【陆家嘴论坛回顾】HRH Prince Turki bin Abdullah bin Abdulaziz Al Saud

图尔基亲王殿下 / 国际金融论坛（IFF）基金理事会联合主席 / 沙特国王阿卜杜拉基金会主席

Let me express my appreciation to Mr. ZHANG for his cordial introduction. I am also indebted to my colleagues and friends on the IFF.  

We are a diverse group in nationality, experience, and perspective; it continues to impress me how eager our Chinese counterparts are to invite internationals in, not simply to listen but also to engage, debate, and learn. 

There is great power in our diversity, which led inevitably to a stronger, more insightful report. Even more powerful, however, is what brings us together. We share a common commitment to the ideas and values that make economies more prosperous, and inspire young people in China,our own countries, and across this world to realize their potential and fulfill their dreams.

The IFF meets that commitment by bringing forward an important and insightful report whose value rests on three pillars: its honest account of China’s economic strength; its candor in naming complex China’s challenges in its real economy and financial system; and its analysis of policies China will pursue, over the next five years and ensuing decades, to achieve its goals.

Make no mistake: These issues are highly complex. The thirteenth five-year plan will unfold in the context of domestic reform and a turbulent global landscape. Against this backdrop, our report deals with these issues in a sophisticated and reasonably nuanced matter. Our approach stands in contrast to how the Chinese reality is often interpreted by the world’s financial media; if accuracy and analysis is the currency of those journalists, it is at risk of depreciation.

First Pillar: China’s Economic Strength

Viewed in isolation, the pledge of China’s five-year plan – to realize“a moderately prosperous society in all respects,” and double the size of its economy and per capita income by 2020 (from the 2010 baseline)” – is ambitious by normal standards. Internally, China is undergoing transformative changes and, as I will say in amoment, more lie ahead. 

But, we cannot consider China uncoupled from the global context; one with global imbalances, slackened demand for Chinese products, sectoral stagnation, depressed commodity prices, political uncertainty at least, and violent conflict at worst, all of which add to an already challenging time. Since this combination of challenges is essentially new, as Nobel Laureate Michael Spence said recently, “there is no proven roadmap for overcoming them.”

In this context, we can take confidence in China’s capacity to meet its challenges. I barely need to repeat China’s exceptional record delivering sustained growth close to 10 percent for 30 years; its emergence as the world’s leading export power; the 600 million and more Chinese who previously knew only deprivation now enjoying middle income lifestyles, to the innovations coming from in China’s private sector at an increasingly fast pace.

As we document in our report, China continues to make strides instructural reform, in diversifying its exports, from steel to services, to seeing how innovation and openness, can drive up productivity and prosperity. In our assessment of what has worked – and is working – the truth bears repeating: China has been doing well.

Second Pillar: China’s Challenges

Our report is also forthright in naming and explaining China’s challenges. Let us consider just a few.

On the real economy, the report does not shy away from detailing the high level forces that have the potential to hold back the pace of economic growth in China. Rising labor costs and their consequences are the start. Declining returns on capital investment are also a critical challenge. The private sector has cut back on its investment spending; aggregate data show that private investment has been slowing for five years, with a sharper decline in the last two. This has left the public sector, China’s state-owned enterprises carrying the ball.

The report is clear-eyed on overcapacity and increased debt burdens, and this is especially acute for old economy companies. It makes a strong case for the importance of fostering greater innovation and entrepreneurship in the economy at large. We say directly innovation needs to encompass a very broad spectrum, including the creation of new technologies.

On the financial system, the report outlines the case for reform that will optimize the flow of and allocation of capital to the private sector including:

1. Need for broad financial/credit liberalization. There is a need for private sector companies generally and more start up/innovative companies inparticular to get credit at prices more in line with their credit worthiness.

2. Risks from elevated debt, particularly in the corporate sector.

3. China aspires to be an exporter of capital rather than just an exporter of products, which will require changing the current capital account arrangement and currency management framework.

Third Pillar: Policies to Help China Realize its Goals

Recognizing these myriad challenges on both the real economy and financial side is a critical step toward being able to develop potential solutions to these issues. And the report does a very good job at highlighting and articulating the relevant issues. The question is what can be done, realistically and at scale.

On the positive side, the government in its preliminary discussions about the new (13th) 5 year plan has laid out various ideas about advancing measures to deal with these and other dynamics. Many of these make sense on the surface. That is an unambiguously positive initial step.

Apart from national security, the greatest challenge that governments face is how to expand and reform our economies effectively without sacrificing our values or the prospects of the next generation. How China meets its challenges is not just consequential for China; it matters for the stability of the global economy, and the destiny of the developing world.

In choosing how best to confront its challenges going forward, China’s investments in One Belt, One Road show that China has chosen well.  Whether this happens within a 10-20 year time frame or longer, this investment holds a key to long-term economic growth in China, and across territories with a cumulative population of 4.4 billion and 29% of global GDP, where some of our world’s poorest people live.

This ambitious plan will demand huge sums in infrastructure finance, itself a major challenge requiring new thinking.  It is therefore noticeable, as we have written in the report, that the Asian Infrastructure Bank has discussed with the Islamic Development Bank, based in Saudi Arabia, the potential for Islamic finance to serve as a source of One Belt, One Road funding. 

To realize this opportunity for the stability and insurance features of Islamic banking to benefit this important project, I have started a working group to research what is needed to make the option of Islamic finance a reality for this project. How better to serve the goals of economic growth and increasing prosperity for this generation and the next?

Conclusion

China is determined to position its economy for leadership and long-term growth. The 5-year plan – with its emphasis on supply-side reform,  on creating in China more higher value ad companies, on innovation fueled by better access to credit for private sector firms, on a larger role for technology in the economy – represents thinking in the right direction. However, even the right policies can only serve us if our leaders decide to adopt them.

What is written here makes this report strong, but the men and women who held the pen and wrote it make it stronger. Our eminent colleagues on the IFF speak with great influence in this country and deservedly so. It is my hope that in speaking directly and candidly about China’s strengths, challenges, and opportunities going forward, our thinking will inform China’s policies, bringing greater stability and growth, at a time when the world is very much in need of both.