Two days ago our Philippine delegation went to Foshan to visit Country Garden, the world’s largest real estate firm and one of Fortune’s Global 500. Country Garden started in 1992 as part of the boom in private sector development following Deng XiaopIng’s great Southern Tour earlier that year. Its founder Yang Guoqiang, who started out as a farmer and construction worker, received us during our visit and introduced us to his daughter Yang Huiyan to whom he transferred his shares in 2005, making her the richest woman in Asia and number 5 in the world. She toured us in their Bright Dream Robotics, a 10-square-kilometer industrial park where they built their R&D facility last year in four months’ time. Their R&D has developed robots that produce and install aluminum moulds, top frames, climbing frames, and wallboards. We saw that the use of robots to build houses at construction sites is no longer science fiction. It is the fourth industrial revolution, and China is a leader of the pack. Congratulations to the people and government of China.
China’s leadership in the fourth industrial revolution should not surprise us, because it has been committed to state-of-the-art technology since 1977, when it boldly declared that science and technology modernization was the foundation for modernizing in turn all other sectors, such as infrastructure, agriculture and defence. China’s experience in its 40 years of reform and opening up gives us lessons on first, a long-term vision; second, a strong will to implement that vision; third, recognizing the value of infrastructure; and fourth, recognizing the value of state-of-the-art technology. As President Xi Jinping put it, China has indeed accomplished much toward becoming a country of producers and innovators. Its breath-taking development over the past 40 years has led to the historical record-breaking graduation of 800 million people out of poverty and brought China to the cusp of becoming the largest economy in the world. China’s rise demonstrates that development based on state-of-the-art technology can indeed re-align geo-economics and geo-politics.
Country Garden, Ali Baba, Tencent, and many other amazing firms inside and outside China make it undeniable that the world is rapidly undergoing a new transition. Klaus Schwab, who coined the term Fourth Industrial Revolution, explains that the world now has the opportunity to shape a new development, characterized by technologies fusing the physical, digital and biological worlds. Robotics, artificial intelligence, genome editing, autonomous vehicles, 3-D printing and blockchain can transform entire systems of production, management and governance and improve quality of life exponentially. On the other hand, the technological disruption and realignment of geo-economics and geopolitical forces brought about by 4IR threaten global stability in many ways: in social relations, in international relations, in trade, in finance.
How do we preserve social stability, for instance, when the fourth industrial revolution replaces construction workers with robots and similarly disrupts almost all other labor markets? The required response is complex, but one element of it surely must be to increase access to science, technology, engineering and math education, while promoting the pursuit of careers less likely to be automated, such as jobs that require human interaction and critical, empathetic thinking. Social work, for example, and jobs in media, entertainment and the hospitality industry, and information.
How do we preserve stability in international relations? One answer can be found in President Xi Jinping’s thoughtful view of “win-win” relations, that as China becomes a fully modern economy, it strives for enduring partnership in growth and development in Asia and the world. Under the leadership of President Rodrigo Duterte, the Philippines is a partner of China in a relationship of “Comprehensive Strategic Cooperation.” For the Philippines, China’s rise is an opportunity, not a threat.
Unfortunately, the win-win game of interdependence is in danger of being replaced by the win-lose rhetoric of great power rivalry. It is saddening to see former champions of free trade and multilateralism straying off course from their previous worthwhile advocacies. Now that a Trump-style conservatism is Presidential policy in the US, past trade agreements are viewed by conservative-nationalists as being too concessionary. How do we preserve stability in trade?
Fortunately, China's policy initiatives provide optimism. In the face of the threat posed by a trade war, the China’s Party Politburo correctly stated, “We have to enhance reform and opening up.” China’s steadfast encourages the rest of the world to hold the fort for global trade. We acknowledge with commendation their vigorous stance for upholding the unifying and stabilizing WTO rules, among others.
In this fourth industrial revolution, upholding WTO rules must be complemented with the creation of rules to harness the full potential of the fast growing digital economy. As underscored in the recent G20 Summit in Osaka, rule-making in data flow and e-commerce will go a long way to promote a secure, fair credible, and yes, stable interconnected trade and economy.
How do we preserve stability in finance? China’s invigorating view of common development augurs well as it advances the Belt and Road Initiative (BRI) that President Xi Jinping launched in 2013. Let me make an analogy using terms that became popular in the computer age of the third industrial revolution: Internatiomal trade and investment relationships, such as those envisioned under the WTO, are like the software for the world’s trade and investments system. But we also need the hardware, and this is where the BRI comes in to provide brick and mortar infrastructures without which international trade and investments cannot possibly operate. In 2014, President Xi Jinping mandated that the BRI should break through bottlenecks in Asian connectivity by building a financing platform. I am glad that the IFF has created a daughter organization, the Silk Road International Alliance, so we can further brainstorm on how the BRI financing platform can ensure financial stability between economies, particularly China and its cooperation partners.
Within the individual economies, the challenge is to make financial technology more inclusive rather than widening the digital gap in finance. The world should develop tools that facilitate access to finance. WeChat is a best practice to emulate. So is the work of Dr. Muhammad Yunus, the father of grameen banking, who today offers micro-loans through technology platforms.
Financial stability and inclusiveness in financial technology should be the continuing work of the IFF, which is unique among economic forums in that it has a heavy academic component. As this conference ponders the contours and directions of the new transition and the new development, may we find strategic insights on how to boost global financial stability and inclusion by preserving stability in social relations, upholding the international order, and facilitating a new and digital globalization.
