Photo/Davos website
The World Economic Forum's 2024 Annual Meeting in Davos, Switzerland, closed on January 19, 2024, with the theme of "Rebuilding Trust."
The world is undergoing unprecedented change, and the global economy is facing challenges. This has highlighted the need for global cooperation.
In an interview with NBD, Primavera Capital Group founder and chairman Fred Hu analyzed said that the main factors behind the slowdown in global trade and investment, which is in turn dragging down global economic recovery, are global inflation risk, rising interest rates and monetary tightening by major central banks such as the Federal Reserve and the European Central Bank, and global geopolitical conflicts and uncertainty.
Regarding how to effectively promote global economic recovery, Fred Hu told NBD that "if regional economic integration can continue to make substantial progress, it will be very positive and beneficial for the global economy."
Artificial Intelligence Takes Center Stage at Davos
Artificial intelligence (AI) was the buzzword at the World Economic Forum in Davos, Switzerland, this year. In addition to U.S. AI companies, governments from Saudi Arabia and the United Arab Emirates also used the forum to promote their own AI development plans and attract investment and talent. The atmosphere was very enthusiastic, and it was a truly impressive experience, said Fred Hu, chairman of the China Development Research Foundation, after the meeting.
During the annual meeting, dozens of conferences were held on the topic of AI. In addition to tech giants such as OpenAI, Google, Microsoft, and Intel, political leaders and heads of international organizations also actively discussed investment opportunities in AI, its impact on human society, and related risk governance. AI has already taken centre stage in Davos, and it is expected to remain a major topic in the tech industry for some time to come.
OpenAI CEO Sam Altman said that human-level AI is on the horizon, but its impact on the world will be far less than we imagine.
In the view of IBM Chairman and CEO Arvind Krishna, AI will bring enormous economic competitiveness to businesses and countries, and it will also change the way people interact with computers.
Microsoft CEO Satya Nadella said that generative AI has been growing rapidly in recent years and will continue to scale in the future. He called on businesses to fully consider the benefits and potential risks of technology, and governments to take intervention measures to use technology rationally and avoid widening the gap between developed and developing countries.
Fred said that the AI technology revolution, represented by generative AI, will profoundly change the global economic, trade, and financial landscape. For all countries, it is necessary to have a sense of crisis and urgency. They should improve the entrepreneurial investment and business environment, relax regulations that are not conducive to innovation and entrepreneurship, catch up with the AI wave, and even become a leader in the AI revolution.
Regional Economic Integration, Path to Global Economic Recovery
In addition to artificial intelligence (AI), strengthening trust and cooperation at the global level was also a key focus of the World Economic Forum (WEF) annual meeting in Davos, Switzerland, in January 2024.
From the 2021 theme of "Crucial Year: Rebuilding Trust," to the 2022 theme of "Working Together, Restoring Trust," the 2023 theme of "Strengthening Cooperation in a Fragmented World," and the 2024 theme of "Rebuilding Trust," it is clear that recent WEF annual meetings have all revolved around the themes of "trust" and "cooperation."
In the closing remarks at the closing ceremony of the WEF 2024 annual meeting on January 19, WEF President Borge Brende said that the world is facing serious and complex challenges, such as climate change, economic fragility, and worsening security conditions. These problems cannot be solved "alone," and the foundation of cooperation in addressing these challenges is trust.
The United Nations released its "World Economic Situation and Prospects 2024" report in January 2024, which stated that global economic growth is expected to slow from 2.7% in 2023 to 2.4% in 2024, below the pre-pandemic growth rate of 3%. The World Trade Organization (WTO) also cut its forecast for global trade growth in 2023 in half, to 0.8%, less than half of its April 2023 forecast of 1.7%.
Fred told NBD that "the main factors that have led to the slowdown in global trade and investment, and in turn have slowed global economic recovery, are the global inflation risk, the tightening of monetary policy by major Western central banks such as the Federal Reserve and the European Central Bank, and the global geopolitical conflict and uncertainty."
He believes that the global economy is becoming fragmented. He points to specific policies such as the U.S. "Inflation Reduction" and "Chips and Science Act" as evidence. These policies, he argues, are typical of national industrial policies and protectionism. In the short term, they may attract foreign companies to invest in the United States, but they also increase the U.S. government's financial burden. Whether these policies are financially sustainable, and whether they will ultimately help the United States rebuild its high-end manufacturing industry, is uncertain.
He further told NBD that the U.S.-first industrial policy has already caused strong dissatisfaction among the United States' trading partners, especially the European Union. European countries are also trying to emulate this, which will exacerbate the trend of fragmentation in the global economy.
So, in the context of Western "deglobalization," is there a feasible path to help global economic recovery?
Fred said that in the long run, China's Belt and Road Initiative (BRI) is expected to promote direct investment, economic growth, and trade expansion for participating countries.
"Given the significant geopolitical headwinds facing globalization, if regional economic integration can continue to make substantial progress, it will be very positive and beneficial for the global economy. Regional trade and investment agreements between China and the regions of Southeast Asia, Africa, the Middle East, and Latin America will also help to find new market spaces and achieve outward opening in a new environment, which is also significant," noted Fred.
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