CAPITALISM has been under siege since the outbreak of the global financial crisis, and the private sector needs to play a big role in restoring confidence, according to financier Lynn Forester de Rothschild.

Forester de Rothschild, chief executive officer of E.L. Rothschild LLC, a private investment company she owns with her third husband, Evelyn Robert de Rothschild, recently visited China. While in Shanghai, she gave an address at Jiao Tong University's Shanghai Advanced Institute of Finance.

A native of the United States, Forester de Rothschild was a successful businesswoman when she married into the legendary Rothschild family in 2000. The family established a European banking dynasty in the late 18th century, turning it into the biggest private fortune in history less than 100 years later. The holding company owned by Forester de Rothschild and her husband manages investments in The Economist Group, owner of The Economist magazine, as well as global investments in industries such as information technology, agriculture and real estate.

Forester de Rothschild served on President Bill Clinton's National Information Infrastructure Advisory Council from 1993 to 1995, and on the US Secretary of Energy's Advisory Committee from 1998 to 2000.

She is co-chair of the Henry Jackson Initiative for Inclusive Capitalism, a group of business leaders and policymakers seeking to address dislocation caused by free market development and the effects of the financial crisis.

Forester de Rothschild agreed to a short interview with Shanghai Daily during her visit to the city, sharing some thoughts on China's development.



Q: Do you see a difference between the "American dream" and the "Chinese dream?"

A: The American dream is the same as the Chinese dream - the belief that if you work hard and play by the rules, anything is possible.

I was born in 1954 as a baby boomer, a time in America that is equivalent to what you are experiencing in China now. The future was beautiful. My father did not have a university education. He had four children, and he told all of us that no matter what he had to do, he would put all of us through university.

As a result, I went to law school and my brothers went to medical school. Indeed, we have lived that American dream.

But now we have a comedian who says that the reason it's called "the American dream" is because you have to be asleep to believe it.

We saw the fallout from the 2008 financial crisis. Some terrible things happened: Ponzi schemes, charlatan financiers and Libor fixing. Tens of millions of dollars were paid out to CEOs who failed, while youth unemployment is up to 25 percent in many parts of our country.

The growing inequality in the US is becoming devastating. From 1979 to 2009, 275 percent of the income gains in our economy went to the top 1 percent. During the same period, 40 percent of the gains went to the 60 percent in the middle, and only 18 percent of the gains to the lower 20 percent.

Between 2009 and 2010, 93 percent of the income gains in the first year out of the financial crisis went to the top 1 percent. This is really disquieting for society.

Thirty years ago, Anglo-American capitalism was the envy of the world. But today, it is viewed as an apartment block that has beautiful marble homes on top, mid-level apartments that are cramped and dowdy, and the lower floors underwater. But what really upsets people is that the elevator is broken.

I believe that it is our duty to help make all people believe that the elevator is working for them. I am not talking about equality in results, but equality in opportunities - whatever the station of your birth is, you can get on that elevator to success.

I understand that you have your Chinese dream. It is one of the greatest feelings in the world to believe that it is possible to work hard and achieve success, respect and security for your family.

I still believe we can restore public faith and confidence that is currently under siege in America. That is why I am so devoted to working toward inclusive capitalism, or inclusive growth or whatever you want to call it, as long as it is inclusive.



Q: China has already become the biggest economy after the US. What roles should China play to sustain that growth for the greater good?

A: I know I am now in a country that does not consider itself capitalist. The Economist refers to the Chinese economic system as "bamboo capitalism" or "state capitalism." I don't think the rest of the world has figured out the correct nomenclature for the amazing economic miracle in China.

We have enormous respect and admiration for what this nation has done in improving the lives of hundreds of millions of people. You may not call it capitalism, but what we are really thinking about are free markets and free trade.

China has proven to the world its achievement in economic growth in the past few decades. The key to underpinning that growth is to raise domestic consumption instead of relying so much on investment. Previous economic expansion stemming from the government's huge stimulus package is not sustainable in the long-term.

Consumer purchasing is an increasingly important contributor to China's long-term growth. And the other key is to have a clearer legal framework and rule-of-law spirit, which is not the case right now. Those two will help promote and foster more reforms for China to rise as a global center of finance.

Lastly and most importantly, there is the moral imperative. I think that is the essence of getting everything right - from personal life to business life.

From a less personal point of view, if business does not help get it right, then bad behavior is going to lead to bad public policy. Inevitably, the government is going to do things that will drain the economic dynamism out of the economy. So, as business people, we have a pragmatic reason to get it right for everyone, so that the government does not intervene in unproductive ways.

China is in a golden period, with hundreds of millions of people lifted out of poverty and enormous wealth creation. The key to sustain that is to protect people not just like you and me, but the whole public. To protect opportunities for all. To keep the elevator working.



Q: Western supremacy has had an enormous influence over developing countries, including China. Do you think China will cast similar influence on the world in the future?

A: China is already exerting tremendous cultural influence in developing countries like Brazil, India and some African countries - counties that want to emulate the success of China.

Emerging countries will get to share more global power, particularly with China as a rising influence in the region.