CHARLIE ROSE: We begin this evening with President Obama’s tour of Asia and his historic first visit to China. The trip comes at a crucial time in U.S./China relations, issues such as global economy, trade policy, the U.S. debt, climate change, and Iran are all on the table, as well as North Korea. After stops in Singapore and Japan, where he called himself the first Pacific president, President Obama arrived in Shanghai yesterday. At a town hall meeting with Chinese students, he spoke about the importance of universal rights. (BEGIN VIDEO CLIP) BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: We do not seek to impose any system of government on any other nation. But we also don’t believe that the principles that we stand for are unique to our nation. These freedoms of expression and worship, of access to information and political participation, we believe are universal rights. They should be available to all people, including ethnic and religious minorities, whether they are in the United States, China, or any nation. (END VIDEO CLIP) CHARLIE ROSE: Earlier today, the president arrived in Beijing for a much-anticipated meeting with Chinese President Hu Jintao. He will next head to Seoul, South Korea, before returning to Washington on Thursday. Joining me is former Secretary of State Henry Kissinger. As all of you know, he was instrumental in the United States resuming a relationship with China. I am pleased to have him here as this president is in China trying to shape a new relationship. Tell me -- first of all, welcome and thank you. HENRY KISSINGER: Always a pleasure. CHARLIE ROSE: Where’s this relationship today? HENRY KISSINGER: Well, first of all, one should not put it in terms of at new relationship. It’s a continuum that has been going on for over 30 years. In many ways, it’s the most successful bipartisan American foreign policy, because eight administrations of both parties have been carrying it on more or less along the same lines. What is new is that China has emerged and is emerging as maybe the dominant financial power at the moment. And what is new is that the financial crisis of last year has shaken the Chinese perception of the ability of the United States to run the international system, so that the Chinese are becoming -- especially the economic field -- a lot more assertive than they have ever been before. CHARLIE ROSE: And more worried about the United States? HENRY KISSINGER: Well, they own about $1 trillion of our debt. So, they’re worried about the United States from that point of view. They’re also worried about -- there’s a standard argument that economists always use, which is America has to consume less and China has to consume more in order to balance. This may be true from an economic point of view, but if we consume less, their exports decline. That has a huge impact on their employment situation. As they consume more, it has a major impact on the surrounding countries and their ties to China. So what that phrase really means is a shift in overall relationships. That is what is new in the situation. But it’s not any individual decision that can be taken. CHARLIE ROSE: So what should the dialogue be about? HENRY KISSINGER: Well, first, I think the relationship with China is good and the administration has conducted it appropriately. And, well, there’s a big cultural difference between China and the United States in any administration. The Chinese look at foreign policy and strategy as a continuing process extended over a long period of time, carefully assessed as to its purposes. American foreign policy generally is conducted as a series of pragmatic solutions to individual problems that emerge that change, and then they are dropped when some other issues comes along. So, we usually have a number of things that we want to get done. The Chinese usually ask themselves, where is this thing going over a five- to ten-year period? And the best way to deal with it is to have long-term strategic dialogues with them and to establish relationships not so much on a personal basis but on a conceptual basis. CHARLIE ROSE: The U.S. and Chinese economies, world’s largest and fastest growing major economy, respectively have become inextricably intertwined, loaded in a kind of codependency that neither side thinks is particularly healthy but which for the moment neither will move to break. HENRY KISSINGER: I believe that what the Chinese are trying to do is to make themselves somewhat more autonomous of financial decisions made in the United States. And therefore they want to reduce their reliance on the dollar as currency. And it seems to me they are moving very gradually, very carefully to create a possibility of an alternative reserve currency. They cannot move rapidly because they cannot depreciate the dollar without hurting themselves. CHARLIE ROSE: Right, because they have all that debt. HENRY KISSINGER: But if you -- but over a ten-year period, the basic thrust of the Chinese is to become less dependent on the American financial decisions. What is happening in China, it’s intangible. It will test itself out over a period of years. CHARLIE ROSE: And the intangible is? HENRY KISSINGER: The intangible is this. China is going to become a very major power. And there’s always the uncertainty it could also have big domestic difficulties, as everybody else has. It will become a very major power in history. Whenever a major power has developed -- say, Germany in the late 19th century -- it leads to friction with the established power, because it cuts across established relationships. On the other hand, what is positive in the situation is that both sides know that war is no solution to their problems. They also know that there’s a whole series of problems that can only be dealt with cooperatively. So each leader, each group of leaders, has to overcome the tendencies towards the traditional pattern in which foreign policy has been conducted in their country. And then we can have a rather unique... CHARLIE ROSE: But they have to find a new pattern. HENRY KISSINGER: They have to find a -- yes, a pattern that’s adequate to this period. My view is in the ‘50s we developed a concept of Atlantic community partnership. What is needed now is some concept of a Pacific partnership community rather than of Asia against America. They’ve been around a long time. They have an adequate understanding of their importance. What we need is, rather than to say let us fix the immediate currency problems, is to have some general discussion of where the world economy will be going and what we all have to do over a period of time. How do we handle the question of proliferation in a long-term sense? And I’m quite optimistic, because the Chinese, in my opinion, have concluded that they need a long period of cooperation with the United States for their own development. We have concluded that we have enough problems in the world without taking on confrontations with China. So the tone of what both sides are saying is extremely positive. So we are starting from a rather strong opposition. We have a lot of huge problems. We have the nuclear problem in Korea, we have the nuclear problem in Iran. We have -- of course a whole array of problems, each of which -- Afghanistan, and so forth. And then we have the financial issues. But they really are issues of the construction of a new world order. That’s what this is about. And that’s the sort of dialogue the Chinese are generally good at. And so a partnership between us is essential. A conflict between us is going to exhaust us both in tactical exercises. It cannot be conclusive. CHARLIE ROSE: And the new world order could satisfy both? HENRY KISSINGER: It has to satisfy both because otherwise it will lead to tensions that will exhaust us both. CHARLIE ROSE: Thank you. Great to see you. HENRY KISSINGER: Good to be here. CHARLIE ROSE: Henry Kissinger as President Obama is in China talking to Hu Jintao and other Chinese leaders about how to find concrete steps towards building confidence and trust and a long-term view of the relationship and the rolls of the two countries.