 Who's the director? Ladies and gentlemen, good morning. What a good crowd for this time in the morning and in all this traffic. Welcome to this session in the round. I'm going to spin around just to get a sense of the room here. It's a bit Shakespearean, isn't it? This is the globe theater kind of experience going on here. We're going to record this particular session for broadcast on Channel News Asia next week. So if I do inexplicable things like throw to a break, it's because we're doing it for TV purposes. So please bear with us. What we're going to do is open up with our, I'll make a brief introduction to the camera, set the scene for what we're doing, and then we'll pretend it's a live TV show. From that point onwards, we can carry on and do what we're doing. I mean, I think there is a provision for questions. OK, so we'll spend about a half hour, 40 minutes, chatting amongst ourselves, and then hopefully you guys can join in and question the panel as much as I do. We're going to treat it as something of a free form conversation rather than a question and answer session. The panel is a very interesting mixture of expertise and experience, and hopefully they can bring their own individual experience to bear and interact with each other, and you'll get more out of it from that. So having said all that, let me make my introduction to the TV camera, and we'll kick off the show. I'm standing up because I can look around much better, and I think much better when I stand up. So hopefully that doesn't apply to you guys, so you can just move. But once I've made the introduction, I'll sit down and then we'll crack on. Hello and welcome to the annual meeting of the new champions here in Tianjin in China, the World Economic Forum's annual gathering for East Asia, the Summer Davos, as they call it. Today, we're going to be talking about Asia's business context. I have with me a distinguished panel of people who will debate their experiences and their expectations for the development of Asia within the general strictures of what we're talking about here in Tianjin. I will sit down and introduce them to you individually, and we'll set the scene for our conversation today. I'll begin with Kevin Sneeder of McKinsey. He's joining us here, Torihiko Kojima of Mitsubishi. He's with us, Kaushik Basu of the World Bank, and Victor Chu. I hope each one of you will introduce yourselves much more formally and with greater detail as you speak, and we'll lay the context. Now, we're talking Asia's business context, and it's a very general topic to begin with. So perhaps the best thing that we could do is try and define what that actually means to each one of you from your perspectives and your experience as to how you see the context and where you think it's going. Because as we wake up this morning, President Obama is speaking again about the threat of ISIS. ISIS has already spoken about the threat it intends to pose in various countries in Asia. We have a poll showing that the relations between Japan and China, at least in the minds of their citizens, have worsened, and that kind of rivalry seems to be getting worse. The ASEAN economic community is supposed to start next year, and we hear that businesses are getting very worried about whether that will deliver what it promises to deliver and whether it will be successful in the manner that the politicians hope it will be. So there are any number of areas we can go with this context, and I'd like to hear from you as to which are the important and the crucial ones for the future. So I'll stop talking and ask Victor to begin. Victor, the context of where we are now, to you, means what, and what should we be discussing at this forum? I think if you look around the world, I mean, Asia is still a oasis for investors. I mean, with high growth relative to the rest of the world, we have huge potential with different Asian economies working with each other, as you say, the ASEAN economic community coming in. But at the same time, we have also huge challenges. The triangular relationship between China, Japan, and Korea needs a lot of work to get back onto normalization. The new presidency in Indonesia, Singapore coming to its 50th anniversary, China now still enjoying relative to high growth, but obviously huge domestic challenges too. So I think Japan with Abinomics coming back to everybody's radar screen. So I'm very excited about Asia, but there are things that we need to work and double our efforts. Bangkok emerging from military into crazy civilian administration. How would that manifest itself going forward? So I think we are an extremely interesting subject and if we make it work, we will be the envy of the world in the next five years. Make it a bit more personal for a second, if you could. I mean, from your own experience in business, in politics, and being part of the Asian community. Tell us, tell the audience a bit about yourself and what drives you in this context. I think in this time of history, I'm very pleased and proud to be Asian. And we are, you know, China provide the huge market, India provide the huge market, Asia in the economic community, China, India, ASEAN, you know, we are talking about almost three and a half billion plus consumers and rising middle classes. We as a firm are big investors in China, but also we are big investors now in Japan, in Indonesia, in Thailand, as well as in Singapore. So what's happening in Asia and within Asia is of enormous interest to us. And we are also investing now heavily in Europe and try to bring European companies into the Asian market but also helping Asian companies, particularly those in China, as they invest abroad. Kaushik, the World Bank. The World Bank, I suppose, is a generic term, but I think most people will see it as a Western organization. You have a foot in both camps, I suppose, West and East. Explain to us what you see today. Thank you. You know, today globally, if you're looking at the range of things happening, is dreadful, as you pointed out in the beginning. Bad news, war, battle, all kinds of risks all over. In fact, what earlier one used to do with horror films, occasionally you feel like switching off. Occasionally with the news now, you feel like really switching it off and look the other way because it's so bad. In that global scenario, I have to second what Victor said just now, that this is a bit of a large oasis, Asia, with all its, there are many troubles, many problems, but despite that, when it comes to the global economy, the hope, a lot of hope resides with Asia. There are also risks and dangers. Asia is a very motley group. In fact, at one level, there are parts of Asia which are wealthy and well-organized, like Scandinavian countries, Nordic countries. Parts are poor, like sub-Saharan Africa. You put it all together and that's what Asia is. And the experiment with economic policy also is really a range. China, I can tell you if China with its regular policies, the policies that China followed, if China did not grow at all, economists would have told you we could have predicted that. The fact that they could have predicted that means that economic theory is not quite up to the challenge of what China has done, which is a phenomenal growth over a 30-year period. Even in the global scenario now, this region is becoming important because first of course there was Japan, Singapore, then later on China comes in. India, for a long time, was a very slow growth region, right up to 1990. In fact, the joke in India used to be that India's growth rate is written in the scriptures of the land. So it's immune to economic policy. But from 1994, India takes off and from 2005, India is growing at rates above 9%, which was really unthinkable. So this is a region with a lot of growth and potential and even with the slowdown, the slowdown has hit all these countries. From 2008 to 2009, you can feel it. But even with the slowdown, China with the slowdown is at 7.5% or so, rough growth. Indonesia, which actually did very well through this period, has slowed down now. It was relying a lot on commodities and that slowed it down. India, for me, the most telltale was about a year ago on a television in India, the interviewer said, what's happening to the country? It's going to the dogs. Growth is down to 5%. That shows a change in yardstick, which even 15 years ago, that sentence wouldn't make any sense. So this region has changed with a huge amount of global responsibility because Africa has stirred and over the last five, 10 years, you're seeing a lot of growth in Africa. But if you dissect it, a major part of that is actually the linkage with Asia today, primarily China. That link is getting that region growing. So there's a lot of hope, resides on this in this turbulent world. So we have to just keep it together and there are some challenges. Maybe I'll come back to some of those later. Just very quickly though, within the context, and I suspect that your framework of analysis is maybe more disciplined because of the organization for which you work. Out of all of that, what do you think is the most significant element determining the growth of Asia in this context? I mean, you're accentuating the positive. But what are the things that you see as being the important element? You know, the initial takeoff of Asia, Japan, Singapore, China, lot of it is driven by very standard textbook driver. Investment and savings was the initial driver. But once a country begins to do reasonably well, you can't rely on that. It has to be innovation and innovative activity. This is picking up in Asia. South Korea is doing actually very well on that. Japan has done well on that. China is beginning to invest in that. So I feel in the next round, the driver has to be innovative activity, research, and that's going to be a bit of a challenge for this region because that was not the original driver for Asia. Lida Kui, David, you sit at Tsinghua University. And I suspect your academic perspective and how your students are responding and demanding from you direction and leadership. What do you see from your position there within China as being the important parts? And particularly, I'm interested to know what you think about Lika Chang's speech yesterday and the emphasis on innovation that Kaohsiung mentions. We hear it every day now in Asia. Well, I think Asia, to begin with, Asia is a very actually big concept, larger than we often think. Asia covers from Japan, China, all the way to Turkey, right? So we are talking about huge context. So for this whole area, a huge part is now challenged because of security issues. That's the western part of Asia, right? That let's put aside. For the rest of Asia, I think two themes are interplaying with each other. One theme is the global financial crisis. As with all crisis in human history, initially when the crisis hit, people were panic, but very soon people realized not so bad, not so bad as in almost all countries in the world. By 2009 and 2010, most economies began to recover. And that's the case for India, that's the case for China and many other countries in this region. However, hard work began to kick in five years after the global financial crisis. Each country is facing the aftermath of the financial crisis and the fundamental courses of the financial crisis. So every country is working hard doing its homework, trying to deal with the problems. In India, they are working on structural problems, right? Taking away impediments to investments and the deficits, the budgetary deficit and the current deficit. In China, of course, we all know that, the old engines of growth, relying upon property market, relying upon export, have to be replaced by new engines of growth. And innovation is one of the drivers of the new engines of growth. So on top of that, there's another theme which is interplaying with this, the first one. That is the emergence of China. China, remind us, four years ago, just surpassed Japan as the second largest economy. Now, if you remember, it's almost twice as large as the Japanese economy, either end of this year or next year. This is amazing. So this big and emerging economy is taking room naturally in various dimensions, various arena. Naturally, the whole structure, the power balance has to be adjusted. However, the problem is the US, the Americans, oftentimes are, I think, overly worried about the consequences of the increase of the size of China. And our neighbors, including Japan, are also very concerned. And that's a source of conflicts in this region. So these two themes, I think, are interplaying with each other, making issues very complicated and interesting from the academic perspective. Very realistic perspective, too. Thank you for that. Pick up on a couple of those things in a moment. Kojima-san, Chairman of the Board of Mitsubishi Corporation, your focus is on trading and on investment in the area. Explain to us what, to you, are the important elements here. Well, our company, Mitsubishi Corporation, used to be just a trading company, but now the business model is changing because the business circumstance in the world is now changing. Therefore, now our company's trading profit is just 20% and 80% is coming from the investment. But we invest not only money, but also human resources. We send our people for the CEO or managing level of our subsidiary companies. That's very, very important. And also, we have over 200 offices in 90 countries throughout the world. Therefore, we can analyze what will be happening next. Therefore, based upon that, we are changing our business model. Then talking about the issue, and I like to talk about India and ASEAN and China. But it will take some more time, but later on I will exchange a comment. But India is concerned. And a new premier, Mr. Modi, visited Japan last week. And he said he will change India. And that was very much impressed. His comment was very good. Then I felt that we have so many chance to develop more business in India. You may know India's problems state by state, regulation and the tax system is changing, different. Now he likes to control everything by himself. And if that is the case, we can manage more business in India. And besides, quite recently, we formed the joint venture with Indian companies. And also, we have already invested more than 150 companies in China. Now that we are working very closely. Therefore, we know what is happening. Therefore, under such circumstances, ASEAN, total economic situation is very good. And ASEAN and the western part of Latin America, the economic constitution is good. Then we have so many offices throughout the world. We are watching and how to make our next business model and strategy. And therefore, maybe later on, I can explain some of my... I'd be very interested in knowing how your strategy is changing in the light of what you're saying. We'll come to that in a moment. Let's just allow Kevin, last but not least. Kevin's need a new chairman of McKinsey, Asia, but with a history going back quite a long way. And things have changed enormously in the times you've been engaging with Asia. But in the present day, in the present moment, your feelings about the context. Well, I think the context, to me, was brought to life. I spent the first part of this week. I came from Italy yesterday and I was in France and Germany days before that. And if we want to sit and talk about risk and why this is an oasis, meaning with a number of our client chief executives, the overwhelming sense was it is far more risky to be investing or operating in Italy, France and Germany than it is in many parts of the region that we currently call Asia. And I think that is a large part of the context. It's set by what's happening in the rest of the world. And Asia, therefore, is, as Victor said, an oasis. There are high expectations and clearly you have to disaggregate what we mean by Asia. But I think there remains an overwhelming sentiment, which I think is legitimate, that the growth engine of the world is here. This is what, 38% of the world's exports, 36% of the world's imports are in Asia. We have a situation in which the optimism that has renewed in terms of India and the rest of the world may give rise to expectations that are unreasonable, but nevertheless, there is an optimism. And I can see it in clients, CEOs and investors at this point in time. In China, we debate whether it's 7.5%, or 7.5% or 6.5%, but we're still debating that level of growth. And if we go to Japan, everybody is debating, well, is Abinomics now, is the third arrow going to hit? Are we going to see this maintenance of a growth trajectory that we haven't seen from Japan for a long time? And Jacobi in Indonesia can he deliver against very high expectations? The Asian business context is one against the rest of the world where risk is everywhere. I think people are looking at Asia to lead in terms of growth. And the questions I tend to get are more around how much can we trust and have confidence in China maintaining its growth rate? Do we think Asia will be able to harness the internet and digital and all the powers and opportunities it unleashes, because actually it's being, in many respects, driven from here, not from other places? And do we think that Asian companies can continue to invest at the rate they're investing in the rest of the world? Because it's not just here where they're investing, they're driving a lot of the investment, the FTI that's going in elsewhere. So the Asian business context I think still remains one which is far more positive than the rest of the world. But of course we could spend the next 45 minutes happily debating all the risks that are here. But I would argue they actually pale compared to some of the risks that you see in mature Europe and other parts of the world. Interesting take. Let me just ask you about the importance of China maintaining its growth rate that you just said, because for a lot of people they'll put everything Asia in that one category. They'll say it all depends upon that one thing. But as our other panelists here are saying, there's so much more going on that's of interest. And India's emergence is obviously one of them. And Lika Chung yesterday himself said, we are now not thinking so much in terms of we must hit a growth rate anymore. Their own thinking is much broader. So how important is that China growth rate to you? And what happens if people begin to diversify their focus? Well I think the growth rate matters in as much as there's a lot of plans being made by corporations and companies on the back of assuming a certain level of growth. But let me just say a few things about that growth. China's undergoing a switch. It's no longer an investment driven engine. It's a consumption situation. Consumer consumption is rising. The new middle class are here. There's a lot of companies making plans to its target and supply into that marketplace. China's only just begun to harness the internet. The consumer internet has been harnessed. But China lags in broadband penetration and it lags on adoption of the internet for common purposes by its small and medium enterprises. Those two factors together, if we can sort out the broadband, sort out the adoption of the internet on the business side, will drive at least an extra 100 basis points of GDP growth for China. So I think while the growth rate matters, there are plenty of places where you can see continuing momentum and actually increasing momentum because technology has not yet landed fully in this part of the world. Chinese companies invest about 2% on IT, the rest of the world 4%. There's a lot of room for growth still here in the existing companies. And I think that gives me reasonable grounds for optimism around the business side of the marketplace. The geopolitics, that's a different matter. Well, maybe that's something we can touch on in a moment. It's a good place to take a short break. And when we come back, I'll ask all of you to maybe engage with what the others have said. Is there anything that you've heard right now that you might disagree with? We'll be back in just a couple of more minutes. There we go. All right. Great, great. Can we have this camera on? And I'll do a welcome back. I need that camera on. OK, here we go. Welcome back. We're talking about Asia's business context here at the World Economic Forum in Tianjin. Victor, in the first half, we laid a broad groundwork of what the context is here. And obviously, optimism is very much, I think, at the forefront of people's minds. It's human nature to see the potential rather than the danger. But I'd just like to ask you to address one of the things that David said. And that is the history of the financial crisis is something that only he touched upon. And the way we've emerged from that and whether we think that's behind us, could you just address what you think about that? I think we are much smarter than before. But human nature being what it is, we bound to make mistakes again. But if you look at it, the financial and the regulatory architecture and infrastructure is now much more solid than before. I think where the risks I see more imminent is really regional security and regional conflicts. I think if you travel around Asia and meeting a lot of the policymakers, I think we know what the challenges are. We know we have to go through more structural reform. We know we have to make more efforts on to fight corruption, to increase transparency, to increase participation in politics. I think they got it, the big picture. The challenge is they must have a stability and peace background. The backdrop has to be there for them to have the ability to implement these policy initiatives. So I think we sitting in this oasis, we have to treasure that we are living in a very privileged situation. The last 30, 40 years has been wonderful for all of us. And we really have to work hard to make sure that the regional conflict can be managed. And we are win-win together rather than lose-lose. I think that's where I see is the most imminent danger. Let's talk about the regional politics from an alliance's perspective. If you could, Koji Masen, you were talking about Narendra Modi's visit to Tokyo recently. And the whole Japan and its alliance building right now I think is an interesting way of looking at this. From your perspective as a businessman, where do you think the alliances could be stronger and how do you see those alliances being built at a political level as well as a business one? Okay, well, talking about India and where Mr. Modi's comment was very good because our concern of the business in India was the states by states, regulation and tax rule is different. And if we are requested to invest for the infrastructure and railway cross-border states, then the regulation is changing. It's very difficult for the private company to take that risk. Therefore, those countries, particularly India and the Sian countries in China, infrastructure business is very important for now. And we are requested to participate. And Prime Minister Abe and he already announced to provide some finance for the Indian business and the such circumstances. Premier Modi said we are now changing the rule and regulations and that's good. If the central government in India has the capacity to control the country, that's very good for us. Therefore, now the changing, I got some feeling, now the business chance for us to develop in India. And also, besides that, we formed the joint venture with Indian companies. And that's also very good. And therefore, there are so many businesses throughout the world. For instance, now the very important business in the world is the shale gas. And we are working together with the Chinese company, shale gas project in Canada. These kinds of things are business model. And not by lateral, but together with China, or together with India, we will develop some business for the countries. This kind of business model is now our company's business model. But you said before that your whole trading strategy, your analysis is changing in its nature. But when you look at this, and obviously you have to lay your bets in as many baskets as you can in order to minimize your risk. But in general terms, would you say that the alliances with India or China cause you more concern right now? And the important thing is our employee has to say kind of knowledgeable of the country and the business field. Then they can control all business throughout the world. And it used to be just a trading company. Just import and export or buy and sell us in between and then get the trading profit. But not our business model. We involved in the investment. We understand from every industry, from upstream to downstream through the investment. And we have to understand what the business is. What the business circumstances is changing. Then how to get these joint venture companies more profitable and stronger. Always we are thinking about that. That is very important. Okay. I think from pure business and economics perspective, Prime Minister Abe's strategy of working with India rather than with China doesn't make sense. Why? Because China is four or five times the market as large as India and still growing faster. And the market is much, much bigger in China. So forgetting the big market, working with the small market doesn't make sense. So I think rather the political motivation behind Prime Minister Abe is the main reason. I think seems to me his strategy is to use his diplomacy working with the Indian, working with Australia, working with the US and also domestically revising the constitution. To generate hopefully enough political support to push for economic changes or reforms needed for the economy. So that's a strategy of, this is my observation. What the question is whether the strategy is working or not. So far I haven't seen major success. Specifically I haven't seen any major, major specific measures, economic measures domestically. Dealing with reducing government budget, dealing with reducing your energy dependence upon foreign countries, therefore cutting down your trade deficit right now. And also helping enterprises, your firms go into the big markets in China. So I am a bit, a bit pessimistic about the prospect of the Japanese economy. Anyone want to weigh in on the issue I think it's very interesting here. I resonate with what Kojima-san said. We're doing something very similar. Businesses are already cooperating on a regional and multinational basis. As Kojima-san said, Japanese companies with Chinese companies are cooperating in Canada but also in the Middle East. Oh yes. Now we from Hong Kong, we are bringing Chinese companies to invest in infrastructure projects in Japan. So I think we already appreciate that win-win connection. Whereas there's a bit of a mismatch on the political side. I think on business it's much easier to build effective, profitable win-win alliances. And we very much hope that we can stimulate you know more of these. But is it really possible in this context to separate the ideas of business and politics? I mean it's driven by these issues. We are. The reality is this. Maybe this is a classic example of I can see something working in practice but does it work in theory? Well let's put the theory to one side. The reality is China's biggest investor is Japan. Massive investment from Japan is China. India has the benefit of a lot of people looking at it now and thinking will they invest but I can assure you the conversations are there and the investment discussions are underway. And I think the reality is this region's opportunity if there is one if you just take ASEAN is intra-Asian trade in ASEAN has half the levels of within Europe. The EU enjoys twice the level of trade amongst its members so it's a necessity. Is that happening because or despite the political situation? It's happening despite the political situation. So let me come in on the politics a little bit. What has characterized Asia in the past is the interaction between Asian countries and if you take the whole span of it is largely mediated by the West frankly, Europe, United States. And that is what you would expect. Those were the early drivers of growth and still the largest economic zones, Europe and United States. So a lot of the politics is mediated through that. What you're seeing now and I think that's what Kojima-san was referring to is a slight step up in bilateral. It doesn't matter which country, which two but two, three, four, there's much more bilateral, trilateral, quadrilateral interaction beginning to take place in Asia. That is very, very important because you want this cluster of countries. Yes, you talk with the entire world and it's a small enough world that we want all these channels to be open. But when you're the growth driver of the world, you ought to have much more direct face to face. And we are seeing the first steps of that in the political arena and we should all welcome that because really for peace, for better economic prosperity, that's very important. But let's make a specific point in this context and that is ASEAN economic community. All the businessmen I've spoken to in the course of the past couple of years around Asia are saying the political vision does not match their realities and they don't know what's going on. As someone who's involved in this, Kojima-san, how do you view that economic community and is the political direction adequate or irrelevant? Therefore, say, if the government support our business, that's very good. And therefore, in India case, and Mr. Modi and Mr. Abe very closely communicated to each other for the future. And this includes, of course, business. And for the business person, we are very happy that the government people communicate to each other. And if we may have some problems in the states by states, I'd like to ask our program minister to communicate with Mr. Modi, it's possible. Therefore, if the government level has a very close communications, that's good. However, if now just started to make a communication level in the government, but still the business level always communicating to each other. Therefore, we have so many reliable partners in China. We are always communicating this. And what is the best business model? And for that business, government may not support us. If our partner said, we don't like to proceed to those business. Therefore, important issue for the business level, we should communicate with the business level always. What is the best business model? And therefore, we like to develop more business, of course, in China. And however, for that purpose, if the government announced some flexibility for the regulation and rule, that's very good. And therefore, in that case, it's very surprising for Premier Modi visited Japan the first time, then communicated, then they discussed about some regulation will be more flexible. And maybe you may know, as I told you, states by states, the regulations are different. But the central government announced that, that is very, very important for us to develop more business, all right. Let's take a short break and we'll be back in just a couple of more minutes with some more talk about the Asian business context. All right, start again. And welcome back. We're talking about Asia's business context today. And Kashyap Basu, I just want to ask you about what Lika Chang was talking about yesterday and if we can just continue the political theme for a moment. Because if you didn't know who he was and you just read the text of his speech, you'd think he was the leader of a free market economy talking about development models. Narendra Modi went to Japan and as the leader of a country which also has a historical economic model that is based in what you would probably, I guess, charitably describe as semi free market is talking the same sort of language. We've said before the break about how you think that the business is driving the politics as much as the other way around. I'm just wondering if you think that is the case. How do you analyze the potential for these governments to actually deliver a free market model that they're talking about because of their political background? One great shift in the ideological discourse the world over is the convergence on that. We continue to use different labels. You may have a name for your party which looks very alien to the name for another party but in terms of the core economic ideology it's surprising how much convergence there has been and that's what you're referring to in these various people's comments. The importance of the market is being recognized just across the spectrum. That you can't run this complex mechanism by the state taking over these decisions. You have to allow the laws of the market to function. At the same time, there's also concerns for huge inequalities and matters like that that the government has to intervene in some strategic places. Infrastructure was mentioned. Regulation, there has to be some regulation but it has to be a cogent regulation, country wide regulation. This commonness of thoughts space for the free market to function. At the same time, a regulatory system that enables it to function well is common across China, United States, India, Japan and there is a lot of hope in this convergence in human thought that has taken place. And it's been a hard battle for the profession of economics getting to this point. And the politics too, I mean from the West they still look at this region and consider it as being a work in progress because the progress they want to see is not necessarily just the free markets but the political change too. Yes, I think that's a very important point. Here we used to see India and China doing different things but the growing economic and strategic interdependence between these big blocks are really happening. I think just because Japan and India are now strengthening cooperation there's nothing for China to fear. India and China are also re-approaching. Mr. Moody is known to be also friendly to China. From India's point of view they have to cooperate much closer with both Japan and China. And I will bet you a modest sum that the biggest investor in Indian infrastructure projects will be both Japanese and Chinese. It's one thing though to say China should not be fearful but it's a reality, different. Yeah, take ASEAN countries for example. China for the past 10 years has been very active working with ASEAN countries doing a lot of treaties. In fact the pace of speeding up the free trade between China and ASEAN countries was ahead of schedule actually for the past 10 years. So this is a natural reflection of the size emergence of the Chinese economy. So naturally China is taking the lead working with ASEAN countries but this fact is not widely perceived as a positive development from some other countries like Japan. So this is an example of the source of conflicts. Economic needs, you cannot push for a logic of China playing a more leadership role whereas politics are preventing that from happening. Also let me comment on the ideology issue. It's very interesting, I often do this mental experiment if you put together 10 economists from China together with 10 economists from the US, I bet the average or the most of the orientation of the economists from China is on the free market side whereas most of the American counterparts are on the left side arguing for more government regulation for example with the leader of the Wall Street and more redistribution. So the ideology, the economic thinking in China is actually more pro-market. The issue of course is to put these ideas into reaction, into reforms. That's the challenge. Well Councillor talked earlier on about the economists disagreeing on most things and the old joke goes if you laid all the world's economists head to toe they'd never reach a conclusion. But let's forget the economic aspect. What would you say about consultants? Well, that's why I'm coming to you next. Thank you. It's like from a consultant point of view I guess there's more pragmatism in forms you're thinking. But what of, let's take Myanmar for a case in point. I mean all the trends that we've been talking about is evident in Myanmar. They've suddenly decided that this is necessary change and that the about turn has been startling. But at the end of the day, what kind of political model will survive in Asia amidst all of these changes and these changing priorities? Well I think it's very, I find it very hard to debate the political model. I think the consensus though on the economic model is striking. Well look at this. Can business live with a political model that is not Western capitalist democracy? What is Western capitalist democracy? I mean the democracy that we've got now, I mean you can debate that forever. I think the point that we're all I think aligning around is the labels just don't help. Yesterday in the UK, most of the debate is around the breakup of the United Kingdom, inequality and how to legislate on wage controls, dealing with a Europe that seems much more interventionist in its regulatory approach. What label do you want to give that? And so I think the reality is these labels are just unhelpful. What really matters is can Asia maintain what has hitherto driven a lot of its growth which is an increasingly open approach to trade? And trade is leading a lot of the economic development and I think the opportunity Asia has hinges on the maintenance of that. Now geopolitics may get in the way. There is no question that the political debate is absolutely relevant. But let's reflect on a few things. Look at what is happening in ASEAN rather than what is not happening. What is happening is the development of the inter ASEAN trade is at levels that are unprecedented. It's unprecedented. It's still half the level of the European Union but there is a lot more to go in 2015 as an important landmark in that development. China's investment level is unprecedented so it is driving a lot of the economics in other countries. But I also have a look at what Japan has been doing and look at what India's been doing. And I think the overwhelming message here is there's no question the politics can get in the way but the economic engine that is churning in Asia is one that's premised on trade and growth. And I think that is driving a lot of the conversation and we can put labels around it but the labels are just not helpful. All right, it's also premised on investment in infrastructure and that investment to a large part is driven by governments as much as anything else. One of the themes of this forum, this meeting this year is innovation. Mika Chang yesterday was banging the innovation and entrepreneurism drum very hard indeed. And I'm wondering you guys, what do you think is the future of innovation and entrepreneurship in Asia? And Victor, I'll begin with you because some 20 years ago Kishom Mahbubani in Singapore wrote a book, Can Asians Think? And in the past, over the course of the next 20 years, the question is being asked of many forums I've been to is can Asia innovate? The idea of generating intellectual property of its own is something that has become an obsession with a lot of governments around here. So let's begin there. Is innovation the future of Asia? I think the question is, and Tainim is conceived. I mean, Japan, Korea, right, are the most advanced innovators in the world. China and India are the biggest consumer markets in the world. You have this dream ticket here in Asia. I hope there's some Americans in the room who might want to challenge us. No, but it's absolutely true. The numbers support this assertion because look at where the innovation in the world is happening. In services, outsourcing, that was innovated from India and it continues to be innovated from India. Technology, go tell Samsung they're not good at innovation. I mean, really? And if you have a look across the region of the internet economy, all the consumer, WeChat, Baidu, Tencent, Alibaba, far more adoption of consumer led internet here than in the United States. Now it's true that the BTB side isn't the same. So in reality, whilst that slogan, I've also heard that Asians can't market, they're not good at marketing. Well, that's also, have a look at the companies, Huawei, ITC. And there's just a lot of innovation happening here. It may happen without the pizzazz of the Silicon Valley noise. And it doesn't happen in that way, it's true. It happens through more collective thought but there is a lot of innovation in this part of the world. True, I agree with this. But there's one level of innovation where I think Asia needs to move into, which is really the absolutely fundamental sciences. There, the dominance of United States is very, very clear. And that does not immediately translate to next day's business strategy, but has a long run advantage. And I feel Asia has reached a stage where that is needed. And I hope we will have the sense because to sustain the long run growth, the growth performance has been phenomenal over the last 20 years or so. But to sustain this, we will need the kind of research that is already taking place, Japan, Korea, really in the frontline of that. But fundamental research, we need to step up so that a lot of the completely new ideas in science begin to come out, not for any chauvinistic reason, but you want this to happen in the growth-leading region for this to take predominance as well. This is a very interesting topic. Talking about scientific research, I just came to realize two statistics. The first is that the number of patents registered in China is almost... Exceed the reservoir. Almost as large as the U.S., I think in terms of the core, they're really the innovative ones, right? And also in terms of scientific publication, the things you were familiar with and citations, China, being a second largest economy, is now very secure in second place in terms of publication in scientific journals, referee journals, as we all know that. So that, I think, is a good sign showing that in this region, at least in China, there is fire back in the room, which will gradually come in to drive the innovation down the road. All right, let's bring in the audience here. I'm sure there's a number of people who have questions. Now, there's a microphone coming to you, sir, let's... Good morning, and thank you for waking us up. That's a wonderful debate. And I have to add one element to this wonderful Asian business context. My question goes to my dear friend and mentor, Victor Chu. You talked about national interest or relation between two countries or regions, but something go beyond that is threatening us, that is climate change. So what is your view of Asian business context in climate, climate change? For example, today we see many scenes in the river system, people evacuating. And Chinese bread basket, northeast Asia, northeast part of China will suffer from drought in many years to come. And even Japanese infrastructure is threatened by traditional rains. And those are huge threats, but do you see how you see the challenges and opportunities posed by climate change over this wonderful growing Asia? Thank you for bringing that subject up. Anyone else wants a question? Please put your hand up and the microphone will come around. Victor. Thank you for that question. I think both in our generation and the next generation, obviously sustainability is now really the key word. And the alignment between politics and business is really in legitimacy. And that is really how can we deliver in order to provide social impact for our stakeholders? So on that question on climate change, I think everybody, we are one world, everybody is the same. Is whether the particular country, in their particular economic cycle, can accelerate more or less to the agreed targets? I mean, China, to be fair, is really probably walking the fastest because China is a big, also a polluter. But the political will to get it right is there, both from the previous administration as well as the current administration. And I think you can see that in this question of climate change, we're all at one. And I'm grateful for you for raising this question. Kojima, sound very quickly. In your business, how much is climate change in forming your decision-making? As far as the climate change and also the other issues are environmental issues. And say, we are very much prepared to support and help the Asian countries. And this is a kind of technologies. And say, since Japan has so many experiences and climate issues and also earthquake issues and so many things. And how to protect those things we are seriously studying. And this might be of some help for the Asian countries in the future. And therefore, just I'm talking about the infrastructure business, but also and environmental businesses and also how to protect those climate change and also earthquake and tsunami and so forth. And we are very much experienced. That's kind of always some help for the Asian countries, I think. Okay, who has the microphone? Anyone? Behind you. Does someone actually have a microphone or we're just wanting a microphone? Oh, there it is. Oh, please, the young lady over there. I thought we'd already passed that around. Try again. My question is for all the guests. And after the financial crisis and the United States have come up with QE and Europe has also put down there interest rates and everyone knows that long term low interest rates may distorting the investment decisions and also push the assets significantly high beyond these fundamentals. My question is that given that the lifting raising interest rates in America is imminent, would that hurt the fundamentals of the world economy? And how Asia cope with this impact? When we saw the first announcement of the tapering, which was last May, there was a huge reaction. Exchange rates across the emerging economy, there were huge depreciations. My expectation is that when the time comes, of course we are already seeing the tapering in terms of the asset purchase in the US, but interest rates as well. Actually I feel the negative impact of that is going to be smaller for the following reason. The announcement came that this is what we intend to do and from December we saw that last December the US moved on the tapering. But now when the tapering actually takes place it's going to be locked step with improvements in the American economy. So the economy strengthens and there's going to be a little bit more tapering. And I feel the strengthening news of the United States is such good news for the rest of the world. It's still the biggest driver that that coming with the tapering is going to soften the effect of the tapering. So I am concerned and you have to watch. But maybe less than when there is a pure announcement without the economy having improved than what is going to happen down the road. There seem to be a lot of questions so if we can keep the questions and answers sure. That would be great. Next one please. Thank you. I'd like to know the panel's view on the impact of this debate. This debate for instance on growth in sub-Saharan Africa. Kevin I think your company came up with a report recently indicating that with increasing improvements in governance and infrastructure the growth in sub-Saharan Africa in particular that has been sustained over the past decade or so is likely going to escalate. And I think we already seen the response of the Chinese and to some extent the Indians in terms of massive investments into Africa especially sub-Saharan Africa. Recently with the African summit we see also the Americans are now also turning around and looking at the opportunities in Africa. And of course our traditional partners the Europeans will probably wake up to that very soon as well. Given this and given the fact that whether in fact the Asians can innovate or not it is clear that they are going up the value chain. It is most likely that we are going to see massive investment flows from all these regions into sub-Saharan Africa. What in the panel's view is likely going to impact the growth in Africa given the uncertainty of the political situation. Thank you. We are optimistic about growth in Africa for all the reasons. You have just one place where I think China for example will be directly relevant and this is the rising labour costs in China. Manufacturing costs in China can just rise. The cost of labour is a big component of that and you can see Chinese companies already investing and manufacturing in the sub-Saharan African territory and I think that is going to continue because the pressure on the wage rates in China is pretty significant and there also is the reality of a demographic deficit. China's working population has started to shrink. People have not spent a lot of time talking about the implications of that but the fact that China's working population is shrinking on the one hand labour cost continues to rise on the other it does suggest that in places like sub-Saharan Africa the investment is going to come both in the infrastructure which we know about but also in the manufacturing and other sides of the economy. That's right. In addition let me add that 2014 will be a landmark year in which China will have more outgoing direct investment than incoming and Africa is the third largest destination of Chinese investments and moreover the structure of the investment from China in Africa will change moving from resources into manufacturing. Another quick question. I got a very quick question to Professor Lee. You talked about the Chinese leadership toward the ASEAN countries. What's the vision of Chinese leadership vis-à-vis ASEAN countries particularly in terms of vision, in terms of value? I think the vision is very simple that is to integrate economically ever closer with the ASEAN countries and in the process work closely on the political diplomatic relations. In this, don't forget, these countries have a lot of traditional Chinese business investors and historically there are a lot of ethnic Chinese living and migrating to this region. Another quick question. Hands please. Anyone? Oh, others. Chatelier. We'd like to have your point of view regarding the issues, regarding challenges about ageing populations and war of talent in Asia. Anyone care to address ageing population? Well, this is, I mean obviously in Japan we can spend a lot of time talking about it but China has the same factors going on. The average age in China, if you look at what's happening to median age it's already 39, it's heading north rapidly and I think as a result the question it creates is both how you make sure that the productivity issue and stop relying on young, low-cost labour and shift up the value chain as was just said but also how we innovate to meet the needs of those ageing consumers because it creates a big opportunity and I think Chinese companies are not yet fully grasping that opportunity in the way that countries, companies coming from the US and others have done so. So the working age and the opportunity that they are for creates is actually both a threat on the one hand I think on the manufacturing side but it's also an opportunity in the innovation side and they need to get after it but governments are going to have to also innovate to ensure that they can deliver services at far lower cost and if they don't do that then there's going to be a real problem because the dependency rates are all going in the wrong direction. Ageing problems are a very serious problem for Japan. Also we have a problem of the reduction of the populations in such circumstances and the working people, the total population is now decreasing and when I went to the Philippines, the Philippines said Philippines has now almost 100 million people there and Japan is 130 or something like and the Philippines is now still increasing a lot and the average age is 22 years or something therefore and we have to collaborate with the ASEAN countries and to protect our ageing problem and also the reduction of the total populations and this is a very important problem for us and try to resolve this problem and collaborating with the ASEAN people and the Chinese people and the Indian people of course. To put in a quick word on this, on the demographics that are general concerns India is still on the dividend slope and the expectation is it's going to peak in 1933-34 so it's going to get younger up to then and then turn around and given that the economy is growing very well actually this ogre is very well that it's going to feed in and take in this labour and give it a growth push but on that the biggest hope is really with Africa, Sub-Saharan Africa where the demographic dividend is going to be very large in terms of the age bulge if the governance and the economy can be gotten to place then you are going to draw on this and become a major driver. We have reached the end of the final word. Very quickly, two very important issues people tend to forget when discussing ageing. Number one is people are getting healthier when they are older controlling the age, people are much healthier than 20 years ago. Second, the per capita income in a country like China when people are still poor whereas meanwhile they are getting healthier if the policies are flexible enough to encourage them to work then the ageing issue can be greatly mitigated specifically encouraging old but healthy and still poor people to work. And there we are going to have to leave it. Gentlemen, thank you all very much indeed. The audience thank you. Please show your appreciation for our panel.