After a year full of economic shocks and turbulence, the global economy is heading into 2023 with record-high inflation, a seemingly inevitable recession and uncertainties in many aspects. Yet when the prospect seems all bleak and gloomy, many believe there is brightness and opportunities await. In the opening session of the Asia Global Dialogue 2022, thought leaders in industry, government and academia shared their views on the outlook of the global economy in 2023.

Nobel laureate Michael Spence argues that the world economy is going through a transformation driven by the rapid development of technology. In the coming decades, digital economy, health and life science as well as energy technology will be the gravity center of growth. Not only does technology have the potential to significantly boost productivity level in a world where the labor force that once seemed inexhaustible is struggling to catch up with the constant growth of demand, it may also create the best space for great powers to work together.

While geopolitical tensions and competition between great powers are unlikely to stop any time soon, all panelists agree that globalization is not dead but taking another form. “It’s just like marriage”, says CEO of Hong Kong Securities and Futures Commission Julia Leung, who argues that in a global system where countries are so connected and interdependent, decoupling and isolation are simply too painful for everyone.

The discussion was centered around the matter of the utmost importance for human beings and planet Earth: climate change and a sustainable future. Many countries in 2022 have witnessed firsthand the effects of climate change and the consequences of downplaying of it. Yet despite the urgency, the world still does not have a solution for it. In this session, moderator Andrew Sheng invited panelists from the financial sector to share practical plans and actions that help mitigating climate change.

Barbara Meynert believes that the financial sector needs to re-examine the existing institutions and rules to adapt to the new era of climate challenge. She established a social enterprise that aims to provide global connectivity for SMEs so that they can get the knowledge, talent and technology they need to transit to sustainable growth.

Similarly, Sally Chen of Bank of International Settlement noticed that many people, especially the young, the poor, and women, are excluded from loans and other financial tools because they lack the collateral that traditional banks require. Without capital and financial tools for a wider population, transition to green growth will be impossible to achieve. The solution to that, Chen believes, lies in financial innovation, a great example of which is the booming virtual banks in Asia which leverage big data and digital assets to allocate capital to smaller borrowers. 

The first penal discussion of the night session shed a light on the issue of inequality. As a widely acknowledged international financial center, Hong Kong has always been actively engaged in addressing financial inequality and other challenges. Moderated by AGI chairman Victor Fung, panelists shared their experience leveraging financial tools and regulations to reduce inequality as well as thoughts on how Hong Kong’s financial sector can do to increase inclusiveness.

In a time when green transition is happening in every sector, banks and investors have the tendency to reduce financing to carbon-intensive industries such as automobile, energy and real estate. However, Ma Jun underlined the important role of transition finance is crucial for these sectors. Without an ample supply of capital, carbon-intensive sectors will not only have trouble adopting a sustainable path, but their sluggish development will also hold back the efforts of other sectors.

On a similar note, Eddie Yue from the HKMA also stressed the need to improve inclusiveness as the economy moves toward a digital era. When large companies are exploring cutting edge technologies for lower costs and more sustainable growth, Yue said the HKMA is working with research institutes and universities to develop digital infrastructures for SMEs so that they can have same access to technologies and information necessary for their transition.

Jennifer Zhu Scott started with an overview of the current landscape of increasing localization of data regulation. She pointed out the need for big powers to focus on addressing globally shared problems. James Fok then talked about the rising levels of inequality and its global impact. He argued that deglobalization would greatly dissatisfy people after globalization significantly raised living standard for many. He indicated an urgent need to look at the imbalance driven by the structure of the global financial system, particularly the US dollar-centric global monetary system.

Andrés Velasco pointed out that deglobalization is a complicated myth and largely a political issue, and complete capital mobility is not necessarily a great asset of the global economy. Lastly, Fred Bergsten emphasized the importance of the potential restart of communication between the US and China, with positive anticipation looking back on President Xi and President Biden’s meeting at G20. He also suggested functional decoupling of security issues, value issues, and economic issues so the two countries could achieve economic collaboration.

Closing Remarks