Date:
November 23, 2018

Topics:
- Analysis on Current International Landscape
- Advices on Chinese Economic and Financial Development

Edited transcript



José Manuel Durão Barroso, IFF co-chairman, former President of the European commission and former prime minister of Portugal

I think I can share with you my experience of the link with what was suddenly the most intense financial crisis of the age of the globalization. That’s why I’m a deep believer in the advantages of multilateral and global approach. It’s quite clear that in this interconnected world, not only financially, but in trade and investment terms, more culturally, in terms of information exchanges, we need to have serious mechanisms of engaging collectively, not only for financial stability, but for sustainable growth.

I am proud to have made some contribution for that purpose. In fact, it was our initiative in the EU when we saw the financial crisis, to propose to the American leadership the first G20 at the heads of state level. It was quite clear that the G8 was no longer enough to respond to those challenges. The G8 was too small, while the UN was too big and too slow. The G20 made some contributions because it was a way to put away protectionism. We have to make sure the financial crisis not contaminate the global economic situation, and try to define some mechanisms for financial stabilities - that’s when we took the decision of establishing the Financial Stability Board, fighting tax evasion and tax fraud globally, asking OECD to do more and doing more for sustainable growth.

The work was certainly not perfect. I really believe it’s important to work globally for financial stability, against protectionism, and set up a common framework for sustainable growth.

I’m going to meet the G20 leaders this month, but to be honest, I’m not very confident. I’m worried with the current economic situation. We are seeing geopolitical contamination, security issues and trade and economic issues. These tensions exist. There shouldn’t be a reason to give up, but in the contrast, there’s a reason for us to continue to engage, discuss and speak. The EU is not perfect, but we have to use the G20 to discuss issues. Countries are different from their histories and problems, but in the end, we need to reach a consensus. I think the experience of the EU can be learned on discussion and reaching a consensus.

The growth of China is very important for the Chinese people, also for the global economy. I think this is the way we should approach the economic situation in China. The EU is the first trade partner of China, while China is the second of ours. Therefore, it is very important for the growth and prosperity in Europe to have stable growth in China. I believe it is important that we create mechanisms to ensure a common sustainable growth, and China being one of the most important economies. The success of the country is critically important for the global economy.



Shaukat Aziz, IFF co-chairman and 23rd prime minister of Pakistan

In terms of the global economic situation, the world continues to face many challenges, but also very attractive opportunities. If you look at the trajectory of the global economic growth, a lot depends on the framework countries adopt, on the leadership, and on how the structure reform agenda is working.

Today, we see three trends in the world, no matter what we do and where we are. First of all, these trends are not all positive. The debate we have today on free trade, open market, access to market and constant change in positioning, and taking specific measures to make trade of one country unattractive to the other, this goes against the core of the free trade. This is the major change, maybe restricting to one or two countries now, will be very extensive in its impact if we don’t react fast, because other countries will learn once one country does it. Globalization, liberalization and other elements are those that gave us the growth in the past decade.

On top of that, new uncertainties caused by new tariffs, these are not small items. These will change the profitability dynamic significantly; demand can be affected. It’s a black box that nobody can tell you what will happen next week, next month or next year. All of us grew up in uncertainties, this is not the end of the world, but we need better reaction and dialogue among key world leaders. What are they going to achieve? What are their real concerns? And what we can do to address the concerns? That is missing at the moment, while there’s unilateral approaches to economic problems solving. Europe should also stand up and take more aggressive stand if they believe in it, on what the tariff situation should be and shouldn’t be. Europe, as a big power, can really exert their influence, in addition to other countries that are going to influence the US.

Another trend is digitization. We are living in a changing world, where the technology is impacting everything we do. We cannot ignore it, and it is changing the pattern and rule of the game in many different parts of the world. To adopt it in business, governance and everything we do, lots of work need to be done. This is a working process. If any country thinks it is really geared to the technology, which will be now and ten years from now, they are mistaken. Infrastructure has to adapt to the changing times. What it will be and what it needs to be requires a longer debate. This requires the attention of all people in the world, whether in this room or not.

I also want to take us back to two or three principles influencing the performance of Pakistan. When I took over, we had negative reserve. Through the reform agenda, we got to a situation where we saw the growth. For the developing world, which is a big chunk of the world, it’s not only the OECD countries. The others have to follow three principles, if they want to tap to their true potential - deregulate, liberalize and privatize. If they can do these three things and adapt to their own ecosystems, they will be able to have huge development and rapid growth. Privatization doesn’t mean the application of the government. We have a check and balance, so that the national and public interests are protected, but this is not the business of the government to doing business. Deregulation is one of the best things you can do if you don’t know what one is doing. It doesn’t mean laws and regulations go away. The banking system always needs to be supervised and put in certain parameters - but you still can deregulate a lot within the system without losing the punch. Our goal as leaders, economic managers and participants in the economy, has to be and need to be the need for the full potential of that country and that marketplace. Within the approach we take, we must be sensitive to the need for privatization, liberalization and deregulation.

Lastly, we cannot do things in isolation in a more global world. We have to hear where the drums are up, and be sensitive to that - this will give you lots of opportunities.



Gloria Arroyo, IFF board member, former President of the Philippines, speaker of the Philippine house of representatives

More than 40 years ago, I was at the Association for Philippines-China Understanding. I was fortunate to be invited to visit Beijing, Shanghai, Guangzhou, Hangzhou and other cities in the 1970s - when China had not yet opened up to the world. So I feel fortunate to have seen the whole transformation of China.

I will elaborate more on the first question. Let me speak from the point of broad strokes of the history, especially history of someone from the developing world like myself. For us, in Asia and in the developing world, one of the most important development in the current landscape is the rise of China. It will look back all the China has accomplished in the last four decades. I recalled when I began my career in the public service in the 1980s, the economy was taking shape in Asia. When I was an economics professor then, I was thinking about if China would become a chief competitor in the world market. Today, we see what China is. Rather than a competitor, China is trying to be a partner in development, a market for developing countries, a donor, as well as a provider of capital and technology. In investment of the Philippines, China invested 60-70% in 2017. It is also the largest partner in trade. This is one of the most important strategic developments in the current times.

Today, one of the developments is a result of China’s transformation. In the past, when the globalization was starting, it was considered a western phenomenon. Then China opened up in 1978, in 40 years China has entered into a new era. Now it is not a western phenomenon - certainly not the globalization in the 20th century, not the one 20 years ago.

Today, we have president Xi Jinping, affirming to the world that China will continue to open up, despite the trend of protectionism in the US and other countries in Europe. On the other hand, you have the transition of the champion of the globalization like the US, entering in to a period of isolationism and protectionism. Some are pessimistic about the current trend saying this will be the end of globalization because of that. But China will open even more, and is becoming the largest economy in the world. China is importing more, and works hard on the regional comprehensive economic partnership. With the support of China, ASEAN has become the world’s largest trading bloc.

Therefore, the globalization is not end, but entering a new period. This is the time that globalization is eastern as well as western. In the developing world, we see a welcoming trend of China’s development as well as that of the globalization for all, which will be east-centric as well as west-centric.

As to what China should do now, I hesitate to talk about China’s internal affairs. I do know we are all praising the opening up, so I want to encourage China to move forward on this path. We respect China’s decision to speed up in this regard. From the point of the view of the Philippines, the relationship of our two countries is as good as it has ever been.

The main thing to focus now on the implementation side. The Philippines has made the maximum effort to remove the bottleneck of the implementation of the projects that involve investment and assistance from China. What impresses us most is in the association with these Chinese investors and funders. We will try our best in the ASEAN on the implementation. As China scaled up assistance, surely the previous bottlenecks will be overcome very quickly.

China’s 40 years’ growth is something that other countries should spend 200 years to do. I’m sure China will take other role it gives itself in the new era - as our partner of future growth and development. I’m very optimistic of the world whether or not the G20 negotiations will be successful in the near term.



Antony Leung, IFF Vice-chairman, Former Financial Secretary of Hong Kong Special Administrative Region

In China, I think the economy will surely slow down in the shadow of the trade war in the short term, but we can still afford it because our economic starting point or growth starting point is still relatively high. I am optimistic about the long term, because over the last few months our top leadership including President xi has been very clear that we will continue to reform and open up. Now we are seeing a lot of concrete measures, especially in the area of opening up. We are still expecting more concrete measures in the reform area. The second aspect is to streamline administration and delegate powers. It takes a long time and a lot of procedures to do something in China. Third, some scholars argue that there is a greater role for the state sector and a lesser role for the private sector in the future. This is not the whole story. We look forward to a further reform in state-owned enterprises, but the so-called privatization SOE reform does not necessarily refer to abroad, because privatisation sometimes seems to put away state-owned enterprises. My previous boss said the privatisation is not equal to completely giving up SOEs, because we see Singapore's state-owned enterprises to reform their value in the aspect of equity cut in half, but the country can also through the board of directors, and so on these SOEs are very effective regulation, We hope we can in the aspect of control on the reform of state-owned enterprises and comparison in terms of funding can according to market rules and measures to make fair competition of private enterprises, especially in financing to state-owned enterprises have equal treatment to solve the financing difficulties, financing is expensive, so if you can really insist on reform and opening up, I have every confidence about China's future.

LEE Jih-Chu, IFF Board Member, Former Chairwoman of Taiwan Financial Holding Co., Vice Chairwoman of Shin Kong Financial Holding Co.,  

The organizer has given us two themes. The first one is about the international economic landscape. The second is about China's economic and financial development. I think this year is actually the financial tsunami, the financial tsunami of 2008, so there are a lot of themes this year around whether we will have the next big financial fluctuations, around the financial tsunami. But the fact that the financial tsunami in 2008 was so severe over the past decade that countries did a lot to save their economies, whether it was fiscal policy or Q1 or a lot of other administrative measures, has undeniably caused a lot of after-effects. The fact is that even this year we've seen a lot of sequelae, for example because there's so much money sitting in there that we can see that financial assets are very high in every country, so there's a lot of concern that financial assets that are too high are going to have a bubble. At the same time, we can also see that countries have a heavy debt burden in order to rescue the economy. Not only governments, especially private enterprises, borrow a lot due to low interest rates, so the debt burden of private enterprises is also very heavy. At the same time, despite all the measures taken to rescue the economy, the only real strong economic recovery is actually in the United States, Europe and Japan with some modest recoveries, but many parts of the developing emerging economies are still in the midst of a shaky recovery. Therefore, in this situation, the overall environment needs a stable economic growth environment to support us to deal with various economic policies or the sequelae of financial policies made by the previous financial tsunami. Therefore, we must make the big economic environment stable. Especially in the wave of financial tsunami by some of the big easy monetary measures also caused a political because income distribution does not cause the rise of a populist on average, the rise of populism, it affected not only the political side, it affects every country perform its monetary policy, fiscal policy, even its financial reform, and so on. So we have to be very careful about dealing with an economy that is still relatively dealing with the aftermath of the crisis, and it's unfortunate that we are dealing with the rise of global protectionism, particularly the Sino-American trade war. Although the financial crisis of 2008 has done a lot of stabilization measures from the advanced countries to restore prosperity and stabilize global finance, there is no denying that the stability of finance and economic growth provided by mainland China also plays a very important role in stabilizing global economy and financial stability. But at present China itself in the face of the positive deal with it internal because hangover from the financial crisis has done some policy adjustment and it is a challenge in the transformation of economic structure, have the stronger china-us trade with global protectionism, global trade protectionism or trade it in fact is upset these entrepreneurs as he originally established planning steps to do investment, planning and so on decision-making behavior to do trade, so you can see our the IMF or world bank have make take the forecast for next year's economic growth, You also see the global trade in began to shrink, the entire global investment began to decline, this not only caused the economy to slow its momentum against we just talk about dealing with face has a bit of a challenge, more important is because it upset the global entrepreneurs I just said especially global had formed such a tight supply chain form disrupted its layout, so I don't think this is aggravating the global environment stable a situation that is very important. So I think we have to be very careful about how we deal with the new shocks and exacerbations of protectionism that the world is facing, and how we deal with some of the current instability that comes with the aftermath of the previous financial crisis. Of course, at the same time, the previous wave of financial crisis can be dealt with smoothly, and a very important factor is the close cooperation of the global community. But we worry about now is in the present global protectionist atmosphere if another one because of the impact of a wave of protectionism and further impact on the global financial instability, whether the world can like the past together to deal with a global instability problem, I do think these are all in the global economy now everybody must be careful to deal with problems. The other about China, I believe that everyone here has a lot of Chinese experts actually don't need us these strangers to close some things, if call me simple talk about, I'm just a few small Suggestions, in fact, after forty years of reform and opening up China in research and development ability is not only the quantity of pure economic growth, on the economic development and innovation has considerable strength, when in fact the world is watching China mainland is not in an emerging economy, so I think China should have more confidence to perform these developed countries particularly concerned about the wisdom of the protection of related issues, It's not just to meet the requirements of foreign countries but more importantly for the mainland itself. I've met a lot of good entrepreneurs myself, who have very strong research and development capabilities. But because domestic less rigorous enforcement could be relatively, but there's no way to eliminate the weak and let the people who started with fake hit the mainland itself very good entrepreneurs, this will affect the quality of mainland China has been pushing the so-called pay equal attention to economic development, I believe that the mainland is absolutely have the ability, I believe departments will also continue to strengthen about intellectual property rights protection to help their own good corporate growth, I believe that the mainland must have been doing, but we hope it can do more thoroughly, more powerful as far as possible to help good enterprise development. Of finance is also facing the other mainland to give a little advice is today were so strongly the development of the shadow financial because when we do to strengthen financial regulation does not adopt consistent standards, so let the shadow of some financial regulatory arbitrage space, it can use relatively low regulatory costs no matter legal punishment cost or other costs to with some of the constraints, formal and regulated financial institutions to competition, causing the shadow will accelerate the expansion of the financial part. In fact, in this part, if we can eliminate regulatory arbitrage and gradually introduce the existing shadow finance into a more fair regulatory conditions, I believe it will contribute to the stability of the mainland's economy.



Wang Yan, IFF Academic Committee Member, Former SeniorEconomist of World Bank

Global economy now needs more patient capital. A trend that is now people are less patient. Data for the first half of this year reveals that the entire global foreign investment fell 41%, China became the largest recipient, America became the third receiving countries, the United States is the first original recipients, this is a very dangerous trend. What is patient capital? We think of it as capital invested in a relationship, not with the goal of maximum profit but with the goal of win-win partnership, is directly proportional to a country's savings rate, directly proportional to the development of a country's financial institutions. So since thousands of years of Chinese farming culture has trained us farmers they must be very patient, because China's Confucian culture, we all know that the Confucian education for their children are very patient, so there is a long-term trend of culture, investment also has a long-term orientation, so China's savings rate is higher, and the influence of Confucian culture surrounding countries also have a relatively high savings rate, the high savings rate and patient capital is not the same but it is in direct proportion to the capital.

Patient capital can also help prevent a financial tsunami. Now OECD wrote many articles to advocate to attract long-term investment, to reach more than ten years or twenty years of long-term investment, so China now put forward south-south cooperation, China-Africa cooperation, all the way to provide a large number of patient capital, set up a China-Africa cooperation fund capacity, green fund, etc., we think that the Chinese government to take these measures will help some impatient capital into patient capital and then used for development and prevent the financial tsunami. We believe that stronger measures are needed to prevent patient capital from turning into impatient capital, which is an outflow of capital that everyone follows and then turns into impatient capital, short-term capital. So there's a big question for financial regulators to think about is how do you prevent patient capital from being long term capital from being short term impatient capital, and how do you prevent strategic impatience, and that's a major point. Also now FDI downward trend is worth attention, we have a big bay, Hong Kong and Macao to suggest is that I wish to set up some funds especially like innovation fund or green fund, such as can attract a three major areas of Guangdong long-term savings, let them put the long-term savings into long-term capital, patient, capital to invest in Guangdong regional bond and equity and venture capital. In addition, it is necessary for political policy makers to formulate laws on China's foreign aid and foreign cooperation. At present, only one institution has been set up to publish the management methods, but there is no law. This law should clearly explain the theories of China's foreign aid and foreign cooperation. What is foreign aid and why do we need cooperation? Does China have a particularly high comparative advantage in this area? So what is China's comparative advantage can make developing countries and area interests of the state to be able to get all the way, this is a big problem to China's legislation of China's foreign aid to be clear. Evaluation and assessment should be established to examine the performance of Chinese foreign aid and agencies and institutions who deliver such aid programme.

YU Lan, Editorial Director of China News Service, Director of Department of Economy of China News Service

This year marks the 40th anniversary of China's reform and opening-up, and China has achieved great success. When a lot of people think that China will of course cross the river and reach to the shore, becoming the kind of market economy they are familiar with in OECD countries, but China in 40 years proves that China finds a new road of its own, this is an accord with Chinese characteristics, and is proved to be a new way to success, of course, there are many drawbacks.

Here, I'd like to briefly talk about the development of China from three interesting phenomena in history. First, from the perspective of regional structure, we can see that China's economic development in the past 40 years has an interesting phenomenon: east and south is more developed than west and north. That is, different regions alternate as the engines of China's economic growth. Behind is the central support and encouragement and local implementation. The next step, I think, is to stabilize the Chinese economy or to further stimulate and unleash the momentum of local development.

Second, in terms of the structure of the industry, one of the interesting things about the last 40 years is hat sectors has developed in turn. That is the upgrading of the industrial structure. But we also see that this new industry and the traditional industry in China can often go hand in hand. Behind is because China has a vast domestic market and demand structure of richness, diversity and an escalation of constantly in evolution, so the next step in the international economic environment is complicated and geopolitical instability increases under this situation, how to effectively expand domestic demand, may still be the development of our top priority.

Third, from the perspective of the ownership structure, mainly from the perspective of the development of the private economy, there is an interesting phenomenon in the development of the private economy in China. In fact, private economy has been in a relatively difficult environment to develop and grow up, not much, as long as there is a relatively fair environment, as long as there is a relatively stable policy signal, private enterprises can be very tenacious to survive. Therefore, to create such a level playing field in the future and give stable signal to avoid fluctuation is still the focus of macroeconomic policy. 



XIA Le, IFF Academic Committee Member, Chief Asia Economist of BBVA:

I'd like to take this opportunity to present some of the results of our recent research based on two themes. The first is about the international situation, which I put it in the economic situation, from the international economic situation, I think there are two big trend of differentiation, the two big differentiation is the first in the developed world, America's economy should be preeminent, and the European and Japanese economies have appeared different degree of ease or slowing down. There is bigger divide is between the developed world and the emerging world, and it's much more pronounced, especially in some emerging markets where there are some early signs of crisis. So beyond these two big divisions, there are two major concerns. The first concern is the process of normalization of monetary policy in the United States. We know that the path of interest rate hikes in the United States is almost half way through now. It's still a very open question, including within the fed and it doesn't form a very strong consensus, so we expect that over the next year or two, this market expectation of a fed rate hike and its eventual outcome could cause additional volatility in our global financial markets. The second concern is that we talk a lot about trade disputes between China and the United States, because China and the United States are the two largest national economies, and trade disputes between them inevitably affect other important trading partners.

Second, developing countries are still very vulnerable. It's been a decade since we've had a financial crisis, but in fact we've seen developing countries go through about three rounds of this kind of financial turmoil. The first, in 2008, was the global financial tsunami. Then, in 2013, when the federal reserve began to unwind its QE program, there was another round of financial turmoil in the developing world. So we have seen in some developing countries actually is the state of crisis, and now in some developing countries called the rise of the populist, might give them was relatively weak state institutions, and policies, frame a new impact, so in the next year or two, we expect to developing countries are likely to see more of the crisis.

Finally, I want to talk about China's economic and financial development, in fact we have seen policy change due to the recent economic slowdown. Regulators use more aggressive monetary and fiscal policy to fight a cyclical slowdown, but we need to maintain a certain concentration. For example, in the direction of financial regulation. The goal is to crack down on regulatory arbitrage. Of course, we can make some tactical adjustments, but we should not waver in the general direction. Another point is the definition of real estate in the national economic status. I think we should still use it as a housing service rather than a capital tool for speculation. 



SONG Min, IFF Academic Committee Member, Dean of Economics and Management School, Wuhan University:

Many developing countries are already in crisis. We've seen some currencies depreciated heavily, stock markets fall, and of course we haven't seen a global crisis or a regional crisis, but we do worry about it. Finally, the policy aspect, the general direction of the lecture needs to be defined, and it can be adjusted tactically.

Gracie Sun, Adviser to the Paulson Institute:

I'm going to talk very briefly today about two issues. First, I would like to make a judgment on the current international situation. Here, I would like to make three points. As the world's two largest economies, China and the United States have a relationship that will play an important role in the international economic situation. China and the United States will also enter a new normal. Such a new normal will also enter a new normal for the international situation. This is the first point I want to make.

The second point I want to make is that in the next five to ten years, or even sooner, the development of technology is going to have a very big impact on the global industry, the human race, and the economy, so it's very important to focus on this area, and to follow up on this area of the industry.

The third point is that climate change is one of the biggest threats to the global economy, but it has not received much attention yet, so we would like to express our concern about it in this point. The second part, some Suggestions on the new development of Chinese economy and finance. Although at present China's economic development has slowed, but it is still one of the fastest developing economies in the world, we suggest that believes that green development is open to China's industry and new economic growth into a very big push, how to shape a sustainable business model, including a long-term investment and the society as a whole, the government's cooperation will promote the development of Chinese economy, including the world play a very important role in the middle of the green development. 



CHEN Xingdong, IFF Academic Committee Member, Chief China Economist of Global Market Research (China), BNP Paribas:

First 2018 has not been an easy year. In one word, it's called Frustration. The term Frustration, I think everyone has experienced, especially the practitioners in capital market should have more profound experience, constantly change, this world is become Frustration, mainly is two countries, one is the United States, one is China. 2018 is coming to an end. No matter how far it has come, we should be cautious in our overall judgment and not optimistic in the face of the expectation of 2019 and 2020. There are now five risks facing 2019, and the answers to these five questions will determine our view and judgment of 2019.

The first is how the trade war between China and the United States will play out and develop. The second is how long the U.S. economy will be at risk, and how the fed's policies will be adopted. The third one is how China's macro economy will go, how China will redefine itself and start again, and how China will reform and open up in the future. The fourth is Brexit, which means to leave the EU. Will there be a hard Brexit? Soft Brexit or hard Brexit? This is a big problem. The fifth is whether the financial risks of developing countries will be further developed on the basis of 2019, and whether these financial storms will become a contagious disease? Is it an individual case? Is it controllable or can it go somewhere else? So the United States, the economy of the United States, you see there are four questions that need to be answered.

The first question is that the U.S. economy is now well understood. It has been the best combination of growth, inflation and unemployment in 50 years. But this is the best, the first question: how far can you still run on the top? The second question is when you run to the peak, you will face a slope or a cliff? Third, what will the FED do about it? Did the FED raise rates three or four or two times? This global impact should be different for everyone. Is the fourth capital market beginning to crack? So our basic point of view that the United States next year's economic growth may be slower than we expected, tax cuts, the purpose of the first round of tax cuts and not tax cuts, the purpose of tax cuts is that I wish to promote the capital market to promote capitalists, but get the benefits of enterprise is more of the money to have the stock repurchase, not reached. The outcome of the second batch of tax cuts become a big question mark, capital markets for it should be no confidence.

As for the trade war between China and the United States, there are three possibilities. First of all, trump and his team may be in no hurry to reach a deal with China. The reason is that he has just finished this midterm election. It will be two years before trump runs for President in 2020. The second is that the us economy is at its best. It is not afraid of a trade war with China. It is not in a hurry to get out. The third fact is that the trade situation between the United States and the European Union, the United States and Japan has not been discussed, what kind of state will it produce? I don't know. It may be too early to form such a relationship with China. It may not be time yet.

But in three other ways, the United States may need to talk to China. First of all, this confrontation between China and the United States has the potential for conflict, a huge conflict. This conflict may not be what the United States wants. For example, a few weeks ago or a few months ago, China, such a naval clash in the south China sea was likely to get out of hand, and it may not have been prepared by trump and his team at this stage. Second, they are also worried about the current negotiations between China and the United States. The United States has the highest bargaining chip. As time goes on, the American economy may decline, and the politics of the United States and trump may also decline. On the other hand, give China another year or so, six months, a year or so, China may gradually find its own way to survive in the pain, then the United States might as well talk to China now, get more benefits. Third, China could use its own huge unceasingly in the growth of domestic purchasing power, China is likely to be American companies and the American economy, take a different way to deal with it from this perspective, it likely will get lost in China market, a lot of things are not, from this perspective, between China and the United States probably won't sweetened, between the two sides will come back to talk about, but a deal is unlikely, this is the second point.

The third point is that China's economy is now facing downward pressure. It should be said that from market observation, the downward pressure on China's economic growth is greater than that reflected by the national bureau of statistics and the official statistics bureau. From the micro point of view, confidence should be said to be relatively large-scale decline, we summed up five reasons. The first reason is called structural decline, the second reason is a cyclical downturn, the third reason is decided after transformation and upgrading of China's economic policy changes caused by the economic slowdown, the fourth reason is that all kinds of policies, other aspects lead to the loss of confidence in private enterprises, the fifth reason is, of course, the impact of the external. So such five reasons resulting in a decline in China's economic growth, if do not take to solve two problems, the first question the trade between China and the United States if not able to stop in time, if China's economy can't take further adjustment and reform, China's economy may be hard to avoid will continue to fall, the difficulty of it is likely to continue in 2019 to 2020. The fourth thing about Brexit, Brexit is that we tend to have a soft Brexit, overall, but the risk is very high, right? So it's a bit of a struggle to say that if there's a soft Brexit, the European Community, the European part and the United Kingdom should have a pretty good positive growth next year. The last point is about the risk of developing countries. On the whole, we believe that the financial risk of developing countries will develop further, but it should not be a systemic risk. It should be an individual risk.

CAO Li, Deputy Director of Institute of Boao Forum for Asia

The current globalization is facing a series of problems, especially including the polarization of the rich and the poor, and the world's rich and poor, and now in the face of global trade friction, the new round of globalization is a big obstacle. Have other experts estimate that the past is characterized by tariff concession of the economic globalization may be up to push the world economy grew by five percent, but powered by interconnection of the new type of globalisation may promote world economic growth of ten percent to fifteen percent, it is constantly updated data in this global investment gap, its road to 56 countries, electric power, railway, water, telecommunications, ports, airports these industries investment gap measure, from 2016 to 2040, these countries need $94 trillion investment, gap is $15 trillion, So we also see that this actually means the potential for economic growth. I feel that the next round of the new type of economic globalization should be promoted from the global connectivity, then in the global connectivity, we need a lot of capital investment, just like the teacher wang yuan mentioned that we need a lot of patient capital investment. Is precisely in this respect, the globalization of China put forward the "area" initiative, "One Belt And One Road" implementation also needs a lot of countries, conducted a at this time we found also in the world other initiatives, such as Japan, the United States, especially burns during a visit to Japan recently, Japan decided to invest seventy billion dollars in the surrounding countries. The European Union also unveiled plans in August to boost investment in roads, the Internet and digital between Europe and Asia. So I think global next in these areas should be better together, so I think it should not be the competition between each other, should be partners, through global connectivity promote the globalization, the major countries, major economies can make concerted efforts, especially as I just mentioned better coordination between major initiatives.



CHEN Wenhui, IFF Vice-chairman, Deputy Secretary-General of National Council for Social Security Fund:

I'd like to give you a couple of points of view and situational judgment. The last round of crisis was mainly in developed countries, Europe and the United States, so the previous financial crisis usually ended in two to three years, the last round of crisis lasted a long time, which is also worth our attention. So this crisis I think is probably not in the major developed countries, but mainly in the developing countries. Because developed countries have withstood a test in their systems and mechanisms during the crisis, which has lasted so long, and made a lot of institutional improvements, the main body of the next round of crisis, I think, may be mainly in the developing countries, which is worthy of our attention.

The second one is that the United States has lowered the tax rate and raised the tariff. I think the impact of this is very profound, and the adjustment of the whole global manufacturing center is probably very significant. I think it is also a place that we should pay attention to.

The third point I would like to make is that although China and the United States are in a trade war, the price elasticity of the Chinese economy is relatively large from the perspective of its facts. global commodity prices, such as oil from our 13 years an average of $one hundred and thirteen, more than $one hundred and ten at a draught is halved to $26, to between $four hundred and fifty, so everyone is able to adapt to, so the Chinese to the tariff level, I think it may be or tolerance of the price elasticity is big, I think may not want to do a special pessimistic view. But there may be a trend here, and one of the things to note is that in the next round of growth in the global economy, it may be more of an endogenous growth than an external growth. Is when trade limited, that is, each country inside it's own growth is likely to account for larger proportion, this may also be worth us to pay attention to, and growth potential, I think is mainly large Asian population in this block, its demand is relatively large, so I think for China or for the world, one of the biggest challenge is that we need to explore a kind of maintaining sustainable growth of a new kind of power. So this new dynamic, not just an industry, not just a technology, there may be some other aspects, some institutional aspects that may need to be broken through to solve.



Robin Xing, Chief China Economist of Morgan Stanley

The first is the global trade friction and trade protectionism would cause long-term change on the global supply chain in the process of relocation. This has huge impacts on China's long-term productivity improvement and the FDI attraction. Second, emerging markets would be heavily affected if the US economy enters the downward phase next year or even a major adjustment; Third, combined with the previous two external upheavals, is the domestic policy response now sufficient to withstand these risks? The first small problem, I think I will discuss it carefully in the next two days. I have conducted a study with 31 economists and industry analysts in the world, and the conclusion is that the relocation of global industrial chain and supply chain will not happen in a short term even if the trade friction is getting worse and worse. Because it is difficult and the cost is high. Moreover it could accept alternative economies are very limited, from the short term, you've seen in the existing productivity layout of some multinational companies put it under the export orders for alternative trading, adding to the perimeter of the economies orders, China less order to avoid tariffs, but with the medium and long term, the capacity to move out from China, the supply chain in search of new economy, we average calculated, through the case analysis and some of the large data questionnaire, makes the supply chain cost increase by about 10%, If next year in the U.S. economy will face some downward inflection point, under the condition of the higher costs may also be a multinational companies and American consumers don't want to see short-term, but long-term, we visit the majority of firms are indeed can expressed more and more attention in emerging economies outside of China for capacity expansion, production line of this possibility, that is to say, the long run there is a risk, I think for now it is necessary to further strengthen the opening to the outside world, especially the protection of intellectual property rights of the strength to further through Hong Kong and Macao to similar large bay area makes the reform and opening up the highlands, A more market-driven, more gender-neutral approach to soes could partially offset the risk that tariffs and other trade frictions could shift r&d away from global industrial chains and foreign direct investment across borders.

The second problem is that the U.S. economy adjustment influence on emerging markets, there is no doubt that the world this year, as if from the momentum of the economy, on the other side of the Pacific seems to be the scenery alone good, the economy is hot, the dollar's value, the global flow of capital to the west, and so on, but just like several analysis above, a lot is a one-off fiscal stimulus, starting from the second quarter of next year, the one-time stimulus gradually dissipate, down into the inflection point, what is a curse or blessing to emerging markets, my personal view is that the may not produce too much, like 08 or is on the emerging markets in 98, the impact of a crisis, Because obviously you have to focus on the now the fed's interest-rate increases are likely to slow down, then the dollar could also can appear, in this process, the emerging markets may not be like this such a big impact, including the possibility of further escalation of trade friction, as the U.S. economy, especially the U.S. financial market volatility to slow down, from the latest meeting also can see that in every way.

The last point is that is the recent domestic policy response good enough? There are a lot of researchers may feel we need a massive credit and infrastructure stimulus to cope with the outside, I think although confidence in the market now is stumbling, slowing economy faces pressure, but this one concerns the psychological, behind is actually has a lot of our economic structure improvement, a little slow is slow, but its long-term sustainable enhancement, this for this year and next year to adopt counter-cyclical policy should be used for reference. I observed three tiny phenomenon, one is China actually productivity rose over the past two years, so 12 to 16 years, we have excess capacity at that time, the state-owned investment faster than private companies, our total factor productivity growth of TFP, probably less than 2% a year, two years of state-owned enterprises investment impulse is, invalid less investment in industries with excess capacity. Corporation investment, especially in the technical reformation to update more, in the field of corporation investment growth of 8% this year is much higher than 2% of the state-owned enterprises, the result is that now the TFP of total factor productivity has risen by about 2.5, then the contribution to the GDP growth is at the forefront in the major countries, this actually reflects the overall over the past few years we are a tight situation, caused productivity result instead of ascension. The second is changes in the job market, which may be more resilient to changes in the export-oriented external situation. For example, in recent years, the economy has been increasingly driven by consumption and services, and there have been subtle changes in the labor market. For the last five years the secondary industry has been shedding jobs and losing people. The third industry and services each year to absorb a large number of labor, in the past year, for example, industry lost a total of five million three hundred thousand jobs, increased by eleven million jobs in service industry, there are a lot of new type the work state, for example, give you to delivery to ride a motorcycle rider or do live webcast and so on are all come out in recent years, from this perspective, may even external situation changes, we won't repeat 2008 financial crisis, this huge swings in the job market. The third point is to leverage began to get control of the firm, as the recent talk about the shadow Banks are not standardized credit, do the framework of the implementation of the step by step, we see China's macro lever is the ratio of GDP has stabilization, we estimate is around 76%, there was no further increase, with the 07, 08 09 due to financial crisis, we adopted some or deal with the years, rising rates of 15 to 20% a year compared to now have greatly improved, I think if you see this policy suggestion is very clear, may be like the several colleagues said to maintain concentration, Even to the palm may be should more to finance tax cuts as the main tool, what about this case, probably we'll have a small recovery in the macroscopic leverage, we estimate that about rising by about 3% next year, but it is more a more transparent controllable tool, for example, the central government to issue bonds to support the reduction of enterprise income tax and value-added tax and local government infrastructure special bonds at least not reopen the non-standard this credit field, let it be insurrection investment so this case I think toughness is increased for a long time, so I just a simple introduction to this, thank you.

WANG Yuan, IFF Academic Committee Member, Former Chief Economist of China Development Bank:

2018 is a very important year, and everyone review the 10th anniversary of global financial crisis and 20 anniversary of Asian financial crisis, or forty years of China's reform and opening up, so no matter from which point of view this is very important for a year, because we have recently a lot of very frequent activities in the review of China's reform and opening up for forty years, these forty years, all of us in the discussion we open these forty years, we have done is really, its reform is the most important point where, in fact it is not just important to the economy of China, is now because of the forty years since China's economic reforms, China's economic growth made it an insignificant role in the global economy of such an economy, has now become the second largest economy, so its position in the global economy and the relationship between the major economies is particularly important, especially this trump President to take a series of unilateral American policy, with China, China, of course, some problems do exist between Sino-US trade, there are some friction, but how to deal with this problem, a problem become very impressive in the world, of course, we in solve the problems of the global trade friction, Especially of Sino-US trade friction problem you may have to consider from the perspective of their analysis this problem, but I very much agree with the earliest Mr Aziz's speech, is to think about the question, whether we light from our own one, say, to think in terms of economic development, to solve the problem of our own country, or more from a global market, the question to think in terms of globalization, deregulation and Mr. Barroso also mentioned a very important and is the world we now is not a perfect world, there are many, many places need to improve and reform, The improvement and reform are to see other people's problems, pointing to other people's problems to reform, and we also want to have a very prudent, seeking truth from facts to our own evaluation system, I think we are discussing the next two days, I suggest to consider a problem from this angle, a trade war with China, of course, everyone can be said the American China trade deficit, compulsory transfer of technology, and then have to IP protection of intellectual property is not enough place for us, and there are more important to a trade war with China actually they don't have much direct relation, Is now in China to attract more foreign investment from a purely FDI to China investment from early 2000 began gradually to invest in such a country in the world, and the change of the world's major economies the relationship between the understanding of each other and positioning, we know the different between the argument or a different opinion, so it is also said to China in the area along the investment of transparency, So now I think you should reform from China, I also very much agree with a number of experts and scholars before China actually if you want to solve in the global positioning and other major economies of the relationship, I think China still needs further reform and opening up, and be sure to do your own thing and do the things is not only by his own standard, should be by global standards, and I also very agree with Nicolas, is in fact the world is now has a lot of multilateral institutional arrangements, These institutions like the IMF, world bank and WTO is it perfect, I think every country, especially the major economies should be in a positive and constructive attitude to participate in the multilateral institutional arrangements for the improvement and reform, that is likely to solve the current trade disputes, the new arrangement for further globalization, one approach may be more helpful.

ZHU Xian, IFF Vice-chairman, Vice-president of New Development Bank:

At forty-year anniversary of reform and opening up, China has grown from a low income, negligible economy in the world became the second largest economy now. thanks to the 30 years in general a favorable environment, making China's economy on the degree of today. Today I'm very glad to see a lot of the old colleagues in this occasion once business of the bank's colleague, two weeks ago I was lucky enough to meet Lin Chonggen, who took the lead to do the first batch of Chinese economic research. He mentioned in 1985 the second China economic report, the world bank did on China from a planned economy to market economy excessive market in the early time. Two questions in this report are still appliable today, one is just when it comes to the total factor productivity, the Chinese economy from the high-speed growth to quality growth, I think one important aspect no matter in terms of macroscopic and microscopic words should be more emphasis on the improvement of total factor productivity, this is a measure of economic competitiveness is a measure of the economy not just like other endogenous development, another is from a planned economy to market economy excessive process is very important. If our economy is under the condition of market competition, if in the middle of the investment to the production process to meet even from the perspective of the government budget is a relatively hard, that is, in fact the quality of our economic or investment decisions will be better.

I've just come back from India, we now mainly engaged in infrastructure in the country. Over the past three years, China's has also done a lot of infrastructure projects, though not all infrastructure investment itself will be able to drive the economic growth. The size of the infrastructure in China will be the first in the world. We need to be more selective. If you still invest a lot in that kind of traditional infrastructure, the infrastructure itself is going to be surplus and saturated, and of course, with the current technology, we're probably not going to do much traditional infrastructure. At the same time, China's economy from the past a hard economic structure to a light asset structure, the infrastructure we need is not the same as the past is, so I also put forward ideas in the discussion here we should also note that we don't have to be all in the process of investment in infrastructure to be able to pull the economy itself, itself can bring about economic benefit, because especially in economic downward pressure, people want to stimulate the economy through investment in infrastructure, but the benefit of investment in infrastructure itself should be a point to be reckoned with.