Transcript: Economic Superpower

This is a partial transcript from "Your World with Neil Cavuto," November 14, 2005, that was edited for clarity.

NEIL CAVUTO, HOST: The president's trip to the Far East will include a visit to China. Many say it's only a matter of time before that nation passes the United States, both economically and militarily, but not Herman Cain. Herman says that all of this talk is a lot of nonsense. Mike Norman says, don't be so sure; a new world order may be at hand. Herman Cain, what's the deal?

HERMAN CAIN, CEO, THE NEW VOICE: Well, first of all, the reason that China is not an economic threat is because they don't have the infrastructure. They have little to no property rights of the individuals.

And the other thing is because of all of the agricultural people that live there, they are adrift, as they call it. The restrictions on the people moving from one province to another is one of the other things, because when you have a system that does not reward risk-taking by allowing you to own the property and to own the fruits of your labor, then, you will never be able to close that gap.

Let me give you one measure that I got from the Heritage Foundation. The economic freedom index for the United States is 12. That's based upon a lot of things that they look at in order to come up with a score. The economic freedom index for China is 112. So, I don't think that we have to worry about them in our lifetime of being an economic threat.

CAVUTO: But, even with all this stuff, Herman, they have made great inroads. And their GDP is growing at, what, three times our clip? And that's slowed down.

What do you think, Mike?

MIKE NORMAN, ECONOMIC CONTRARIAN UPDATE: First of all, Neil, I want you to know, this is about as rare as seeing a UFO, me arguing against my good friend Herman Cain over here.

(LAUGHTER)

NORMAN: And it pains me to do so.

However, look, China has now surpassed the United States as the No. 1 destination of investment capital, foreign direct investment. They are transforming. And the issues that Herman raises are correct. And the Chinese government is very aware of this disparity between the poor hinterlands and the rich cities, but they're trying to do something about that.

They're slowly but surely switching their model into more domestic investment, research and development. Per capita, China now is the third largest, in terms of public funding of research and development. They're graduating more scientists and engineers than the United States. And that advance happened in only a six-year period, Neil. China is on track now...

CAVUTO: So, all this freedom stuff that Herman says notwithstanding, you're not...

(CROSSTALK)

NORMAN: The freedoms will come as economic prosperity grows.

CAIN: Freedom, that is what is going to be the big holdup.

NORMAN: People will demand more freedom. The government will loosen up. But you know, China is a burgeoning economic power.

CAVUTO: All right, Herman, what do you make of that?

CAIN: I will agree that it is a burgeoning economy, but it does not have the dynamics that this nation has in order to overtake the United States with respect to its burgeoning economy, because, when you consider the number of people that they have what they call adrift, they have over 100 million people that are restricted to staying on small farms.

And, so, if you don't have the infrastructure, because they don't have the roads and the rest of the things that go with infrastructure...

(CROSSTALK)

CAVUTO: They have 1.3 billion people.

(CROSSTALK)

NORMAN: Look, Herman, half the cement consumed in the world last year went to China. I mean, infrastructure is one of the major areas of investment there. So, infrastructure, in telecommunications, in transportation, they're building that out at a rapid rate

(CROSSTALK)

CAIN: Do you know what they did with that cement?

NORMAN: Excuse me?

CAIN: Do you know what they did with that cement? They put it into airports and ports.

They are shipping it out, and they're flying it in and out, because that's what they're doing. They're not putting it into roads and bridges and things like that. They're putting it into the airports and ports...

(CROSSTALK)

CAVUTO: So, you're not worried, Herman.

Mike, you're saying keep an eye on these guys, right?

All right. Thank you, guys, very much.

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