Overview of Global Think Tank Summit

Overview of Global Think Tank Summit

China Center for International Economic Exchanges

The Global Think Tank Summit, initiated and sponsored by China Center for International Economic Exchanges (CCIEE), has been successfully held twice and is widely recognized both at home and abroad. Future sessions are anticipated enthusiastically. The Global Think Tank Summit has established a platform for the cooperation and communication of think tanks all over the world. This is an unprecedented pioneering undertaking for its function and influence have crossed the national borders and united the global consensus, thus making suggestions to solve global issues and contributing wisdom to promote the balanced development of the global economy.

The first Global Think Tank Summit was held in Beijing in July 2009. At the time, the global financial crisis was in full swing and the global economy was facing great challenges. It was necessary for all countries to coordinate their macroeconomic policies and probe jointly into the best approaches to handling the crisis. It was the holding of the Global Think Tank Summit that formed a significant consensus and pushed forward the coordination of the policies of all countries. Therefore it played a positive role at that critical moment.

At the end of June 2011, the second Global Think Tank Summit was held in Beijing. At this time, the global economic recovery was performing weakly and many people were confused by the world economic trend. Against the background, the Summit took the theme of “Global Economic Governance: Common Responsibility” and explored the major issues of global economic governance in an open manner, actively promoted the international community to develop a consensus on the major issues, and consolidated and developed achievements in global knowledge sharing.

To the holding of the Global Think Tank Summit, the Chinese government had attached great importance and support. In the first Summit, Chinese Premier Wen Jiabao met with the distinguished foreign participants and Chinese Vice Premier Li Keqiang attended the opening ceremony and delivered a keynote speech. The summit attracted more than 900 representatives from more than 60 countries and regions and international organizations, including more than 150 foreign dignitaries, former politicians, government officials, diplomats, and representatives of the World Bank, International Monetary Fund, United Nations Conference on Trade and Development and the World Intellectual Property Organization, 450 Nobel laureates in economics, and well-known domestic and foreign think-tank representatives, experts and scholars, 200 Chinese and foreign entrepreneurs (Fortune-500 enterprises included), and 150 Chinese and foreign media representatives.

In the second Global Think Tank Summit, Chinese Vice Premier Li Keqiang met with some of the distinguished foreign guests present and made a keynote speech at the summit. Dr. Henry Kissinger, former U.S. Secretary of State, Lord John Prescott, former British Deputy Prime Minister, Grzegorz Kolodko, former Deputy Prime Minister of Poland delivered speeches. Ambassador Sha Zukang, Secretary General of the Sustainable Development Conference of the United Nations and Under Secretary-General of the United Nations, and Nobuo Tanaka, Director of the International Energy Agency, attended the summit and made speeches. In total, more than 800 people, including the well-known Chinese think-tank representatives, experts and scholars from more than 23 countries and regions, diplomats of various countries in China, Chinese and foreign entrepreneurs (Fortune-500 enterprises included) attended the meeting.

The open discussion adopted by the second Global Think Tank Summit focused on seven subjects and reached important consensus on the solutions to the challenges and problems confronted jointly by the world. The main points are summarized below:

I. Pool the Global Think Tanks and Improve the Global Economic Governance

The experts and scholars conducted in-depth discussions on global economic governance and solutions of the international financial crisis and proposed plenty of valuable suggestions on the joint responsibilities for global economic governance.

All countries should take corresponding social and international responsibilities conforming to their roles. Chinese Vice Premier Li Keqiang stressed that it’s important to strengthen global economic governance for the benefit of the world economy. To achieve full recovery and healthy development of the world economy, we should think seriously about the causes of the crisis and orientation of future development and take on the social and international responsibilities according to our own roles from a strategic, global, and long-term perspective. All countries should continue to carry forward the spirit of concerted efforts, cooperation, and solidarity formed during the process of tackling the financial crisis to improve and innovate the global economic governance. China, as the world's largest developing country, is willing to meet global challenges and share the development opportunities jointly with other countries all over the world.

The global wisdom should be pooled to research and improve the global economic governance. Zeng Peiyan, former Vice Premier of China's State Council, Chairman of CCIEE, pointed out that the current global economy still had uncertain and unstable factors. Under the background of world multi-polarization and economic globalization, no country or region could cope with all the challenges single-handedly and no country or region could be immune to the global crises. Therefore, it is particularly urgent and necessary to unite the global intelligence, predict accurately the situation of world economic development, research and improve joint strategies for the global economic governance, and study thoroughly long-term issues to promote the stable and healthy development of the world economy.

The world needs a consensus to cope with challenges jointly. Dr. Henry Kissinger said that the current world situation is very serious and we are faced with many complex challenges. Structural change in the global economy is a long process. It took a long time for the conversion from GBP to USD and political aspects were involved in such a process. Under the background of economic globalization, the world needs to jointly cope with challenges and overcome the uncertainty of the economic system and the risks incurred.

The United Nations should play a greater role in global economic governance. Ambassador Sha Zukang, Secretary General of the Sustainable Development Conference of the United Nations and Under Secretary-General of the United Nations, said,  ”Global economic governance is the top priority of the UN's work schedule. Recently, the United Nations General Assembly passed a resolution on global economic governance, which stressed the inclusive, transparent, and effective multilateralism. Any global economic governance must meet the following conditions: First, the say of all parties, especially the least developed countries should be ensured. In particular, the poorest countries, should have more say. Second, efficient policy coordination should be ensured so as to improve the effectiveness of emergency response. Third, its legitimacy should be based on a broad and inclusive foundation. The United Nations is the most comprehensive and legitimate institution meeting the above three conditions. While addressing global issues on behalf of the entire international community, the United Nations has unparalleled appeal and a broad mandate. Currently, the United Nations has taken action to strengthen the correlation and effectiveness of international coordination in the environmental, economic, and social areas. For example, the United Nations World Summit in 2005 established a Ministerial Conference and established the biennial Development Forum under the framework of ECOSOC. These new mechanisms have promoted dialogue and provided the opportunity for the review of policies among various parties. For another example, in the 2012 United Nations Conference on Sustainable Development, one of the themes of the Rio +20 Conference, the specialized agencies of the United Nations will participate in the economic, social, and environmental works of the United Nations in varying degrees. Global governance in the aspect of sustainable development is one of the key parts of global governance in a broader sense and it is a necessary condition to promote a green economy, which is another important theme of the United Nations Conference on Sustainable Development. So I sincerely invite everyone to care about the process of the United Nations Conference on Sustainable Development. Secretary-General Ban Ki-moon has said that it will be the most important meeting in history. I look forward to and treasure your feedback.”

Emerging economies should play an important role. Ambassador Sha also believed that, due to the inertia of the existing international mechanisms and other political factors, these new economies have been unable to play their due role in global economic governance. Since 2007, the global outbreak of food, energy and financial crises, has resulted in a sharp increase of fund demand by developing countries. If they do not have the necessary financial support, the United Nations Millennium Development Goals are bound to fail. Most of 172 medium and small countries in the United Nations member states are excluded from decision-making in the global economy. And thus, the inclusiveness of the G20 is greatly watered down during the process of making global economic policies.

The North-South Gap is a great challenge faced in the global economic governance. Lord John Prescott, former Deputy Prime Minister of Britain believed that, during the international financial crisis, some large international financial organizations could not respond to the crisis impact properly, thus leading to the collapse of the financial system and the huge losses in all countries in the world. This shows that a completely free market in lack of appropriate supervision will result in serious problems. Although certain progress has been made for the construction of the current international governance mechanism, there is still a huge gap between the rich North and the poor South. Many underdeveloped countries in the world are faced with serious problems in development and poverty, which poses a huge challenge for the global economic governance.

II. Thoroughly Study the Inflation Reasons, and Jointly Cope with the Challenge of Global Inflation

It is believed that the inflation will not only affect the economic development but also lead to political, social and other unexpected problems. Therefore, it is necessary to form a global strategy to fight against inflation.

The excess liquidity is a direct cause of inflation, which is the second round of shock wave affecting the global economic recovery. Zheng Xinli, Permanent Vice Chairman of CCIEE, believed that, over the past three years since the breakout of the global financial crisis, thanks to the concerted efforts of all governments, the world economy has prevented itself from suffering a Great Depression taking place after the 1930s crisis, but showed signs of slow recovery. Nevertheless, the global inflation prompted by the quantitative easing monetary policy of the Fed brought new impact upon the world economic recovery. If the significant decline of the international trade in 2009 was the first shock wave of international financial crisis, then the inflation caused by the U.S. depreciation may be the second round.

Cost-driven inflation is a long-term trend, and it is difficult to solve it fundamentally by taking the measures of tightening fiscal and monetary policy. Prof. Li Yining of Beijing University and Executive Vice Chairman of CCIEE, thinks that there are four causes for the inflation in China since the second half of 2010: rising raw material prices, agricultural prices, labor costs, and land and house prices. For the demand-driven inflation, the deflation policy is effective; for the cost-driven inflation, the tightening macro policy is ineffective. Under the current circumstances, five questions must be considered for the tackling of inflation. First, what is the normal level of currency in circulation? The borrowed experience from developed countries may lead to excessive tightening. Second, how to put RMB taken up by foreign exchange reserves in the normal level of the currency in circulation? Third, we must consider the impact of current economic restructuring upon the money in circulation. Fourth, what’re the results of excessive tightening of monetary circulation? It is necessary to prevent the enterprise fund chain from breaking, for the capital chain breaking is accompanied with the product supply chain breaking. Fifth, the stagflation is never unlikely.

The comprehensive measures should be taken to change the public's expectations on inflation. Lawrence Lau, Executive Vice Chairman of CCIEE, former President of the Chinese University of Hong Kong believed that, to control the inflation in China, a series of measures and policies should be taken to change the public's inflation expectations. First, try to stabilize the long-term supply and demand in agricultural products and real estate markets. Second, prevent the short-term price increases from causing the long-term rise in inflation. Third, protect low-income households under the premise of not distorting market function. For example, help low-income households cope with electricity price increases by implementing the differentiated price subsidies. Fourth, reduce inflationary expectations by increasing productivity. The improved productivity can increase the space for higher wages, but not cause inflation. Fifth, provide reliable financial instruments for the people to prevent inflation, such as inflation-proof savings deposits. Finally, the advantages of RMB appreciation can be taken to increase imports and reduce tariffs, so as to increase the expected domestic supply.

It is the low-income countries that are mostly affected by high inflation. Bart Van Ake, Senior Vice President and Chief Economist of The Conference Board, believed that low-income countries are most vulnerable to high inflation. In the least developed countries, like other countries probably, the inflation is often caused by rising food prices, and the core inflation is not high at all. While food prices are closely linked to the prices of oil and other fuels. This is a very significant feature, particularly in the least developed countries.

III. Summarize the Lessons of Japan's Fukushima Nuclear

Power Accidents, and Take Joint Efforts to Establish the Energy Security and Nuclear Energy Safety and Utilization System.

The experts and scholars has made in-depth discussion and proposed suggestions on the nuclear power development prospect, promoting the safe development of nuclear power and strengthening global cooperation.

There are five major lessons as well as four countermeasures to the nuclear accident in Japan Fukushima. Shouwa Toyota, President of Japan Institute of Energy Economics pointed out that the Japanese government has concluded five lessons on Fukushima nuclear power plant accident and submitted the relevant reports to the International Energy Agency. First, strengthen the preventive measures for major accidents, mainly for preventing natural disasters; second, strengthen emergency measures after the major accident; third, improve the nuclear emergency response capability; fourth, strengthen the nuclear safety infrastructure; fifth, build the nuclear safety culture. For the safety of future nuclear power development, the Japanese government is considering the implementation of four plans. First, upgrade safety standards; second, establish a crisis management mechanism; third, strengthen the research and development; fourth, promote international cooperation.

After Fukushima nuclear power accident, France improved the related work. Ma Pingchuan, CEO of Asia-Pacific Electricite de France, said that after the accident in Fukushima, the French nuclear facilities should receive safety assessment within the double framework, namely the pressure test required by the European Commission and the safety review by French Prime Minister. The review report includes three aspects: first, the security measures adopted in the power plant design standards, and whether the power plant meets the current licensing approval requirements; second, the solidness of the power plant exceeding the design standards; third, any improvement to further enhance the safety of the power plant. Currently, France has developed its own action plans: first, test the existing nuclear power plants; secondly, implement the periodic evaluation; third, ensure the safety of the Action Plans after the Fukushima. By the end of this year, Electricite de France will implement resources at the national level and ensure that the 19 power plants and safety margins can be re-assessed.

Accelerate the development of safer nuclear power technologies. Louis Kahn Pang, Investor and Senior Technology Consultant of France VVR International stressed that, when it comes to the future energy demand, the nuclear industry should play a very important role. To meet the energy demand, the renewable energy sources are not enough, and the nuclear power is indispensable. The rational and quantitative methods must be employed to prove the safety and economy of nuclear power.

Ⅳ. Keep Giving Play to G20 and Pushing Forward Reform of the International Monetary System

Essop Pahad, former Minister in the presidency of South Africa, believed that G20 should support the development of those least developed countries that are poor and weak and marginalized, and that rejecting 172 developing countries is not legitimate. Wook Chae, President of Korea Institute for International Economic Policy, thinks that G20 should become the global coordinator and supervisor. Currently, as G20 is loosely organized, it can reduce bureaucracy but can not make overall plans for discussion of some important global issues, and is greatly influenced by the rotating country chair. Therefore, a permanent secretariat shall be set up.

In the case of the reform of the International Monetary System (IMS), the participants believed that it should be incorporated into the framework of G20. Dai Xianglong, Chairman of National Council for Social Security Fund, CCIEE Vice Chairman and former President of People's Bank of China, proposed that G20 should regard the reform of the IMS as an urgent historic mission and that the U.S. dollar as global reserve currency is increasingly displaying unsuitability with the world economic developments. The feasible program of IMS reform is to establish a diversified IMS with adjustable main currency exchange rates.

Ⅴ. International Industrial Transfer and Relocation Will Have an Important Impact on the Global Industrial Distribution

Wang Bo, Managing Director of Accenture Greater China Group, believed that onshore manufacture may become the trend for the international markets to transfer the industries with the developed countries in Europe and America re-returning to manufacture, which is the multinational corporations’ rapid response to local market demands and relocation in the context of globalization. Chen Jinya, Vice President of Alcoa, believed that American strategy of re-industrialization tells us the utmost importance and irreplaceability of industry to the economy of one country and that the emerging markets’ role in industrial transfer and upgrade is valued by many multinational corporations when the major developed economic entities are considering re-returning to industry. Stephen Singh, Director of Global Energy Policy of WWF, believed that the industry of the emerging countries requires low-carbon transition and that it’s very important for the developed countries to provide them with transfer of technology.

D.C. Chien, Chief Executive Officer of IBM Greater China Group (GCG), pointed out that in the past decade, the emerging market economy countries including China have become important markets of the multinational corporations and the proportion of total turnover has been rising rapidly. Tang Yadong, General Manager of European Union Chamber of Commerce in China presented the results of market survey by the Chamber on the multinational corporations in China, wherein, 79% of the members believe China economy will remain rapid growth over the next two years, 71% say that they make more profits in China than they did last year, but 46% feel prejudices of the Chinese government's policies against them.

Ⅵ. China Has Played an Important Role in Dealing with the International Financial Crisis and thus China's Role in World Affairs Shall Be More Valued

Dr. Henry Kissinger pointed out that China has played an important role in dealing with the international financial crisis: First, China's economic growth has stopped the global economy from sagging. Without China's economic stimulus policy, the whole world could face more serious economic recession; Second, China's commitment to financial stability has prevented the global market from further turmoil. China's holding of U.S. Treasuries and other bonds is of vital importance to the recovery of the global financial system. Nathan Gardner, senior consultant of Berggruen Institute, said that China is currently doing things similar to the previous American Marshall Plan, not only buying a lot of European national bonds but also rebalancing the world economy. Suman Bailey, Economic Adviser of India's International Development Center, believed that China, as the world's largest creditor nation, has assumed an important responsibility in the global economic governance. Kiyoyuki Seguchi, Research Director of Canon Institute for Global Strategy Studies believed that in the next decade China will remain the engine of world economic growth. China is Japan's most important investee. Nobuo Tanaka, Director General of the International Energy Agency says that being the world's largest energy consumer, China’s energy policy will become the warning factors of the world energy market.

Lord John Prescott believed that China's development pattern is based on practicality rather than ideology with all aspects of the reform being very realistic and avoiding the cycle of bubble and burst. Grzegorz W. Kolodko believed that the secret to the success of China's economic development rests with the joint forces of good governance, regulation and mechanism, which is an important guarantee for the success of China's market economy.

Ⅶ. The Think Tanks Play an Irreplaceable Role in the Global Economic Governance. The Exchanges and Cooperation among the Think Tanks Is the Inevitable Choice of Time Development

Chinese Vice Premier Li Keqiang pointed out, the international financial crisis breaking out two years ago brought serious blows to the world economy. At that critical moment, CCIEE hosted the first Global Think Tank Summit, where delegates raised important opinions that enlightened the solution of global issues. Facts have proved that in face of the international financial crisis and global challenges, no country is immune. In order to jointly tackle the global financial crisis, coordination of macroeconomic policies among nations has played a key role in preventing global economy from stepping into recession. Compared with two years ago, the conflicts facing the developed countries and the emerging economic entities are currently different. Some economic entities are facing multiple risks of economic downturn, finance and sovereign debt and so on while others are coping with more serious inflation pressure, which pose hidden danger for the global economic recovery. To solve these problems, the countries should continue to coordinate macroeconomic policies, strengthen global economic governance, and assume shared responsibility. The Second Global Think Tank Summit focusing on the theme of global economic governance is of great significance.

Chairman Zeng Peiyan believed that the think tanks with policy influence have contributed precious wisdom in solving problems related to human survival and development, global and regional security, and international hot issues, etc. The think tanks should consciously assume more social responsibilities for the increasingly complex economic and social problems, increase their participation in policy making, promote dialogue and exchanges among the governments to achieve macroeconomic policy coordination on the global scale. To properly solve the growing global problems, the global think tanks should establish flexible and efficient cooperation mechanisms. The World Think Tank Summit has set up a world-class platform for the Chinese think tanks to communicate and cooperate with their international counterparts and has played an important role in promoting international development of the Chinese think tanks.

Dr. Henry Kissinger believed the Global Think Tank Summit has provided an important platform to discuss the global issues. Today mankind is facing many common problems, such as energy security, nuclear proliferation, terrorism, and climate change, etc., which require cooperation to find the solutions. CCIEE led by Chairman Zeng Peiyan has initiated a very important proposal: invite worldwide think tanks to discuss regularly the common global problems and explore their solutions.

Sivaramamakrishnan, Professor Emeritus and Chairman of India Centre for Policy Research, and former Secretary General of the Indian government, believed that the think tanks should have the sense of historical mission and participate in global economic governance from the viewpoint of global common interests. Any conformism and yielding to the authorities will bring difficulty to solving the common challenges facing humanity.

The participants agreed that reforming the global economic governance requires not only the courage of the decision-makers but also human wisdom. There is no doubt that global governance needs great wisdom while the think tank has an indispensable position in the co-governance framework of government, society and market. The complicated international economic situations require all governments to solicit recommendations from the think tank to solve the problems. The communication and cooperation among the think tanks can help the globe to respond to the risks and challenges. By exchanging ideas and sharing opinions, the think tanks can surmount their own limitations and play a better part in the global governance. Global governance reform requires the think tanks and the governments to work cooperatively to put forward strategies from the viewpoint of common interests, ensuring the consistency of independence and inclusiveness, reality and perceptiveness, and criticalness and constructiveness with their judgment and decisions. The transnational cooperation of the global think tanks will become an important force for the development of the global economy.

This article is also published on the Website of the United Nations