Peking University, Guanghua School of Management’s 19th Annual New Year’s Forum
This report provides a window into the forum, distills its eight core themes and gives commentary on the forum’s discussions and debates.
The Key Takeaway
*China can no longer depend on the traditional investment mode and now must take a different, more innovative and market-based approach to development. Innovations in science and technology will be new economic drivers in China’s future economic growth. Reforms should focus on shifting towards a more market-based economy and promoting innovation.
?*In order to address the challenges China faces due to globalization, it should create (1) a new investment model, (2) develop its outbound foreign direct investment model and (3) internationalize the RMB.
*In order to solve the contradiction of the global equity debt problem, China should strengthen the source of equity and increase its debt, or in other words, engage in a debt to equity swap.
*On the micro level, entrepreneurs will drive future economic growth. The government should enact reforms that supports them and provides a more market-based structure.
*The future of service is Internet-based. Firms must have a deep understanding of their industry and offer quality, Internet-based service in order to compete in China’s future economy. The government should enact reforms that supports this future.
*Global sharing-based business models, increased ease of communication and mobile payments will redefine global industries and provide vitality for the Chinese market.
The Morning Session
The forum’s morning session focused on four core themes: (1) The Global Expansion of Wealth is a Bubble, (2) A New Development Ideology for a New Era, (3) Peking University’s Mission: promoting national development and societal progress, and (4) The Road Ahead: the Path of the Reform & Opening Policy.
HAO Ping, Party Committee Secretary at Peking University, opened up the forum with remarks on the significance of 2018 for China and the university. He also discussed the role that the university will play in China’s new era. HAO said, “2018 is an important year with special significance…this year’s theme ‘New Era, New Ideology’ not only embodies the spirit of the New Year’s Forum, but also China’s future direction.”
The Global Expansion of Wealth is a Bubble
CHEN Yuan, Vice Chairman of the CPPCC National Committee and the Deputy Director of the China Center for International Economic Exchanges, discussed monetary and financial policy’s role in China’s development and the issues facing the economy in the new era.
Some of China’s most significant achievements after the Reform and Opening Up policy are a direct result of financial and monetary policy and reforms. In fact, China’s monetary and financial policy has had a significant impact on China’s economic development, international financial status and the internationalization of the RMB.
Now, in this new era, China and countries around the world, are faced with a new problem- the imbalance of share and creditor's rights, which is a global problem that is more prominent in China. A shortage of equity in an economy causes serious issues in terms of economic movement.
We can see that short-term equity will become creditor's right, and long-term creditor's rights will also become equity. This is a process of transformation. CHEN offered a possible solution to the contradiction of the equity debt: strengthen the source of equity and increase the debt, or in other words engage in a debt to equity swap.
Looking towards the future of international development trends, we can see that global wealth, including capital, real estate, land, etc. is expanding rapidly and forming bubbles. This problem must be solved urgently.
A New Development Ideology for a New Era
Prof. LI Yining, honorary dean at Guanghua and renowned China economist, discussed the issues facing many developing countries. While foreign investment and open markets increased the GDP rate, it has not fundamentally changed the system. Thus, Prof. LI Yining argues that without systematic changes, these countries become stuck in a low-income or middle-income trap.
Why? He argued that leadership in those countries stick to the ‘old path,’ which is insufficient to address social and economic disparity, instead of taking the risks of forging a new development path. This is what he defines as ‘path dependence.’ Prof. LI Yining argues that path dependency is dangerous for developing countries.
In the case of China, the country can no longer depend on the traditional investment mode and now must take a different, more innovative and market-based approach. However, this is easier said than done. The new development model does not have a defined structure and important reforms must be enacted in order to ensure that businesses are the main drivers of the market, the basis of the new development model.
Further, Prof. LI Yining argues that the reform of the new development model must rely on innovations in science and technology. Innovations in that space can produce new products, as well as increase capacity and functions in the economy.
Reforms cannot be implemented slowly. The economy is moving forward and new firms must compete, at home and abroad, or be eliminated. The transformation in the new economy is about competition. Thus, firms must rely on cultivating talent and increased efficiency in order to forge the new path ahead.
Peking University’s Mission: promoting national development and societal progress
President of Peking University, Prof. LIN Jinhua, looked at ahead at the future of Peking University and the role it will play in the nation’s development.
“Peking University has made significant contributions to the development of China’s economy and the growth of its entrepreneurs,” Prof. LIN Jinhua said. As a world-class institution in China, the university sees its role as an integral part of the nation’s economic and social development and progress.
During the 19th Party Congress, the government defined a clear future- to become a powerful, socialist modern nation by 2035. Against this backdrop, Peking University has also defined its future path- to become one of the world’s top universities by 2035. In order to achieve this, Peking University will need to draw from its advantages, which Prof. LIN defined as: the great rejuvenation of China, open and inclusiveness of the Chinese culture, and China’s significant human resources.
The Road Ahead: the Path of the Reform & Opening Policy
Under the theme, “The Road Ahead,” the speakers discussed three subthemes in the morning session of the forum: (1) Reform of the Economic system: liberating society’s productivity, (2) Economic Reform: promoting market vitality and (3) China’s Entry into the WTO & the Awakening of Internet Consciousness.
Reform of the Economic System: liberating society’s productivity
GAO Shangquan, Former Honorary Chairman of China Society of Economic Reform, and SONG Zhiping discussed the reform of China’s economic system. In their discussion, they emphasized reform as integral to business survival. As SONG Zhiping put it, “the market doesn’t believe in terms, who is the first to reform is the one who will survive.”
Economic Reform: promoting market vitality
XU Xianping, Counselor of The State Council of the People‘s Republic of China andCHEN DongshengYU Minhong
China’s Entry into the WTO & the Awakening of Internet Consciousness
The Afternoon Session
The Nexus between Thought Leadership &
Prosperous Development, (2) Globalization & International Opportunities Under Reform &
Opening Up Policy, (3) The Past 5 Years of Rapid Development: Overcoming Challenges &
Seizing Opportunities and (4) China 2035, the Chinese Dream.
The Nexus between Thought Leadership & Prosperous Development
Globalization & International Opportunities Under Reform & Opening Up Policy
Past 5 Years of Rapid Development: Overcoming Challenges & Seizing Opportunities
Chairman of Hikvision, echoed hat sentiment. He pointed out that for Chinese firms, innovation is an important norm. He also suggested that all reforms must be centered around real entrepreneurs who are driving innovation in the country.
China 2035, the Chinese Dream
Welcoming a New Era in Chinese Sports
Looking towards at China 2035, LI Ning, Founder and Chairman of Li-Ning, talked about the future of the Chinese sports brand. In his opinion, two elements are key: (1) R&D in sports and (2) the application of new technologies in sports products. LI Ning’s company has already began innovating to that end. They established their own sports research center and have strong R&D capabilities. As a former Olympian, LI Ning is passionate about the future of China’s sports industry and believes that people in the city will increasingly engage in sports activities. Thus, the Li-Ning brand will continue to invest in the industry and promote sports development in China.
Defining a Better Life for the Future
LI Bin, discussed the future of the car industry, particularly in the emergence of autonomous vehicles and the increased integration of technology in cars. He posed an interesting question during the forum: Is a car a product or a service? In the future, the line between products and service will be blurred. As tech giants, such as the BAT and Google, invest millions in the car industry, there will be an emergence of the ‘new car,’ which will be the integration of products and services for the consumer. Thus, fundamentally changing the way in which we use and interact with cars.
Global Sharing & the Travel Revolution
In DAI Wei’s, CEO of ofo, talked about the future of the global sharing industry as it relates to what he coined, ‘the travel revolution.’
DAI Wei argued that people have always had the same relationship with transportation- whether it is a bike or a car, or a train or a plane. People want transportation that is fast, cheap, confortable and safe.
The travel industry, DAI Wei believes, is ripe with opportunity.
In combination with the sharing model, transportation has experienced increased efficiency. In China, a single-owned bicycle was used for an average of 5 minutes per day. Under the new sharing model, a bicycle can be used on average for 80-100 minutes per day for a total of 20 trips. This eliminates waste and increases the efficiency of the transportation mode. It is also convenient for the consumer.
It also has increased trust among consumers. When DAI Wei first started, many people were skeptical. They told him that the site would be a ‘tragedy,’ as people would not care for a shared commodity. Yet, this hasn’t been the case.
Now, ofo has become a part of a global sharing revolution with service in more than 20 countries and 50 cities around the world. As of today, they have provided more than 10 million trips abroad.