Asia-Global Dialogue 2013 was held on December 5 and 6, 2013 in Hong Kong. More than 400 international participants from a broad range of sectors within Asia and beyond took part in the conference. Participants explored a variety of subjects including what business and policy makers should do to drive future growth and how regulators can better recognize risk factors in lending.
Distinguished speakers at the event include Bank of Israel Governor Stanley Fischer, Former IBM Chairman Sam Palmisano, HSBC Group Chief Executive Stuart Gulliver, SEB Chairman Marcus Wallenberg, AIA Group Chief Executive and President Mark Tucker.
Re-thinking Growth – Are Business and Policy in Step?
Can a Global Architecture Work for Finance and How Relevant is this to the New Problems We May Face?
Asia’s Financial Markets – In Search of a Better Regulatory Model?
Asia’s Re-balancing Act: An Opportunity for Global Business
Innovation and Business Opportunity – Can Asia Lead?
Boosting Trade in a Global Economy – Can Multilateralism Win the Day?
What Matters Most for a Sustainable Asia?
Evolving Growth Models
Asia’s Sustainable Development
Asia Finance 2020
Global Value Chains
Long Term Global Investment – A Changing Role for Families?
From Snake to Horse – Saddling Up for 2014
Partnerships for the Future of Sustainable Growth
In Conversation with Marcus Wallenberg
Founding Chairman Victor K Fung set the stage by referring to four recent, defining events whose significance went to the heart of the Fung Global Institute’s four research themes and the AGD 2013 agenda
Opening Dialogue: Panelists explored what business and policy makers should do to drive future growth
Keynote Address: Stanley Fischer discussed post-crisis financial reforms
Plenary Dialogue: Panelists discussed how regulators can better recognize risk factors in lending and how to balance regulation with the welfare of the wider economy
Keynote Lunch Dialogue: Five years into the global recovery, every region faces its own challenges in returning to balance. This Lunch Dialogue focused on key global trends with particular relevance to Asia
This Plenary Dialogue discussed whether Asia can take the lead in global innovation:
Plenary Dialogue: With the multilateral system seemingly unable to deliver much progress on further trade liberalization, this Plenary Dialogue discussed whether “mega” preferential trading agreements being negotiated outside of the WTO are the right way forward
With 40 per cent. of the world’s population, Asia’s sustainability challenges are immense. Drawing from their experiences in Asia’s two most populous countries, the panelists discussed the particular challenges facing China and India
Parallel Breakout Sessions
The Foshan Story: A Chinese Lens on State and Market
Industrial powerhouse Foshan has important policy lessons for the rest of the country as China begins its transition to a more market-driven economy. As part of the Pearl River Delta (PRD), but lacking the advantages that came with Special Economic Zone status, Foshan could not develop itself along the prescribed track taken by its neighbors. In Foshan, the State has for decades assumed a support role for businesses, with more openness to experimentation in providing infrastructure and encouraging domestically-oriented enterprises. The result is an economy linked into 30 global markets, along with thousands of strong local brands. Today 60 per cent. of Foshan’s GDP is generated by private enterprise. However, Foshan’s sustainability challenges are mounting.
Escaping the Middle-Income Trap – Implications of the Foshan Experience
Foshan, a city of seven million in the Pearl River Delta, has a per capita GDP of US$14,828 – well above the World Bank’s high-income threshold of US$12,616 and even above Shanghai’s per capita GDP. This was achieved without being designated as a Special Economic Zone. The panel explored what enabled Foshan to achieve this growth, and how might this be applied to other Chinese cities. The strategy that brought China this far will no longer work. Foshan’s strength came from a shift of the State away from directing the market and towards a greater focus on governance. The panel noted that the trend must be extended across China if the country is to develop a competitive market in which innovation and high-value industries can grow.
China’s Latest Reforms – A New Growth Model
The Third Plenum of the 18th Party Congress outlined a greater role for the market in China’s economy. The ambitious reforms are destined to fundamentally remake China’s economic system. The panelists noted the influence of domestic departments and think-tanks on the document, which is a roadmap aimed at moving the economy to the high-income class. At the core, the market as the “decisive” factor in directing the economy. One panelist saw it as curtailing the influence of the government in the market, while another saw the introduction of the word “governance” to state actions as signaling a new emphasis on the rule of law.
Re-thinking Competitiveness, Economy and Environment
The past three decades of fast growth in much of Asia has had severe impact on the environment. Many now accept that protecting the environment and undoing much of the damage already caused is essential. The panel noted that environmental consciousness is growing, but not fast enough. “Others are not doing enough,” seems to be the common refrain. However, governments that have to provide services such as water, electricity and transportation with dwindling natural resources are realizing their responsibilities. Cooperation with all sectors has slowly begun, but there is a long way to go.
Re-thinking Growth and Social Development
Increasing inequality, advancements in technology and labour markets and demographic shifts are shining new light on issues of growth and inclusiveness. For developing Asia the concerns are especially acute, given the huge populations involved. Among the challenges are opportunities as well. The panel noted that there are several driving forces for companies doing business in the Asia-Pacific region today. Foremost are the economic headwinds as developing countries still largely depend on exports to advanced economies. Second, firms face ecological headwinds as the global requirements of protecting the environment get stricter. Third, there are headwinds of social inclusion: taking care of all the people without exception – has become an imperative for governments and businesses in general. Cambodian and Bangladeshi panelists provided ample examples to illustrate problems and prospects in their societies.
Kick-starting Asia’s Sustainable Future
Although policy and regulation can help promote sustainable growth in Asia, the private sector holds the keys for much of the financing, innovation, and implementation that will be required. The panel discussed how business leadership can help to accelerate the shift towards sustainable growth? Panelists dwelt on the successes and problems of companies that have made such efforts. The panel also noted that some companies in niche situations have succeeded in promoting sustainability while making decent profits. This rare combination might not apply across the board, but there are useful measures that all companies can adopt.
Below are highlights of the Parallel Sessons. Detailed reports from the Parallel Sessons can be found at www.asiaglobaldialogue.com
Intra-Asian Trade – The Renminbi Effect
The panel noted that Intra-Asian use of the Renminbi is growing in terms of value, lines of credit and settlements. Some 30 per cent. of Letters of Credit are now denominated in Renminbi. However, it is still a long way from becoming a fiat reserve currency – and not only because of China’s caution in pursuing full convertibility. Currently, there is a barely liquid Renminbi bond market, although the Third Plenum has set a goal of increasing the market dramatically. Currently, there is no way for institutional investors to effectively utilize their Renminbi holdings. More than 50 per cent. of mainland companies would give trading partners a discount if they could trade in Renminbi, but for the outside world there are still many challenges.
The Role of Long-Term Investors in Asia’s Growth
The panel noted that Asia has sufficient savings to finance its long-term development. However, there are very few viable investment vehicles to mobilize individual savings for long-term investment in Asia. Even in Japan, 56 per cent. of individual savings are in banks and six per cent. are in equities. Asian growth and long-term investment needs such as big infrastructure require big long-term institutional investment. The challenge is finding the way to channel these savings. The Australian model was cited as a possible example that Asia could emulate.
Asian Finance 2020 – The Search for a Blueprint
The panel noted that the Asian financial system must find new ways to foster innovation to break the region out of the role of assembler and exporter to the West. The financial system should concentrate on serving the real economy and encourage the development of small- and medium-sized enterprises (SMEs), which are nimbler and more open to innovation than bigger and older companies. The German Mittelstand – small- and medium-sized entrepreneurs – have shown the way, dominating Germany’s export market. Taiwan has successfully followed this model. China as outlined in the recent, Third Plenum, has identified SMEs as an important pillar of its economic reform.
Parallel Breakout Sessions
Global Value Chains – Responding to Policy Risk
The panel noted that geo-politics, local politics and protectionist sentiment are influencing trade policy, which impact global value chains. Multilateralism is still the best way to ensure a level playing field for all. It allows developing economies to participate on an equal platform, as opposed to preferential trading agreements that often exclude smaller countries. It also continues to serve as a bedrock for the preferential arrangements. Efforts to improve the measurement of trade should continue to receive close attention so that policy decisions are based on more accurate information on trade, jobs and value creation.
Enabling Trade in a Changing World
The panel discussed how global value chains are affected by governments either through policy action or inaction, focusing on the impact of trade barriers such as tariffs, standards and border procedures on access to markets and value chain competitiveness. Panelists noted that unnecessary trade costs can arise as a result of policy design, interpretation and administration. It is in the interests of stakeholders to address these issues because the benefits of reducing trade barriers can be significant. Panelists agreed that reducing value chain barriers would significantly drive productivity and competitiveness.
The Risks and Rewards of Innovation
There is growing attention to the role of innovation in value chain operations. The panel noted that continuous innovation is imperative for value chain competitiveness. Sources of innovation vary along the value chain, involving both consumers and suppliers. Innovation space goes beyond manufacturing technology to include service-based innovation. An innovation-friendly business environment will generate more value and jobs. The digital age has further expanded and globalized innovation space, presenting new opportunities for participating in global value chains, particularly for young or small entrepreneurs.
Panelist explored the opportunities and challenges of building resilient and sustainable family business
After a shaky start to 2013, the world is emerging from the Year of the Snake in a calmer state. Panelists discussed the outlook for the Year of the Horse
This final panel comprising leaders of established think-tanks from around the world discussed how business and policymakers need to adjust their focus to benefit growth and re-balance the economy. Asia must become the bridge to the global dialogue on the future of sustainable growth
Keynote Dinner Dialogue: Marcus Wallenberg shared his thoughts on Europe’s view of Asia and China, innovation and family business