This is John Bachelor, conversation with colleague Fraser Howie, co-author of Red Capitalism, the

consumer class in China.

Does it exist?

How big?

Why not?

Fraser very carefully explains that the consumer is an answer to a capitalist economy. However, the reason it is not happening in China is the Chinese Communist Party takes

the lion's share of everything.

Here's Fraser to explain how capitalism really works, why America is driven by the consumer class and all the

European allies have the consumer class to prosper with as well, but not China. More of this tonight.

Look I think that you're right.

consumption and one of the things kind of wants to do is move its economy from investment

driven to consumption driven. The way you're going to improve consumption, you know, there's nothing genetically different or economically different from, you know, what you see elsewhere in Asia or in the states and in Europe.

If consumers have more money, they will consume more.

And the problem is that in China, where the money ends up, where the wealth ends up is reflective of the power structures and the man in the street has no power in China.

The state has power and Xi Jinping wants power and money to flow to the center and that means that

the households are getting a lower share of the wealth in China than they should and unless that

imbalance is addressed then how are you going to boost consumption you ultimately need to put money in people's

pockets and people have to believe that that money is going to continue to come into their pockets.