Here’s What’s Coming Up at Day Two of the New Economy Forum
(Bloomberg) -- Day Two of the Bloomberg New Economy Forum in Singapore kicks off on Wednesday.
Hank Paulson, chairman of the Paulson Institute and former U.S. Treasury Secretary, is scheduled to start events with opening remarks at 8 a.m.
Former Federal Reserve Chair Janet Yellen will be on a panel soon after, with BlackRock Inc. CEO Larry Fink, KKR & Co. co-founder Henry Kravis and IMF Managing Director Christine Lagarde also set to speak. David Rubenstein, the co-founder of The Carlyle Group, will discuss the results of the U.S. midterm elections.
Michael Bloomberg, Lagarde and Singapore Deputy Prime Minister Tharman Shanmugaratnam are due to wrap up the event at 2:50 p.m. The forum is organized by Bloomberg Media Group, a division of Bloomberg LP, the parent company of Bloomberg News.
For a full run down of Wednesday’s schedule, click here.
Here are the takeaways from Day One:
Singapore is No Brexit Model
Singapore is not a model for post-Brexit Britain, Prime Minister Lee Hsien Loong said.
“Maybe, maybe if you look at Singapore, you might think you have some ideas that you can use, we hope so,” Lee said in an interview with Bloomberg Editor-in-Chief John Micklethwait. “But I don’t think you can take one society’s solution and just plonk it on a different society.”
While some lawmakers hope Britain can become an export-rich, low-bureaucracy economy like Singapore, Lee said one key difference is that his state spends just 16 percent of gross domestic product compared to around 40 percent spent by the British government.
Henry Kissinger, the 95-year-old foreign policy guru, had a blunt message for the packed audience of business leaders, diplomats and academics: If the U.S. and China don’t sort out their growing rivalry, things could get messy.
“If the world order becomes defined by continuous conflict between the U.S. and China, sooner or later it risks getting out of control,” Kissinger said on Tuesday.
The former secretary of state to President Richard Nixon was hopeful that a worst-case scenario could be avoided.
“The objective needs to be that both countries recognize that a fundamental conflict between them will destroy hope for the world order,” he said. “That objective can be achieved and I am, in fact, fairly optimistic that it will be achieved.”
A top deputy to Chinese President Xi Jinping said Beijing remained ready to discuss a trade solution with the U.S., but cautioned the country wouldn’t again be “bullied and oppressed” by foreign powers.
Vice President Wang Qishan, one of China’s best-known economic reformers, said trade was still the “anchor and propeller of China-U.S. relations.” He prefaced his support for talks -- a refrain Chinese leaders have repeated for months -- with a warning about the dangers of “right-leaning populism” and “unilateralism.”
Not everyone is convinced that a trade deal is doable.
“We’re going to see these two sides continue to dig in their heels,” Scott Kennedy, deputy director of China studies at the Center for Strategic and International Studies in Washington, told Bloomberg Television. “For President Trump, even though he’s signaling that it’s possible they want a deal, there’s actually no monster benefit to him economically or politically. So I think they’ll continue to do this dance and all of us will continue to watch.”
As delegates await the outcome of the U.S. midterm elections, former Australian Prime Minister Kevin Rudd had this to say about America’s withdrawal from international structures: “The world including China looks at that and says, ‘Hmm, this is different, this is new.’ We do not now know, including China, what America believes is its future global role.”
Rudd also sounded downbeat on the U.S.-China relationship.
“There is a deep realization in Beijing that there is a fundamental shift in the American take on China,” he said. “They see China no longer as a status quo power but as changing the international realities.”
Too Big To Fail
The World Trade Organization must be reformed in order to shore up the global trading system, and China has a major role to play in that process, former EU Trade Commissioner Peter Mandelson said. China’s juggernaut economy poses a huge challenge to the international trading system and the nation needs to do much more to help reform the WTO in order to avoid a “Trumpian disaster,” he said.
“The WTO has almost become too big to avoid failing,” he said.
Fellow panelist Frederick Smith, the chairman and chief executive of FedEx Corp., channeled economist Joseph Schumpeter and his theory of creative destruction, and said the “proven formula for success” for world trade is zero tariffs and barriers. He said the solution to the growing global unease about economic inequality may not lie with governments, pointing to the millions of dollars his companies are investing in staff to create the workers of the future.
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Yellen warned that “regulations are in many ways burdensome and probably need to be revisited, but now is not the time to loosen the safeguards” that were put in place after the last financial crisis. She gave a nod to the benefits the U.S. labor market was enjoying at full employment, especially for more vulnerable workers, and noted that the unemployment rate for black Americans was hovering close to an historic low.
While more companies are reconsidering their supply chains because of the trade war, moving plants out of China will be costly and time-consuming -- and it’s not always simple to find suppliers in other countries. That was one of the lines of discussion on a panel featuring company executives including John Flint, chief executive officer of HSBC Holdings Plc.
Supply chains are very complex systems and the U.S.-China trade conflict is just one variable among many, he said. Still, rising tariffs will bring pain, with Flint saying: “A 10 percent shot is digestible. A 25 percent shot is of a different magnitude.”
Marjorie Yang, who heads Esquel Group, had a different take. Her company is one of the world’s leading producers of premium cotton shirts, with production facilities in China, Malaysia, Vietnam, Mauritius and Sri Lanka.
“With this trade war, everyone is scared. That’s good,” she said. “I’m using this trade war as a shock effect. We’ve been trying to get people to change the way we manage.”
FedEx’s Smith said in an interview with Bloomberg TV that the company is in talks with some of its customers looking to move part of their supply chain out of China to other parts of Asia, such as Vietnam and Thailand.
Kerry Logistics Network Ltd. Chairman George Yeo said the U.S.-China trade dispute has accelerated the outflow of investments from lower-level manufacturing in China, a process that had already begun because of rising costs in the country.
Anwar Ibrahim, Malaysia’s leader-in-waiting, spoke of the need for authentic democracy and governance -- topical issues for a country dealing with the fallout of a major corruption scandal. The current president of the People’s Justice Party, Anwar said it would be “inexcusable” if Goldman Sachs Group Inc. were complicit in the scandal surrounding state investment company 1Malaysia Development Bhd., calling it a failure of governance by financial institutions.
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