 Ladies and gentlemen, let's come to the second part of our morning session. This one is going to be a one-hour discussion among a very strong panel about the global economic outlook from the Asian perspectives. Even though we're talking about the Asian perspectives, many of the figures we're going to see on the stage later actually have been the great minds coming from Asia contributing to the world thinking of the economy. So may I introduce to you one by one, all of them, and then to invite them onto the stage. Professor Justin Lin, Professor of National School of Development with Peking University, Professor Lin, please come to the stage. Thank you very much. Welcome. Minister Yasutoshi Nishimura, I hope I pronounce your name right, means the minister, coming from Japan State Minister of Cabinet Office from Japan. Please have your seat with your name tag. Thank you, Mr. Minister. Mr. Rintaro Tamaki, he is the Deputy Secretary General from the Organization for Economic Cooperation and Development, OECD. Thank you, sir. Mr. Zhang Xiaoqiang, Vice Chairman of China Center for International Economic Exchanges from the People's Republic of China, welcome. Thank you very much, gentlemen. Our topic is about the world economy, what are likely to be the factors that can reinvigorate and also rebalance it. Before we go to a discussion about this, I would like to have your advice and also your comments about the reports you have just heard from our colleague, Ms. Blank, from the World Economic Forum. She earlier had been expressing her appreciation on behalf of WEF to the numbers and statistics shared by some of the organizations who's represented but also on the stage with us here. So, Dr. Zhu, may I have your comments first, because she's talking about the IMF's numbers. Well, thank you and I really like the report, thank you, Jennifer, to putting everything together. We participate in the very small parts by providing some information on the joint research. I would like to emphasize one point, the point that pro-equity, pro-growth can go together. I think that's absolutely important because previously the classical thought is the growth will go away. If you have support growth, you may have inequality go along, then when you're high income level, you come back to dealing with the inequality issue. Now the newsletters say it's not necessarily been the case, pro-equity, pro-growth can go together. I think this is absolutely important policy message and a policy agenda for all the policy makers in the world. Thank you, Jennifer. All right, thank you. Mr. Tamaki from OECD. Thank you very much. Thank you very much. Turn it off. Thank you very much. The OECD is very glad to be able to cooperate with WEF on this inclusive growth report. In terms of OECD context, two years ago in 2013, we had an intensive discussion on this topic. As the first graph in Jennifer's report shows, in many of the OECD countries after the financial crisis, the inequality expanded, especially many countries which were considered to be very equal like Sweden and other noted countries, there has been the rapid widening of inequality and that attracted much of the attention. And according to OECD's view, that led to many countries and the disruption of trust to the government and public institutions. Therefore, after our discussion, we wanted to conduct a national studies. So we approached and conducted a survey of the state of inequality in many countries and we offered the opportunity as such. And the first entity or first country which wanted to do the study of inequality and inclusiveness was China, because China was to that extent very much interested in inclusive growth. So to cooperate with inequality, and this is a very tough issue. And as Jennifer's report points out, the fiscal transfer is a major element, but the transfer through taxation system, for instance, the increasing steepness of income tax. And also to increase inheritance tax system, it is not easy. Therefore, the improvement of transfer alone through taxation cannot improve the inequality alone. We have to increase the level of skill and give a much better employment opportunities and good jobs to as many people as possible. That is the ultimate prescription. Thank you, Mr. Tamaki, already giving us a lot of details about your earlier report and interesting comparison. Of course, Jennifer mentioned several countries specifically. One is China, coming from the upper middle class so-called economy. Professor Lin, very briefly from you, some comments. Well, I think a poor growth and increased growth are all desirable, but the issue is how to achieve that. And as a development economist, I think the best way to achieve that is to generate high pay decent job through dynamic economic growth. But again, how to have high pay and job creation through the dynamic economic growth, I'd like to recommend recently I allocate the new structural economics to achieve that. So if the world economic forum is interested in my ideas, maybe we can organize another session in the coming meeting about the perspective of inclusive growth through the lens of new structural economics. Well, already a lot of new reports and new ideas popping up on the stage. And Minister Zhang, very briefly from you, a very brief, I think that is really a very good report. That means the growth of development is not only the GDP increase, it should also include employment, education, income distribution, poverty alleviation, so far so on. And there will be excellent inclusive growth. Okay. Some points to add into the areas, I guess, as Minister Zhang said. And also, Mr. Minister, Japan is not being mentioned, but I'm sure it's going to be a very interesting case study as well. Thank you very much. I'm sure you know much about Japan, but growth and equality. We, Japan is a country which have achieved both in our process. And 90% of Japanese people consider as the middle class belonging to middle class. And we take pride in the fact that we've achieved both. From 1960s, 70s up to now, this remains unchanged. But 90% of Japanese people consider themselves belonging to the middle class. To that extent, we have achieved both growth and equality through education, a social security system that is basic education provided to everyone with the equal opportunities. And also redistribution function through social security system that has been the solid functioning. While we've gone into a lower growth era, so the redistribution through growth is very important. And through that innovation is important. And we are aware that structural reform is important. We are in that phase. And Abenomics is here to promote such structural reform. I'm already on our own topic, so let me just begin by asking directly the topics that to our discussion about the world economy Asian perspective. Why don't I just begin with you since you talk about the Abenomics and the Japan's economic situation? Certainly there has been a lot of interesting idea related to Abenomics. And some have been talking about how much it is interacting with the other economies, for example, that of China in Asia. So from your perspective, how much opportunity really is Abenomics has been providing to the Japanese economy, but really is it addressing the real issue of the Japanese economy reform, which is also certainly urgently needed? Thank you very much. As I mentioned, Japan had a high growth era. And achieving that, we have established an equal society, but we had lost 10 years. And through deflation, economy stagnated and the fiscal deficit expanded. And because of low growth, probably we lacked the dynamism lacking the opportunity for new innovation. And we have to change that. We have to get ourselves out of deflation and to start a new whole range of innovation. To that extent, we have to deregulate and establish a totally free society and economy. It is often talked about the Japanese agriculture, medical services, and energy. There are some regulations. We should open it up to make it possible for free economic activities. In the past three years, we have achieved a great deal of reform. Now what we are looking at is the reform of the way of working, the labor situation reform. It is difficult. We have to have a good understanding of all the people with the decreasing population. We have to increase the productivity further. So in order to increase the productivity, we have to make sure that people have a great range of choice with flexibility and exert their ability to the fullest extent, making it possible to improve their careers. So we are trying to achieve a free and open economy. So investment from abroad is increasing very much. And the entry of foreigners to Japan is increasing than tourists. It used to be 8 million, but now 13 million visitors and tourists come to Japan. And also, we would like to accept more workers and the students into Japan, and in fact increasing. And we are involved in TPP negotiations, Trans-Pacific Partnership negotiations. And through that, in Asia-Pacific region, we are trying to create an environment of free investment and trade, and also a partnership with ASEAN countries, and the partnership with China and South Korea, FTA. So basically what we are trying to create is free and open society. So it's not that Japan alone should grow, but when we reform and grow further, we like to contribute to other countries as well. And if we can invite more investment, we invest further. And we can exchange the intellectual property asset. And with the growth, we can lead and further promote the growth and development of the Asian and the whole region as a whole. Okay. Thank you very much. 13 million visitors coming to Japan. China has been contributing a great deal of them, I guess. Especially during the holiday season. So Professor Lin, talking about China, earlier, the Chinese Premier Li Kuchang in his speech yesterday was talking about China is not the one that is the troublemaker, quote-unquote, but rather the contributor to the world's growth. How much, really, China still has the capacity to contribute to the world economy and invigorating even the world economy, which is our topic today. What is your judgment of the capability? Well, for the global economy today, the number one thing is growth and how to achieve growth. In the past, China contributed to about one-third of the global growth. And because of that, recently, the dissolution in China's growth rate and some domestic issue became global attention. And so the question is certainly, where does China will be able to achieve the around 7% growth rate? It's a big question mark in many people's minds. But I'm very confident that China will be able to achieve that growth target. The number one issue certainly compared to the two-digit growth rate, now 7% growth rate seemed to be lower. But one of the main reasons for this kind of decline in the growth rate was the global economy has not recovered from the 2008 crisis. And China's export is one of the very important drivers for China's growth. And because of the weakness of the growth in the high income countries, the export from China to the high income country declined. And that is one of the reasons for the dissolution in China's growth. And if we look into the future, certainly we cannot expect the high income country to rebound to a great dynamic growth very quickly. And China need to rebalance from export-oriented growth to internal driven growth. And for that, China has a lot of opportunity. Because internal growth consists of two components. One is investment, the other one is consumption. In terms of investment, although people talk about the exit capacity in many industrial sectors, but China is a mid-income country. There's a lot of opportunity for industrial gradients, and those are good investment opportunities in China. Secondly, infrastructure improvement. Third, environmental protection. Fourth, urbanization. All those areas are good investment opportunities. And here I'd like to mention this opportunity differentiates China from other high income countries. Other high income countries, when they encounter the dissolution in their growth, it's very hard for them to find good investment opportunities. Because their industry are on the global frontier, where will be the new productive industry is hard to find. And their infrastructure is good, their environment is good, their urbanization has completed. So this differs China from other high income countries. And secondly, when you have to invest some opportunity, you need to have resources for investment. And the physical position in China actually is quite strong because government accumulated debt. It's only a little bit above 40% of GDP, amount of lowest in the whole world. Private sector savings is about 50% of GDP, amount of highest in the world. And China had 3.7 trillion US dollars of foreign reserve. And so that means China has enough resources to make investment whenever it's necessary. And this differs China from other developing countries. A very developing country should also have good investment opportunities. But they may be constrained by their physical position or saving or an adequate foreign reserve. China is not bounded by that. So I think that that's necessary. China will maintain high enough investment growth rate. And if China has good investment growth rate, it creates jobs, household income will increase, consumption will also increase. So by that, I think China will be able to maintain around 7% growth rate. And I think this kind of conditions are not going to change quickly. So I think China will be able to maintain around 7% growth rate, not only 2015, but also come in 5 or 10 years. And here I'd like to mention last point. Program solved. No, no, I'm going to mention last point. Even China's growth rate is 7%. And now China's contribution to global GDP is around 15%. So that means 7% growth rate in China contribute to about 1% point of the global growth. And currently the global growth is around 3% to 4%. So China's contribution to the global growth will continue to be around a quarter to one third of the global growth. So China will continue to be the driver of the global growth in the coming years. All the talking points have been very important. I'm sure we're going to deconstruct some of them later in our discussion. Professor Lin mentioned the, seems to be long term factors that would guarantee China still as the engine of growth for the rest of the world. But what about some of the short term phenomenons that we have observed over, let's just say, the past few weeks, if not months? And therefore I go to Mr. Zhang for this. I speak Chinese, I speak English, it's okay. Market turbulences, we have witnessed over the past few weeks. And the actions and inactions coming from the Chinese side. What does that suggest to us about the confidence, the economic governing capabilities and also the sustainability of the Chinese markets, capital markets I mean, and also the economy, sir. In fact, and Dr. Zhu, please be prepared as well. I know you are not only coming from the IMF, but also you have been an expert on the Chinese economy for quite some decades before that. So I'm sure you are also here to answer that question as well. Let Mr. Zhang go first. In fact, the meeting day before yesterday, Professor Li Daokui from the Qinghua University have, I think, given a very reasonable introduction about China's economic development and its relationship with our state stock market is quite different of the development trend. Once the overall economic development is very good, maybe the stock market is in a very bad situation. So that's in my hand reflected that China's stock market is not a mature one. It's only 20 years history. In another hand, it means there need a lot of things to be done to improve the regulation and also for the investors, they also need to draw some lessons from this. And in yesterday's speech from our prime minister, he emphasized the overall capacity as for the economic development potential basis and the government policy, which can make sure China is still in a very good stable increase for this year. And what I would like to mention here is that because China is very deeply involved in the globalization, so if the overall world economy is in a very difficult time, so China, of course, will be influenced, for example, the overall demand, the global world is very slow. So China's export has been seriously influenced. The first eight months of China's overall export is negative one. I think this, in fact, in some extent reflected the overall situation of the world economy need to be done something, including, for example, the structural reform, the debt issues. Also, you know, trade protectionism should be dealing hundred. And also in some times, the joint political issues also occurred a lot of the difficulties for the economic development. You know, recent days, many people, you know, pay great attention for the serious refugee issues. Those kind of the big problem is not only occurred by senior people of Middle East country, they have other things. So those need the global government, need the coordination, need the cooperation. And what about the capital market that's just briefly coming from you? For the capital market itself, I think the Prime Minister... We're not here to do any prediction about the stocks in the market, so just to clarify. The government agencies, the direct leaders have already done a lot of things. We have quite confidence to keep the risk in the reasonable level, in certain areas. The Premier, Dr. Zhu, was talking yesterday about China's action, and he said China has done its job in terms of preventing financial risks from spreading. That's an exact quote coming from the Premier. What do you think about the short-term phenomenon we observed, vis-à-vis? Some of the potentials, of course, Professor Lin, has been wonderfully illustrated earlier. Short-term, long-term, what happened just now? What's likely to happen? Dr. Zhu. Well, for China, we see the equity market volatility has very limited impact on the real economy. In the past few days, we just down-adjusted the global economic forecast from 3.5 to 3.3. For example, we down-adjusted US groceries from 3.1 to 2.5, but we stick on our forecast for China 6.8, we don't change. We believe China growth is still on track, we'll move that way, because we see the service sector pick it up, we see job creation move very well, and we see investments slow down, and we see the exports also restructuring itself. So the whole economy is in the process of rebalancing, but I think this is a good process. Now, I would like to emphasize one thing. We always emphasize the number of growths, right? I would say we forecast China growth for next year, 6.3. 6.3. 3. Why is it lower? We have to understand for China, the key challenge is go through the structure reform to transform from the investment-driven, export-driven model to more service, more innovation, more high-tech, more consumption-driven growth model, more sustainable, and in this transformation process, the older model will drop, the new model will pick it up, the growth is a consequence of this two-force moving together, the combination. I don't think we should pay too much attention on exactly how much the number, 6.3, 6.5, 6.6, 7, 7.5, regardless. It's not the key issue. The key issue is ensure the structure reform, ensure the transformation, ensure we resolve the risks we accumulated in the past few years, move into more long, sustainable paths. I think that's the key challenge. So in that sense, I think the structure reform, the system reform, further market reform opening, and also more innovation of things. Pay for the productivity growth is the key issue for the future in China. I remember very clearly that we had a panel one year ago, also with summer doubles, and I was hosting that panel, and I hear, and I've been hearing today almost the very same talking points as we heard last year. The question Dr. Zhu raised is very important, which is how that really has been implemented. How have these visions that all of you have been talking about, after all, have been implemented? May I have Mr. Tamaki to comment from the OECD's perspective? Thank you very much. From the standpoint of OECD, of course, as Professor Justin Lin or Dr. Jiang mentioned, taken to the point, the shift from the export and the capital investment-driven economy to consumption and domestic demand-led economy and the sustainable growth. And I entirely agree with that discussion and the point that China is trying to go through structural reform and make the shift. And we will do everything to support Chinese efforts of structural reform. And if I were to pose a question here, it's not a challenge to you, but a question I would like to pose here is that when you look at the more recent numbers, there are some aspects difficult to comprehend or understand. For instance, Chinese import statistics, there has been a drastic decline in Chinese import. Of course, quite a capital-intensive structure. So when investment decreases, the import decreases as well. But still, the degree of drastic decline of import by China has a considerable impact and influence on the countries in Southeast Asia and on Japan as well. So this decline of Chinese import, for instance, how would it be related to the weakness of final demand in China, whether it is related to the final demand in China? I'd like to invite the experts from China to comment on this if this is related to final demand. That is important, the final demand. Moderator, I would very much like to have you replace my role by asking questions, but you still need to answer questions before you ask a question, Mr. Tamaki. And therefore, I will also once again invite your opinion, briefly, if you can, on the questions that I just posed to you. Dr. Drew and many others have been talking about some of the solutions we have, and that has been the talking points that have been there for some time. So what about implementation? My question is to you, representing OECD, what do you think about the implementation so far? Before we can pose your question to the other panelists. Otherwise, I have a very difficult job to do this morning. So, Mr. Tamaki, thank you for your understanding. Go ahead. Yes, of course. Of course, of course. Implementation is of great importance. And how China will continue with structural reform. It may be a tough path, but it is of great importance. It will be a long-term shift. And it should be done without disrupting the social stability. And also, it should go through the inclusive path as the theme of this session goes. And therefore, the Chinese efforts in structural reform and implementation will entail a lot of difficulties. For instance, how to secure the revenue for central and local governments, there are various discussions. And China has a long agenda, a wide faced with a major challenge. And what I thought, I answered the question already was that OECD has been ready to provide various policy advices and support to China in structural reform. Thank you very much. It seems that to me, when it comes to the challenges, we would look at our own camp, but at the same time, we very much do our finger pointing at the others and suggesting, how come you're not doing better? And therefore, our economy is suffering. But I would really like to have all of these wise men coming from China, Japan, and from Asia, to also look at ourselves and say, what are the things that we can do? I think that would be a very constructive spirit, rather than say, you're not doing good and therefore we're suffering. Because overall, this is something we all need to work together. With that spirit, Professor Lin. Well, the question raised by Tamaki Sun certainly is a right observation. China's input reduced substantially. But I think there are two reasons for that. One is desirable adjustment in China from investment to consumption. And when China reduced investment, the kept good import certainly will be reduced. And so that should be desirable from the global economy point of view, because that has been recommended by IMF, by almost all the digital economies in the world, to China. And secondly, China's export, about 50% of that, was processed in export, processed good. And the export of China reduced from double digit down to now 5%. And last month, negative growth. And certainly with that, the import or process intermediate good will be reduced. I think those two factors contribute to your observations. All right. What would that mean, Dr. Zhu? Because there have been a lot of discussions about the Chinese economy. What could be the factors driving the change of the reform? RMB into the special drawing rights basket of the IMF that we long discussed, it is one of those processes in which RMB become internationalized. And RMB internationalization is being regarded as the important factor of China's financial reform. And all of this is contributing to the overall restructuring and reform process of the Chinese economy. Having said all of this, how is that going? China is a more and more engaging global economy, become more and more important part of the Asia. Since this session is a global economic outlook, and from Asia's perspective, I think we focus too much on China now. So if I may, with your permission, Madam Chair. Go ahead. And let me bring a little bit of Asia and put China into the Asia perspectives. If you're looking for the whole Asia, I think Asia still have a strong growth, but not as strong as they had before. We forecast Asia today overall have a 5.4% GDP groceries, which is lower than last year. Last year, it's 5.6%, and clearly lower than before. And a little bit of a lower groceries reflect few things. Number one, the global growth is still moderate. We just downgrade global growth from 3.5% to 3.3%. So the weak external demand, which is very important for Asia. The second issue is the commodity price drop a lot, because a lot of Asian countries act for the commodity. And it's not a drop a lot, a drop in such a dramatic way. The third issue is the dollar become very strong. When dollar become very strong, the copper balance have to adjust accordingly. And also people concerns, salaries, interest rates may have a financial cause as well. So financial condition is tightening. We observed the capital outflow from Asia since July. Actually, the capital outflow from Asia is quite big. Today, it's almost reached 2013. In May, it's a tapering times now. At that time, the US announced going to tapering. The Fed QEs and the market volatility really impressed all the emerging market. A lot of capital outflow today in Asia capital outflow reached that time level already. So you will see those real conditions impact on the region and also the China. So what shall we do? I think when come to those things, clearly it's number one. We need the macro policy to maintain macro stability. I think in this very challenging time, it's still the key, most important issue for the authority to do. And number two, continuously carry on structural reform and the building domestic financial market less dependent on the capital flow from outside, less dependent on the export demand from outside. This also important issues for the whole region as well. And this is the same thing for China. So there's a reason China need to transform its model to less dependent on investments and exports, move to more domestic consumer driven as well, and the building on the domestic financial market as well. That's the reason the Chinese government firmly determined to carry on the IMB internationalization. Firmly determined to carry on the IMB exchange rates become more market flexible and market based. So yesterday, I think the key issue from the Prime Minister's speeches is really two key messages I can take away. The first, the most important issue is China is going to open onshore IMB market to central banks. I think this is a very important step to firmly clearly demonstrate the Chinese government's determination to move forward on the IMB reform internationalization and to bring the Chinese financial market into the whole financial market. I think that's very important. The second issue is international cooperation on production capacity, which will be very good, I think, for China and for the whole war, given war today, suffering moderate growth, low investments, low capital flow, low trade flow as well. If you- On the production capacity, please go ahead. I would like to first, it's a point to answer the question from the Deputy Secretary General of OECD. He asked when China talked about, in large demand, why your import is so bad. In fact, the main item for China's import in the recent years, if we look at the important items, first, cruel oil, second, IC, third, iron ore, in last year, we imported cruel oil and IC, both 220 billion US dollar, iron ore, 100 billion US dollar. In first seven months of this year, all those inquiries, cruel oil, IC, and even the iron ore, iron ore is almost the same level of compared with the same period of last year. But the price of this commodity declined seriously. So, even though the cruel oil increased in first seven months of China, nearly 10%, but the total value declined 45%. IC increased about 6% in terms of a month, but in value zero, iron ore, almost the same amount, 450 million, but the value declined 50%. So, that's one thing I want to use this statistic. And probably that has also something to do with what the Chinese Premier yesterday was saying in his speech. He said the commodity imports of China actually has increased in volume. That's the exact quote, if I could just recite. I think I remember that quote very well. Having said that, Professor Lin. I think that observation is right. The value of the commodity input reduced, but the quantity does not change much. However, Mr. Tamaki-san's question is how come the input from Japan also reduced? Japan will not export iron ore, will not export oil. So, those two components are what I replied to you. Many capital goods and many intermediate goods for processing increase. Mr. Minister, I guess it's your turn. In terms of trade between China and Japan, electronics parts, capital goods to produce that machine tools have been affected. And so, the export from Japan to China has been declining of recent. Listen to the discussion so far. If I may make some comment. At the moment, whatever country it is, every country is faced with the current economic situation who will have to do something about the short-term issue as well as a medium to long-term structural reform. So, every country is faced with the challenge of making both these efforts together concurrently that applies to Japan. And in case of Japan, we have to go through the structural reform through Abenomics. We emphasize the structural reform further. Well, we should increase the investment to promote productivity in the face of declining population when the investment increases and the business boom, wages will increase and consumption will increase. And therefore, we place more emphasis on structural reform. And in China as well, structural reform to support the current state of economy. And that applies to Europe, and especially a country like a Greek. So there is a strong need for reform. However, we look around. And under such backdrop, the Japanese experiences may be of some reference to China. And in 1990s, through the bubbles, we had a high growth, but when bubbles bursted, we had a 15 to 20 years of deflation. And that has been our experience. But China, being the driver of the world economy, I hope you would not have to go through this bad experience of Japan. So looking at the Japanese experience, I hope you will achieve a reform and growth without making the same mistake. There were three surpluses in Japan in the past. One is the capacity. And the second is the debt. And the third would be the excess workers. We had such excess surpluses. And for the past 10 years, we have resolved such excesses. And the one was the injection of public fund, for instance, to resolve such a bad excesses, three excesses in the economy. But looking at the Chinese situation in terms of demographics, well, Japan is faced with the aging society and increase in social security rather than expense. Unless we reform such aspect, we cannot make it sustainable. And China will be faced with the aging population. And therefore, you have to face that squarely without increasing the burden. And the three excesses in the economy, which means the economic structural reform and social structural reform necessary. So my question, in view of public finance or fiscal situation in China with a growth in Chinese economy, you have further room for fiscal mobilization. But going forward, you would have to achieve a healthy growth of fiscal aspect or public finances. What's your prospect about China's public finances, fiscal aspect? I see our panelists are becoming ever more active in posing their questions, but giving very brief talking points to their own solutions. So that would be part of the question, in fact, in terms of the overall picture that every country is facing in terms of restructuring and also reform. And if I could, on top of the points posed by the minister minister, it is not just the local government debt, the relations between the local and the central government. There are many other issues about financial reform for example, and about, as I included earlier, a question to Dr. Zhu about the IMB internationalization. China has so many tasks on hand all at the same time. This could be an opportunity. This could be a challenge. So may I have Professor Lin to briefly respond to some of these points because we cannot go one by one. Each would take an hour and two. So very briefly to all of these talking points as to where China is and overall, how is China looking at the global economy? Once again, we're talking about global economy, not just Chinese and the Japanese economy because we're talking about global economy from the Asian perspective, Professor Lin. OK, first I'd like to respond to the question to compare China and Japan. And Japan had a burst of bubble in 1991 and then experienced about, you know, lost two decades already. And certainly now there's some concern about the bubble in the stock market adjustment and so on, whether that will cause China to, you know, have the same path as Japan. Actually, I think I respond in my open remark already. When Japan in 1991 was already a high income country, major bipartisan power parity in that year was as high as it was. So your industry was on the global frontiers. Your infrastructure was good. Your environment was good. Your urbanization has completed. And so under the current situation, each very half for Japan to find new driver growth. And I think that one of the reasons why Japan has been trapped in the deflation of growth. But China is a medium country. As I mentioned, we still have so many good investment opportunities. And also we have abundant resources for making investment. So I think that we need to, you know, pay attention to these two differences instead of just drawing the experience from Japan to judge the future of China as one thing. And secondly, I mentioned at the beginning also, for the global economy, the number one issue is growth. How to find new drivers of growth? For the developing country and for the whole income country. Certainly we are in that integrated world. The growth in the developing country will contribute to the opportunity to high income country because you can export more capital. Certainly if luckily high income country can resume its growth, it will also provide the market of export from the developing country. But to resume the growth in high income country seem to be not so easy. So the hope should be in the developing country. In the developing country, I think the best way to address the short term issue and not long issue is infrastructure investment. Because if you make investment, because first, most developing countries have a lot of bottleneck in infrastructure and they become a mining country for their growth. And if you make investment in the infrastructure initial one, it creates job, it creates demand, it creates growth, and it creates income to the workers and also support their consumption. And secondly, in the wrong one, it will remove the mining constraint for the growth. So their productivity level can be enhanced. And also in that regard, so that's the reason why Asian investment, infrastructure investment bank has been welcomed by almost all the country. And that is very important thing. And so I think we should be cooperative to push that solution. And I'd like to say, I have been champion these ideas in 2009, at the beginning of 2009. And I'm very excited to see, now globally this has been a consensus. For example, October last year, the IMF published the war economic outlook. And you know champions say, now the global economy is second 19, it's the best time to make infrastructure investment. So let's join on both for this, good for the developing country, good for the developed country, good for now and good for the future. Just to be fair, do you have a question for your Japanese counterparts? If you don't, that's fine too. Just an invitation for Japanese counterpart to join this Asian infrastructure investment bank. Okay, Mr. Minister, briefly. Thank you very much. And indeed, it is very important to build the high quality infrastructure in Asia. And we stand ready and willing to support that high quality infrastructure means a good for environment. And the solid operation plan of such investment and profitability of such a project. So AIIB is based on solid plan and there'll be a great room for cooperation. And so we like to watch the good governance there and we like to keep emphasizing high quality infrastructure building in Asia and we're willing to support that. AIIB is an interesting talking points. Another thing, of course, the trade mechanism. When we talk about the global economy, there are just so many factors that we can mention and elaborate on. But since our time is very limited, I want you just to briefly touch on it. TPP, RCEP, FTAAP, these are interesting abbreviations that we do as tongue twisters every day these days. But they are very important potential trade mechanism for the region and possibly for the rest of the world as well. TPP is still in a very difficult process of negotiation. We don't know when it would come out. Other two mechanisms have been alternative mechanisms as well. How much do you think, Dr. Zhu, trade mechanisms, if I could ask you and also Mr. Tamaki, trade mechanism like this, how much would they be able to contribute the issue that we talk about, reinvigorating the world economy? Well, clearly global trade growth is slower. I think that's a challenge you are facing altogether. We observed in the past during the crisis period from 2007 to today, the first time in the past 30 years, the global trade growth is a week than GDP growth. Why is that? Because in the past 30 years, the tariff has been lower and so the rule for further lower tariff is very limited. And with WTO promotions and the global supply chain pick it up, but now it's getting mature. And the most important thing is with the technology, with the innovations, more and more production today move close to the consumer. So size is no longer the key issue. So those are changing make the trade become very slower. So the new direction for trade is actually on service sector. So which need a very different framework for the global or regional negotiations and even for the very different measures because how do we measure trade on service? Those are a lot of challenges. I think that the war needed to rethink seriously about how do we promote the trade and particularly how do we promote the service of trade? Mr. Tamaki, trade mechanism important for us, but at the same time it's been influenced by many other factors. Geopolitists could be one. Election politics could be others. These are we all observing these days. What do you think about the potential of the many mechanism we just mentioned and also respond to what Dr. Drew just said as to how these trade mechanisms might really providing invigorating opportunity for our economy? The source of growth is investment and trade. So these are the two major engines for growth. However, after the financial crisis these two engines are not operating properly. Investment is stagnant as you know and on the trade front trade has been growing over the world economic growth prior to 2008. However, the relationship with trade promotion and the economic growth, this relationship have aggravated and through the trade facilitation mechanism we should activate the trade activities and at the same time this trade facilitation mechanism would contribute to the further integration of domestic economy of participating countries to the global economy. So domestic sectors which have been protected from the international competition should be exposed to international competition so that their competitive power would be improved. This kind of restructuring efforts would be necessary. So through this kind of mechanism trade facilitation mechanism would enhance the growth of the world economies as a whole. So Mr. Minister, since you are coming from China and Japan, Mr. Zhang, Chinese Premier, rather one of your former colleagues coming from the National Reform and Development Commission was talking about China's exports and he was earlier talking about upgrade the export coming from just the consumer goods to more machinery and many other items. Given the trade and the exports that you have touched on earlier, how much is China having this opportunity in upgrading and secondly, how much opportunity and China is working with others in creating the most appropriate or complimenting to the world WTO system, the best economic trade mechanism? First, I would like to add one statistic figure to what Governor Zhu means. Just talk about the potential for service trade. In the first half of this year, China's good trade, commodity trade, declined 6.9% compared with the same period of last year, but the service trade increased 13.3%. So there have great potential, both for China and for the world. Then I will move to the question you asked, but I don't want to limit it only for such like trade and other things because the President, the Deputy Secretary General, Vice Governor Zhu, already talked about the importance for the new momentum for China and the world economy infrastructure investment, to develop the free trade, and also how to do the monetary policy and the financial system reform. I would like to use this opportunity to emphasize three things. Once he says, science and technology is always the first force for the productivity. Nowadays, there have some new development very important, such like the next generation of ICT technology. So, you know, the Chinese government published the guidelines. Internet plus, you can image, Internet plus how much sectors which can create a room for employment, for income, for development. The second is innovation. The innovation including both in terms of science and technology and also the management commercial model. Everyone now looks, Mr. Maimian, as a hero. In fact, it's a combination of innovation for both technology and the commercial model. The third, green development. We are facing the challenge kind of a change to make sure the security of resources. And just now the WIF published the report about inclusive growth I think for the future, if we can make the joint efforts for the science and technology development, for the innovation, for the green growth, we can create a better future for the sustainable development. All right. Okay. Briefly from you, Mr. Minister. Briefly. I will be brief. First, as was mentioned, trade and investment should be further activated to achieve the economic growth. And that, I think, is the basic direction. And TPP involves 12 countries now. This aims for a 21st century type of standard, including investment and trade, including services, environment, consideration, and so forth. For each participating country, it would require the reforms, and it may be a painful part. And for Japan as well, it is a painful part with a lot of reforms, so we are willing to do that for many emerging market countries. The reform of SRE and to change various policies to improve competitiveness. But if we achieve that, we can increase investment, trade, and the growth. And in order to achieve innovation, a good protection of IPR is very important, as Premier Liko Chan mentioned. Intellectual property rights should be fully protected. Therefore, TPP is here to establish a new framework. TPP is not at all a closed framework. We are at the final stage now, but after it is concluded, then we are fully open to new participants willing to abide by the set of rules. So together with TPP, they are also in the Japan, China, Korea, FDA, and other organizations to achieve a free open trade environment in Asia and Pacific. First of all, Professor Lin, just two sentences before we wrap up. Well, I do have two points to make. The first one related to TPP. I'd like to mention the facts. China now is the number one trading country in the whole world. And China is the largest trading partner, or second largest trading partner of all the countries involved in the TPP discussions. So under this kind of situation, if China is not a member of the discussion, I don't think TPP can be considered as a high quality new agreement. That's one thing. And secondly, I am very delighted to hear you know, State Minister Nishimura-san said, Japanese is all supportive of the infrastructure investment through the new mechanism of AIIB if the investment is in high quality. For this, I'd like to mention, high quality is something very subjective. And so no matter how we do, you can always say the quality is not high enough. That's one thing. And you can always say, well, it's not our responsibility because you do not meet our standard, but we do not know what your standard of high quality is. That's one thing. And secondly, the best way to achieve the so-called high quality is to be a member of the discussion board and to really, you know, understand each other and so we can really achieve something which is acceptable to every party. So for this regard, I think China would like to join the TPP discussion and China also very much like to help Japan to participate in AIIB. That's from my personal point of view. It's in academics. All right. And we are already reaching, in fact exceeding the time that we should wrap up our discussion. But just to be fair and just to be clear to our audience, I need everyone to have a very brief sentence to touch on the most important factor to our topic, which is reinvigorating, rebalancing the world economy from your own perspective. One or two key words for a sentence. Let's begin from Professor Lin. I'll go with this alphabetic form. Only one word, cooperation. All right. Mr. Shimadura. Nishimura. Mr. Shimadura. Again, structural reform. Structural reform. Strong resolution determination to promote structural reform. When it comes to determination, Mr. Minister would express it in English. Thank you very much. And also Mr. Tamaki. We didn't discuss today about it, but we are facing a quite different challenge, transition to low-carbon economy, which has a great impact on the future of Asian economies. So let's discuss about next time about how to achieve decarbonization in Asia. And Mr. Jump. Reform, innovation, and the strength of the cooperation. Finally, last but certainly not least, Mr. Drew, Dr. Drew. Global growth is still moderate. We just don't adjust growth from 3.5 to 3.3. So it's very important for all of us to work together to promote the growth, and the key drivers for growth today is the structural reform. It's a surprise side policy because we don't have aggregate demand side policy space. But meanwhile, the financial sector risk is building because the financial volatility capture flows out of life from Asia, dollar getting stronger, fairly expect to raise interest rates. So the authority, the member countries, need to very careful to monitor the financial sector to ensure the financial stability. We see the solutions might be different in different versions coming from different perspectives, but the tasks are shared. That is the re-vigorating of our economy, structural reform, and many other issues related to that. And it seems it has to be done in the spirit of cooperation, which have also been mentioned by our panelists. So thank you so much for your input. Thank you very much. This is a white topic. Thank you for narrowing down for us. And thank you also for your patience. Thank you very much.