This is a rush transcript from "Hannity & Colmes," July 8, 2008. This copy may not be in its final form and may be updated.

SEAN HANNITY, CO-HOST: "The People's Republic of Capitalism" is a four-part series that starts tomorrow night on the Discovery Channel hosted by veteran journalist, Ted Koppel. And it takes a look at China in the modern world.

(BEGIN VIDEO CLIP)

TED KOPPEL, NBC NEWS: When they chant that slogan about safety being important, it is. To them and certainly, on this occasion, to me.

Video: Watch Sean and Alan's interview with Ted Koppel

They're allowing my crew and me to accompany them down to the. We've been assured and reassured that this is one of the safest mines in China, and so it appears to be. Instead of going a thousand feet up, we're going a thousand feet down.

(END VIDEO CLIP)

HANNITY: Joining us now is the managing editor the Discovery Channel, Ted Koppel, the only person that ever actually forced me to do an interview. At one of the conventions.

KOPPEL: You said that this afternoon.

HANNITY: You made me sit down and do an interview, and I didn't want to do it.

KOPPEL: Stop whining, Sean.

ALAN COLMES, CO-HOST: I've been telling him that for 11 years.

HANNITY: Well, anyway, it's good to see you.

KOPPEL: It's nice to see you.

HANNITY: You've spent a lot of time in China?

KOPPEL: Actually, I've been going to China for 40 years now. I was -- the first time I was there was back in '69. We used to just go to the border on the Hong Kong side, and record television pictures from there.

HANNITY: My niece is there. The People's Republic of Capitalism. One of the reasons people aren't really paying a lot of attention to it, that we're paying such high gas prices, is that China, their demand has increased and is increasing significantly.

KOPPEL: And will increase much more as the years go by. One of the other things I'll be interested in hearing your thoughts on this.

HANNITY: Oh, boy.

KOPPEL: The Bush administration is the first administration in history that's gone to war and has not raised any new taxes. So where's the money coming from? It's coming from Japan. It's coming from China. It's coming from Saudi Arabia. It's coming from the Brits.

We are in hock to the Chinese to the tune of about 600,000 billion to a trillion dollars, which they would hold in U.S. Treasury now.

HANNITY: Well, I'll give you the answer. If you look at George Bush, with his tax cuts, we still have had record years and months in terms of actual revenues coming into the government. One of the things that we always discuss on this program is it never curtails spending.

But to stay a little bit on this. It's interesting. You use the phrase, capitalism without democracy. We were talking a little bit about that earlier today.

KOPPEL: We were. I mean, you know, people think somehow that capitalism is a political ideology. It's got nothing to do with politics. It's an economic theory, and it works, and it works well.

And it works so well that the Chinese, who have had one economic disaster after another under Mao, have suddenly realized that capitalism is the thing for them. It's working brilliantly, but without the freedom.

HANNITY: It's working. The democratic reforms. So, in other words, what communism can't do, what communism couldn't do...

KOPPEL: Capitalism has done.

HANNITY: Capitalism is doing. Now, along with capitalism and wealth creation, I guess my question is also will come education and also comes the Internet.

KOPPEL: I agree. All of that.

HANNITY: Also comes the availability of — all the information. Does that then, therefore, threaten the governmental system?

KOPPEL: It does.

HANNITY: And create a path for democracy?

KOPPEL: It may, but that — that terrifies the Chinese government. And the interesting thing is there's an interview in this program with a young Chinese fashion photographer. He speaks excellent English, and he talks — he says, "I don't know what it is. My imagination is blocked. It's stifled."

And I said, you know, "What do you — what do you attribute that to?"

And he said, "Because the Chinese education system, it's one and one is two, two and two is four.

HANNITY: Right.

KOPPEL: No creativity. Right? We don't think of creativity as being a function of freedom, but it is.

COLMES: It really is.

HANNITY: At its core.

KOPPEL: I was going to say — don't you ever get to say anything?

COLMES: When he shuts up. Let me ask you this. How repressive of a regime is it?

KOPPEL: It's — it's definitely an authoritarian — an authoritarian regime. No more or less repressive than the Saudi regime, for example,

COLMES: But people — you know, it's interesting, the confluence between democracy and capitalism. People associate the two, as Sean started to touch on. That's really not what's going on there. You can have capitalism, not in a democracy. Does that move it toward a democracy?

KOPPEL: Not necessarily. I mean, you have capitalism in Saudi Arabia. You do not have democracy in Saudi Arabia. That doesn't seem to bother us as much. We're far more concerned about the Chinese.

The Chinese are worried that, if they allow democracy to rear its ugly head, that they will have anarchy, and that anarchy will undercut and undermine this economic development.

COLMES: How quickly are they moving toward a reform and toward being the kind of government that we would be comfortable dealing with?

KOPPEL: As slowly as they can.

COLMES: There's no rush?

KOPPEL: There's no rush.

COLMES: Doesn't the Internet — doesn't the ability to communicate with the rest of the world, doesn't that automatically, technology, move things forward?

KOPPEL: You would think it would, but they do everything they can, when necessary, to block the Internet.

COLMES: And they still tell families how many kids they can have?

KOPPEL: Absolutely. And when you realize they've got 1.3 billion people, and a billion of those people are still in poverty, you can understand why they don't want another 200 million.

COLMES: One of the things you touch on in this is that also, that people feel comfortable with some of the dictatorial attitudes there. They like the government telling them, to some extent.

KOPPEL: I'm not sure they like the government telling them, but they say of the government, "We had it so bad for so long that capitalism now is giving us more than we've ever had before. We like that."

COLMES: We're going to pick it up right there with Ted Koppel. More with Ted right after this break as continue and talk about his great series coming up on China on the Discovery Channel. Just a moment.

(COMMERCIAL BREAK)

COLMES: All right, we are back with Ted Koppel.

HANNITY: More ratings, Ted.

COLMES: What's that now?

HANNITY: It was an inside joke.

COLMES: Do you miss doing "Nightline?"

KOPPEL: Not really. I mean, I did it for 26 years.

COLMES: Yes.

KOPPEL: And it's tough, as you guys know.

COLMES: The daily show. It's a grind, a treadmill.

KOPPEL: Right. You've been doing it 12 years. I did it 26 years.

COLMES: Yes, but you — you have a great opportunity here with Discovery. This — for example, to put a year into a project and get into the kind of depth you did on that.

KOPPEL: Absolutely.

COLMES: You can't do it on daily television.

KOPPEL: No, you can't.

COLMES: So this must have been a great opportunity.

KOPPEL: The thing is, when you are doing a daily, if, like today, you have this lousy show, you forget about it. Tomorrow you'll have a great show.

COLMES: What kind of show did you call this?

HANNITY: Let me ask you one quick — we have less than a minute. Just your general thoughts about the presidential election.

KOPPEL: Yes.

HANNITY: What are your thoughts? What do you think?

KOPPEL: It's the most exciting general election I think we've had in a long time.

HANNITY: Is that true? Because you've covered all...

KOPPEL: I think so. I think so. I've been covering them since Barry Goldwater in '64. And except for the '68, you know, when you had Richard Daly, right? An old man. That was he...

HANNITY: Governor Wilder saying...

KOPPEL: ... he and Dave Rubikov (ph) yelling at each other. Those were good times.

HANNITY: Those were good times. Controversy equals, I guess, good times.

Anyway, so it starts on the Discovery Channel.

KOPPEL: Tomorrow Night.

HANNITY: Tomorrow night.

KOPPEL: Ten o'clock. As soon as you get through watching "Hannity & Colmes."

HANNITY: Don't make Greta mad at us. See you, Ted.

KOPPEL: Thank you.

COLMES: Thank you very much. Very nice to have you here.

Watch "Hannity & Colmes" weeknights at 9 p.m. ET!

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