Interview with Michael Tucker; Paul Wolfowitz Named As New Head of World Bank; China Continues To Build Toward Superpower Status.

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Original Source: CNN IN THE MONEY

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ANNOUNCER: From New York City, America's financial capital. This is IN THE MONEY.

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CHRISTINE ROMANS, HOST: Welcome to IN THE MONEY. I'm Christine Romans in for Jack Cafferty. Coming up on today's program:

Time to sign up for those mandarin lessons: China is starting to play like a superpower and it's making connections to match. After a tough ruling on Taiwan, we'll look at America's up-and-coming rival.

Plus, from the heat of battle to the lap of luxury. The new movie "Gunner Palace" brings the Iraq War home. We'll speak with the director about the things the news doesn't show you.

And a ride on the wild side: Videogames, like Grand Theft Auto grab the hottest demographic of all -- kids with cash. Find out about the game business and how it grew.

Joining me today, a couple of IN THE MONEY regulars, "Fortune" magazine Editor-at-large, Andy Serwer, and "money.com" Managing Editor, Allen Wastler.

And gentlemen, almost two years on now from the toppling of Saddam Hussein, and a man who's an architect of that is getting a new job.

ANDY SERWER, "FORTUNE": Paul Wolfowitz has gotten tapped by President Bush to head the World Bank. And what was funny to me is that one of the first things he did was to reach out to Bono. I mean, you know, the front man of U2. It's, you know, a lot of people sort of made a joke and suggested he would be the right man for the job and I guess maybe Wolfowitz thinks he is someone who should be called upon.

ALLEN WASTLER, "MONEY.COM": Well, I think that's sort of part of trying to soften his image a little bit. But appointing Wolfowitz to this, basically, glad-handling for America's economic aid, that's willing to do that, I think the administration's sending a message, saying, hey look, economic aid, defense, where we work with you on one, maybe we'll work with you on the other. And you know what? I don't think that's a bad thing to do a little... ROMANS: There's a lot of buzz on Wall Street about Carly Fiorina, perhaps, being considered for this job. That would have been interesting, loses her job at HP and then very quickly running the World Bank. It turned out, of course, not to be true, but interesting who they're considering for this position.

SERWER: Yeah, I think -- right.

ROMANS: What is this position anyway?

SERWER: Well, first of all, as far as Carly Fiorina goes, I think they were throwing her a bone. In other words, you know, making her feel good by putting her name in a hat and I don't really think that she really stood a chance. You know, it is a job where you represent world economic interest, but everyone knows that the U.S. is really the power behind the World Bank. And I think that Allen is dead on when he says, you know, this is not a soft shoe approach. It's linked to national security. It's linked to our military interest, to our political interest and they are one in the same with our economic interest.

ROMANS: All right, interesting.

China, meanwhile, got Washington's attention, this week, with a new law aimed at preventing Taiwan from breaking away. It calls for the use of military force if the Taiwanese formally declare independence. The Bush administration labeled that decision, "unfortunate," and a White House spokesman warned it could raise tensions in the region. Beijing's move comes as its influence is growing both economically and politically.

For a look at where the situation could be headed we're joined from Tucson by Mr. Ted Fishman. He's the author of "China Inc.: How the Next Superpower Challenges America and the World."

We know that China is on the political and the economic stage, front and center. Are we doing enough? Are we positioned enough, in Washington, to meet this challenge?

TED FISHMAN, AUTHOR, "CHINA, INC.": No. I'd say the answer's no. We have a lot on our plate around the world. The war in Iraq is a perfect example. Wolfowitz has been very strong, for example -- you were just talking about him -- about the Middle East and about regime change in the Middle East. There's very little focus in the administration on China. Before 9/11, they were focused very intently on China and much of that concern seems to have gone away.

SERWER: Well Ted, I'm a little -- I'm a little confused by the fact you say there is very little focus. I mean, I seem to think that there's a lot of focus. Obviously the situation the Middle East is taking up the bulk of the time, but second to that I would say China is very much on the agenda. But, I want to ask a little bit about the military. You know, we've been talking about the Chinese military since the Korean War. Is this a situation where the military could get even bigger than it is today? FISHMAN: Actually in the recent past, China's military has shrunk. What the Chinese are trying to do with their military is make a leaner, meaner, more efficient, but smaller military that will have more resources thrown at it. Primary among its objectives are to make it a technologically-advanced military, in which it wouldn't need all of that manpower, but it would have very sophisticated aircraft missiles. China doesn't really have a navy that matches up against the world navies at the moment, but it's interested in acquiring one.

WASTLER: Ted, there's a lot to be worried about with China and its growth, but one thing that happens to countries as they get bigger, a little richer, their citizens get a little better off, is that they tend to start having problems domestically. People start having arguments with their own government and whatnot. Do you think maybe that might be a factor that may obviate some of the worries that we should have?

FISHMAN: You know, it's part of all the same mix. It's a really good question. What happens is when things in China get mixed up domestically is that these foreign issues come to the fore and the government trots out Taiwan is an issue when it's worried about controlling its own people.

I think people don't realize about the Taiwan issue it is that it's part of the belief system of the Communist Party and in order to get the Chinese people on the mainland behind the Communist Party, they do things domestically. They're very interested in narrowing the wealth gap that's come about as part of market reform, but Taiwan is a tried and true issue that they can bring out over and over again. That's why you see this parade of declarations on Taiwan, you know, very regularly.

ROMANS: Where does the U.S. stand officially on the Taiwan issue? I know that there were some hawks who were concerned with this, Lenovo, a Chinese...

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