. The U.S. and Chinese presidents are scheduled to take, as I said, two questions each in the news conference that's going to start moments from now.

And this follows a busy morning of pomp and private meetings beginning on the south lawn of the White House. President Hu got the full treatment in vivid contrast to the last U.S. visit, in 2006, when something called 'state honors' were not extended.

Now, these two leaders quickly got down to business. Business, presumably, was top of their agenda. The Oval Office doors had barely closed when we got word of a newly signed U.S. export deal, or various deals, worth $45 billion and more than 200,000 U.S. jobs.

Now, as we speak, the presidents are wrapping up a meeting with U.S. and Chinese business leaders -- major U.S. CEOs, one of whom will join me live in the next hour, to tell us what they talked about with the two presidents.

Tomorrow, President Hu visits the only other U.S. city on his itinerary, Chicago. Mayor Daley, as only mayor Daley can, describes the visit as big, big, big, big, big deal. We couldn't have said it better ourselves.

Now let's -- let me show you a little bit about China. When we talk about China, you really have to talk about money. That's the big deal. So, let me go over to the -- right here, the magic wall, and tell you where some of the issues are between the U.S. and China. Let me start with cars. Chinese love American cars. They like cars, in general ,but they love American cars. The market for cars, in China, is growing because its middle class is growing.

General Motors saw record growth last year, and it, actually, sold more cars in China than it did in America. China is now the largest auto market in the entire world. It surpassed the U.S. , by the way, back in 2009. China needs freeways for all these cars, and it is building them like crazy.

In the next 20 years, China is expected to have about 50,000 miles of freeways which is equivalent to the U.S. interstate system.

OK. Let's talk about something else. Now, let's talk about homes. China is going through a housing bubble, much like the one in the U.S. that burst. Some people say it's even worse than the situation in the U.S. because it's growing so much faster. If that housing bubble bursts, the world's fastest growing consumer base could grind to a halt, and that's got serious implications.

It is not all bad, however. China is building more homes, more offices, more factories. And it is short on everything you need to build stuff with. Water, energy, every kind of raw material you can think of. So, now it's importing all of those things. Everything from oil and gas to cement and copper. And that could be an opportunity for companies around the world, including here in the United States.

OK. Let's talk about jobs. Some say that -- and they wouldn't be wrong, but millions of U.S. manufacturing jobs have been lost to China because of lower manufacturing costs in that country. But let's look at the future. We know that already. China is the third largest buyer of American-made goods. Canada is the first, Mexico is the second.

Now today, we are exporting, from the U.S., 12 times the value of goods we exported to china 20 years ago. More exports from America to China, theoretically, means more jobs, here, in the United States.

Also, China does invest money into U.S. businesses. That will be part of Hu Jintao's visit to Chicago. Just last year, China invested billions in American finance, energy, gas and car companies, among others, including some tech companies.

And I mentioned energy. Let's talk about energy for a moment. You can't talk about China and why it matters to the rest of the world, and to the U.S., without talking about the energy consumption of the biggest consumer base. People are getting prosperous in China. China uses lots and lots of energy. And, in that country, there's notable air pollution, soil erosion and a steady fall in the water table.

Secondly, the Chinese are, in fact, trying to clean things up. The Chinese government is looking to move past coal and oil and it is focusing on nuclear, hydro and other forms of alternative energies. All right, so, we're going to talk a little bit more, as we go on, about what is going on in China. But we are waiting for this joint press conference out of the White House, right now. I think Christine Romans is in New York with us, right now. Let's take a look. That's the press conference. They're in it now. Are we going to listen into this? All right. We'll follow what's going on there. Christine Romans is in New York. Our Senior White House Correspondent Ed Henry is with us as well. And here, in Atlanta, Mary Brown Bullock. She is the President Emeritus of Agnes Scott College. She's now a distinguished professor of China studies at Emory University.

Let's put this into perspective. Christine, let's start -- let's start with you. What do you expect is going to be happening? We know that these two countries matter to each other, dearly. What do we think is going to happen at these meetings?

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: We already know that they've been working ahead of the scenes, of course, right ahead of this time, behind the scenes, to be able to announce some deals. And they have. Senior administration officials saying they're going to announce $45 billion in different deals, everywhere -- everything from, Ali, building ethanol plants to supplying new technologies for all of the nuclear power facilities the Chinese are building.

The Chinese are spending hundreds of billions of dollars to invest in their own infrastructure. And, so, U.S. companies, like Caterpillar, Honeywell, General Electric, a lot of big names, getting in on the game and they're announcing a lot of those contracts today.

There's some other announcements they'll be making like the fact -- this one is really interesting that, you know, software industry has been concerned because the Chinese government has been very weak on intellectual property rights in China. In fact, the Chinese government operates its computers on not legal software. Stolen or pirated software. The Chinese have promised, again, according to a senior administration officials, to now use legal software.

This time it's different, though. The administration says because they are actually putting money in a budget to buy legal software. So, these are some of the little things that they move, incrementally, with trying to make progress with the Chinese on some of these issues.

We have seen our exports explode to China. No question. We have seen our imports, though, explode to a much greater degree. That's where the trade gap comes into play. Many people blame the currency for that on a call earlier with the senior administration official. They're noting some of this progress, but it made no mention of the currency -- Ali.

VELSHI: All right. Ed, what's the buzz around Washington on this, because the fact is, the problems between China and the U.S. -- the relationship is remarkably strong, but the progress is not going to be made on these smaller issues. It's nice that everybody's getting along and working out some of the side issues, but the big issues are currency. The big issues are growth in China. The big issues are increasing Chinese consumption of goods from around the world. And there really aren't any big deals on the table to solve any of those problems right now.

ED HENRY, CNN SENIOR WHITEHOUSE CORRESPONDENT: You're right. And that's why the White House is being careful to calibrate the expectations as little as possible and make clear there's not going to be some major breakthrough, today. That this is a long process. Reform, obviously, does not come quickly, or easily, in China, on any of these issues, whether it's currency, whether it's trade imbalances, or whether it's human rights, an issue we haven't had a chance to talk about yet.

And, so, basically, the White House strategy is, let's keep the conversation going. This -- these sets are meetings now, the eighth time since President Obama took office, just -- in less than two years, the eighth time these two leaders have had face-to-face talks. So, what they, basically, say is, look, this is long, it's arduous, it's going to take time, but, they believe, they are slowly inching along to make progress on all of these issues.

They also say that in private, the President is going to be taking a very tough, direct stance, standing up to President Hu on human rights, as well as trade and currency, but, in public, he's going to be, obviously, a lot more diplomatic when he comes out here.

As we heard the President, earlier this morning, on the south lawn. He was talking about, look, these two countries are the economic superpowers who can compete, but they can also have some cooperation. That's what we're going to hear mostly about, in public, is the cooperation.

Behind closed doors, there's going to be a lot of conversations about where they disagree. As you have been noting, there's a lot of areas they disagree. But they have to -- they've got to keep this dialogue going because these are the two economic superpowers who need to be having this conversation right now.

VELSHI: All right. So, Mary, this is like of like when we covered G- 20s and things like this and we argued that why do they have to happen because all the stuff gets done in the background? But, in the end, deals are made and things happen. How do we gauge this kind of visit? Because things between the U.S. and China are almost at crisis proportions. But we've heard, now, from Christine and from Ed that, not a whole lot is going to get done in this visit.

MARY BROWN BULLOCK, PROFESSOR CHINA STUDIES, EMORY UNIVERSITY: You have to remember that these summits are also ceremony. And ceremony signals the, perhaps, growing crisis. A snafu as in the Bush summit earlier. Or it's -- it really symbolizes some progress.

VELSHI: OK.

BULLOCK: And, I think, it's what is going to be the takeaway. If the -- and the takeaway for the domestic audiences.

VELSHI: Right.

BULLOCK: We have to remember that President Hu is speaking for Chinese audience just as Obama is speaking to the American audience.

VELSHI: But these are two - these are two major powers.

BULLOCK: Yes.

VELSHI: Neither of which who want to look weak in the eyes of the other with their domestic audiences. So, how do you resolve that? Because China is the ascendant power and Hu would like to look strong in China. America is the present power that could be weakening, and, really, could be - could have more to lose than gain here.

BULLOCK: Well, I think, President Obama has to signal respect for the Chinese for President Hu. Certainly, this symbolism of the intimate dinner at the White House -- the state house -- the state banquet tonight. All of this sends a very clear message, not just to President Hu but to the Chinese people.

VELSHI: Right.

BULLOCK: We are looking at China. We respect that role. I think, in terms of the American audience, you are right, President Obama has to look strong. You remember the images from the last summit. President Obama on the great wall, by himself, he looked lonely.

VELSHI: Right, right.

BULLOCK: It was cold. He looked lonely. And the takeaway from that was, also, he didn't get to have an open press conference.

And, so, I think, what we're looking at, particularly, just about to start, with both of them speaking, really is signaling we're going to communicate and that there is a response. I think, President Hu has to appear somewhat responsive to American concerns or the Americans will give it a bad rap.

VELSHI: OK. Well, we'll be able to watch that. Christine, there's a meeting that has just wrapped up with a number of key CEOs. Some Chinese and some major American CEOs. Any idea of what they're doing and what they could possibly be wanting to achieve in that meeting? The two presidents and a bunch of these CEOs?

ROMANS: Well, it's interesting because the CEOs want to sell more products in china and they want some assurances from the Chinese leaders that, yes, when we have a patent or an innovation that we've developed in the United States, that we don't have to sign it over to you to use it in your country. We want some progress on what's called indigenous -- these indigenous rules where -- and the White House says they've made progress on this, where the Chinese favor Chinese businesses and Chinese ideas first. Where if you are going to have a patent, you have to have a Chinese version of the patent or Chinese companies can use -- I mean, the legal structure there is not as established as it is, quite frankly, here in this country.

And, so, sometimes, businesses and CEOs say that the landscape is constantly shifting beneath them. Sometimes, there's paperwork delays and glitches that while they are working to get a factory up and running, another factory that's been state owned has been gone up right down the street, in time to give the domestic industry a little bit of a leg up.

So, these are the things that CEOs have been complaining about. At the same time, they want access, Ali, to that market.

VELSHI: Right.

ROMANS: It is a huge potential lucrative market, so they can't be out of China complaining about these things, but when they get in China, they get worried about -- they want it to move a little faster.

VELSHI: Well, Christine, Ed and Mary, the thing I like about this summit is that we have to move beyond simple explanations of China and the U.S. it is a complex relationship, as you all have indicated. It will continue to be complex and it's best our audiences here in the United States, and in China, understand that it is complex, and it's going to take a lot of work.

Thank you, to all of you, for joining us. Ed and Christine, obviously, on the case and Mary Brown Bullock, President Emeritus of Agnes Scott College and visiting - distinguished visiting Professor of China Studies at Amory. Thank you to all of you.

We've got our eyes on the White House. We will be bringing you that news conference as soon as it starts. And I have to tell you, for those of you who think news conferences are boring, I would make an exception for this one, because there's really no part of your life that this bilateral relationship does not touch. So, stay with us on it.

Some developing stories that we're -- I'm going to give you some developing stories on the other side of the break. Let's take a break right now and we'll come right back.

(COMMERCIAL BREAK)






ALI VELSHI, CNN ANCHOR: We have our cameras tuned in to the White House right now. And you can see everybody's awaiting the arrival of President Obama and President Hu Jintao of China. They're going to be holding a dual -- a joint press conference. They will be taking just a few questions from some U.S. reporters and some Chinese reporters.

This is going to be one of the more important press conferences of our time because the relationship between China and the U.S. is one of the more important relationships of our time. And it is a critical juncture for that relationship. So it's worth tuning in.

We'll have some analysis of it, around it, to say what did it mean. But as one of my guests just told me, sometimes it is just symbolic, but it's going to be symbolic as to whether the relationship between these two countries are getting better or is getting worse. And if it's getting better, there are opportunities for American businesses and American workers to take a look at it.

Now we see some people who have reserved seats in the front coming in now, which indicates to us that they might be followed very shortly by President Obama and President Hu. But we will be getting into this press conference the minute it starts and we'll be offering you some analysis of it.

In the meantime, maybe I have a chance to bring you up to speed on some of the stories that we're following for you here in the CNN NEWSROOM.

According to an e-mail from her mother, Congresswoman Gabrielle Giffords is doing well enough to be transferred to a rehab facility in Houston on Friday. This is a week and a half since she was shot through the brain at a public event. Giffords has surprised doctors with her physical and mental capabilities. Her mom's e-mail says Giffords will begin aggressive rehab and be treated by surgeons who specialize in bullet wounds to the head. I do want to note, this development has not been confirmed by University Medical Center in Tucson where Giffords remains in serious condition.

Meantime, new details on some of the security video that captured the January 8th shooting tragedy. The Pima County Sheriff's Department chief investigator tells us about this key moment.

(BEGIN VIDEO CLIP)

RICHARD KASTIGAR, CHIEF INVESTIGATOR, PIMA CO. SHERIFF'S DEPT.: There's a portion of the tape where you can see very clearly that Jared, the suspect, comes out of one of the doors. He walks around a table, a collapsible, perhaps a six-foot table. And when he does so with very significant purpose, he walks up to the congresswoman, points a gun at her face and shoots.

(END VIDEO CLIP)

VELSHI: Jared Loughner, the suspect, by the way, will be in court again Monday for a hearing.

A day after reconvening on Capitol Hill, the House is about to vote on a measure that would undo last year's sweeping health care reforms. Yes, the measure is likely to pass the new Republican-led House, but that's about it. Since Democrats retained their majority in the Senate, they don't even plan to bring it to the floor.

Look at that. A 50-foot fireball lights up a Philadelphia neighborhood, killing one person and badly injuring several others. Residents had reported the strong smell of gas, so a utilities crew rushed to the scene. They found a break in a high pressure gas main and they got to work. Then, a bad sign, gas started bubbling up through the pavement and the whole thing just went up. The explosion was so strong that folks felt it across the Delaware River in New Jersey. Later, fire crews found the body of a 19-year-old Philadelphia gas works employee in the blast zone. The cause is still under investigation.

Classes are back in session at Gardena High School a day after two students were found in an apparently accident -- were wounded in an apparently accidental shooting. A boy shot through the neck is expected to be fine, but a 15-year-old girl who was struck in the head by the same bullet, well, she's in critical condition. Los Angeles Police say the student who brought the gun to school faces charges of assault with a deadly weapon.

And the Mine Safety and Health Administration says it is honing in on the causes of last year's explosion at a West Virginia mine. Twenty- nine men were killed in Massey Energy's Upper Big Branch coal mine. At a briefing for their families last night, MSHA investigators laid out their working theory. It involves a domino effect of natural causes and potential negligence. The agency cautions, though, its final report isn't due for another few months.

All right, take a look again at this room. We are still waiting. You're looking at live pictures from the White House where we are expecting President Obama and Chinese President Hu to step up to the podium any moment now for a joint news conference. We'll bring that to you live. Stay with us.

(COMMERCIAL BREAK)

VELSHI: OK. While we're waiting for Presidents Hu Jintao and Barack Obama to arrive at the White House for that briefing -- they're in the White House but to arrive in that room that you're looking at -- I want to give you some perspective on China. Stay with us, though, we're going to break in if that press conference starts.

I want to give you some perspective on China. Let's start with actual land mass.

China is about 5.9 million square miles. The U.S. is 6.1 million. So actually China is smaller than America, but just by a little bit. About 140,000 square miles. It's about the size of the state of Montana. On the grand scheme of things, these two countries, very similar in terms of geography. Let's talk about the population of both countries. This is where it's a little different. In America, there are, you know, a little bit more than 310 million people. In China, $1.3 billion. So basically for every one person in the United States, there are four people packed into China. A country, as you just heard, no larger than our own.

The age spread is slightly different between the two countries. On the -- in terms of the proportion, the percentage of youth, it's about the same in both countries. China has a bigger proportion of middle age people. There are more older folks in the U.S. The proportion's a little higher, but China's aging population is expected to even that out in coming years.

Life expectancy a little bit different between the two countries. People in China live about four years less on average than people here in the United States.

Let's talk about their government. That's a hot topic. China is a communist state. It has a constitution. A president who is chosen by committee every five years. It doesn't have universal suffrage. China also has three branches of government -- an executive, a legislative and judicial -- but the judiciary and the legislative branch, they're not independent of the executive as they are in the United States.

China is a mix of provinces, autonomous regions and municipalities.

And, finally, let's talk about communications. You can't have 1.3 billion people in a country without talking about how they talk. Cell phones? For every one mobile phone in the United States, there are about three in China. And that will tell you a lot about opportunity. China ranks number one in the world for the number of cell phones. It also ranks number one in the world for the number of Internet users.

Tomorrow on the show we're going to dig into social media in China. There's some things you think you'll find very, very interesting. And later in the show, I'll be talking to the CEO of Motorola, who has just come out of a meeting with both presidents, Hu Jintao and Barack Obama. I want to talk about what they are doing in China, what he hoped to achieve in that meeting and whether he got what he was looking for.

All right, take a look at the live pictures. Again, more people streaming into the room as they await Presidents Hu Jintao and President Barack Obama. And I would imagine by the fact that they're still streaming in, that they are holding back the two presidents. Perhaps they're talking some more. Perhaps they're building their relationship. Who knows.

Let's take a quick break. We are not going away from this story. We'll have more of it on the other side.

(COMMERCIAL BREAK)

VELSHI: We expect that we are moments away from the beginning of a press conference at the White House between Presidents Obama and Hu. We understand that two questions will be taken from each side, four questions in total. We will have translation. We'll be bringing it to you.

Mary Brown Bullock is with me.

Mary, am I overselling it by saying that this is really a crucial press conference? For people who maybe don't like to watch press conferences, this one actually might make a difference.

MARY BROWN BULLOCK, ASIA FOUNDATION, EMORY UNIVERSITY: It's very important. It's probably Hu Jintao's last state visit to the United States. He wants to leave a legacy. He's out in two years. What kind of message does he want to give both to his own netizens (ph), you might say. They're watching. And also the United States.

VELSHI: And they're all stand up. Let's listen in.

BULLOCK: Let's watch.

(INTERRUPTED BY CNN COVERAGE OF LIVE EVENT)