EVAN OSNOS, WELCOME BACK TO THE >> THANK YOU, WALTER.

GREAT TO BE WITH YOU.

>> YOU HAVE A NEW PIECE CALLED "THE FUTURE, MADE IN CHINA. "

YOU LIVED IN CHINA I THINK FROM 2005 TO 2013.

FIRST OF ALL, WHAT STRUCK YOU MOST WHEN YOU WENT BACK FOR A WEEK OR TWO TO DO THIS PIECE?

>> ONE THING THAT JUMPS OUT AT YOU RIGHT AWAY IS THAT TECHNOLOGY IS EVERYWHERE.

I THINK WE FEEL THAT IN OUR OWN LIVES IN THE UNITED STATES.

BUT IT IS EVEN MORE ACUTE WHEN YOU STEP INTO BEIJING.

I'LL GIVE YOU AN EXAMPLE.

IF YOU GET ROOM SERVICE AT THE HOTEL, THERE IS A DECENT SHOT THAT WHEN YOU OPEN THE DOOR, THERE WILL BE A ROBOT THERE PAINTED TO LOOK LIKE A BUTLER, ABOUT SORT OF R2-D2 HEIGHT DELIVERING YOUR ROOM SERVICE.

AND THERE IS ALSO A KIND OF UNEASY ELEMENT TO THIS TOO.

OBVIOUSLY WE'RE AWARE OF CHINESE SURVEILLANCE CAMERAS EVERYWHERE.

YOU GET THE SENSE THAT EVERYTHING THAT HAPPENS IS BEING DOCUMENTED.

AND THAT'S SOMETHING THAT WE'RE THINKING ABOUT IN THE UNITED STATES TOO, BUT IT CAN FEEL A LITTLE BIT LIKE A PREVIEW OF A WORLD TO COME WHEN YOU STEP INTO CHINA THESE DAYS.

>> AND YOU SAY IT'S BEING DOCUMENTED.

THE CAMERAS THAT FOLLOW YOU, THE FACIAL RECOGNITION.

BUT EVERY TIME SOMEBODY DOES AN EXCHANGE, A DIGIT TAM EXCHANGE, MONEY GETS EXCHANGED, WHATEVER, ALL OF THAT GOES TO A BIG DATABASE, RIGHT?

>> IT DOES.

ONE OF THE THINGS THAT'S BEEN A BIG CHANGE IN CHINA IS THEY'VE ESSENTIALLY GOTTEN RID OF CASH OVER THE LAST DECADE.

PEOPLE MAY HAVE HEARD OF THAT.

WHEN YOU DO THAT, WHEN YOU'RE PAYING FOR EVERY CONVENIENCE STORE VISIT, EVERY TAXI TRIP, EVERY TIME YOU TAKE OUT A BICYCLE ON A RIDE SHARE, ALL THAT OF IS FEEDING INTO THE SYSTEM THAT KNOWS WHERE YOU ARE AT ANY MOMENT, WHAT YOUR PREFERENCES ARE, WHAT YOUR TASTES ARE.

SO IN SOME WAYS, IT DRAWS YOU IN MORE DEEPLY BECAUSE ALL OF THE SUDDEN YOU'RE BEING SERVED PRODUCTS ONLINE THAT LOOK PARTICULARLY ATTRACTIVE TO YOU BECAUSE THEY KNOW WHAT YOU LIKE.

SO IT IS A FASCINATING PLUNGE INTO THE WORLD OF THE ALGORITHMIC ERA MORE THOROUGHLY THAN WE'VE FELT EVEN HERE IN AMERICA.

>> ONE THING THAT MAKES THAT PARTICULARLY INTERESTING IS THAT IN ORDER TO HAVE GOOD ARTIFICIAL INTELLIGENCE, GOOD AI IS NOT SIMPLY ABOUT THE SOFTWARE THAT RUNS THE AI, IT'S ABOUT THE DATA UPON WHICH IT TRAINS.

ARE THEY CREATING THESE HUGE POOLS OF DATE A THAT WILL GIVE THEM AN AI ADVANTAGE?

>> THEY ARE.

IN MANY WAYS THEY DECIDED AS ONE VENTURE CAPITALIST PUT IT THAT CHINA COULD BE THE SAUDI ARABIA OF DATA.

MEANING WHAT OIL WAS FOR THE 20th CENTURY, DATA COULD BE THE MAKING OF WEALTH AND POWER IN A NEW CENTURY.

AND THERE ARE SOME PLUSES AND MINUSES THAT COME WITH THAT.

BY HOOVERING UP ALL OF THIS DATA IN EVERYDAY LIVES, THEY GET AN EXTRAORDINARY PORTRAIT OF NOT ONLY WHAT YOU'RE DOING NOW BUT WHAT YOU MIGHT SEEK TO DO.

THAT'S VERY HELPFUL FOR THINGS LIKE CHINESE POLICE AGENCIES, BUT IT ALSO TRUE THAT IT ALLOWS COMPANIES TO SELL YOU THINGS EFFECTIVELY.

I THINK THERE IS A DEBATE IN THE UNITED STATES, AND THAT IS WHERE DO WE WANT TO BE OBSERVED AND WHERE DO WE WANT TO HAVE THESE ZONES OF PRIVACY, WHERE WE SAY OKAY, WE'RE INTERESTED IN YOU HELPING US, MAYBE IMPROVE MEDICAL CARE AND HEALTH CARE, BUT WE'D LIKE YOU TO STAY OUT OF DECISIONS WHEN IT COMES TO MORE PRIVATE THINGS.

THAT'S SOMETHING THAT YOU --A DEBATE YOU CAN HAVE IN THE U. S. , AND YOU CAN'T REALLY HAVE IT IN CHINA.

>> ONE OF THE THINGS ABOUT DEBATE IN THE UNITED STATES IS WE PRETTY MUCH FREELY GIVE UPDATE THAT TO --DATA TO COMPANIES.

AMAZON, EVERYTHING I DO WHETHER IT'S GOOGLE, AMAZON, ANTHROPIC, THEY TEND TO UNDERSTAND ME.

BUT WE'RE VERY AFRAID OF THE GOVERNMENT DOING THAT.

IS THAT DIFFERENT IN CHINA?

>> YEAH.

IN CHINA --WELL, TO BE FRANK ABOUT IT, WALTER, THEY DON'T HAVE THE LUXURY OF TELLING YOU AS A VISITOR THAT THEY'RE UNEASY ABOUT GOVERNMENT SURVEILLANCE, THAT'S FOR SURE.

BUT THERE IS ANOTHER THING HAPPENING WHICH IS CHINESE LIFE DURING THE COMPUTING ERA, WHICH FOR ALL OF US HAS BEEN THE PAST HALF CENTURY, CHINESE LIFE HAS IMPROVED DRAMATICALLY FROM THAT TIME.

IT USED TO BE THAT 3/4 OF THE POPULATION WORKED IN AGRICULTURE.

TODAY IT'S DOWN TO LESS THAN 25%.

SO THEY TEND TO BE A LITTLE BIT MORE TOLERANT PERHAPS, A LITTLE MORE OPTIMISTIC ABOUT TECHNOLOGY WHEN WE ARE IN OUR COUNTRY WEARIER.

WE'VE GONE THROUGH THE SOCIAL MEDIA ERA WHERE PEOPLE SAID LOOK, THERE ARE NEGATIVES FOR OUR DEMOCRACY, FOR OUR EMOTIONAL HEALTH.

SO THERE IS A KIND OF ROBUST PUBLIC CONVERSATION HERE WHEREAS IN CHINA IN MANY CASES IT'S FULL SPEED AHEAD, WHETHER YOU WANT IT OR NOT.

>> YEAH YOU SAY THE LESS WARY ABOUT TECHNOLOGY THAN WE ARE HERE.

WE KIND OF SEE DATA CENTERS OR AI, WE KIND OF GET WARY.

BUT THEY'RE ALSO, YOU WRITE IN THE PIECE, THEY'RE LESS WARY ABOUT DATA COLLECTION.

IS THAT TRUE?

>> IT IS.

I THINK PEOPLE HAVE COME TO ASSUME OVER THERE THAT ANYTHING YOU'RE DOING, AS ONE PERSON PUT IT TO ME, ANYTHING YOU'RE DOING CAN BE WATCHED AT ANY TIME.

IT'S BECOME A FEATURE OF THE MODERN LIFE.

AS A RESULT, YES, THERE ARE PEOPLE THAT ARE UNEASY ABOUT IT.

OCCASIONALLY YOU RUN INTO SOMEBODY WHO SAYS I AM NOT ON WE CHAT, BUT IT'S RELATIVELY RARE.

HERE'S THE DIFFERENCE.

IN THE WEST, AS LET'S CALL IT WHAT IT IS, AS FLAWED AS DEMOCRACY CAN SEEM US TO RIGHT NOW, THERE IS ALSO A PLACE WHERE YOU'RE ABLE TO HAVE THESE KINDS OF PUBLIC DEBATES ABOUT IT.

CHINA IS FORGING AHEAD.

THEY SAID FROM THE TOP LEVEL DOWN, THE COMMUNIST PARTY SAYS WE THINK IT'S BETTER FOR US TO HAVE DATA, TO USE IT FOR ALL KINDS OF ADVANCED PURPOSES, AND WE'RE GOING TO GO AHEAD WITH IT.

SO THAT CREATES THE TENSION.

>> YOU TALK ABOUT TOP DOWN, YOU TALK ABOUT THE SOCIAL ENGINEERING THAT CAN BE DONE WHEN THE GOVERNMENT HAS THAT POWER.

ONE OF THE GREAT FAILURES, TRAGEDY OF SOCIAL ENGINEERING FROM YOUR PIECE, KIND OF KNEW IT, BUT IT HIT ME, WAS THE ONE CHILD POLICY THAT WAS SOCIAL ENGINEERING.

HOW HAS THAT AFFECTED CHINA TODAY?

>> IT'S BEEN A FASCINATING STORY.

PEOPLE WILL REMEMBER THE ONE-CHILD POLICY WAS ADOPTED IN THE EARLY '80s.

BASICALLY, THEY TRIED TO REDUCE THE POPULATION SO MORE PEOPLE COULD HAVE A LARGER SHARE OF THE PIE.

BUT THE NET EFFECT WAS ACTUALLY AN ECONOMIC FIASCO.

TODAY AS A RESULT OF THESE CURBS ON POPULATION GROWTH, THEY DON'T HAVE ENOUGH WORKERS TO BE ABLE TO FILL THE KINDS OF JOBS THAT THEY NEED TO TAKE CARE OF THE ELDERLY.

THEY HAVE A REAL INBALANCE IN SOCIETY.

THEY'RE STRUGGLING, FOR INSTANCE, TO MAKE SURE THAT THEY WORKERS 20, 30 YEARS DOWN THE ROAD AT THE SAME THEY HAVE UNEMPLOYMENT IN YOUNG PEOPLE BECAUSE THEY WERE TRAINED IN UNIVERSITIES GEARED FOR YESTERDAY, NOT TOMORROW.

>> STOP THERE.

I DON'T QUITE GET THAT WHY UNEMPLOYMENT CAN BE 20% AMONG YOUNG PEOPLE, AND YET THERE IS A SHORTAGE OF YOUNG PEOPLE.

>> WELL, WHAT YOU HAVE IS A LOT OF PEOPLE WHO STUDIED THE KINDS OF MAJORS AREN'T THAT DIFFERENT THAN PEOPLE WE HAVE IN OUR COUNTRY THAT MADE SENSE FIVE YEARS AGO, EVEN TWO YEARS AGO.

BUT AS SOMEBODY WHO WORKS IN AI TOLD ME RECENTLY, IN CHINA, I HAVE A 15-YEAR-OLD SON.

I DON'T KNOW WHAT THAT KID SHOULD BE STUDYING IN COLLEGE WHEN HE GOES OFF IN TWO YEARS.

HE SAID AI IS THE HOT NEW MAJOR, BUT AI MIGHT NOT EVEN BE A MAJOR IN TEN YEARS.

SO THE TAKE AWAY FROM THE ONE-CHILD POLICY HISTORY IS WHEN YOU TRY SOCIAL ENGINEERING ON A BROAD BASIS LIKE THIS, IT CAN SEEM AS IF YOU'RE JUST TWISTING THE DIALS OF SOCIETY AND MAKING GREAT ADVANCEMENTS, BUT YOU'RE ALSO EXPOSING YOURSELVES TO THE RISK THAT TAKING A GIANT LEAP OF THAT TIME EXPOSES YOU ULTIMATELY TO BIGGER DOWNSIDES LIKE THE KIND OF ECONOMIC UNEMPLOYMENT PROBLEMS THAT THEY'RE FACING TODAY.

>> YEAH, AND ONE OF THE THINGS THAT STRUCK ME ABOUT THE ONE-CHILD POLICY IS OKAY, THAT WAS A BAD IDEA, LET'S REVERSE IT.

LET'S LIFT IT.

AND YET THE BIRTH RATE IN CHINA CONTINUES TO GO DOWN.

IT'S EVEN LOWER THAN THAT IN THE UNITED STATES, LESS THAN THE TWO PER FAMILY REPLACEMENT RATE YOU NEED.

>> IT IS.

>> WHY DOES IT STAY LOW?

>> I THINK THIS IS THE BIGGEST STORY IN CHINA RIGHT NOW, WALTER, IS THIS QUESTION OF WHY PEOPLE AREN'T HAVING KIDS.

AND THE ANSWER WHEN YOU TALK TO THEM, AND I'VE HAD A LOT OF CONVERSATIONS WITH YOUNG PEOPLE, KIND OF MARRYING AGE, CHILD BEARING AGE, AND THEY SAY THEY DON'T FEEL CONFIDENT ABOUT THE FUTURE.

THEY FEEL TREMENDOUS UNEASE.

FRANKLY, THEY'RE UNEASY WITH THE LEVEL OF GOVERNMENT INTRUSION INTO PRIVATE LIFE THAT'S GROWN OVER THE LAST FEW YEARS.

THEY'RE UNEASY ABOUT WHAT THE AI ERA WILL MEAN FOR THEIR EMPLOYMENT.

WILL THEY BE ABLE TO PAY FOR EDUCATION, HEALTH CARE FOR KIDS IF THEY HAVE THEM.

SO IN SOME WAYS, YOU CAN GO TO A PLACE LIKE SHANGHAI, AND AS SOMEBODY SAID TO ME, KIT FEEL LIKE TRULY ONE OF THE GREATEST CITIES IN THE WORLD.

BUT IF PEOPLE AREN'T CHOOSING TO BRING THEIR CHILDREN INTO THAT FUTURE, WHAT DOES IT TELL YOU ABOUT THE UNDERLYING MOOD IN THE COUNTRY.

>> WELL, IT'S NOT JUST CHINA, IT'S TRUE IN JAPAN, ITALY, THE UNITED STATES, WESTERN EUROPE.

IS THIS PART OF A LARGER GLOBAL TREND, OR IS THERE SOMETHING PARTICULAR ABOUT CHINA?

>> IT'S BOTH.

THE GLOBAL TREND IS REAL.

YOU SEE THAT AS A COUNTRY INDUSTRIALIZES, AS A COUNTRY GETS MORE URBANIZED THAT PEOPLE DO HAVE SMALLER FAMILIES.

WE SEE THIS IN KOREA AND JAPAN AND ELSEWHERE.

BUT IN CHINA THE NUMBERS STAND OUT THERE.

IS NOW ESSENTIALLY ONE CHILD PER WOMAN IN CHINA, THAT'S THE FERTILITY RATE.

IT'S THE LOWEST RATE THEY'VE HAD SINCE 1949 WHEN THE PEOPLE'S REPUBLIC WAS FOUNDED AND THEY STARTED KEEPING THESE RECORDS.

THEY'RE DEALING WITH A PROBLEM THEY HAVEN'T BEEN ABLE TO SOLVE WITH POLICY.

THEY TRIED SAYING WE'LL GIVE YOU SUBSIDIZED HEALTH CARE OR FERTILITY TREATMENTS.

THEY'VE GIVEN ACTUALLY PEOPLE INDUCEMENTS.

WE'LL GIVE YOU MONEY IF YOU HAVE KIDS.

IT'S NOT WORKING.

AND IF YOU TALK TO DEMOGRAPHERS, THAT'S BECAUSE THE ISSUE IS ACTUALLY NOR SPIRITUAL AND INTERIOR.

IT'S REALLY PSYCHOLOGICAL.

IT'S ABOUT HOW PEOPLE FUNDAMENTALLY FEEL ABOUT THEIR LEVEL OF PERSONAL AGENCY IN THE FUTURE.

AND THAT I THINK IN SOME WAYS THE MISSING PIECE OF THE PUZZLE.

BOTH THE UNITED STATES AND CHINA ARE TRYING TO FIGURE OUT HOW DO YOU GIVE YOUNG PEOPLE A FEELING THAT THEY HAVE A HAND IN SHAPING THIS FUTURE THAT'S COMING DOWN THE PIKE AT US.

>> THIS IDEA OF CHINA LEAPING AHEAD AND SURPASSING US ON SO MANY TECHNOLOGIES RIGHT NOW IS THE THEME OF YOUR PIECE, BUT THERE'S A PAPER THAT SOMEBODY WROTE ABOUT IT WITH A TITLE THAT JUST REALLY STRUCK ME, AND THE TITLE WAS "THANK TRUMP. "

TO WHAT EXTENT IS TRUMP'S POLICIES CAUSING THIS?

>> TRUMP'S POLICIES HAVE BEEN A BIG PIECE OF THIS STORY, IT TURNS OUT.

WHEN THE TRUMP --WHEN THE FIRST TRUMP ADMINISTRATION CAME IN BACK IN 2017, ONE OF THE THINGS THAT CHINA REALIZED BECAUSE THEY WERE NOW DEALING WITH A TRADE WAR WAS YOU KNOW WHAT?

THE FUTURE LOOKS ROCKY.

WE NEED TO DEPEND ON OURSELVES.

AND THEN WHEN TRUMP CAME BACK IN FOR A SECOND TERM, THIS WAS A BIG CLARIFYING MOMENT.

AS WE REMEMBERED, HE WENT, IN A SENSE, WENT UP AGAINST BIG RESEARCH UNIVERSITIES IN THE UNITED STATES, GOING TO BATTLE AGAINST HARVARD, CUTTING FUNDING IN PLACES FOR THINGS LIKE BASIC RESEARCH.

CHINA SAID, AND THEY SAID IT VERY EXPLICITLY, THIS IS AN OPPORTUNITY FOR US.

LAST YEAR, CHINA EXPANDED ITS INVESTMENT IN BASIC R&D BY 7%.

THIS WAS A RECORD.

THIS IS ON TOP OF LARGE FEDERAL INVESTMENTS IN RESEARCH AND SCIENCE OVER THE LAST FEW YEARS.

THE NET EFFECT IS THAT CHINA NOW TODAY IS DOING MORE CLINICAL TRIALS, FOR INSTANCE, THAN THE UNITED STATES IS DOING.

THEIR SHIP BUILDING CAPABILITY IS 200 TIMES AS LARGE.

THEY'RE NOW PRODUCING 70% OF THE WORLD'S ELECTRIC VEHICLES.

LITHIUM- ION BATTERIES, SOLAR CELLS.

ALL OF THESE TECHNOLOGIES, WALTER WHICH WERE INVENTED IN MANY CASES IN THE UNITED STATES, BUT CHINA HAS INVESTED HEAVILY IN SAYING HOW DO WE MAST THEY'RE MANUFACTURING, HOW DO WE LEAP AHEAD AND SOLVE THAT CHALLENGE FOR OURSELVES AND ALSO DOMINATE THE MANUFACTURING FOR THE FUTURE.

>> DOES THAT ALSO INCLUDE THINGS LIKE BIOTECH PATENTS?

BECAUSE WE TALK SO MUCH ABOUT DIGITAL, BUT PART OF THE FUTURE IS GOING TO BE BIOTECH, FINDING THE VACCINES FOR CANCER.

>> IT REALLY IS.

BIOTECH IS THE NEXT BIG REVOLUTION THAT WE'RE GOING TO SEE COMING OUT OF CHINA.

AND I THINK THEY HAVE --I'LL TELL YOU, TEN YEARS AGO, WALTER, WHEN I WOULD GO AND TALK TO PEOPLE ABOUT HEALTH CARE, RESEARCH, AND BIOTECH IN CHINA.

THAT WOULD SAY, LOOK, THIS PLACE IS NOT READY FOR "PRIME TIME" THERE WAS A LOT OF FRAUDULENT RESEARCH.

IT WAS JUST A PLACE THAT TURNED OUT GENERIC DRUGS.

TODAY CHINA IS TURNING OUT, THE HELP OF AI, A LOT OF POTENTIALLY PROMISING DRUG CANDIDATES THAT FOREIGN COMPANIES, THE BIG PHARMA GIANTS IN THE WEST ARE THEN LICENSING FROM CHINA.

AS ONE AMERICAN EXECUTIVE SAID TO ME, WE ARE WORRIED THAT CHINA IS GOING TO DO TO BIOTECH WHAT IT DID TO ELECTRIC VEHICLES, MEANING CHINA HAS NOW SURPASSED TESLA IN TERMS OF SALES OF ELECTRIC VEHICLES.

SO IF CHINA GETS THE NEXT GENERATION OF TECHNOLOGY LIKE BIOTECH, AI, AND ROBOTICS AS ONE AMERICAN SCHOLAR SAID, THAT FUNDAMENTALLY CHANGES THE WORLD.

SO THE RACE IS ON FOR THE UNITED STATES TO COMPETE NOW.

>> WELL, WHEN YOU TALK ABOUT THE BIOTECH, AND YOU'VE BEEN QUOTED THOSE EXECUTIVES, YOU HAVE VERY TECHNICAL TERMS WHICH I'M NOT SURE I CAN USE ON PUBLIC TELEVISION, WHICH IS WE SCARED ALL OF THIS F'ING TALENT BACK TO CHINA.

THIS IS AN AMERICAN EXECUTIVE SAYING THAT THE TALENT USED TO COME TO THE UNITED STATES IS NOW BEING SCARED BACK TO CHINA.

HOW DID THAT HAPPEN?

>> PEOPLE MAY REMEMBER THAT DURING THE FIRST TRUMP TERM, THERE WAS AN INITIATIVE UNDER THE DEPARTMENT OF JUSTICE CALLED THE CHINA INITIATIVE, WHICH WAS GOING AFTER THE PROBLEMS OF ESPIONAGE AND TRADE THEFT.

THESE ARE REAL ISSUES.

AND CHINA IS NOT THE ONLY COUNTRY THAT'S STEALING.

THE UNITED STATES DOES A FAIR AMOUNT OF ESPIONAGE ITSELF.

BUT AS A RESULT, WHEN CHINA WAS ARGUED THE IN THIS WAY OVER THE COURSE OF THE LAST DECADE OR SO, ACCORDING TO STUDIES, SOME 20,000 CHINESE SCIENTISTS HAVE LEFT THE UNITED STATES AND GONE BACK TO CHINA AND ELSEWHERE.

THIS IS A BIG REVERSE BRAIN DRAIN, BUT IT IS ALSO IN SOME WAYS STOCKS THE CABINET IN CHINA WITH SCIENTIFIC TALENT.

AND THEN ON TOP OF IT, YOU HAD THE CUTBACKS IN RESEARCH FUNDS AVAILABLE IN THE UNITED STATES OVER THE COURSE OF THE LAST TWO YEARS BECAUSE OF CHOICES BY THE TRUMP ADMINISTRATION.

SO IT CREATES AN INCENTIVE FOR CHINESE SCIENTISTS TO GO BACK TO THEIR OWN -- TO THE COUNTRIES WHERE MANY IN CASES THEY WERE TRAINED AND GREW UP AND PUSH FORWARD THE FRONTIER OF SCIENCE THAT THE UNITED STATES FOR THE MOMENT HAS HAD TROUBLE SUPPORTING.

>> SINCE WE'RE SAYING HOW GREAT CHINA HAS THE WIND ASBESTOS AT ITS BACK, WHAT ARE THE ACTUAL BAD THINGS THAT ARE CAUSING PROBLEMS IN CHINA?

>> WELL, YOU HAVE SOME SERIOUS ISSUES AROUND THE ECONOMY, PARTICULARLY THE REAL ESTATE SECTOR.

THIS IS A CASE WHERE FOR MANY YEARS CHINA BELIEVED THAT ITS ECONOMIC FUTURE DEPEND ON POURING AS MUCH MONEY INTO REAL ESTATE AS POSSIBLE, EVEN WHEN THEY WERE BUILDING HOMES AND APARTMENTS THAT PEOPLE DIDN'T NEED.

AT A CERTAIN POINT, AS YOU CAN IMAGINE, A MARKET LIKE THAT CRASHES.

BEGINNING IN 2021, THE CHINESE PROPERTY MARKET HAS COLLAPSED TO TODAY PEOPLE ARE SPENDING ABOUT HALF AS MUCH FOR NEW HOMES IN SOME PLACES THEY WERE EVEN FIVE OR SIX YEARS AGO.

THERE ARE NOW SO MANY EMPTY HOMES IN CHINA RIGHT NOW, WALTER, THAT YOU COULD IN FACT HOUSE THE ENTIRE POPULATION OF RUSSIA JUST IN THESE EMPTY KIND OF GHOST APARTMENTS.

THAT'S ANOTHER EXAMPLE.

>> IS THAT A PROBLEM WITH CENTRAL PLANNING?

>> IT ABSOLUTELY.

CENTRAL PLANNING IS THE PROBLEM HERE.

WHEN YOU HAVE AN ECONOMY THAT IS ULTIMATELY DIRECTED FROM THE TOP, WHAT YOU LOSE IS THE ABILITY TO PICK UP SIGNALS WHEN THINGS ARE GOING WRONG.

SO AS IN THE CASE OF THE ONE-CHILD POLICY, OR IN THE CASE OF THE REAL ESTATE CRISIS, THERE WERE SIGNALS SAYING TO THEM WE NEED TO SLOW DOWN OR RECONSIDER.

BUT AT THAT POINT WHEN THE POLICY IS CHOSEN, THEY'LL CONTINUE DOWN THE TRACK, AND IT'S HARDER TO CHANGE IT THAN IT IS IN A MORE FREE MARKET ECONOMY.

AND THAT'S SORT OF THE TENSION HERE BETWEEN THESE TWO DIFFERENT APPROACHES TO THE TECHNOLOGICAL FUTURE.

IN SOME CASES THERE ARE SOME PEOPLE WHO SAY WELL, THE UNITED STATES COULD TAKE A NOTE FROM CHINA AND DO A BIT MORE INDUSTRIAL POLICY, SOMETHING THAT USED TO BE ALLERGY TO US HERE, BUT NOW SEEMS MORE ATTRACTIVE IF YOU'RE TRYING TO MAKE BIG INVESTMENTS IN MICROCHIP MANUFACTURING AND THINGS LIKE THAT.

BUT AT THE SAME TIME, YOU WOULDN'T WANT TO COPY TOO MUCH OF THE CHINESE SYSTEM OR YOU CHOKE OFF THE KIND OF INNOVATION THAT HAS PRODUCED AMERICAN INVENTIONS IN THE FIRST PLACE.

>> WE TALK ABOUT THE RACE BETWEEN CHINA AND THE UNITED STATES, WHETHER IT BE ON AGI, BIOTECH, ALL THE TARIFFS THAT ARE FLYING BACK AND FORTH.

TELL ME, YOU'VE BEEN CHINA EXPERT FOR 20, 30 YEARS NOW.

DOES IT HAVE TO BE A ZERO SUM GAIN, OR IS THERE A WAY IN WHICH THE U. S. AND CHINA CAN WORK WITH SOME COMPETITION, BUT LOT OF COOPERATION TOWARDS A SHARED BETTER VISION?

>> I THINK YOU'VE PUT IT WELL.

I THINK WE'RE COMING TO THE REALIZATION, AND THIS IS FOR ME THE RESULT OF 30 YEARS OF STUDYING AND WORKING IN CHINA THAT WE DON'T HAVE THE LUXURY OF IMAGINING THAT CHINA IS SUDDENLY GOING TO DISAPPEAR FROM THE WORLD STAGE.

IT IS A FACT OF OUR LIVES.

AND THESE TWO BIG POWERFUL COUNTRIES, AMBITIOUS COUNTRIES HAVE TO FIGURE OUT A WAY TO CO-EXIST, PARTICULARLY NOW THAT WE'VE DEVELOPED THESE ENORMOUSLY POWERFUL TECHNOLOGIES IN AI.

I THINK WE'RE HEADING TOWARDS AN ERA, AND IT REMINDS US A LITTLE BIT OF A MOMENT IN THE COLD WAR, NOT A PERFECT ANALOGY, BUT USEFUL ONE.

WHEN THE SOVIET UNION AND THE UNITED STATES BOTH REALIZED THAT WE'RE BOTH NUCLEAR ARMED NATIONS, IF WE DON'T FIGURE OUT A WAY TO TALK ABOUT THESE TECHNOLOGIES, THESE WEAPONS, WE'RE GOING TO FIND OURSELVES IN A DANGEROUS SITUATION THERE IS A LOT OF PEOPLE CALLING IT FOR NOW THE UNITED STATES AND CHINA HAVE TO SIT DOWN AND COME UP WITH SOME RULES OF THE ROAD TO MAKE SURE THAT THESE TECHNOLOGIES DO NOT GET OUT OF CONTROL BEFORE WE'RE ABLE TO MAKE THE BEST OF THEM.

>> EVAN OSNOS, THANK YOU SO MUCH FOR JOINING US.

>> THANK YOU, WALTER.