Asia will be a bright spot for a world that’s otherwise facing wide-ranging risks, Chinese officials told the Boao forum, where top speakers are set to include Chinese Premier Li Qiang.
(Bloomberg) — Asia will be a bright spot for a world that’s otherwise facing wide-ranging risks, Chinese officials told the Boao forum, where top speakers are set to include Chinese Premier Li Qiang.
Government officials and business leaders are meeting this week on the tropical island of Hainan for the annual conference, with discussions to tackle topics ranging from supply chain disruption to the post-Covid economic recovery to clean energy and geopolitical tensions. Billed as an Asian version of the World Economic Forum, the conference kicked off Tuesday and is slated to run through Friday.
Li will deliver a keynote speech at the conference Thursday, while Singapore’s Prime Minister Lee Hsien Loong, Spanish Prime Minister Pedro Sanchez, Malaysian Prime Minister Anwar Ibrahim, IMF’s Managing Director Kristalina Ivanova Georgieva and Ivory Coast Prime Minister Patrick Achi will also attend.
What to Watch:
- China’s premier Li Qiang is scheduled to address the forum Thursday
- Chinese deputy central bank governor Xuan Changneng is slated to speak on a panel about carbon neutrality on Wednesday, while Zhao Chenxin, deputy head of the National Development and Reform Commission, the nation’s economic planning agency, will speak at a panel about the global economic outlook
- Lu Lei, deputy head of China’s State Administration of Foreign Exchange, will join the CEO of DBS Group and a Goldman Sachs executive on a panel about inflation and rising rates on the same day
- Also on Wednesday, there is a session about the digital economy, with panelists including a deputy chief of the Ministry of Industry and Information Technology as well as top executives from ZTE Corp., China Construction Bank, Intel Corp., Baidu Inc. and Paypal Holdings
- READ: Dalio, Cook Among Few US Chiefs Heading to China Summit (1)
Latest developments: (Time-stamps are local time in Boao, Hainan)
Mongolia Eyes 7% Economic Growth in 2023 (6 p.m.)
Mongolia’s economic growth is expected to reach 7% if China’s economy grows 5% this year, according to Mongolia’s Economic Development Minister Khurelbaatar Chimed.
China is Mongolia’s largest trading partner and its economic recovery will benefit the country, Chimed said during a panel discussion at the Boao Forum, adding that China’s gross domestic product growth is expected to be at least 5% in 2023.
Debt Trap? (5:30pm)
Jim Yong Kim, former president of the World Bank, dismissed the notion that China has pushed some countries into debt traps with its infrastructure-related lending.
“The name calling is too much,” said Kim. While it’s “perfectly reasonable to be concerned about debt,” people should refrain from using broad statements like “debt trap diplomacy” casually, Kim said at a panel discussing the Asian superpower’s Belt and Road Initiative.
Other panelists proposed that mobilizing private capital is a better solution to infrastructure financing without increasing countries’ indebtedness, especially when the world is facing growing economic challenges.
Private-public partnerships can be a right approach for developing countries, according to Mongolia’s Economic Development Minister Khurelbaatar Chimed, citing experiences of the landlocked Asian nation’s mining companies.
READ: China Becomes Lender of Last Resort for Developing Countries
Ex-PBOC Chief Warns of Risks for Global Economy (04:26 p.m.)
Former Chinese central bank Governor Zhou Xiaochuan said the global economy does not look promising in 2023, as it increasingly faces both “conventional and unconventional” growth challenges.
“Cold War mentality, conflicts and wars, economic sanctions, trade and technology decoupling are not the solution to problems. They will only lead the world to a more dangerous situation,” he said in remarks posted on Boao Forum’s social media account.
Other key points he made are as follows:
- Asia is the key force for global economic growth and sustainable development
- Despite weakened global demand, Asia will make an important contribution to growth and stability in the world
- China will bring “certainty” in a world of uncertainty by working with other Asian countries
Top Liquor Brand Eyes Biomass Power Expansion (4 p.m.)
Wuliangye Yibin Co., the world’s third-largest liquor company by market capitalization, plans to expand its biomass energy program as it seeks to reduce emissions.
The company plans to build a facility to process and burn 400,000 tons of solid waste from its liquor-making process annually, sending about 80 million kilowatt-hours a year of carbon-neutral electricity to the grid, cutting emissions by more than 100,000 tons, the company said in a report announced Tuesday at an event at the Boao Forum for Asia.
Wuliangye, which specializes in the Chinese liquor known as baijiu, already operates a facility that captures methane from its wastewater and burns it for energy, reducing emissions by 4,300 tons a year, the company said. That’s compared to its annual emissions of about 520,000 tons, according to data compiled by Bloomberg. The company also plans to boost its share of renewable energy use to 50% and reduce carbon emissions intensity by 30% by 2025.
Supply Chain Shifts to ‘Safety-oriented’ from ‘Cost-oriented’ (3 p.m.)
The global supply chain is shifting to “safety-oriented” from “cost-oriented” following the shock of the pandemic, Macau’s former Secretary for Economy and Finance Vai-Tac Leong said at a Boao Forum session Tuesday afternoon. Geopolitical tensions and sanctions are also a factor, he said.
Covid lockdowns in China pushed companies to move some of their supply chains to Southeast Asia or elsewhere, added Fabrizio Ferri, China CEO of Italian shipbuilder Fincantieri. For many manufacturers, supply chains in China are now mainly for the domestic market instead of the wider world.
With the deterioration of the US-China relationship, international clients — particularly from America — are asking Chinese suppliers if they can move, said Zhu Shihui, chairman of Vital Thin Film Materials, a Guangdong-based company that provides rare materials used in electronic displays and semiconductors. “We have no choice, as we have to survive,” Zhu said.
China should work more independently in some areas, such as certain semiconductor production, said Yao Yang, director of the China Center for Economic Research at Peking University. While there will be some near-term challenges, Chinese companies will benefit from this in the end. The entire localization of production won’t be a universal trend for industries, he said.
Consumer, Manufacturing Challenges (1:00 p.m.)
There has been little sign of so-called “revenge spending”, or the unleashing of pent-up consumption demand, since China scrapped Covid restrictions in December, according to Lin Guijun, a professor specializing in international trade at the University of International Business and Economics in Beijing. It may take one to two years for consumers to recover their income and start to feel more confident with spending, as many people suffered from reduced earnings over the past three years, he told reporters on the sidelines of Boao Forum. China will also need to import more goods and help low-income groups increase their wages in order to improve domestic consumption, Lin said.
Moving labor-intensive industries like textiles to Southeast Asian countries such as Vietnam is a good thing for China, as it helps reduce excessive domestic capacity and pushes China to upgrade toward higher value-added production, Lin said. In the longer term though, this may make it harder for the manufacturing sector to maintain its dominant place in the Chinese economy, and there hasn’t been sufficient discussion of this problem yet, he said.
Green Goals (12:00 p.m.)
Green development promises to be a key theme at this year’s Boao Forum for Asia, with panels on renewable power, energy infrastructure and the impacts of extreme weather, and leading companies from China’s solar and wind industries in attendance.
As the world’s largest emitter of greenhouse gases, China plays a key role in determining how much the Earth will be impacted by climate change. While it is expanding its fleet of polluting coal power plants to try to ensure reliable electricity supplies, it is also the top clean power producer and dominates manufacturing of clean technologies like batteries and solar panels.
Here are a few recent stories that highlight China’s key role in the global energy transition:
- China’s Rooftops Are Becoming the Key to the World’s Solar Boom
- How China and the US Watered Down a Key UN Climate Document
- China Approves New Coal Power With Capacity of Entire UK Fleet
- China Gives New Backing to Coal Even as Clean Energy Accelerates
Asian Economic Recovery Seen Accelerating, Albeit Unevenly (10:30 a.m.)
Asia’s economy is expected to grow 4.5% this year, up from last year’s 4.2%, Zhang Yuyan, an economist at the Chinese Academy of Social Sciences — a top think-thank for the Chinese government — forecast at a briefing in Boao.
South Asia should see the fastest growth in the region this year, with the rate of expansion hitting 5.4%, followed by 4.5% for East Asia, 4.1% for Central Asia and 2.9% for West Asia, he said.
Inflationary pressures for the region are expected to ease in 2023 due to recent sharp falls in commodity prices and a slowing global economy that has dampened demand.
Asia a Major ‘Bright Spot’ (10:00 a.m.)
China kicked off the Boao Forum Tuesday with a call for strengthening multilateral cooperation, stabilizing the global economy and easing geopolitical tension.
At a briefing to mark the start of the gathering — the first after the end of the country’s draconian Covid Zero policy — the forum’s secretary general, Li Baodong, told journalists that Asia will be a major “bright spot” for the global economy this year, which is reeling from a series of challenges such as geopolitical conflicts, an ongoing banking crisis, slowing growth and climate change.
A rebound in Chinese growth this year will create a positive impact for the Asian and global economy, he said. But the recovery in Asian economies is uneven as many countries in the region have been hit hard by crises in such areas as food, public health, energy and finance. Some countries have even fallen into debt trouble.
“We hope to seek certainty in an uncertain world and promote solidarity and cooperation among countries around the world to better meet the challenges,” Li said.
–With assistance from Phila Siu and Will Davies.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.