[Caixin.com] (Special correspondent Li Zengxin Li Wei Wang Li is Zhang Yuanan) At the end of January 2017, two major events occurred on both sides of the Atlantic: On January 20th, the 45th President of the United States Trump was sworn in on Capitol Hill in Washington, DC Heads of government, international organizations, business leaders, academic leaders, observers and media from around the world on January 17-20 in Davos, Switzerland, to discuss the most uncertain political environment since the 2008 financial crisis Next, how to ensure that the global economy remains on the track of growth.
The most discussed topic in the 2017 Davos Forum is undoubtedly the fear of counter-globalization triggered by the Brexit and Trump elections. How to stop populism and protectionism in almost every economic entity discussion Have become one of the focuses. From the forum theme “Leadership: Taking Advantage, Being Braveâ€, to the “angry middle class†discussion, ubiquitously rethinking the problems of global economic integration and mapping the political ecology of the world’s largest economy on the other side of the Atlantic. Variety. Among them, the topic was lifted to the peak, and the most eye-catching was the Chinese President Xi Jinping's first attendance at the Davos Forum, which was “inflated†for globalization and published a keynote speech promoting open trade and investment.
The famous investor Soros said at the Davos dinner that the existence of Trump makes it easier for the international community to accept China's leadership role. And "China's economic model can be successfully transformed and integrated into the international system, and it can be an accepted potential leader, which is in everyone's interest."
China has a role to play
With Xi Jinping's keynote speech entitled "Building a Community of Human Destiny" on January 17, he became the only head of state in the world's top ten economies to attend this forum. In the 47-year history of the World Economic Forum in Davos, he was also the first Chinese president to attend. This makes this forum a veritable "Year of China."
At the Chinese community dinner on January 18th, the President of the World Economic Forum, Schwab, personally attended the meeting and said that he was pleased to see the Chinese delegation grow stronger. He hoped that China would participate more in the Davos Forum and exert leadership.
Zhu Min, a member of the Davos Forum's credibility committee and former vice president of the International Monetary Fund (IMF), told Caixin that he had participated in Davos for more than 20 years and witnessed changes in China's topic: from discussions about China in the 1990s. It’s just trade. Later, when it comes to direct investment in China and then in the economy, financial topics are becoming more and more important, and discussions about China are becoming more and more abundant. Until this year, Xi Jinping attended this iconic event, and China has closely linked itself to the interests of the whole world and has become a real community of interests.
Xi Jinping said that China is the biggest beneficiary of globalization and the biggest contributor. China will continue to promote the process of global trade and investment opening up, and will start from its own reforms to adapt and promote the improvement of the global economic governance structure.
"Unprecedented" (unprecedented) "Impressive" (impressive) "Phenomenal" (phenometic level), these are the most commented by Xi Jinping on the scene heard by Caixin reporters.
"We should be ashamed that the world's largest communist country is calling the world to maintain free trade and globalization," said a former Swedish ambassador to the United Kingdom. In international affairs, China used to sit in the “back rowâ€, but this time it has never assumed leadership responsibility. This is a positive force in the global populism and protectionist sentiment environment.
Michel Demare, chairman of the Swiss agrochemical group Syngenta, told Caixin reporter that what impressed him most was that Xi Jinping not only said that he wanted to promote globalization, but also stressed that China would adapt to globalization through reforms. That is, "we don't adapt, but we will change it!"
Fang Xinghai, vice chairman of the China Securities Regulatory Commission, who attended the forum, believes that Xi Jinping emphasized that reform should focus on “major areas and key links†and let the market play a decisive role. This is the first time that it highlights the need to break through the difficult issues of reform and link reform and innovation with reality.
Xi Jinping promised that China will remain open to the world and ignite hope for entrepreneurs. Ma Yun, chairman of the board of directors of Alibaba Group, said that China is expected to import 8 trillion US dollars of goods in the next five years, which will help the United States achieve small-scale enterprises to export to China and create jobs for the United States.
Xi Jinping said that in the next five years, China is expected to import 8 trillion US dollars of goods and absorb 600 billion US dollars of foreign investment. The total foreign investment will reach 750 billion US dollars, and the number of outbound tourism will reach 700 million. This will provide countries around the world with a broader market, more abundant capital, more abundant products, and more valuable cooperation opportunities. For the industrial and commercial circles of various countries, China's development is still an opportunity for everyone. The door to China is always open to the world and will not be closed.
While welcoming overseas investment, China also hopes that the doors of all countries will also be open to Chinese investors. Xi Jinping also mentioned that the “Belt and Road Initiative†will benefit the world. At this forum, Chinese investment “going out†and “Belt and Road†have also become hot topics.
Fang Xinghai said that China's savings rate has remained high. Although the growing middle class's purchasing power is increasing, it is impossible to "digest" this part of the savings by domestic consumption. The scale of Chinese enterprises' foreign investment will continue to increase.
In the “New Finance Debate: A New Starting Point for China's Overseas Investmentâ€, Li Xiaopeng, the general manager of China Merchants Group Co., Ltd., believes that China's “One Belt, One Road†strategy is an inclusive, reciprocal and fair national strategy, not only for Chinese companies to go global. Good carrier, and let countries along the line share China's development results.
Chinese companies' foreign direct investment (ODI) grew by 50% in 2016, the fourth consecutive year of growth. This data may have a correction in 2017. Zhang Xin, director and chief executive officer of CITIC Capital Markets Holdings Co., Ltd., believes that 2017 is likely to be a "small year" for China's foreign investment. It has made a significant increase in foreign investment for more than a decade, especially on the basis of explosive growth in 2016. In 2016, China's overseas acquisitions have repeatedly experienced high-value transactions. The logic behind this is that many Chinese companies want to borrow overseas arbitrage to identify the internal and external capital market valuation gap.
"We see a lot of transactions in the market, it is unreasonable from the valuation point of view, but Chinese companies are still buying, because 20 times P / E (price-earnings ratio) bought, back to China, 30 times sold to listed companies Go or make money." Zhang Wei said. "From this perspective, some of the policies introduced by the government are to return the market to rationality. Therefore, (foreign investment) 2017 should be a decline for 2016, but this is not a bad thing, but a good thing."
While the depth and breadth of overseas investment by Chinese companies are increasing, they often expose shortcomings of insufficient soft power and insufficient global vision. Liu Mingkang, former chairman of the China Banking Regulatory Commission, made systematic recommendations to Chinese companies. At Caixin Media's January 18th “Layout One Belt, One Road†breakfast meeting, Liu Mingkang summed up the “three three†overseas investment list for the company from strategy to financing. The first layer of this list is “clean, green, open and transparentâ€, and the second layer is what is truly completed, that is, “beyond technology, economic construction and social construction are more importantâ€. The third layer is the real investment success, or depends on "capital, capital, or capital."
“China has a lot of money, but if the funds are entirely from loans, if the country of investment can provide part of the capital, if they can participate in the legal entity of the project, their sense of responsibility will be completely different.†Liu Mingkang Say. In addition, he suggested that the project financing needs to be locked in a market-oriented way and means, and only the support of the Chinese government and foreign governments is not enough. The enterprises also need to strengthen communication through dialogue and local society, including non-governmental organizations. Communicate with all stakeholders and be transparent in time, not to cover up or whitewash the issue.
In the "New Finance Breakfast: Layout One Belt and One Road", Wanda Group Chairman Wang Jianlin said that Chinese companies should be "buy right, and they must manage well". "M&A has a lot of questions, and more importantly, it has bought." What to do in the future, how to manage, how to turn some companies into losses."
Looking for certainty
2017 is a high-risk year for the global economy, said Harvard professor Carmen Reinhart. Li Daokui, a professor at Freeman University in Tsinghua University, said that this year is a year of chaotic global economics.
Different from the technical issues of economic growth in the past, the Davos Forum has more discussion on the policy changes brought about by the changes in the political environment of developed countries, the most of which is to reflect on the prevalence of populism in many countries. Trump became a "quasi-state leader" who did not attend the forum but was everywhere.
At the “Middle Class Crisis†seminar on January 18th, the International Monetary Fund (IMF) President Lagarde said that developed countries are indeed experiencing a “middle class crisisâ€, which is reflected in the lack of trust and hope. Dissatisfaction with the status quo.
"In the past, including the organization I was in, the general consensus was that everyone wants to get a bigger cake. First, make a big cake. Even the only thing to do is to make a big cake." Lagarde said, now Obviously it won't work, and the research direction of the IMF is also extended to solve the problem of income inequality.
Policy makers in all countries must reflect on what specific policy measures are used to eliminate middle class dissatisfaction, and if there is a strong signal, let them feel it. Measures should include redistributive measures aimed at reducing income inequality, improving social security, improving education and training, and addressing the practical problems of the majority of the population with a combination of monetary, fiscal and regional localization.
The dissatisfaction of the middle class in various countries is also reflected in the extreme distrust of the government and the so-called “elite classâ€, which sounds the alarm for policy makers and also means that national governance mechanisms must be improved by promoting accountability, transparency and anti-corruption. .
Larry Summers, a consultant to Caixin Media's credibility committee, former chief economist of the World Bank, and former US Treasury secretary, said that ordinary American residents feel that the government has not done the battle for them, fighting for them, and the government is the leader of other countries. For the new immigrants who just entered, they are the masters of the refugees... "To be the master of all people is not to be the master of me!" The result of the Brexit and the US election is a concentrated expression of this sentiment.
For the transfer payments at the bottom of the income level, the average American voter thinks that they are taking care of them too much. By definition, the United States does not need more income redistribution measures.
For the protectionist measures that Trump is likely to implement, Summers said that the results are not difficult to predict, and it will definitely be "lifting his own feet", and the final price is the middle class that demands and supports this tendency. . For example, he said that Trump called the president of the US manufacturing company and asked them to cancel the overseas construction plan, which apparently left the manufacturing position in the country, but the Mexican peso caused by the depreciation of 15% in a short period of time, Manufacturing in Ohio, USA, is even less advantageous and loses thousands of jobs.
Summers believes that to resist trade protectionism, it is impossible to increase the intensity of redistributive policies. Globalization is no longer a simple import and export of goods, but a high degree of integration of the entire industry value chain. Even if 10% of the energy is placed on eliminating cross-border tax avoidance and regulatory arbitrage, it will change the perception of globalization for ordinary people.
Soros thinks that Trump will let China and Europe go closer. Trump has attacked both the European and Chinese economies, but instead has more common interests in Europe and Asia. Soros proposes to use the Asia-Pacific Regional Comprehensive Economic Partnership (RCEP) as a target for dialogue with Europe.
Anthony Scaramucci, executive member of the Trump transition team, is the highest-ranking person on behalf of the new US government at this forum. He was treated as a "star", and the audiences of the two seminars he attended were full, and the limelight overshadowed the outgoing US Vice President Biden and Secretary of State Kerry.
Scala Mucci said that a by-product of the monetary policy that successfully responded to the 2008 financial crisis was "a little bit" inflation and asset price recovery. The wealthiest 3% of the population returned to the crisis before, and there were some small profits, while the wealth and income of ordinary people eventually deteriorated. Therefore, “including the so-called elites in our room can no longer be self-isolated. This requires policy responses, including interventions in the public and private sectors, tax redistribution system reforms, infrastructure construction, etc.â€
On the other side, he also became the direction of the same guests to critic Trump's position. David Rubeinstein, co-founder of Carlyle Group, said that Trump’s economic stimulus to achieve “self-balancing†is untenable and will inevitably lead to an expansion of the fiscal deficit. "In the United States, the annual deficit of 400 billion to 600 billion US dollars, on the basis of stock debt of 20 trillion US dollars, if you want to increase debt, you need to ask, how much capacity do we have to borrow?"
In addition, the US president's control over finance is far less than that of Congress, and tax cuts and other plans become legal for 9-10 months, during which the market will be full of uncertainty. Scala Mucci said that the Trump administration's economic policy has not been finalized. It is not clear what it will be, but the focus must be on improving the income prospects of the working class. "Growth is the best way to solve economic problems." 
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