1 00:00:12,011 --> 00:00:17,917 >>> GETTING INTO CHINA IS ALL BUT IMPOSSIBLE FOR MOST WESTERN JOURNALISTS. >> THIS IS THE FINANCIAL AND 2 00:00:17,984 --> 00:00:24,824 ECONOMIC CAPITAL OF CHINA. >> BUT WHEN THE U.S. AMBASSADOR NICHOLAS BURNS INVITED US TO COME FOR A VISIT AND AN 3 00:00:24,891 --> 00:00:31,498 INTERVIEW, WE WERE GRANTED VISAS. >> IS IT OUR MOST COMPETITIVE RELATIONSHIP IN THE WORLD RIGHT 4 00:00:31,564 --> 00:00:37,170 NOW? >> THIS IS THE MOST IMPORTANT, MOST COMPETITIVE, AND MOST DANGEROUS RELATIONSHIP THAT THE 5 00:00:37,237 --> 00:00:45,779 UNITED STATES HAS IN THE WORLD RIGHT NOW AND WILL, I THINK, FOR THE NEXT DECADE OR SO. >>> WHAT HAPPENS IF VLADIMIR 6 00:00:45,845 --> 00:00:55,121 PUTIN ENTERS ANOTHER COUNTRY BESIDES UKRAINE BY FORCE? HE ALREADY HAS. 15 YEARS AGO, RUSSIA INVADED 7 00:00:55,188 --> 00:01:00,627 NEIGHBORING GEORGIA. IT HAS MILITARY STATIONED THERE AND CONTROLS 20% OF THE COUNTRY. WHAT'S NEXT? 8 00:01:00,693 --> 00:01:08,868 >> THE RUSSIANS ARE BUYING APARTMENTS HERE IN EVERY 33 MINUTES, AND THEY'RE REGISTERING A BUSINESS IN EVERY 26 MINUTES. 9 00:01:08,935 --> 00:01:16,876 SO WE ARE ON THE BRINK OF A VERY DANGEROUS SITUATION HERE IN GEORGIA. >> I'M LESLEY STAHL. 10 00:01:16,943 --> 00:01:21,648 >> I'M BILL WHITAKER. >> I'M ANDERSON COOPER. >> I'M SHARYN ALFONSI. >> I'M JON WERTHEIM. 11 00:01:21,714 --> 00:01:31,958 >> I'M CECILIA VEGA. >> I'M SCOTT PELLEY. THOSE STORIES TONIGHT ON "60 MINUTES." 12 00:01:35,361 --> 00:01:44,804 >>> AMERICAN CEOs USED TO SWOON OVER CHINA. ITS VAST POOL OF CONSUMERS HAS BEEN A MAGNETIC DRAW FOR 13 00:01:44,871 --> 00:01:52,745 DECADES. BUT DOING BUSINESS THERE HAS BECOME SO FRAUGHT AND RISKY, WITH INTELLECTUAL PROPERTY THEFT 14 00:01:52,812 --> 00:02:01,387 AND AN EXPANDED ESPIONAGE LAW USED TO INTIMIDATE THE BUSINESS COMMUNITY, THAT U.S. COMPANIES HAVE PRESSED THE PAUSE BUTTON. 15 00:02:01,454 --> 00:02:10,597 ON TOP OF THAT, THE U.S.-CHINA RELATIONSHIP HAS BECOME CONTENTIOUS DUE PARTLY TO CHINA'S BELLIGERENT ACTIVITY 16 00:02:10,663 --> 00:02:19,105 TOWARD TAIWAN AND IN THE SOUTH CHINA SEA. THE BALLOON SPY INCIDENT OF LAST YEAR, AND THE LIST GOES ON. 17 00:02:19,172 --> 00:02:29,849 MAKING MATTERS WORSE, THE CHINESE ECONOMY HAS HIT A WALL. EXPORT GROWTH IS SLOWING. THE COUNTRY'S DROWNING IN DEBT, 18 00:02:29,916 --> 00:02:36,222 AND YOUTH UNEMPLOYMENT HAS SOARED. GETTING INTO CHINA TO TELL THAT STORY IS ALL BUT IMPOSSIBLE FOR 19 00:02:36,289 --> 00:02:44,631 MOST WESTERN JOURNALISTS. BUT AS WE FIRST REPORTED IN FEBRUARY, WHEN THE U.S. AMBASSADOR, NICHOLAS BURNS, 20 00:02:44,697 --> 00:02:51,404 INVITED US TO COME FOR A VISIT AND AN INTERVIEW, WE WERE GRANTED VISAS. WE SPOKE WITH HIM AT HIS 21 00:02:51,471 --> 00:03:02,515 RESIDENCE IN BEIJING. >> MORE MONEY IS LEAVING CHINA FOR THE FIRST TIME IN 40 YEARS THAN IS COMING IN FROM AMERICAN, 22 00:03:02,582 --> 00:03:07,954 JAPANESE, EUROPEAN, KOREAN INVESTORS. >> NOW, WHY IS THAT, AND HOW MUCH OF A PROBLEM IS THAT FOR 23 00:03:08,021 --> 00:03:13,927 THEM? >> THAT'S A REAL PROBLEM FOR THIS ECONOMY. THEY HAVE 1.4 BILLION PEOPLE 24 00:03:13,993 --> 00:03:17,196 HERE. THEY'VE GOT TO KEEP IT GROWING, AND FOREIGN CAPITAL IS IMPORTANT. 25 00:03:17,263 --> 00:03:22,168 YOU ASK WHY. I THINK THERE'S BEEN A CONTRADICTION IN THE MESSAGING FROM THE GOVERNMENT HERE IN 26 00:03:22,235 --> 00:03:29,542 CHINA TO THE REST OF THE WORLD. ON THE ONE HAND, THEY SAY, WE'RE OPEN FOR BUSINESS. WE WANT AMERICAN, JAPANESE 27 00:03:29,609 --> 00:03:36,950 BUSINESSES HERE. BUT ON THE OTHER HAND, THEY'VE RAIDED SIX OR SEVEN AMERICAN BUSINESSES SINCE LAST MARCH. 28 00:03:37,016 --> 00:03:41,354 >> RAIDED? >> RAIDED. >> YOU MEAN -- >> THEY'VE GONE INTO AMERICAN 29 00:03:41,421 --> 00:03:47,794 COMPANIES AND SHUT THEM DOWN AND MADE ACCUSATIONS WE BELIEVE ARE VERY MUCH UNWARRANTED. >> Reporter: THE AMERICAN 30 00:03:47,860 --> 00:03:56,302 COMPANIES INCLUDE BAIN & COMPANY AND THE MINTZ GROUP, A COMPANY THAT DOES DUE DILIGENCE FOR OTHER COMPANIES THAT MIGHT WANT 31 00:03:56,369 --> 00:04:03,142 TO INVEST HERE WAS RAIDED LAST YEAR. FIVE OF ITS CHINESE EMPLOYEES WERE TAKEN INTO CUSTODY, AND 32 00:04:03,209 --> 00:04:10,149 THEY'RE STILL THERE. ANOTHER FIRM, CAPVISION, WAS RAIDED. LEST THE MESSAGE WASN'T LOUD AND 33 00:04:10,216 --> 00:04:20,593 CLEAR, A REPORT ABOUT IT WAS PUT ON STATE-RUN TELEVISION. IT ACCUSED WESTERN CONSULTING FIRMS OF ESPIONAGE AND STEALING 34 00:04:20,660 --> 00:04:26,666 NATIONAL SECURITY AND MILITARY SECRETS. >> THEY WANT THE INVESTMENT TO COME BACK, AND THEY'RE RAIDING 35 00:04:26,733 --> 00:04:30,269 AMERICAN COMPANIES? >> YES. >> AND THEY'RE- >> THEY'VE PASSED AN AMENDMENT 36 00:04:30,336 --> 00:04:37,577 TO THEIR COUNTER-ESPIONAGE LAW, AND IT'S WRITTEN IN SUCH A GENERAL WAY THAT IT COULD BE THAT AMERICAN BUSINESS PEOPLE 37 00:04:37,644 --> 00:04:46,152 COULD BE ACCUSED OF ESPIONAGE FOR ENGAGING IN PRACTICES THAT ARE PERFECTLY LEGAL AND ACCEPTABLE EVERYWHERE ELSE IN 38 00:04:46,219 --> 00:04:52,492 THE WORLD -- COLLECTING DATA TO DUE DILIGENCE SO THAT YOU CAN DECIDE WHETHER YOU WANT TO INVEST IN A COMPANY OR FORM A 39 00:04:52,558 --> 00:05:00,533 JOINT VENTURE, RIGHT? >> WHAT DO YOU THINK THE CHINESE ARE AFRAID THAT THESE COMPANIES ARE GOING TO FIND OUT, THESE DUE 40 00:05:00,600 --> 00:05:05,371 DILIGENCE COMPANIES? WHAT ARE THEY WORRYING ABOUT? >> YOU KNOW, I THINK THEY WANT TO CONTROL DATA ABOUT THE 41 00:05:05,438 --> 00:05:13,212 CHINESE PEOPLE, ABOUT CHINESE COMPANIES. AND SO THAT, I THINK, IS AT THE HEART OF THE PROBLEM OF THOSE 42 00:05:13,279 --> 00:05:18,651 AMERICAN COMPANIES OPERATING IN THAT SPHERE. >> Reporter: AMBASSADOR BURNS TOLD US THAT'S JUST ONE OF THE 43 00:05:18,718 --> 00:05:22,889 CONCERNS HE HEARS ABOUT. >> THERE IS STILL INTELLECTUAL PROPERTY THEFT FROM AMERICAN COMPANIES HERE. 44 00:05:22,955 --> 00:05:29,028 >> IS EVERY AMERICAN COMPANY AFRAID OF THAT? >> YES. >> Reporter: ALL KINDS OF U.S. 45 00:05:29,095 --> 00:05:40,373 COMPANIES BEGAN FLOCKING TO CHINA IN THE EARLY 1980s AFTER THE COUNTRY OPENED TO THE WEST UNDER THEN-LEADER DENG XIAOPING. 46 00:05:40,440 --> 00:05:49,716 AND NOW U.S. BANKS OPERATE HERE. WALMART HAS NEARLY 300 STORES ACROSS THE COUNTRY. SHOPPERS HERE IN SHANGHAI CAN 47 00:05:49,782 --> 00:05:59,659 BUY LEVI'S, BROWSE IN AN APPLE STORE, AND GET A CARAMEL FRAPPUCCINO. >> STARBUCKS HAS 6,000 STORES IN 48 00:05:59,726 --> 00:06:05,832 CHINA, 1,000 STORES IN SHANGHAI, AND THEY WANT TO KEEP BUILDING BECAUSE COFFEE -- THIS WAS A TEA CULTURE. 49 00:06:05,898 --> 00:06:11,904 >> RIGHT, YES. >> FOR HUNDREDS OF YEARS. IT'S NOW BECOMING, AT LEAST FOR THE YOUNG CHINESE, A COFFEE 50 00:06:11,971 --> 00:06:17,844 CULTURE. >> AND THEY LOVE STARBUCKS? >> THEY LOVE STARBUCKS, AND I'LL BUY YOU A CAPPUCCINO. 51 00:06:17,910 --> 00:06:22,815 >> I'LL TAKE ONE. THANK YOU. >> Reporter: BOEING'S HERE. SO IS TESLA, PFIZER, CHEVRON, 52 00:06:22,882 --> 00:06:28,988 INTEL. BUT WHILE SOME BUSINESSES ARE THRIVING, MANY OF THE FOREIGN COMPANIES ARE WORRIED ABOUT THE 53 00:06:29,055 --> 00:06:37,363 BUSINESS CLIMATE UNDER PRESIDENT XI JINPING. >> IF YOU TRACK CHINA FROM THE DEATH OF MAO TO THE OPENING OF 54 00:06:37,430 --> 00:06:44,237 CHINA TO THE WORLD, WE'VE SEEN A CLOSING OF SORTS. WE'VE SEEN A CENTRALIZATION OF POWER OF THE PARTY. 55 00:06:44,303 --> 00:06:52,545 WE'VE SEEN INCREASED REPRESSION OF THE PEOPLE OF CHINA HERE. THAT'S A VERY SIGNIFICANT TREND, JUST OVER THE LAST DECADE. 56 00:06:52,612 --> 00:06:59,051 >> WITH XI? >> UNDER HIS LEADERSHIP. >> Reporter: PART OF THAT TREND INCLUDES PRESIDENT XI'S 57 00:06:59,118 --> 00:07:06,592 REVERSING MANY OF THE MARKET REFORMS THAT UNLEASHED CHINA'S ECONOMIC MIRACLE. >> THEY'VE BEEN GROWING OVER 40 58 00:07:06,659 --> 00:07:18,538 YEARS, THE FASTEST GROWTH RATE RECORDED IN ECONOMIC HISTORY. 8, 9, 10% GROWTH RATES. THEY'VE LIFTED PEOPLE OUT OF 59 00:07:18,604 --> 00:07:22,508 POVERTY. THAT GROWTH RATE IS SLOWING DOWN. MOST ECONOMICS ARE PROJECTING 60 00:07:22,575 --> 00:07:28,815 THERE WILL BE A 2%, 3%, 4% GROWTH RATE, MAYBE EVEN LOWER. >> CAN THEY SUPPORT THEIR SOCIETY IF IT'S THAT LOW? 61 00:07:28,881 --> 00:07:34,754 >> THAT'S GOING TO BE DIFFICULT FOR THEM. >> IF THERE WAS SO MUCH EXPLOSIVE GROWTH, IF SO MANY 62 00:07:34,821 --> 00:07:41,360 PEOPLE WERE LIFTED OUT OF POVERTY, WHY IS HE TURNING AWAY FROM WHAT WORKED? >> WELL, I THINK THEY'VE GOT 63 00:07:41,427 --> 00:07:47,200 MAYBE COMPETING PRIORITIES. THE GOVERNMENT HERE IN CHINA CERTAINLY WANTS THE ECONOMY TO GROW, BUT THEY ALSO HAVE A 64 00:07:47,266 --> 00:07:55,641 NATIONAL SECURITY MIND-SET. THEY WANT TO CONTROL DATA. >> BUT THAT'S MORE IMPORTANT, THE CONTROL, RIGHT, THAN 65 00:07:55,708 --> 00:08:02,448 ECONOMIC GROWTH? IT SEEMS THAT WAY. >> I THINK IT'S OPEN FOR DEBATE. YOU'RE HEARING -- WE ARE HEARING 66 00:08:02,515 --> 00:08:07,386 BOTH MESSAGES. >> IT SOUNDS AS IF YOU, YOURSELF, DON'T KNOW THE DIRECTION IT'S GOING. 67 00:08:07,453 --> 00:08:15,361 >> WHAT I PERCEIVE HERE IS THAT THE GREATER ENERGY IS WITH THOSE ON THE NATIONAL SECURITY SIDE OF THE GOVERNMENT OF CHINA. 68 00:08:15,428 --> 00:08:21,067 >> GOOD MORNING. HOW ARE YOU? >> Reporter: ON A TRAIN TRIP FROM BEIJING TO SHANGHAI, THE 69 00:08:21,133 --> 00:08:32,178 AMBASSADOR POINTED OUT THAT IN THE DECADES BEFORE PRESIDENT XI, CHINA POWERED ITS ECONOMY BY INVESTING IN THESE HIGH-SPEED 70 00:08:32,245 --> 00:08:40,152 TRAINS, ROADS, FACTORIES, AND SKYSCRAPERS THAT LIGHT UP SHANGHAI, THE FINANCIAL CAPITAL OF CHINA. 71 00:08:40,219 --> 00:08:49,395 BUT UNDER PRESIDENT XI, CHINA LOST MORE THAN $120 BILLION WORTH OF LONG-TERM FOREIGN INVESTMENTS LAST YEAR BECAUSE OF 72 00:08:49,462 --> 00:08:57,003 THE WEAKENING ECONOMY AND THE HARSH GOVERNMENT TACTICS WHICH HAVE LEFT AMERICAN COMPANIES UNCERTAIN OF THE FUTURE THERE. 73 00:08:57,069 --> 00:09:03,175 >> THERE ARE A LOT OF AMERICAN COMPANIES HERE. HAVE A LOT OF THEM JUST PICKED UP AND LEFT BECAUSE OF THIS 74 00:09:03,242 --> 00:09:07,680 CURRENT BUSINESS ENVIRONMENT? >> YOU KNOW, THAT'S INTERESTING. NOT MANY. >> NOT MANY? 75 00:09:07,747 --> 00:09:12,318 >> NOT MANY. >> WHY NOT? >> CHINA IS THE SECOND LARGEST ECONOMY IN THE WORLD. 76 00:09:12,385 --> 00:09:19,492 IT'S A BIG MARKET. SO A FEW AMERICAN COMPANIES HAVE LEFT, BUT MOST HAVE STAYED. >> Reporter: SOME AMERICAN 77 00:09:19,558 --> 00:09:27,867 COMPANIES ARE MOVING AT LEAST SOME OF THEIR OPERATIONS TO SINGAPORE, VIETNAM, MEXICO. >> BUT THEY'RE NOT LEAVING 78 00:09:27,934 --> 00:09:33,306 CHINA? >> THEY DON'T WANT TO LEAVE. >> THE MARKET'S SO IRRESISTIBLE TO AMERICAN BUSINESS PEOPLE. 79 00:09:33,372 --> 00:09:38,678 IT'S GIGANTIC. >> MAYBE THEY'RE NOT LEAVING, BUT THEY'RE NOT INVESTING. THEY'RE NOT MAKING MAJOR 80 00:09:38,744 --> 00:09:47,086 INVESTMENTS UNTIL THEY CAN SEE EXACTLY WHERE THE GOVERNMENT IS HEADED. >> Reporter: YET BECAUSE OF THE 81 00:09:47,153 --> 00:09:55,828 1.4 BILLION POTENTIAL CONSUMERS, SOME COMPANIES LIKE DISNEY ARE INCREASING THEIR INVESTMNT. >> WELCOME TO SHANGHAI DISNEY 82 00:09:55,895 --> 00:10:03,135 RESORT. >> Reporter: IT RECENTLY EXPANDED ITS SHANGHAI DISNEYLAND THAT THEY TOLD US IS THRIVING. 83 00:10:03,202 --> 00:10:11,444 APTAR, A $9 BILLION COMPANY HEADQUARTERED IN CRYSTAL LAKE, ILLINOIS, IS ANOTHER AMERICAN FIRM BUCKING THE TREND OF 84 00:10:11,510 --> 00:10:21,454 CAPITAL FLIGHT. PRESIDENT OF APTAR ASIA ZIANGWEI GONG, A CHINESE-BORN U.S. CITIZEN, SHOWED US AROUND ONE OF 85 00:10:21,520 --> 00:10:28,127 THEIR FIVE MANUFACTURING SITES IN CHINA. >> WE ARE MANUFACTURING FOR SOME OF THE LARGEST U.S. BRANDS, 86 00:10:28,194 --> 00:10:33,199 ACTUALLY THE U.S. CONSUMERS BRANDS. >> Reporter: THIS FACTORY MAKES THE PACKAGING AND DISPENSING 87 00:10:33,265 --> 00:10:43,175 DEVICES FOR FOOD, PHARMACEUTICAL, AND BEAUTY PRODUCTS SOLD IN ASIA. >> ALL OF OUR CUSTOMERS LIKE ARE 88 00:10:43,242 --> 00:10:54,020 ALL HERE DOING BUSINESS. >> Reporter: APTAR, IN CHINA FOR NEARLY 30 YEARS, RECENTLY INVESTED $60 MILLION IN A NEW 89 00:10:54,086 --> 00:11:00,626 FACTORY. ZIANGWEI GONG SAYS EVEN IN A SLOWING ECONOMY, THE COMPANY IS DOING WELL. 90 00:11:00,693 --> 00:11:06,866 >> AMERICAN COMPANIES HERE, AS THE AMBASSADOR WELL KNOWS, ARE PAUSING OR CUTTING BACK ON INVESTMENT, BUT NOT THIS FIRM. 91 00:11:06,932 --> 00:11:15,341 YOU'RE EXPANDING. >> WELL, BECAUSE WE ARE HERE FOR THE LONG TERM AND WE BELIEVE IN THE CONSUMPTION POWER OF THE 92 00:11:15,408 --> 00:11:22,114 RISING MIDDLE CLASS. IT'S 1.4 BILLION PEOPLE HERE, AND IMAGINE, FOR EXAMPLE, HEALTH CARE. 93 00:11:22,181 --> 00:11:29,622 AND THE SAME WITH COSMETICS AND BEAUTY AND BEVERAGE, ALL THOSE SECTORS, PACKAGED FOODS. THESE ARE REALLY THE BIGGEST 94 00:11:29,688 --> 00:11:36,362 MARKETS. AND SO WE ARE VERY CONFIDENT ABOUT THE LONG TERM. >> WHAT DOES IT SAY ABOUT THE 95 00:11:36,429 --> 00:11:46,472 CONFIDENCE REALLY IN THE U.S.-CHINA RELATIONSHIP? IT SEEMS TO SAY YOU BELIEVE THAT THINGS WILL -- WHAT? 96 00:11:46,539 --> 00:11:50,476 I'M ASKING. GET BETTER? >> THAT'S A GREAT QUESTION FOR THE AMBASSADOR. 97 00:11:50,543 --> 00:11:55,815 I BELIEVE SO. I HOPE SO. >> YOU KNOW, WE'LL SEE. >> Reporter: ACTUALLY, BURNS 98 00:11:55,881 --> 00:12:05,157 SAYS HE'S WARY OF THE FUTURE AS THE FUNDAMENTAL RIVALRY AND MISTRUST BETWEEN THE U.S. AND CHINA IS SHAKING THE CONFIDENCE 99 00:12:05,224 --> 00:12:14,066 OF THE BUSINESS WORLD AND HAS PUSHED OUR RELATIONSHIP TO ITS LOWEST POINT IN HALF A CENTURY. >> IS IT OUR MOST COMPETITIVE 100 00:12:14,133 --> 00:12:20,673 RELATIONSHIP IN THE WORLD RIGHT NOW? >> THIS IS THE MOST IMPORTANT, MOST COMPETITIVE, AND MOST 101 00:12:20,739 --> 00:12:26,779 DANGEROUS RELATIONSHIP THAT THE UNITED STATES HAS IN THE WORLD RIGHT NOW AND WILL, I THINK, FOR THE NEXT DECADE OR SO. 102 00:12:26,846 --> 00:12:34,987 >> I WANT TO QUOTE YOU BACK TO YOU, AND TELL US WHAT YOU MEANT. YOU HAVE SAID "DIVORCE IS NOT AN OPTION." 103 00:12:35,054 --> 00:12:39,792 >> RIGHT. OUR TWO COUNTRIES HAVE TO LIVE TOGETHER. AND THIS, I THINK, IS THE 104 00:12:39,859 --> 00:12:46,866 GREATEST TENSION IN THE U.S.-CHINA RELATIONSHIP. CHINA IS OUR MOST SIGNIFICANT COMPETITOR AND, AT THE SAME 105 00:12:46,932 --> 00:12:54,707 TIME, CHINA IS OUR THIRD LARGEST TRADE PARTNER, 750,000 AMERICAN JOBS AT STAKE. AGRICULTURE. 106 00:12:54,773 --> 00:13:02,548 CHINA IS THE LARGEST MARKET FOR U.S. AGRICULTURE. ONE-FIFTH OF ALL OF OUR EXPORT PRODUCTS FROM AGRICULTURE ARE 107 00:13:02,615 --> 00:13:08,921 SENT TO CHINA. THAT WAS $40.9 BILLION LAST YEAR. >> SO WE CAN'T AFFORD REALLY TO 108 00:13:08,988 --> 00:13:13,893 HAVE A REAL BREAK HERE? >> WELL, IT'S COMPLICATED. >> ALL THOSE JOBS WOULD -- >> IT'S COMPLICATED. 109 00:13:13,959 --> 00:13:18,964 SOME PEOPLE ARE SAYING, WELL, WE'RE SO COMPETITIVE WITH CHINA, WE SHOULD END THE ECONOMIC RELATIONSHIP. 110 00:13:19,031 --> 00:13:26,038 WELL, THE CONSEQUENCE OF THAT WOULD BE 750,000 AMERICAN FAMILIES WOULDN'T BE ABLE TO PUT DINNER ON THE TABLE. 111 00:13:26,105 --> 00:13:32,978 AND SO THIS MAKES FOR AN EXTRAORDINARILY DIFFICULT BALANCING ACT IN MY JOB. >> YOU'RE A WALLENDA BROTHER. 112 00:13:33,045 --> 00:13:36,682 >> I'VE NEVER THOUGHT OF MYSELF THAT WAY. >> BUT YOU'RE UP ON THAT TIGHT ROPE. 113 00:13:36,749 --> 00:13:41,954 >> HIGH WIRE, RIGHT? WELL, WE HAVE COMPETING INTERESTS HERE, AND BALANCING THOSE INTERESTS IS THE REALITY 114 00:13:42,021 --> 00:13:51,330 IN THE U.S.-CHINA RELATIONSHIP. IF WE'RE GOING TO COMPETE, WE HAVE TO COMPETE RESPONSIBLY AND KEEP THE PEACE BETWEEN OUR 115 00:13:51,397 --> 00:13:55,301 COUNTRIES. BUT WE ALSO HAVE TO ENGAGE. >> Reporter: MORE ABOUT THE BALANCING ACT AND THE BIGGEST 116 00:13:55,367 --> 00:13:58,204 ECONOMIC PROBLEM IN CHINA TODAY WHEN WE COME BACK. 117 00:14:08,814 --> 00:14:17,756 >>> 1 IN EVERY 5 PEOPLE IN THE WORLD IS CHINESE. CHINA'S POPULATION IS FOUR TIMES THAT OF THE U.S., AND THE 118 00:14:17,823 --> 00:14:26,398 COUNTRY IS VAST, 3.7 MILLION SQUARE MILES. IT OVERLOOKS THE TAIWAN STRAIT, WHERE HALF THE WORLD'S TRADE 119 00:14:26,465 --> 00:14:32,871 FLOWS EVERY DAY, AND IS LOCATED ABOUT 100 MILES AWAY FROM TAIWAN. PRESIDENT XI LIKES TO SAY THAT 120 00:14:32,938 --> 00:14:42,147 THE EAST IS RISING, THE WEST IS DECLINING. BUT ECONOMICALLY, THE U.S. IS THRIVING COMPARED TO CHINA. 121 00:14:42,214 --> 00:14:53,225 IN DECEMBER, MOODY'S, THE CREDIT RATING AGENCY, CUT ITS OUTLOOK FOR CHINA TO NEGATIVE, AND IT'S FACING A LONG-TERM DEMOGRAPHIC 122 00:14:53,292 --> 00:14:58,998 BIND. A DECLINE IN THE BIRTHRATE THAT EXPERTS SAY IS IRREVERSIBLE, MEANING THE COUNTRY IS BOTH 123 00:14:59,064 --> 00:15:05,871 AGING AND SHRINKING. AMBASSADOR NICHOLAS BURNS TOOK US ON A TOUR STARTING IN BEIJING. 124 00:15:05,938 --> 00:15:11,410 THE AMBASSADOR AND HIS WIFE, LIBBY, LIKE TO TAKE EARLY MORNING WALKS THROUGH A PARK NEAR THEIR RESIDENCE. 125 00:15:11,477 --> 00:15:25,224 ♪ >> THIS IS A 600-YEAR-OLD MING DYNASTY PARK CALLED RITAN PARK. IT'S A PLACE FOR A LOT OF 126 00:15:25,291 --> 00:15:28,460 RETIREES AND A LOT OF YOUNG PEOPLE, AND IT'S TREMENDOUSLY ACTIVE. >> Reporter: IT'S WHERE THE 127 00:15:28,527 --> 00:15:43,208 LOCALS COME FOR THEIR EARLY MORNING ROUTINES, LIKE TAI CHI, YO-YO-ING, AND PING PONG. [ SPEAKING IN A GLOBAL 128 00:15:43,275 --> 00:15:51,850 LANGUAGE ] >> Reporter: YOU COULDN'T TELL FROM THESE SCENES THAT CHINA, WHERE THE COVID PANDEMIC BEGAN, 129 00:15:51,917 --> 00:16:03,262 IS STILL EMERGING FROM THE TRAUMA OF PRESIDENT XI JINPING'S OPPRESSIVE ZERO-COVID POLICY. BURNS, 68, A CAREER DIPLOMAT WHO 130 00:16:03,329 --> 00:16:13,138 HAS SERVED IN BOTH REPUBLICAN AND DEMOCRATIC ADMINISTRATIONS, GOT TO CHINA AT THE HEIGHT OF THE ZERO-COVID LOCKDOWNS AND 131 00:16:13,205 --> 00:16:18,644 QUARANTINES. >> WHEN MY WIFE, LIBBY, AND I ARRIVED HERE IN EARLY MARCH OF 2022, WE WERE QUARANTINED IN 132 00:16:18,711 --> 00:16:26,752 THIS HOUSE FOR 21 DAYS, FOR THREE WEEKS. SHANGHAI, A CITY OF 26 MILLION PEOPLE, WAS COMPLETELY LOCKED 133 00:16:26,819 --> 00:16:32,157 DOWN FOR 63 DAYS. >> WHAT WAS THAT LIKE IN THE CITY? >> WE HAD WOMEN WHO NEEDED TO 134 00:16:32,224 --> 00:16:38,964 GIVE BIRTH, AND WE HAD TO FIND A WAY TO GET THEM TO THE HOSPITAL. WE HAD AMERICANS WHO WANTED TO GET OUT BUT HAD TO FIND A WAY 135 00:16:39,031 --> 00:16:47,873 OUT OF THEIR LOCKED COMPOUNDS TO THE AIRPORT. SO ZERO-COVID WORKED FOR A WHILE. 136 00:16:47,940 --> 00:16:57,983 IN '20 AND '21, THEY HAD RELATIVELY LOW INFECTION RATES. >> BUT BY 2022, IT HAD REALLY DIVIDED THIS SOCIETY. 137 00:16:58,050 --> 00:17:03,756 >> Reporter: IT SET OFF RARE, WIDESPREAD PROTESTS. THEN IN DECEMBER OF 2022, PRESIDENT XI ENDED THE POLICY 138 00:17:03,822 --> 00:17:08,427 ABRUPTLY. >> THE LAST THING THIS GOVERNMENT IS GOING TO ACCEPT HERE IS VOLATILITY. 139 00:17:08,494 --> 00:17:16,835 >> Reporter: VOLATILITY IS SOMETHING JOERG WUTTKE, A GERMAN BUSINESSMAN WHO HAS LIVED AND WORKED IN CHINA FOR OVER 30 140 00:17:16,902 --> 00:17:25,344 YEARS, HADN'T SEEN SINCE THE TIANANMEN SQUARE UPRISING IN 1989. HE REPRESENTS BASF, THE WORLD'S 141 00:17:25,411 --> 00:17:32,518 LARGEST CHEMICAL PRODUCER. >> YOU HAVE SAID THIS IS A PTSD COUNTRY, POST-TRAUMATIC STRESS DISORDER COUNTRY. 142 00:17:32,584 --> 00:17:39,892 WHAT DO YOU MEAN? >> WELL, EVERYBODY HAS BEEN TRAUMATIZED BY THE LOCKDOWNS THAT TOOK PLACE IN MANY CITIES 143 00:17:39,958 --> 00:17:44,596 ACROSS CHINA, AND THE KIND OF MESSAGING THAT CAME OUT OF THE LEADERSHIP, IT'S FOR YOUR OWN SAFETY. 144 00:17:44,663 --> 00:17:51,837 AND THEN THE LOCKDOWN WAS LIFTED. ACTUALLY IT WAS MORE A CAPITULATION FROM THE 145 00:17:51,904 --> 00:17:55,841 GOVERNMENT. THE LOCKDOWN BASICALLY LEFT. >> THEY SAID, WE WERE WRONG. THEY'RE GOING TO LIFT IT. 146 00:17:55,908 --> 00:17:59,978 >> THEY NEVER SAID THEY WERE WRONG. THAT'S NOT THE SYSTEM TO ADMIT THEY DID SOMETHING WRONG. 147 00:18:00,045 --> 00:18:05,250 AND THEN LIKE A EXCUSE ME, COVID WAS ROLLING ACROSS THE COUNTRY. >> AFTER THEY LIFTED IT? >> DECEMBER, JANUARY, I WOULD 148 00:18:05,317 --> 00:18:11,423 SAY A BILLION PEOPLE WERE INFECTED, AND CERTAINLY LOTS OF OF PEOPLE DIED. >> Reporter: INDEPENDENT 149 00:18:11,490 --> 00:18:19,131 ANALYSTS SAY THAT AN ESTIMATED 1.4 MILLION PEOPLE DIED. >> THIS KIND OF ENVIRONMENT REALLY CHANGES YOUR ATTITUDE 150 00:18:19,198 --> 00:18:24,470 TOWARDS LIFE. AND IN BUSINESS, WE THOUGHT WE'RE GOING TO HAVE A COMEBACK STORY, AND WE HAD A GOOD COUPLE 151 00:18:24,536 --> 00:18:31,310 OF WEEKS. AND THEN THE ECONOMY BASICALLY HAS BEEN FLAT SINCE. >> YOU KNOW, AFTER COVID IN THE 152 00:18:31,376 --> 00:18:37,349 WEST, IN THE UNITED STATES PARTICULARLY, WE DID HAVE A HUGE, QUICK REBOUND. WHY DIDN'T IT HAPPEN HERE? 153 00:18:37,416 --> 00:18:43,455 >> WELL, I THINK THAT COVID ALSO HAS COVERED UP A COUPLE OF LONG-TERM PROBLEMS THAT CHINA HAS BEEN BUILDING UP. 154 00:18:43,522 --> 00:18:50,028 FOR EXAMPLE, IN THE REAL ESTATE SECTOR. >> Reporter: WE REPORTED ON THE REAL ESTATE SECTOR TEN YEARS AGO 155 00:18:50,095 --> 00:19:00,806 WITH ASTONISHING SITES LIKE THIS OF EMPTY BUILDINGS IN CITY AFTER CITY ACROSS THE COUNTRY. THIS IS TODAY. 156 00:19:00,873 --> 00:19:08,213 SIMILAR, HOLLOWED-OUT WASTELANDS OF UNOCCUPIED AND UNFINISHED APARTMENTS KNOWN AS GHOST CITIES. 157 00:19:08,280 --> 00:19:13,986 >> WHEN I WAS HERE TEN YEARS AGO, I NEVER EXPECTED TO SEE THESE BUILDINGS STILL HERE. >> YEAH. 158 00:19:14,052 --> 00:19:22,628 >> Reporter: WHAT WAS A HOUSING BUBBLE BACK THEN GREW AND FINALLY EXPLODED. THIS REAL ESTATE CRISIS LIES AT 159 00:19:22,694 --> 00:19:32,371 THE HEART OF CHINA'S ECONOMIC DECLINE. >> HAS ANYBODY COUNTED UP THE NUMBER OF EMPTY UNITS, I MEAN 160 00:19:32,437 --> 00:19:38,277 ACROSS THE WHOLE COUNTRY? >> WELL, THE WHOLE OF GERMANY, WE HAVE 82 MILLION PEOPLE COULD MOVE IN HERE RIGHT AWAY. 161 00:19:38,343 --> 00:19:44,082 80 TO 90 MILLION APARTMENTS ARE EMPTY. >> 80 TO 90 MILLION APARTMENTS ARE EMPTY? 162 00:19:44,149 --> 00:19:52,824 >> RIGHT, UNFINISHED. >> Reporter: OVER THE YEARS, CHINESE BANKS READILY LOANED MONEY TO THE DEVELOPERS AS THE 163 00:19:52,891 --> 00:20:00,265 BUILDING BOOM CREATED MILLIONS OF JOBS AND PROPELLED CHINA'S GROWTH. BUT IN 2020, THE GOVERNMENT 164 00:20:00,332 --> 00:20:08,106 UNDER PRESIDENT XI CLAMPED DOWN ON THE RAMPANT BORROWING, CAUSING THE MAJOR DEVELOPERS TO DEFAULT ON THEIR LOANS AND RUN 165 00:20:08,173 --> 00:20:12,911 OUT OF MONEY. >> LOOK AT THAT. THE FACADE ISN'T EVEN FINISHED. >> YEAH. 166 00:20:12,978 --> 00:20:19,284 >> Reporter: HE SAYS THEY COULDN'T EVEN AFFORD TO TAKE DOWN THE CRANES. IN JANUARY, EVERGRANDE, ONCE 167 00:20:19,351 --> 00:20:27,659 CHINA'S LARGEST DEVELOPER, WAS ORDERED TO LIQUIDATE ITS REMAINING ASSETS. LEFT IN THE LURCH ARE MILLIONS 168 00:20:27,726 --> 00:20:35,467 OF CHINESE CITIZENS WHO BOUGHT THESE APARTMENTS BEFORE THEY WERE BUILT. >> THE DEVELOPERS OWE THEIR 169 00:20:35,534 --> 00:20:41,473 CUSTOMERS THAT PAID UP TO THE MAGNITUDE OF 1 TRILLION U.S. DOLLARS. SO IF I DID A DOWN PAYMENT ON 170 00:20:41,540 --> 00:20:45,177 ONE OF THESE APARTMENTS -- >> RIGHT. >> -- WILL I EVER SEE THAT MONEY? 171 00:20:45,243 --> 00:20:48,413 >> NO, YOU WILL NOT SEE THE MONEY. >> IT'S GONE. IT'S VANISHED. 172 00:20:48,480 --> 00:20:53,452 >> IT'S GONE. IT'S FINISHED. IT'S REALLY DRAMATIC. >> TEN YEARS AGO, WE WERE TOLD 173 00:20:53,518 --> 00:21:00,926 THAT THIS WAS THE WAY PEOPLE PUT MONEY DOWN FOR THEIR NEST EGG. >> RIGHT. >> FOR THEIR RETIREMENT FUND. 174 00:21:00,993 --> 00:21:08,467 IS THAT STILL THE CASE? >> 66%, TWO-THIRDS OF FAMILY HOUSEHOLD AVERAGE WEALTH IS IN APARTMENTS. 175 00:21:08,533 --> 00:21:16,842 >> Reporter: THAT LOSS OF WEALTH HAS DEPRESSED CONSUMER SPENDING AND DRAGGED DOWN THE ECONOMY. WE WONDERED IF THE PEOPLE BLAME 176 00:21:16,908 --> 00:21:24,583 PRESIDENT XI FOR THAT OR FOR THE COVID DEATHS. BUT IT WAS IMPOSSIBLE FOR US TO GAUGE PUBLIC OPINION OR IF IT 177 00:21:24,650 --> 00:21:32,224 EVEN MATTERS. WHILE NO ONE FROM THE GOVERNMENT WOULD GIVE US AN INTERVIEW, WE WERE ABLE TO LEARN, AS JOERG 178 00:21:32,290 --> 00:21:38,263 WUTTKE, WHO HAS LIVED HERE FOR 30 YEARS TOLD US, IT'S NOT A GOOD IDEA TO BET AGAINST THE CHINESE PEOPLE. 179 00:21:38,330 --> 00:21:46,304 >> WHAT ARE SOME OF THE POSITIVE ASPECTS OF THE ECONOMY HERE? THEY DO HAVE A STRONG MANUFACTURING BASE STILL. 180 00:21:46,371 --> 00:21:55,547 >> WELL, THE BIG PART IS BETWEEN THE EARS OF PEOPLE, THE BRAINS OF THE CHINESE ENTREPRENEUR THAT ACTUALLY MADE THIS SUCCESS STORY 181 00:21:55,614 --> 00:21:59,384 HAPPEN. CHINA IS NOT REALLY GOOD IN BASIC RESEARCH, BUT THEY'RE FANTASTIC IN DEVELOPMENT. 182 00:21:59,451 --> 00:22:04,256 THEY'RE WORLD CHAMPION IN ACTUALLY MAKING PRODUCTS BETTER, FASTER, AND CHEAPER. >> ARE THEY BETTER? 183 00:22:04,322 --> 00:22:10,896 >> YES, THEY ARE IN SOME AREAS. OUR CHINESE COMPETITORS ARE BREATHING DOWN OUR NECK AND BASICALLY DRIVE SOME OF US OUT 184 00:22:10,962 --> 00:22:16,301 OF THE MARKET. >> Reporter: FOR INSTANCE, CHINA NOW MAKES OVER 80% OF ALL THE SOLAR PANELS IN THE WORLD. 185 00:22:16,368 --> 00:22:25,410 IT DOMINATES THE WIND TURBINE MARKET AND LAST YEAR, BECAME THE WORLD'S BIGGEST EXPORTER OF CARS AND MORE. 186 00:22:25,477 --> 00:22:30,982 >> THEY'RE THE LEADING TRADE PARTNER OF TWICE AS MANY COUNTRIES IN THE WORLD AS THE UNITED STATES. 187 00:22:31,049 --> 00:22:36,922 SO THEY HAVE -- >> THEY'RE THE LEADING TRADE PARTNER. >> WITH OVER 60 COUNTRIES IN THE 188 00:22:36,988 --> 00:22:43,762 WORLD. >> Reporter: AND NOW WITH HEAVY GOVERNMENT SUBSIDIES, IT IS FAST BECOMING A LEADER IN ELECTRIC 189 00:22:43,829 --> 00:22:51,803 VEHICLES. THE CARMAKER BYD IS VYING WITH TESLA FOR THE TITLE OF BEST-SELLING EV MAKER IN THE 190 00:22:51,870 --> 00:22:57,976 WORLD. SHANGHAI-BASED NIO IS TRYING TO BREAK THROUGH WITH HIGH-TECH INNOVATIONS. 191 00:22:58,043 --> 00:23:08,386 IN DECEMBER, THE COMPANY UNVEILED A NEW BATTERY WITH A DRIVING RANGE OF 620 MILES, MORE THAN 200 MILES FURTHER THAN 192 00:23:08,453 --> 00:23:15,026 TESLA'S TOP-END MODEL. >> THIS IS NICE. >> THIS IS OUR FLAGSHIP. >> Reporter: WILLIAM LEE, THE 193 00:23:15,093 --> 00:23:23,668 CEO AND FOUNDER OF NIO, SAYS IT'S BATTERY SWAP TECHNOLOGY ALLOWS OWNERS TO SWAP OUT THEIR DEPLETED BATTERY FOR A FULLY 194 00:23:23,735 --> 00:23:33,578 CHARGED ONE IN UNDER THREE MINUTES. >> IT'S 2 1/2 MINUTES. >> 2 1/2 MINUTES? 195 00:23:33,645 --> 00:23:41,419 >> YES. WE ALREADY INSTALLED 2,200 SWAP STATIONS ALL AROUND CHINA. >> Reporter: CHINA IS ALSO 196 00:23:41,486 --> 00:23:52,230 DEVELOPING A HUMANOID ROBOT INDUSTRY. >> LOOK AT THAT. >> Reporter: ALEX GU IS THE 197 00:23:52,297 --> 00:24:01,873 FOUNDER AND CEO OF FORIE INTELLIGENCE. LAST YEAR HE LAUNCHED THE GR1, HIS FIRST-GENERATION HUMANOID. 198 00:24:01,940 --> 00:24:07,879 >> WE CAN DO ARM. HE CAN SWING THE ARM. YOU SEE? >> OH, LOOK AT THE FINGERS. 199 00:24:07,946 --> 00:24:13,585 OH, MY WORD. CAN HE PLAY THE PIANO? >> YEAH. FUTURE, DEFINITELY CAN. 200 00:24:13,652 --> 00:24:21,526 >> Reporter: ALSO IN THE FUTURE, HE SAYS THE ROBOTS COULD PROVIDE HEALTH CARE FOR CHINA'S RAPIDLY AGING POPULATION. 201 00:24:21,593 --> 00:24:30,535 >> MAYBE WE CAN -- FOR EXAMPLE, WE CAN REMOTE CONTROL SUCH KIND OF ROBOTS AND HELP MY GRANDPA FOR EXAMPLE. 202 00:24:30,602 --> 00:24:34,773 YEAH, I THINK. >> YEAH. >> Reporter: PRESIDENT XI, WHO VISITED THIS COMPANY LAST YEAR, 203 00:24:34,840 --> 00:24:47,686 HAS CALLED FOR THE MASS PRODUCTION OF HUMANOIDS BY 2025. IN HIS ANNUAL NEW YEAR'S SPEECH, HE TALKED ABOUT THE COUNTRY'S 204 00:24:47,752 --> 00:24:53,992 ECONOMIC WOES AND, FOR THE FIRST TIME, ACKNOWLEDGED THE HIGH UNEMPLOYMENT RATE. STILL, HE HAS LAID OUT A 205 00:24:54,059 --> 00:25:02,300 LONG-TERM GOAL OF DOUBLING CHINA'S ECONOMY BY 2035 AND SURPASSING THE WEST IN TECHNOLOGY. 206 00:25:02,367 --> 00:25:10,008 >> OUR COMPANIES AND TECH EXPERTS ARE COMPETING ON A.I. AND BIOTECH AND QUANTUM MATHEMATICS. 207 00:25:10,075 --> 00:25:17,816 ALL THOSE TECHNOLOGICAL ADVANCES WILL LEAD TO A NEW GENERATION OF MILITARY TECHNOLOGY. OUR TWO MILITARIES ARE VYING FOR 208 00:25:17,883 --> 00:25:24,789 MILITARY SUPREMACY. WHO'S GOING TO BE THE MOST POWERFUL IN THE MOST IMPORTANT, STRATEGIC PART OF THE WORLD, 209 00:25:24,856 --> 00:25:31,062 WHICH IS THE INDO-PACIFIC. >> Reporter: PRESIDENTS BIDEN AND XI MET IN SAN FRANCISCO IN NOVEMBER IN HOPES OF 210 00:25:31,129 --> 00:25:36,101 RE-ESTABLISHING MILITARY COMMUNICATIONS BETWEEN OUR TWO COUNTRIES, WHICH CHINA HAD CUT OFF. 211 00:25:36,167 --> 00:25:42,607 >> I THINK WE'RE BACK TO A MORE SETTLED AND STABLE RELATIONSHIP BETWEEN THE TWO COUNTRIES, BUT IT'S BEEN A ROLLER COASTER. 212 00:25:42,674 --> 00:25:49,948 >> Reporter: THE LOW POINT, HE SAYS, WAS THE SPY BALLOON INCIDENT LAST YEAR. BUT THERE'S ALSO BEEN THE 213 00:25:50,015 --> 00:26:00,358 BUILDUP OF MILITARY BASES IN THE SOUTH CHINA SEA, THE INCREASE OF AIR SORTIES NEAR TAIWAN, AND THE BUZZING OF U.S. MILITARY PLANES. 214 00:26:00,425 --> 00:26:08,033 >> DO YOU SEE A LOWERING OF THE TEMPERATURE IN THE SOUTH CHINA SEA? >> NO, AND THAT'S A PROBLEM. 215 00:26:08,099 --> 00:26:14,005 >> YOU DON'T? >> AND THEN ON TAIWAN, FOLLOWING SPEAKER PELOSI'S VISIT, WE'VE SEEN NOW FOR 16 MONTHS A MUCH 216 00:26:14,072 --> 00:26:24,015 HIGHER RATE OF CHINESE BOTH ARABTAIR ACTIVITY AND NAVAL ACTIVITY. IT'S VERY INTIMIDATING, MEANT TO 217 00:26:24,082 --> 00:26:26,718 INTIMIDATE. >> AND THEY HAVEN'T PULLED BACK ON THAT? >> THEY HAVEN'T PULLED BACK ON 218 00:26:26,785 --> 00:26:31,923 THAT, AND I THINK ULTIMATELY THEY WANT TO BECOME AND OVERTAKE THE UNITED STATES AS THE DOMINANT COUNTRY GLOBALLY, AND 219 00:26:31,990 --> 00:26:36,528 WE DON'T WANT THAT TO HAPPEN. WE DON'T WANT TO LIVE IN A WORLD WHERE THE CHINESE ARE THE DOMINANT COUNTRY. 220 00:26:36,594 --> 00:26:46,271 >> WHEN THE COLD WAR ENDED, WE ALL THOUGHT OUR SYSTEM HAD WON. >> YEAH. >> YOU KNOW, THEIR SYSTEM 221 00:26:46,338 --> 00:26:51,476 FAILED. OUR SYSTEM ROSE UP. NOW HE'S COME BACK AND SAID, NO, NO. 222 00:26:51,543 --> 00:26:55,513 THE COMMUNIST SYSTEM'S THE RIGHT WAY. I GUESS WE DIDN'T BURY THAT AFTER ALL. 223 00:26:55,580 --> 00:27:05,523 >> YOU KNOW, IT'S INTERESTING. TO COMPARE THE OLD COLD WAR WITH THIS TIME, WHAT DISTINGUISHES THIS TIME VERSUS THE OLD COLD 224 00:27:05,590 --> 00:27:11,463 WAR, THE SOVIET UNION HAD A STRONG MILITARY AND NUCLEAR WEAPONS. IT HAD A VERY WEAK ECONOMY, 225 00:27:11,529 --> 00:27:20,071 WHICH IN NO WAY COMPETED WITH OURS. CHINA'S ECONOMY IS VERY STRONG. WE'RE DEALING WITH AN ADVERSARY, 226 00:27:20,138 --> 00:27:30,915 A COMPETITOR IN CHINA, STRONGER THAN THE SOVIET UNION WAS IN THE 1940s, '50s, '60s, '70s, AND '80s. 227 00:27:30,982 --> 00:27:37,188 >> SO IF THAT WAS A COLD WAR, WHAT ARE YOU CALLING THIS? >> IT'S A COMPETITION OF IDEAS, A BATTLE OF IDEAS. 228 00:27:37,255 --> 00:27:45,296 OUR IDEA, AMERICA'S BIG IDEA, OF A DEMOCRATIC SOCIETY AND HUMAN FREEDOM VERSUS CHINA'S IDEA THAT A COMMUNIST STATE IS STRONGER 229 00:27:45,363 --> 00:27:53,772 THAN A DEMOCRACY. WE DON'T BELIEVE THAT. SO THERE'S A BATTLE HERE AS TO WHOSE IDEAS SHOULD LEAD THE 230 00:27:53,838 --> 00:28:01,146 WORLD, AND WE BELIEVE THOSE ARE AMERICAN IDEAS. >> Reporter: THE LATEST SALVOS IN THE BATTLE FOR SUPREMACY CAME 231 00:28:01,212 --> 00:28:12,157 LAST MONTH WHEN CHINA CONDUCTED TWO DAYS OF LARGE-SCALE WAR GAMES AROUND TAIWAN, AND PRESIDENT BIDEN IMPOSED NEW 232 00:28:12,223 --> 00:28:16,327 STIFF TARIFFS, INCLUDING A 100% TAX ON CHINESE ELECTRIC VEHICLES. 233 00:28:22,467 --> 00:28:27,906 >> Announcer: LESLEY STAHL ON WITNESSING CHINA CHANGE WHILE REPORTING FOR "60 MINUTES." >> THIS WAS DIFFERENT FROM THE 234 00:28:27,972 --> 00:28:36,114 OTHER TIMES I'D BEEN THERE REPORTING. >> Reporter: AT 6 235 00:28:38,883 --> 00:28:39,384 CU . . 236 00:28:41,886 --> 00:28:49,694 >>> THE DAY RUSSIA INVADED ONE OF ITS NEIGHBORS, WAGED A BLOODY WAR, AND SEIZED A FIFTH OF THAT NEIGHBOR'S TERRITORY, FEAR AND 237 00:28:49,761 --> 00:28:55,233 SHOCK RIPPLED THROUGHOUT THE REGION. WE'RE NOT TALKING ABOUT RUSSIA'S INVASION OF UKRAINE. 238 00:28:55,300 --> 00:29:00,472 RATHER, THE SMALL COUNTRY OF GEORGIA. THAT INVASION WAS MORE THAN 15 YEARS AGO. 239 00:29:00,538 --> 00:29:08,446 VLADIMIR PUTIN'S PLAYBOOK HASN'T CHANGED MUCH. TODAY GEORGIA, WHICH SHARES A 556-MILE BORDER WITH RUSSIA, IS 240 00:29:08,513 --> 00:29:15,653 SILL TRYING TO REMOVE THE GRIP OF THE KREMLIN. DAYS AFTER RUSSIA INVADED UKRAINE, GEORGIA SUBMITTED AN 241 00:29:15,720 --> 00:29:22,494 APPLICATION TO BECOME PART OF THE EUROPEAN UNION WITH HOPES OF GAINING A WESTERN INSURANCE POLICY TO PROTECT IT. 242 00:29:22,560 --> 00:29:30,869 LAST OCTOBER, WE MET WITH THE PRESIDENT OF GEORGIA, SALOME ZOURABICHVILI, THE DAUGHTER OF GEORGIAN REFUGEES RAISED IN 243 00:29:30,935 --> 00:29:36,608 PARIS, SHE SAYS THAT VLADIMIR PUTIN HAS LAUNCHED A QUIET INVASION OF GEORGIA IN AN ATTEMPT TO EXTEND RUSSIA'S 244 00:29:36,674 --> 00:29:46,117 REACH. >> THE WAR IN UKRAINE IS NOW MOVING INTO ITS THIRD YEAR. HOW IS THE WAR THERE IMPACTING 245 00:29:46,184 --> 00:29:55,226 LIFE HERE? >> IT IS, OF COURSE, A REMINDER OF EVERYTHING THAT THIS COUNTRY HAS GONE THROUGH AND OF THE FACT 246 00:29:55,293 --> 00:30:06,371 THAT IT'S ALWAYS AN IMMEDIATE DANGER AND THREAT. IT'S ALREADY PART OF THE REALITY THAT RUSSIA IS TESTING THE 247 00:30:06,437 --> 00:30:09,707 GROUND. >> YOU THINK THE RUSSIANS ARE TESTING THE GROUND RIGHT NOW IN GEORGIA? 248 00:30:09,774 --> 00:30:17,882 >> RIGHT NOW. >> HOW SO? >> HERE, THEIR EASY WAY IS THE HYBRID WAR. 249 00:30:17,949 --> 00:30:25,790 >> Reporter: A HYBRID WAR THAT HAS INCLUDED ONLINE AND TELEVISED DISINFORMATION CAMPAIGNS AND ANTI-WESTERN 250 00:30:25,857 --> 00:30:34,599 PROPAGANDA PUMPED INTO GEORGIA. A FAVORITE TACTIC OF THE KREMLIN. GEORGIANS HAVE SEEN IT BEFORE. 251 00:30:34,666 --> 00:30:40,972 IN 2008, THREE WEEKS BEFORE RUSSIA LAUNCHED ITS FIRST AIR STRIKE IN GEORGIA, MOSCOW HIT THE COUNTRY WITH A SERIES OF 252 00:30:41,039 --> 00:30:48,613 CYBERATTACKS. THE FIVE-DAY BLOODY BATTLE THAT FOLLOWED ENDED WITH RUSSIA SEIZING 20% OF GEORGIA'S LAND. 253 00:30:48,680 --> 00:30:55,520 PRESIDENT ZOURABICHVILI SAYS THE MOSTLY MUTED INTERNATIONAL REACTION TO THAT WAR LAID THE GROUNDWORK FOR RUSSIA'S INVASION 254 00:30:55,587 --> 00:31:03,528 OF UKRAINE AND VLADIMIR PUTIN'S PLAN TO BRING FORMER SOVIET REPUBLICS BACK INTO THE RUSSIAN FOLD. 255 00:31:03,595 --> 00:31:12,704 TODAY, A FIFTH OF GEORGIA IS OCCUPIED BY THE RUSSIAN MILITARY AND AN ESTIMATED 8,000 RUSSIAN TROOPS ARE INSIDE THE GEORGIAN 256 00:31:12,770 --> 00:31:21,746 BORDER. WE TRAVELED WITH GEORGIAN SECURITY FORCES 37 MILES OUTSIDE THE CAPITAL, TBILISI, INTO THE 257 00:31:21,813 --> 00:31:25,717 TINE VILLAGE OF CURVE KHURVALETI. TODAY, IT IS A RURAL NO MAN'S LAND. 258 00:31:25,783 --> 00:31:32,690 >> OH, MY. >> Reporter: ACROSS A RICKETY BRIDGE, WE FOUND AN ABANDONED STRETCH OF FARMLAND CHOKED OFF 259 00:31:32,757 --> 00:31:40,131 BY BARBED WIRE. WARNING SIGNS TO STAY OUT. >> OH, THERE SHE IS. >> Reporter: AND A DEFIANT 260 00:31:40,198 --> 00:31:48,673 87-YEAR-OLD VALYA VANISHVILI. >> Translator: THE RUSSIANS HAVE TOLD ME THIS IS OUR LAND. AND I SAID, NO. 261 00:31:48,740 --> 00:31:55,179 YOUR LAND IS IN RUSSIA. THIS IS OUR LAND, NOT YOURS. YOU HAVE NO RIGHTS HERE. >> HOW LONG HAVE YOU BEEN 262 00:31:55,246 --> 00:32:04,756 SURROUNDED BY THE BARBED WIRE? >> Translator: FOR 15 YEARS. >> Reporter: IN 2008, HER LAND WAS SEIZED BY RUSSIAN TROOPS. 263 00:32:04,822 --> 00:32:13,631 THE GRANDMOTHER OF FOUR STILL REFUSES TO SURRENDR HER HOME. CUT OFF FROM FAMILY, SHE RELIES ON OUTSIDERS AND A STICK TO 264 00:32:13,698 --> 00:32:21,339 DELIVER FOOD AND THE MEDICINE SHE NEEDS. SHE WHISPERED TO US THAT THE RUSSIANS WERE WATCHING US FROM 265 00:32:21,406 --> 00:32:25,176 OVER THAT HILL. >> ARE YOU AFRAID OF THE RUSSIANS? IS. 266 00:32:25,243 --> 00:32:30,948 >> Translator: YES, I'M AFRAID OF THEM. WHAT IF THEY TAKE ME AND DETAIN ME? 267 00:32:31,015 --> 00:32:37,255 NOBODY CAN HELP ME. I'M ALONE. IF IT'S ONLY A COUPLE OF THEM, I CAN ALWAYS ANSWER THEM AND FIGHT 268 00:32:37,322 --> 00:32:43,828 BACK. BUT WHEN IT'S A LOT OF THEM, THERE IS NOTHING I CAN DO. >> Reporter: GEORGIA IS BORDERED 269 00:32:43,895 --> 00:32:52,203 ON THE NORTH BY RUSSIA, THE EAST BY AZERBAIJAN, AND THE SOUTH BY ARMENIA AND TURKEY. THE BRIDGE BETWEEN THE BLACK AND 270 00:32:52,270 --> 00:32:57,408 CASPIAN SEA, AN IMPORTANT ROUTE FOR NATURAL GAS AND OIL. HIGH UP IN THE MOUNTAINS OF GEORGIA, WE SAW ANOTHER REASON 271 00:32:57,475 --> 00:33:04,215 THE SMALL COUNTRY OF NEARLY 4 MILLION IS CRUCIAL TO THE KREMLIN. A LONG LINE OF TRUCKS, MANY OF 272 00:33:04,282 --> 00:33:11,756 THEM CARRYING EUROPEAN CARGO ACROSS THE BORDER INTO RUSSIA. UNITED NATIONS DATA SHOWS THAT SINCE THE WAR BEGAN, EVERYTHING 273 00:33:11,823 --> 00:33:19,197 FROM CARS TO CHEMICALS HAVE ROLLED INTO RUSSIA THROUGH GORGIA, SOME IN VIOLATION OF WESTERN SANCTIONS, A LIFELINE 274 00:33:19,263 --> 00:33:26,270 FOR PUTIN'S REGIME. THERE IS TRAFFIC COMING INTO GEORGIA TOO. THOUSANDS OF RUSSIAN NATIONALS 275 00:33:26,337 --> 00:33:34,946 ENTERING THE COUNTRY IN CARS AND ON FOOT, EXTENDING FOR MILES AND ARRIVING IN WAVES FIRST AT THE BEGINNING OF THE UKRAINE WAR IN 276 00:33:35,012 --> 00:33:42,453 2022 AND AGAIN LATER THAT YEAR WHEN FIGHTING-AGE MEN FLED RUSSIA'S MANDATED MILITARY SERVICE. 277 00:33:42,520 --> 00:33:49,427 BUT SOME GEORGIANS WORRY PUTIN LOYALISTS COULD BE ENTERING THE COUNTRY TOO, LAYING THE GROUNDWORK FOR RUSSIA'S NEXT 278 00:33:49,494 --> 00:33:56,834 MOVE. WHEN VLADIMIR PUTIN INVADED UKRAINE IN 2022, HE SAID IT WAS TO, AMONG OTHER THINGS, PROTECT 279 00:33:56,901 --> 00:34:04,208 THE RUSSIANS LIVING THERE. PRESIDENT ZOURABICHVILI FEARS PUTIN COULD LAUNCH A SIMILAR CAMPAIGN IN GEORGIA. 280 00:34:04,275 --> 00:34:13,785 SINCE THE WAR, GEORGIA HAS BECOME HOME TO 100,000 RUSSIANS. >> IT'S VERY UNNERVING WHEN, IN YOUR OWN COUNTRY, YOU HAVE 281 00:34:13,851 --> 00:34:21,526 PEOPLE THAT ARE TALKING THE LANGUAGE OF THE ENEMY AND THAT BELIEVE THAT THEY'RE AT HOME. >> THE RUSSIANS BELIEVE THAT 282 00:34:21,592 --> 00:34:26,831 THEY ARE AT HOME? >> THEY'RE BEHAVING AND BELIEVING THAT THEY ARE VERY MUCH AT HOME. 283 00:34:26,898 --> 00:34:35,406 SO THERE'S A FINE LINE, AND THAT LINE HAS TO BE KEPT SO THAT WE DO NOT HAVE INCIDENTS IN THE FUTURE THAT WOULD ALLOW RUSSIA 284 00:34:35,473 --> 00:34:43,514 TO USE THEIR FAVORITE DOCTRINE OF PROTECTING RUSSIAN-SPEAKING CITIZENS. >> SO WHY DOESN'T GEORGIA JUST 285 00:34:43,581 --> 00:34:47,018 SAY NO MORE RUSSIANS THROUGH OUR BORDER? >> THAT IS A QUESTION FOR THE AUTHORITIES. 286 00:34:47,084 --> 00:34:54,058 >> AREN'T YOU THE AUTHORITY? >> NO. I DON'T HAVE THE EXECUTIVE POWERS UNFORTUNATELY. 287 00:34:54,125 --> 00:35:02,934 >> Reporter: THE EXECUTIVE POWER TO CONTROL GEORGIA'S BORDER WAS SQUARELY IN THE HANDS OF ITS PRIME MINISTER, IRAKLI 288 00:35:03,000 --> 00:35:08,272 GARIBASHVILI. PUBLICLY, HE SAID THAT HE SUPPORTED THE COUNTRY'S BID TO MOVE AWAY FROM NEIGHBORING 289 00:35:08,339 --> 00:35:15,112 RUSSIA AND JOIN THE EUROPEAN UNION. BUT HIS ACTIONS AND INACTIONS TOLD A DIFFERENT STORY. 290 00:35:15,179 --> 00:35:21,486 SINCE THE UKRAINE INVASION, PRIME MINISTER IRAKLI GARIBASHVILI AGREED TO RESUME FLIGHTS BETWEEN TBILISI AND 291 00:35:21,552 --> 00:35:27,625 MOSCOW FOR THE FIRST TIME IN ALMOST FIVE YEARS. HE'S ALSO FAILED TO ADOPT STRONG SANCTIONS AGAINST RUSSIA. 292 00:35:27,692 --> 00:35:36,868 CRITICS OF THE PRIME MINISTER ACCUSE HIM OF BEING IN THE POCKET OF A GEORGIAN OLIGARCH, A BILLION WHO HELPED GET HIM 293 00:35:36,934 --> 00:35:43,307 ELECTED. THE 67-YEAR-OLD OLIGARCH MADE HIS FORTUNE IN RUSSIA AND SERVED A BRIEF STINT AS GEORGIA'S PRIME 294 00:35:43,374 --> 00:35:52,783 MINISTER. HIS $50 MILLION HOME LOOMS OVER TBILISI, A REMINDER OF HIS WEALTH AND POWER. 295 00:35:52,850 --> 00:35:57,889 IN 2022, EUROPEAN LAWMAKERS CALLED FOR SANCTIONS AGAINST THE OLIGARCH FOR HIS, QUOTE, LINKS TO THE KREMLIN, A CONNECTION 296 00:35:57,955 --> 00:36:03,861 THAT COULD UNDERMINE GEORGIA'S EU BID. >> WE'RE GOING WITH A GOVERNMENT THAT'S COMPLETELY CORRUPT, A 297 00:36:03,928 --> 00:36:10,635 GOVERNMENT THAT'S PRO-RUSSIAN, CLEARLY ANTI-WESTERN, CLEARLY DOES NOT REALLY CARE ABOUT WHAT THE MAJORITY OF THE POPULATION 298 00:36:10,701 --> 00:36:24,782 WANTS AND NEEDS. >> Reporter: A GROUP WITH THOUSANDS OF YOUNG FOLLOWERS WORKING TOWARD GEORGIA'S ENTRY 299 00:36:24,849 --> 00:36:32,023 INTO THE EUROPEAN UNION. >> IF RUSSIA WINS, IT MEANS LOSS OF FREEDOM, LOSS OF EVERYTHING THAT WE FOUGHT FOR IN THE PAST 300 00:36:32,089 --> 00:36:39,830 30 YEARS BASICALLY. IT'S A FIGHT FOR VALUES. IT'S A FIGHT FOR WHERE YOU WANT TO STAND IN THIS BIG FIGHT FOR 301 00:36:39,897 --> 00:36:46,704 DEMOCRACY. >> AS SOON AS WEST IN ANY FORM, BE IT THE U.S. PARTNERSHIP, BE IT EUROPEAN UNION, IS NOT 302 00:36:46,771 --> 00:36:53,010 REPRESENTED IN THIS COUNTRY, RUSSIA WILL FILL THE VOID RIGHT AWAY. >> Reporter: THEY SAY THE INFLUX 303 00:36:53,077 --> 00:36:59,250 OF RUSSIANS IS ALREADY CHANGING THE FACE OF GEORGIA. >> WHAT ARE THEY DOING IF WE LOOK AT IT? 304 00:36:59,317 --> 00:37:08,192 THEY'RE BUYING APARTMENTS. THEY'RE BUYING PRIVATE PROPERTY. THEY'RE OPENING UP BUSINESSES. THEIR ACTIONS CHANGED GEORGIAN 305 00:37:08,259 --> 00:37:11,963 ECONOMY. >> THE RUSSIANS ARE BUYING APARTMENTS HERE IN EVERY 33 MINUTES. 306 00:37:12,029 --> 00:37:18,703 THEY'RE PURCHASING A PIECE OF LAND IN EVERY 27 MINUTES. AND THEY'RE REGISTERING A BUSINESS IN EVERY 26 MINUTES. 307 00:37:18,769 --> 00:37:26,310 SO I THINK WE ARE ON THE BRINK OF VERY DANGEROUS SITUATION HERE IN GEORGIA. >> Reporter: ACCORDING TO PUBLIC 308 00:37:26,377 --> 00:37:33,784 RECORDS, RUSSIANS HAVE REGISTERED MORE THAN 20,000 BUSINESSES IN GEORGIA OVER THE LAST TWO YEARS AND LAUNCHED FIVE 309 00:37:33,851 --> 00:37:41,092 NEW RUSSIAN-ONLY SCHOOLS, NONE OF WHICH ARE LICENSED BY GEORGIA'S DEPARTMENT OF EDUCATION. 310 00:37:41,158 --> 00:37:49,800 RUSSIANS HAVE DRIVEN RENT UP NEARLY 130%. PRIZES FOR EVERYTHING FROM FOOD TO CARS HAVE GONE UP 7%. 311 00:37:49,867 --> 00:37:54,672 OVER 100,000 GEORGIANS HAVE LEFT THE COUNTRY BECAUSE MANY OF THEM CAN'T AFFORD TO LIVE HERE ANYMORE. 312 00:37:54,739 --> 00:38:01,112 >> I'VE HEARD THIS DESCRIBED AS A QUIET INVASION. >> QUIET INVASION, YEAH. THERE'S A RISK OF THE ECONOMIC 313 00:38:01,178 --> 00:38:08,319 DIVERGENCE. THERE'S A RISK OF MILITARY INTERVENTION, AND THERE'S A RISK OF GEORGIA'S STATEHOOD BEING 314 00:38:08,386 --> 00:38:16,260 DESTROYED. >> Reporter: EMMANUIL LISNIF, GEORGE SMORG LENCO AND PAVEL BACK ADOVE DON'T LOOK LIKE MUCH 315 00:38:16,327 --> 00:38:22,133 OF A THREAT. ALL RUSSIANS IN THEIR 20s, THEY FLED THEIR COUNTRY FOR FEAR OF BEING DRAFTED OR IMPRISONED FOR 316 00:38:22,199 --> 00:38:33,778 SPEAKING OUT AGAINST PUTIN. THEY NOW LIVE IN GEORGIA AND WORK AT THIS RUSSIAN-OWNED COMEDY CLUB IN TBILISI. 317 00:38:33,844 --> 00:38:38,649 >> I TRY AND SAID I'M AGAINST WART IN RUSSIA. I WAS BEATEN, AND AFTER THAT, GOING TO PRISON THREE TIMES. 318 00:38:38,716 --> 00:38:43,187 >> SO THREE TIMES YOU WENT TO JAIL? >> YES. YES, THREE TIMES. 319 00:38:43,254 --> 00:38:48,926 >> I BELIEVE AND I KNOW THAT RUSSIANS ACTUALLY AGAINST THE WAR >> YOU THINK THAT MOST RUSSIANS 320 00:38:48,993 --> 00:38:53,164 ARE AGAINST THE WAR? >> YEAH. JUST SCARED, REALLY SCARED. >> HAVE ANY OF YOU HAD ANY 321 00:38:53,230 --> 00:38:57,334 AGGRESSION TOWARDS YOU BECAUSE YOU'RE RUSSIAN? >> ACTUALLY, I HAVE A BIG WRITING ON THE WALL. 322 00:38:57,401 --> 00:39:05,943 IT IS THE BIGGEST THING I SEE FROM MY WINDOW, JUST BIG "RUSSIANS GO HOME." >> Reporter: THERE IS NO 323 00:39:06,010 --> 00:39:10,414 SUBTLETY IN SPRAY PAINT. ANTI-RUSSIAN GRAFFITI BLANKETS THE CITY ALONG WITH SUPPORT FOR UKRAINE. 324 00:39:10,481 --> 00:39:16,654 ON CRUMBLING WALLS, THE GEORGIAN FLAG IS JOINED WITH THOSE OF THE EUROPEAN UNION, THE U.S., AND NATO. 325 00:39:16,721 --> 00:39:24,595 OVER 80% OF THE GEORGIAN PUBLIC BACKS ENTRY INTO THE EU, AS DOES GEORGIAN PRESIDENT ZOURABICHVILI. 326 00:39:24,662 --> 00:39:31,102 BUT HER POSITION HAS BECOME INCREASINGLY CEREMONIAL AS THE COUNTRY MOVES TOWARDS A PARLIAMENTARY GOVERNMENT. 327 00:39:31,168 --> 00:39:39,910 AFTER SHE WENT TO EUROPE TO TRY AND PAVE THE WAY FOR GEORGIA'S EU BID, PRIME MINISTER IRAKLI GARIBASHVILI ACCUSED HER OF 328 00:39:39,977 --> 00:39:46,650 VIOLATING THE CONSTITUTION, BANNED HER FROM TRAVELING TO EUROPE, AND TRIED BUT FAILED TO IMPEACH HER. 329 00:39:46,717 --> 00:39:52,223 PRESIDENT ZOURABICHVILI HAS DEFIANTLY CONTINUED TO FLY TO EUROPE TO MEET WITH LEADERS ON HER OWN DIME. 330 00:39:52,289 --> 00:39:59,263 >> IT DOESN'T SEEM LIKE THE PRIME MINISTER IS INTERESTED IN JOINING THE EU. >> WELL, THAT'S A QUESTION THAT 331 00:39:59,330 --> 00:40:06,504 THE WHOLE POPULATION IS ASKING, WHETHER THEY REALLY WANT IT OR WHETHER IT'S LIP SERVICE. >> THIS IS A CRITICAL TIME. 332 00:40:06,570 --> 00:40:16,480 DO YOU FEEL LIKE THE WEST, PARTICULARLY THE U.S., HAS BEEN RESPONSIVE ENOUGH AND SUPPORTIVE ENOUGH OF GEORGIA IN THIS 333 00:40:16,547 --> 00:40:23,120 MOMENT? >> I DON'T THINK SO. AND I WILL TAKE ONE CONCRETE EXAMPLE. 334 00:40:23,187 --> 00:40:35,866 I'VE BEEN A PRESIDENT NOW FOR FIVE YEARS, AND I'VE NOT MANAGED TO HAVE ANY FORM OF MEETING AT MY LEVEL, WHICH WOULD BE THE 335 00:40:35,933 --> 00:40:43,307 PRESIDENT OR THE VICE PRESIDENT, EVEN THROUGH A PHONE CALL. I UNDERSTAND THAT THERE ARE MORE URGENT ISSUES, BUT I THINK THAT 336 00:40:43,374 --> 00:40:49,213 SOME MORE PUBLIC RECOGNITION IS NEEDED. >> RECOGNITION OF? >> OF THE FACT THAT THE UNITED 337 00:40:49,280 --> 00:40:56,420 STATES IS SUPPORTING OUR CANDIDATE STATUS WITHIN THE EUROPEAN UNION. I KNOW THAT THAT IS THE LANGUAGE 338 00:40:56,487 --> 00:41:06,564 THAT THE U.S. HAS WITH OUR EUROPEAN PARTNERS, BUT THAT BEING REPEATED BY THE HIGHEST LEVEL WOULD BE MEANINGFUL FOR 339 00:41:06,630 --> 00:41:13,304 THE GEORGIAN POPULATION. >> Reporter: THE EU HAS LAID OUT A LIST OF REQUIREMENTS FOR GEORGIA TO BECOME A FULL MEMBER. 340 00:41:13,370 --> 00:41:21,278 THE CONDITIONS INCLUDE TACKLING CORRUPTION AND LESSENING THE ECONOMIC AND POLITICAL INFLUENCE OF DOMESTIC OLIGARCHS. 341 00:41:21,345 --> 00:41:33,290 MEMBERSHIP IS NOT GUARANTEED. >> WHAT HAPPENS TO GEORGIA IF THE EU DENIES THE BID? >> IT WILL BE A BIG VICTORY FOR 342 00:41:33,357 --> 00:41:38,562 RUSSIA. >> Reporter: A VICTORY VALYA VANISHVILI REFUSES TO GIVE THEM. 87 YEARS OLD, SHE SAYS SHE IS 343 00:41:38,629 --> 00:41:47,471 HOLDING HER GROUND FOR HERSELF AND FOR GEORGIA. THAT BID MAY BE IN FURTHER JEOPARDY. 344 00:41:47,538 --> 00:41:58,148 THIS PAST FEBRUARY, THE GEORGIAN PARLIAMENT APPOINTED A NEW PRIME MINISTER, AN AERNT WESTERN MINISTER OF THE RUSSIAN LEANING 345 00:41:58,215 --> 00:42:03,854 GEORGIAN DREAM PARTY. IN MAY, HIS POST PASSED A FOREIGN AGENTS LAW WHICH THREATENS TO SILENCE MEDIA 346 00:42:03,921 --> 00:42:10,561 OUTLETS AND NGOs INSIDE GEORGIA. IN JUST THIS PAST WEEK, HIS PARTY PROPOSED LEGISLATION THAT WOULD STRIP SAME-SEX COUPLES OF 347 00:42:10,628 --> 00:42:16,734 THEIR RIGHTS. BOTH MOVES THE EU HAS SAID COULD SERIOUSLY COMPROMISE THE COUNTRY'S CHANCE FOR MEMBERSHIP 348 00:42:16,800 --> 00:42:20,471 AND PULL GEORGIA DEEPER INTO RUSSIA'S ORBIT. 349 00:42:27,878 --> 00:42:28,879 >>> I'M SCOTT PELLEY.