Tang Min: International chaos is frequent, what should China do?

Tang Min: International chaos is frequent, what should China do?

Source: Zhenghe Island

Author: Tang Min

Introduction: On December 29th, the first China-ASEAN Entrepreneur Forum • 2017 Zhenghe Island New Year Forum was held in Xishuangbanna. Mr. Tang Min, a State Council counselor and economist, delivered a keynote speech at the forum that morning. The following is the full text.

Tang Min: Thank you for inviting me to give a speech. My topic is "New Opportunities for Cooperation between China and ASEAN under the International Chaos."

The upcoming 2017 will be a year of black swan dance, a point we have never seen before, and a very important turning point in human history. In this turning point, I feel that our government and entrepreneurs must be prepared to deal with this new change and new trend.

In this group of black swan, first of all, the new US President Trump came to power. In another 20 days or so, Trump will begin his road to the US president. He is a businessman president who has never experienced and never seen in the past few decades, and his team is also a group of very wonderful people. The team, their emergence, the policies and various measures they will take may make us feel the appearance of a black swan again.

In the history of the United States, a wrong policy often causes a big crisis in the United States itself and even in the world. Let us review the history of the United States. This was also the case during the Great Economic Crisis of 1929, when the new president of the United States, President Hoover, came to power. This president had a bit of a relationship with China. He was the first to start a mining engineer in Kailuan, and later became a US business. Minister, later elected to be the president of the United States, February 1929 is the time when the world economy is in full swing and development is very good. By October of 1929, Wall Street stocks had collapsed. It was normal for a stock market to go up and down, including a big crash. Why did it cause a 1929 crisis? Many historians came back to study this history, saying that after the Wall Street crisis of 1929, the United States adopted an unprecedented policy of trade protectionism in May 1939. The United States has raised tariffs by 40% at once, and it has also begun to protect the interests of Americans and revitalize the US economy.

However, this protectionism was immediately countered by major countries around the world, and 33 countries around the world quickly raised tariffs, resulting in just two to three years, because of this sudden trade barrier, international trade. The total was reduced by 2/3. The United States has not received any benefits. The United States’ foreign trade has also decreased by 70%, and its GDP has decreased by one-third. The US automobile industry has opened almost 100% from 1929 to 5% in 1935. This trade protectionism, This erroneous policy has not only caused great damage to the United States but also to the whole world.

Today, new trade protectionism, new anti-globalization, and a new series of policies may be introduced again. We are not so violent, we don’t know, but this trend of anti-globalization is likely to run through Trump’s policy. . These impacts on the world economy, the impact on the Chinese economy, and the impact on ASEAN will be great.

At the same time, Europe is now in the resurgence of populism, the British Brexit, the upcoming French elections, the German elections, this series of changes may cause the crisis of the EU or even the euro, and even collapse, I hope this is not the case. If the EU, as China's largest trade zone, has a big problem, it will have a very big impact on China and a very big impact on ASEAN.

The third big black swan that will appear next year is the dollar's rate hike. The US dollar rate hike and the Fed rate hike seem to be changes in monetary policy, but this may have a big impact on the world's financial markets, capital markets and the world's entire business market. Let's review history. It happened once in the 1980s. At that time, Reagan's supply school raised the dollar very high. At the beginning of the US dollar, the capital would be backed up a lot. Together with Trump's series of products to be made in the United States. The industry has brought back these policies to the United States, and the massive return of funds will bring great challenges to countries in which developing countries rely on foreign capital to achieve economic growth or survival. The interest rate hike of the US dollar has caused a rapid increase in the cost of international debt, and these countries and enterprises that have borrowed a large amount of dollars and euros in the world suddenly have huge cost increases.

In 1980, the interest rate hike of the US dollar caused a crisis in the entire Latin American country. During this rate hike, Latin American countries were caught in a serious debt crisis and could not recover in ten years. Since 1993 and 1994, the new round of interest rate hikes of the US dollar has led to the Asian financial crisis. Everyone has experienced it, and they have personally experienced this history. Many Asian countries have collapsed. This time, the new dollar interest rate hike has started again. Which countries and which groups of countries will collapse and have a big crisis during the US dollar rate hike, we will wait and see, but this crisis will come sooner or later.

Under such chaos, what should China do? What about ASEAN? Many of the spearheads point to China. Many policies are aimed at China. ASEAN is China's largest trading partner, and it may also be a fire in the city. Under this circumstance, we may have to re-examine the economic cooperation of China and ASEAN with a new angle and a new strategy, and re-examine the “Belt and Road”, which is big in the new international economic environment, international trade environment and international capital market. In the case of changes, how can we strengthen cooperation. Of course, whether it is China or the ASEAN countries, we must first protect ourselves, tie our fences, do a good job in the domestic economy, and then further strengthen cooperation.

In the past ten or twenty years, China-ASEAN has indeed undergone tremendous changes in cooperation. In 1991, China-ASEAN trade was only 9.1 billion U.S. dollars. Now it is nearly 500 billion U.S. dollars, with an annual growth rate of nearly 20%. This speed will continue. It is predicted that China-ASEAN trade may reach 1 trillion US dollars by 2020. Of course, this means that if the world economy is still largely in accordance with the current situation, if there is a big crisis of sex, it will be another matter. However, China-ASEAN is likely to need more cooperation than ever before, and we need to work together to resist the emergence of a new big crisis. In 1997, ASEAN was greatly affected by the Asian crisis, but today's ASEAN is completely different from ASEAN in 1997. The ASEAN exchange rate has been very flexible, and there will be no such situation at that time. ASEAN's foreign exchange reserves. It is also very strong and can withstand a crisis of more than medium and above. Of course, we don’t know what a bigger crisis is, but in general, the current economic situation of ASEAN is much better than that of 1997. China and 1997 The year is completely a country that cannot be compared to the Japanese. In this case, how can we further increase cooperation, we have to re-examine and study with a new perspective.

No matter how to do it, the “One Belt, One Road” initiative should be promoted first, including the China-Laos railway that has just been signed and is being built. It will open the entire ASEAN channel through Jinghong and will be fully operational by 2020. . And the investment method is very interesting. 40% is government investment, of which the Chinese government takes 70% and the Lao government takes 30%. This is the first time the Chinese government has taken the big railroad. The remaining 60% is carried out by private investment in China and Laos. This is a new model of infrastructure, and now a series of projects are under construction or under planning. The infrastructure is good, and the entire trade and environment will undergo great changes.

In addition, we are now vigorously promoting the development of a series of high-tech, new models, and the entire world economy and trade are also changing. Take the example of cross-border e-commerce that we are familiar with, this year's growth rate reached nearly 30%. As we all know, our import and export trade is negative growth this year, but cross-border e-commerce maintains a 30% growth, and the scale is not small. The cross-border e-commerce trade volume has exceeded the total import and export volume of China in 2002. Such a large scale, while growing at such a rapid rate, is a change in the new economy in the new economy in the new situation, there are huge opportunities. Now, if we accelerate the construction of infrastructure, including some new economies like cross-border e-commerce, the ASEAN cooperation can be further developed. Here, civil cooperation is particularly important. Today, China-ASEAN is mainly engaged in the discussion of entrepreneurs, and it is particularly important to conduct discussions among entrepreneurs.

Zhenghe Island should play a very important role in this process to increase the candid dialogue between entrepreneurs and the private sector, and not only dialogue, but also cooperation, and seize some opportunities, which is especially important. . Zhenghe Island may take a long time to pay more attention to the opportunities of developed countries in Europe and the United States. Now that the market environment in Europe and America has undergone some major changes, we will start dialogues between Chinese and ASEAN entrepreneurs, including think tanks. Kind of dialogue, I think the meaning is very significant. Don't think that we already have the ASEAN Expo in Guangxi and Nanning. We already have various mechanisms. Are these unnecessary? Not at all, but how to grasp specific opportunities in this way, how to use the perspective of entrepreneurs to examine, observe, and study problems is even more important in the days when a black swan flies.

Therefore, I congratulate the convening of this conference and congratulate us on being able to keep such a conference open for five years and ten years, and slowly form a mechanism in the international economic environment under change and the domestic economic environment under change. Seize the opportunity and achieve greater results. thank you all!