(Yicai Global) July 2 -- The World Economic Forum's summer gathering, dubbed the Annual Meeting of the New Champions, is focusing on the fundamental economic changes brought about by globalization in a digital world, known as Globalization 4.0.
The Summer Davos Forum kicked off yesterday in China's northeastern coastal city of Dalian in Liaoning province. Over 1,900 leaders from government, business and academia are meeting to focus on ways to adapt to the new era of globalization through innovations in leadership and methods of cooperation.
Environmental challenges, regional competition, problems of economic disparity and technological reforms are important issues facing every country.
"As unstable and uncertain factors are increasing globally, the international community looks forward to hearing China's voice and having in-depth conversations with the country," said David Aikman, the head of the WEF's China office.
Many important meetings and seminars were held yesterday, including a sub-forum on the topic of How China Shapes the Future of Finance, which was hosted by Yicai Media Group.
Risks and Uncertainties
After the financial crisis in April, the International Monetary Fund revised down this year's global economic growth forecast to a new low of 3.3 percent. This is due to increased tension in the international trading arena, growing economic uncertainty and other factors. The World Trade Organization has also dramatically reduced this year's forecast for global trade growth to 2.6 percent from 3.7 percent.
Most participants at the forum believe that uncertainty and risk in the global economy this year is particularly high.
Risk is on an upward course this year, largely stemming from the increasing possibility of a so-called Hard Brexit by the UK, said Zhu Min, head of the National Institute of Financial Research at Tsinghua University and former IMF vice president. Global trade frictions are still likely to have many twists and turns and the associated risk will probably continue to rise, he added.
The economy and the financial sector could also take a hit. Actual growth of the US's gross domestic product reached 3.1 percent in the first quarter, but most economists think that such a rate may slow in the second quarter while Zhu believes US economic growth will further decline in the third quarter and that for the entire year it will remain between 2.3 and 2.4 percent. There is also the possibility of a further rate hike by the US Federal Reserve, he added.
The proportion of people who believe the global economy will worsen increased to 57 percent this year from 33 percent a year ago and only 13 percent believe that things will get better, while a year ago 33 percent thought so, according to a survey by US management consulting firm McKinsey & Company. This growing pessimism can be put down to changes in the global power structure, shifts in consumer groups, the rise of populism worldwide, the deteriorating state of the environment and other issues, according to Kevin Sneader, McKinsey's global managing partner.
But participants at the forum are still optimistic about China's economic prospects.
China's general economic trend is still very strong and will continue to be strong as long as employment remains high, Sinochem Chairman Ning Gaoning believes. The economy is readjusting towards a more balanced path, and increasing individual consumption continues to spur it on, said Asian Infrastructure Investment Bank Vice President Joachim von Amsberg.
WEF participants are greatly interested in the opportunities presented by investment in high technology and ways of adjusting to the changes brought about by this field.
What investment opportunities will the Green Belt and Road Initiative bring to China? Chinese companies will actively take part in a large number of environment-related projects taking place in countries participating in the Belt and Road Initiative. For example, the development of wind, solar and other renewable energies, the development of liquefied natural gas, liquefied petroleum gas and other clean energies, as well as the building of public facilities connected to environmental protection, such as factories for waste incineration. These projects will save energy and accelerate local economic growth, said Linda Lin, a managing partner at KPMG China.
China will also more actively collaborate with third-party markets as it grows into a technologically-advanced nation. The country will bring a large number of advanced technologies to countries participating in the Belt and Road Initiative to help them raise production efficiency and reduce energy consumption during manufacturing processes, Lin told Yicai Global.
When China focuses on high-tech investment, it will actively embrace participation from foreign high-tech firms into the sector.
The Chinese government announced on June 30 that it will lower the threshold for admission to the agriculture, mining and manufacturing sectors and support more foreign investment into high-end, intelligent and green manufacturing and other fields, such as adding core components to fifth-generation mobile networks in the electronic information sector.
The autos sector will represent smart manufacturing as policies that encourage foreign investment in the high-end manufacturing industry come into play. The introduction of overseas capital mainly helps to further internationalize firms, enabling them to attract more global resources and seek more foreign partners, according to Shen Hui, the founder, chairman and chief executive of Chinese electric vehicle startup WM Motor.
China's financial market still faces brand-new internal and external challenges brought about by changes in the global situation. The Chinese market for derivatives has been able to hedge against the difficulties that companies face in this environment, in the opinion of Dalian Commodity Exchange Chairman Li Zhengqiang.
The development of the country's banking sector also faces unprecedented challenges with the enormous changes in both the domestic and foreign financial sectors and the huge transformations that new technologies have brought in recent years.
Internet-based thinking has greatly challenged the conventional logic of banks, according to Huang Yi, vice president of China Construction Bank. He added that he thought the two scenarios currently under debate -- when fintech's growth will replace the conventional banking business and whether large tech firms will replace banks or not by entering the banking sector -- are both possible.
The new fintech subsidiary China Construction Bank set up in April last year soon garnered over 200,000 clients from its 100 million customers who can be granted loans without needing credit, Huang added. Based on such a system, CCB will continue to transform its fintech, banking and other financial services, he said.
Editor: Chen Juan