 Good morning, everybody. My name is Michael Jarner, international editor with the Danish newspaper Politiken. And I have the honor to moderate this session entitled Strategic Outlook for Europe. I also have the honor to welcome a powerful panel consisting of Kersti Kalljulait, president of Estonia since 2016, first female president in Estonia and youngest ever. Yang Deng, vice president and dean at China Europe International Business School in Shanghai, one of the most quoted experts in mainland China when it comes to economics. Mr. Valdis Dmbrowskis, vice president of the EU Commission for Euro and Social Dialogue. And also former prime minister of Latvia from 2009 until 2014. And Jules Chappell, managing director for business at London Partners, lead teams that support investors in London and help London-based companies to export. Welcome to all of you. A few years ago, I was moderating with CNN's money's famous host, Richard Quest, and he was talking about interesting times. I'm not able to pronounce interesting times as intensely as Richard Quest can do. But I can assure you that when we were talking, it was interesting times. But now they are even more interesting. Global powers are shifting. Old powers changes course. USA is behaving in a more unpredictable way. But around an axis of America first and a sort of contempt for international institutions like WTO, treaties and agreements, a sort of a deal-based bilateralism. And now an ongoing trade war with China is taking more and more power. China is the upcoming superpower, soon with the world's next largest economy, and ambitious plans like the Belt and Road Initiative and Made in China 2025. EU in the middle stands there, another economic giant with a large ambitions, but also almost imploding forces like Brexit, EU skepticism, and political polarisation between countries and inside countries. Today we will have two questions to answer. With a combined GDP of 15.3 trillion euro, the EU is the second largest economy, but political tensions between its member states with the USA and Brexit are putting it to the test. What are the implications for business? What are the implications for Europe standing in a world between USA and China? You might have other questions out there, and you'll be able to answer, or to post them later in the session. We'll come back to that. But first, President Kajulaj, how do you assess EU's power in this dramatic situation in the world as it is by now? Frankly speaking, I think all these risks and problems you mentioned in the EU context, I admit Brexit is a sad event and creates a lose-lose situation on both sides, and we have nothing else to do but to respect the democratic decision of British people but economically looking. It doesn't shape out too good also, I think, politically looking, it's not looking good. But that apart, if you say there is discussion in the EU and therefore EU might be somehow weaker in its international position, then I think you are mistaken. Because if you consider the discussions we have to have, for example, migration, terrorism, these will not be solved better alone as our British friends quit nowadays. Thank God the rest 27 are sticking together. Imagine trying to negotiate to each one alone. And let's take one concrete example, migration. We don't have a European Union and we need to agree on how to quell the migration or how to accept migrants in an orderly way on our continent. We take how many years to find a place where we do this Congress of Migration of Europe, how many years to set the scene and how many years to agree on the rules and then there will be not be implementing body. I mean it's simple economical logic, not rule of law but simple logic of economy efficiency and effectiveness which are the free catch lines of the European Commission always that we do these things together. And yes, we do argue among ourselves but it happens in a preset format. We have already rules when we enter this big egg building or used to slips us previously and we argue within this framework and we come to conclusions within this framework. And if it looks nasty to outsiders or to journalists it's because it's transparent but the process is continuous and nobody has yet proposed anything which will be more economical efficient and basically useful for European people. Try to do it one by one, everything one by one. I don't know where you are right. Try to look at every European economy alone. I mean Frank Walter Steinmeier says very often, very openly Germany is too small to go with alone. 500 million relatively rich customers this already sounds the bell with biggest economies like this one surrounding us. But still you have those forces about nationalism about increasing your skepticism and even a Brexit. There I believe has been a few things which you could always say you have also done wrong. One thing which I think it went wrong sometime between Barossa one and two. It was this Europe is coming close to simple people. I'm sorry Europe is a difficult legal construct meant for one thing. Leaders, democratically elected leaders come together and argue it out what is best for everybody. And this is what the European Union is. It's not coming close to every people. It's not taking social responsibility. Redistributional policies from education starting from education which is very important egalitarian education. This is member states responsibility. So the popularity of Brussels will always be actually held hostage by how well member states government use this forum in Brussels and use these gains, economic gains they get from belonging to this huge market. And there are gains, only Greece is behind this 2004 wealth level, everybody else is rich including the Western European countries. And these gains need to be used for these in white term redistributional policies. If this goes wrong, nothing can save the popularity of Brussels and my feeling is, is there a egalitarian education available for example in UK? In Estonia it is, well, of course it may be false correlation but in our country the popularity of EU is 79% and don't give me this, you get so much money from that. Mr. Yang, that was the President's perspective on it. How does it look from China and how does the view affect a business actually? Okay, so I'm someone maybe a little bit atypical because I live in France for 12 years so I also look from the inside and now I'm living in China and dialoguing with different level of people, different social classes if I'm allowed to say that. So first I see there are several issues we have to face. The first one is really about immigration in Europe because for me the biggest problem we see now is the confusion between economic immigrants and the refugees because in all the European country we are still mixing these two words. Last year, WEF invited me with a bunch of experts who worked very hard in Milan to come out with some white papers but I don't see anything really catch any intention in Brussels talking about how to create a rational immigration system, economic driven which is necessary for the Asian population and to fix some structure to accept within the capacity these are political refugees but still the problem is not solved. And another big issue we saw all the crisis started with very aggressive or ambitious enlargement of EU and that of course creates a lot of heterogeneity within the group and now we are always questioning I'm outsiders, I can always question so EU is about integration of value or integration of geopolitical zone so nobody really answered me in a satisfactory way so sorry to be blunt. The third one is also about the talk because I'm sitting in France in an ordinary family watching the TV when the politicians are talking about Brussels and EU and every time when they go to Brussels agree on some coordinated reform or integration when they go back home when they sell it to their voters they always try to blame Brussels that I'm sorry but we are in that system and we have to implement that because it's come from Brussels as the end of the day the ordinary people say why shouldn't we get out of it? So that's why we have the breakers so the politicians although the majority of them in power they are poor Europe but they are still using Brussels to just discharge their responsibility or to recognize the reality from China I see there's a lot of problems of course China has a lot of problems the Chinese investors in Europe they have a lot of problems we can talk for hours about that I did a lot of study on that but there are two issues I think for China now it's a very risky moment to enter into Europe first of all by investing one country against another that will make the divergence within the European Union more visible and the Europeans might use China some European countries to play against Brussels and actually this will intensify the conflicts within the amount of the different member states the second problem is with the increase of the nationalism and the protectionism as Mike mentioned at the beginning I see more and more resistance among the very investment friendly countries like Germany even if it's not in EU like Switzerland, France against the Chinese investment but actually it's a reflection of the internal problem within EU so I just stop here No but could you please elaborate when you said that some countries are using China against Brussels so you have a feeling that countries are not it's not like China and EU but this is something which is used internally in EU too I agree because the problem is that if you look at many of these Eastern European countries they have a high aspiration for the support for the support from Brussels and Brussels and now they are playing between Brussels and China because you know in China they have this structure called 16 plus one so there are a lot of investment pulling into these areas maybe using different because the value system different different kind of regulation or approval then that creates more problem actually for me the problem first the problem is internal but now with the Chinese investment coming into this area of the European Union actually that intensified the divergence and problems Sorry I have a two thing on that I come from that part of Europe and I have strongly to argue first of all all EU countries apply EU procurement rules in public processes also there is a level playing field for all kind of capital so it's absolutely impossible under the European structure to play one country one country's capital against somebody else's least European MFF it's ridiculous notion and other ridiculous notion is that all problems in Europe started with enlargement we didn't, sorry to say, unleash lemon bras we absolutely didn't unleash the migration crisis and we didn't leave the liberal reforms undone in Italy and France like they were done in Germany so we didn't kill the economic growth what we did we made Europe more competitive actually by holding back the growth of the average salaries or lower end salaries in Western economies and this was done in two different means and one of them I admit may have led to Brexit because if you see now we can look back its insights so we couldn't know what happens but UK opened its job market immediately whereas Germany and France didn't now if we look 15 years on UK has many immigrants but relatively little factories in Eastern Europe whereas French and German businesses were forced to go out now they are only already in Serbia and building factories there because it's again cheaper we have converged we are not competitive in that sector anymore but this quelled salaries but didn't rise the migration question to the level in France and Germany even if the macro effect was the same so you could see that there were different outcomes but otherwise I really refused to accept that Europe's problem is that it has Eastern European members yes there is the free seas initiative but this is all under the European Union procurement rules I mean this is just ridiculous I'm sorry if people in France think this way I understand this is a petit peuple de français qui pense comme ça ok we've taken it in all languages ok George Chappell at this orderly Brexit could have dire consequences for UK once IMF and Christian Lagarde business must be freezing somehow in UK right now I think it's true to say that the uncertainty has been unhelpful for businesses honestly across the borders and particularly in regulated very heavily regulated industries we've certainly seen the contingency planning already happening but I did actually I checked the FT data on FDI particularly into London over the past year before coming to this conference and later stats are sort of July to July and London has the fundamentals of being a very international trading city I mean a history of 2000 years of being very adaptable very resilient and it remains out of 11,500 cities monitored in terms of FDI projects it remains the single biggest destination for FDI projects both in terms of coming in from around the world but also going out and I think it's important to keep that in perspective because that international trading is part of the DNA of a city like London it's an incredibly diverse city you know every third Londoner comes from outside of the UK it has more international bank lending than any other city in the world largest foreign exchange second largest assets under management fourth largest insurance market you know very well leading in terms of infrastructure finance which is important for initiatives like the Belt and Road sustainable finance, fintech as well as the wider technology infrastructure and I think what while this is undoubtedly it has started challenging times I was quite struck listening to the president because I used to be a British ambassador and we used to cooperate so closely because of the values that we shared it wasn't because in the morning we got a script from the commission saying these are your lines to take we operate it as a group because we genuinely agreed with each other and I am very pragmatic in hoping that despite these challenges that we are a group of friends and I listen to you and I find myself nodding and I don't think that's going to change after Brexit but I do think that there are real tensions and I mean we sat here in the World Economic Forum and I think when we talk about the fourth industrial revolution and the pace and the scale of change it is incredibly difficult for humans for cities to adapt at the pace that we need to adapt and we need to be incredibly resilient more so now than perhaps ever before and so I think that whilst politics is undoubtedly difficult I do, I get very different feelings when I am sat with a group of tech entrepreneurs in London, I feel the sense of international collaboration and a lot of it purpose driven and driven by these big global challenges and that longer term perspective so that is what gives me ongoing hope but that takes me directly to Mr. Dembruskas because do you have the same optimistic perspective on the world when facing maybe a hard Brexit we have seen the French government are even driving up some contingency plans for the future how does it look from your post? Well, first if we look at the economic outlook of Europe actually it looks quite stable so we expect around 2% growth both this year and next our estimates on the impact of Brexit so far the effect or economic growth has been quite limited for EU 27 it has been more pronounced for UK because currently UK together with Italy are slowest growing EU economies but in the case we see that the economy growth is set to continue despite the Brexit and approaching Brexit deadline then if we talk about public perception of EU actually latest data shows that two thirds of Europeans think that European Union is good for their countries and that's the highest share since 1983 so in a sense one could say that the difficulties which we are facing would it be Brexit would it be instability and conflicts in our neighbourhoods both eastern and southern neighbourhood would it be ongoing trade tensions are actually concentrating minds and more Europeans understand that we are better off dealing with the problems together than trying to solve them in 28 different ways But when you are meeting your counterparts here in Beijing as you know you are what is the perception right now of EU how does Chinese officials look at EU's ability to play a powerful role internationally well actually now we see that the perceptions of EU are I would say positive and we see increased interest maybe exactly for the reasons that US has decided to engage in extensive trade conflicts relating tariffs and so on and so forth we actually see that there is a lot of interest to cooperate with EU and also from EU side I think there is some areas where we can step up our also external economic activity including by strengthening the international role of the euro it would be unnatural not to touch on the trade war which is blooming I mean both had meetings with the Chinese leadership and leading officials while USA was pronouncing new tariffs China was answering back again what do you fear the most from this situation we are standing in in the relation between China, USA and EU Mr. Lee? Well first if we clearly see those trade tensions as a downside economic risk maybe we do not see it like immediately triggering in the global and potentially European economy but we already see it in confidence indicators which then leads to the investment decisions potentially consumption so clearly that kind of a retreat to protectionism can be damaging to the world economy but then I would say there is another worry which is to protect the multilateral rules based system and that's why EU is emphasizing so much the need to respect the role of international organizations including World Trade Organization as you know just yesterday EU European Commission came up with some new ideas on how to facilitate the WTO reform so we think that it's important that we solve our trade tensions which inevitably occur within existing international framework so we will be like trying to pop up the VTO but what would we do how can we put an American president on board I mean what can EU do to put an American president on board I know, we need to kick the can down the road unless until it becomes apparent what happens to the economy but Baltis may have a better idea because they are in the business of kicking the can down the road well actually if we talk exactly trade tensions and President Trump we are in a business of stopping the escalation as you remember there was a meeting between President Trump and President of European Commission Mr. Junker which avoided further trade conflict escalation between EU and US and indeed we agreed to set up a negotiating group and currently we are sitting at the table and negotiating trade with the US well the scope of negotiations is clearly less ambitious than what we were discussing when we were negotiating TTIP transatlantic trade and investment partnership but I would say in the current circumstances the very fact that we are actually sitting at the table and negotiating is already a good sign when you are running down international papers you often see there is a fear among some Chinese diplomats that EU and USA is actually going on the same boat that Donald Trump is actually trying to take EU out of the equation put him on their side so EU and USA would actually end up teaming up against China in WTO what is your perspective on that? I think this is the worst nightmare that the Chinese authorities are thinking about waiting currently but there are some way out first of all as Mr. Commissioner mentioned very well the approach that President Trump adopted is more like a unilateral so one-to-one negotiation which was totally against the value that the EU and China want to protect which was under the international setting of multilateralism so this is I think a window of opportunity for both sides to sit down and talk and I think on the other side for the China there is an opportunity to really work well with other part of the world to deepen the reform which is also a commitment from President Xi Jinping and we were here from Premier Li Keqiang very soon just in an hour I'm sure that they will reconfirm this kind of direction for China on the other side for the European Union China is by far the biggest opportunity for the next one or two decades to grow I just want to share some of the numbers this year according to the economists China will become the largest consumption market in the world with 5.7 trillion US dollars and with the growth of 7% per year in two years the Chinese market will at least twice larger than the US market which will be the second largest consumption market so for the European side since we have so many good products and service and brands so China represent a big growth opportunity for European companies and yesterday I was joining some other panels and there is a very interesting insight shared by some Chinese companies showing that because of the increasing level of protection of intellectual property in China and also the higher level of protection for the environmental issues and it's also becoming the KPIs of the local authorities a lot of the small and highly polluting factories are closing down I talked with some leading chemical companies from Europe for the first six months of this year they enjoy more than 70% increase of sales and profit in China so there are some great opportunities for the European multinational so we try to keep positive and negotiate I think this is the best way to get a kind of win-win solution for both sides President Tsai, you touched upon it how good friends are we after all China and EU we are seeing a tendency Germany recently was avoiding a Chinese investment in a company for security reasons we are seeing friends doing the same how do you assess the... first of all I think you take it from the wrong viewpoint it's not about being friends it's about creating win-win situations economically and politically for us all second you mentioned the stream in the newspapers that there is a certain fear that the US and EU will team up I can bring you enough examples of the different stream in equally good newspapers which say Europe is turning anti-America very much also forward let's all, everybody calm down we have our economic interests, we have our interests to protect our people and we need to work this through Europe values cooperation through the World Trade Organization Europe values also the rule-based world order it's deeply written into our basic values without that Europe cannot survive so that enough win-win situations will be created because interest-based means win-lose and we know that wouldn't work for us and therefore what we are trying to do is to discuss with Chinese how our companies could be for example sure that their intellectual properties protected when they do work here discuss with Chinese how they with all other capital providers can find equal conditions to their capital in Europe and with the US I think Valdis Dombrovsky's elegantly put how they say in Europe if they are kicking the can down the road this is all what he said we have created a negotiating group this has split into a thematic negotiating group so we take two or three years meanwhile sanctions are not getting applied and just the risk of getting them applied will start to change supply change which will bring economic calamities and therefore as we know and which has happened before still there is a push area this whole thing will feature out if we are lucky and smart if we do not have strategic patience of course and react very quickly and I admit that nowadays all this social media and everything seeks instant gratification in politics but I mean this is not about instant gratification this is taking things calmly forward and I also wanted to say to Mr. Chappell that you very elegantly put it that actually UK is not leaving Europe it's leaving European Union and the other streams of our cooperation are actually really strong and good definitely not affected by this process because it's very common to think that now they will be very mean about how they do other things like for example defence cooperation where we too cooperate very closely and we have been warned that you will see you will be forced to take that side in this Brexit discussion because otherwise you will be punished in other streams not a single incident not a single hint that this could happen yes and I applaud the UK politicians for that thank you Mr Chappell I would like to take the same question to you because the English government took the same stance as the German and France and recently propped up the possibilities that the government could actually stop Chinese investment in I think they called it sensitive industries how do you assess the friendship but the partnership I mean speaking from London China and the US are the two biggest investors into London so both very established relationships both incredibly important relationships there is obviously a process in terms of assessing investments and again it comes back so many of these standards and points of view are completely shared and so from from that cooperation point of view and as you say you're absolutely right not once being brought into the negotiation table because we share them so it will be completely counterintuitive so again I think on those kind of strategic issues there will always be that sense of collaboration but where there is a great opportunity I think are areas particularly around fintech, AI, blockchain creative technologies where particularly China and London there is already very strong activity yesterday, a couple of days ago Babylon which is one of London's unicorns announced new investment in AI and health and that's done in partnership with Tencent and Hawaii has invested a lot more into London so I think these I love the phrase strategic patience I think where there are values shared these very these spikes of difficult political negotiation I think pragmatism will win through Was the young thing taking the question to you how is it perceived in China? I think for the Chinese they are still in a transformation period I think the Chinese colleagues they are repositioning themselves many of them are still staying in the old model by believing China is still a developing transitional economy but the problem now is that on the other side China has a much bigger ambition to be in the center of the stage you are in the center of the stage you have to bear the equivalent responsibility so I think the message is not well taken actually when they translate to Chinese it's a lost meaning when Macau or Macron come here and push Chinese side to get what they call the reciprocity and Chinese understand in a kind of transactional way but actually when the Europeans talk about equality I think on this side we need to push them further and by representing my school when I travel to Europe many of the journalists are asking me a very I would say hot or spicy question especially in Germany asking me that when Professor Ding will be allowed to buy 10% of number one automotive in Changchun and 10% of ICBC already sold these 10% of Deutsche Bank and the Mercedes-Benz to Chinese investors of course when I repeat the same question of my Chinese colleagues here always the first reaction is that we are different we are a transactional economy we are still emerging so how come we can sell these strategic assets but I said are these strategic assets for Germans so gradually they will realize that and I think it's everybody's interest to really open equally I think the European Chamber of Commerce here the German Chamber of Commerce they are working very hard pushing that and also recently I had a talk with Mofcum people and they also raised the same question they said why the multinationals now here they are asking for more I said the perceptions of these multinationals are very different when they came to China early 1980s even until 1990s they came here to take China as a stop of manufacturing for their global value chain so they don't care actually that much about this corporate environment for them because they just here to take all the raw materials and components out of China do the processing and resell it in the world so they only care about tax, the land price the labor that's it but now many of the multinationals they want to come to China to stay they say okay we now want to become a true corporate citizen in China so we will create the whole value chain in China from the branding, from R&D some specific products to the Chinese market so of course they are much more sensitive towards the Chinese legal taxation and even environmental and IP protection environment so they are much more sensitive about that so Chinese colleagues they still need some time to digest all that but I hope that will come very soon it's good for the multinationals for Europeans but it's also very good for the Chinese economy Mr. Dombrovsky I noticed that you in an interview yesterday you actually said some of the same that now it was time for China to deliver on trade for example could you elaborate on that? Well actually I'm doing the Chinese market opening I did both bilaterally during my visit to Beijing also yesterday there was a dedicated panel on this so on this China has recently come up with a new initiatives on market opening and from the EU side we very much welcome those initiatives and especially in the area of services we see that it's actually quite broad based market opening covering banking insurance capital markets credit rating so number of areas that's the so to say ownership share caps will be raised or even lifted all together so we certainly welcome this ambition so what will matter now is the implementation so how it's practically implemented at central level, at local level how it's seen from the real business perspective do they really see the hurdles to the investment being removed so we welcome this policy announcement and are willing to see a timely and full implementation. And what are the time prospects in this? As regards the time prospects that's exactly the question so the policy announcements are there the decisions will start actually triggering down already some have already started so as I said now it will be what will matter is more to see the practical implementation of those decisions. And what will you come with the other way around? Well as you know we are also now in a process of negotiating between EU and China a comprehensive investment agreement there was a 20th EU-China summit in July where we made some progress as regards the investment agreement and we hope to make progress and to reach this agreement which we believe it's mutually beneficial for both EU and China as it will provide more clarity for both sides what are the rules of game on investing in each other's economy. Do all of you do you sense that the ongoing trade war will USA has that somehow made China more open for for this European point of views anyway. It was interesting I was at a lunch yesterday and Chinese investor in Silicon Valley saying that they were feeling the impact of these tensions and that some investors were now looking to European markets potentially to put their capital there so I think as a Brit I love rules we very much follow the rules based system so I don't anyone wants to see these kind of trade wars but I think there are opportunities for Europe Well frankly I think these things rather coincide Chinese economy has grown quite quickly so big that first of all of course it is able to I mean trade with most of us all of us more and more extensively second it's also creating capital for foreign investment so it's just two things coinciding that we do see we would have seen this anyway we have been talking for 10 years now that China is coming out on the other hand we of course have to remember that I mean in this economic room there exist different rules we are liberal market economies this is rather state controlled I admit at the SME level quite similar to what we do but if we get to larger companies it's not exactly the same and so these two economic spaces if they do coexist side by side they need different multilateral fora in order to understand each other well and to operate well not seamlessly together but at least understanding why there are differences and if there are differences then at crossing these borders these differences need to be evened out somehow and for that we need to continue these discussions on the other hand I do welcome one huge country with really huge population exiting in big swaths of its population poverty we have also created in 30 years an economic change in Estonia in 91 we think we think we cannot even measure it was about 30 dollars no it's 1300 we are also coming out we are also starting to look where to invest because you cannot anymore construct stuff in Estonia you have to go somewhere where it is cheaper and concentrate on growing not your GDP but your gross national product same happens here just I mean in a billion times larger and this is the difference but otherwise it's exactly what you would expect for a country which passes the transformative phase to start acting we do the same it's just that we are 1.3 million and the smallest economy among Nordic countries otherwise it's just economic logic okay for me if we want to make sure that investment flow works well there are two issues of course as I mentioned if we look at the Europe VS US there are a lot of substitution effect in the technology partnership for China so of course naturally with all the resistance as they are facing in US many of the Chinese companies and investors will move into Europe and it's happening already however in order to make it work we need to observe the two level issues the one level is like Madam the President mentioned about this nation level how China will reform its system in order to offer a more friendly environment for investment in China so of course we are pushing on the trade but also another side is investment so this is something the Chinese company cannot work on but they will suffer or they will suffer from that because if not the host countries in Europe will take that as a hostage in order to push China towards that direction and then since I'm a business school professor there is also a clearly a firm level operation issues because how to make Chinese investment smooth and the profit for both countries this is also a big issue and big challenge because we see many failures in the past five years some of them hit the headlines in Europe which creates some very bad reputation damage for Chinese companies so then the local environment will resist Chinese investment because of these failures and the politicians with elections they have to face that because of their accountability and they have to do something again unfortunately against the Chinese investment so there is a level and also firm level so it's the responsibility on both level to work together in order to push that into a smooth way in May trade ministers of EU Japan and US actually agreed to deepen and accelerate discussions regarding possible new rules on industry subsidies and state-owned enterprises so as to promote a more level playing field I guess that is still going on and that could indicate that we are actually seeing a new front EU, Japan, USA front in WTO to strengthen the rules well I would say there several aspects if we discuss those points which you raised on subsidies I would also add intellectual property rights technology transfers those are not new issues and those have been issues we have been raising with China Bilaterally we have been raising within the framework of WTO those are the issues which we now propose also to deal with when discussing WTO reforms so clearly those are the issues we are raising but what we are saying here that exactly we need to solve those differences those disputes through the international organizations through the World Trade Organization and that's why we do not agree to this unilateral approach US is currently taking but rather saying let's stick with the agreed framework and with a multilateral way of solving problems so that's really what is combining EU and China that is we should strengthen the WTO and the rule based system and work with that that is the main objective as it is right now that's something which you really missed in that statement combining EU and China to strengthen the WTO I mean multilateralism is not about once coming together and defining it's about everybody belonging to that organizations having a say and this is what matters to me always the most to remember that in multilateral processes we have the right to say for the smaller participants so if you define it this way it hurts my ear I'm sorry but then I will try not to hurt your ear because what do we do with an American president who obviously do not believe so much in this institution as I said we need to delay processes as long as we can because I believe that even the threat of the sanctions or the threat of the breakdown of international supply change will start well companies in America for example looking for local provisions which will definitely be costlier than using the current model and then hopefully I mean just the poor economic effect will make it once again quite clear that the economy has not changed it's almost the rule of law that I mean if you cut down on international trade you get the negative spiral so I'm counting on our capability and ability to draw the process until it is quite visible that it doesn't make sense and as you know in the international politics including trade politics delay is sometimes a really good tactic if it's possible you move ahead quickly if it's not possible you do and we have to respect that president he promised his voters some things he's now executing them he didn't promise the macroeconomic effects which will come out of them but when these come his voters may also well change the view and start demanding the opposites it's very much like in Europe in Europe crisis do you think that European technicians didn't know that Euro area is not complete they did know but when they created the Euro area they couldn't demonstrate it to wider public as soon as the crisis hit it was evident to everybody and we could in Europe move forward in creating a better Euro area you use what you can demonstrate to your people and then develop international relations European Union issues this is how politics works and it has always been like that so I somewhat tend to also regret all these shock and horror and doom and gloom thing that world is horrible after all yes we have problems really problems for example the number of people starving globally has started to rise again after long decline so I mean these are problems but simply that we argue in a heated way and I do regret that sometimes we use strong words as well I mean this doesn't mean that the basics of international diplomacy and politics have in any way changed sounds like time is on our side yeah I agree I think we can keep this optimistic note and and try to move on but as you know that there are a lot of challenges down the road I agree George Chavo I'm just wishing I was Estonian I can vote for that no I do it's actually genuinely really refreshing you know I think it is very easy sometimes when you are reading the press to feel that things are very very extreme but as I say I mean I'm dealing every day with businesses with startups with scalups with investors with regulators with institutions like the London Stock Exchange and there is that perspective there is that perspective of I mean the uncertainty is unhelpful and people just want to know but they want to know so they can get on with it and so I do think as I say it's genuinely very refreshing to hear a debate where that sense of perspective is so concrete I mean in Germany what we do here is called housewifeish policymaking so we are housewives okay with that word shouldn't we leave the word to the floor please raise your hand any of you who has a question to the panel over here please you will have a microphone please present yourself and you're welcome to indicate around so I will take names my name is K.S. Kumar but we have an operation in Estonia we were employed with 200 people and this was to president of Estonia one of the initiatives that Estonia has been leading was about the digitization of European Union the digital Europe in other words even today there are challenges about EUROPE and therefore European Union probably has challenges about EU governance across all of the European countries together so I just wanted to get your view on how you are leading the way in making EUROPE actually a reality especially in the new context of the data privacy acts and so on and so forth yes indeed it is true that Estonia is a society where all public service part 2 is operated online whereas you cannot get married and you cannot sell property everything else is online 100% and that of course means that for a small open economy in the European economic space our problems start when you want to cross border and of course 80% of our business crosses border because I mean we are international and then we immediately have to do everything on paper and our people are seriously complaining so when it was the EU Council presidency period for Estonia we realized we need to do something about it and we had a huge digital summit which I think as the most important conclusion was not which working groups and paperwork we will do but the understanding that all leaders of EUROPE came together and admitted that our people are in the internet our businesses are in the internet they transact and interact in the internet anyway we have to give them secure internet we have to give people digital identities and recognize them all over EUROPE and start this work immediately this understanding is clearly there and if I am not mistaken France for example will have its digital ID next year we talk quite often with our French colleagues your Minister of Digital Affairs is practically a friend of our ambassador because very often they call and ask how you did it and they do it Germany gives out ID cards which digital identity since last year so it's happening it's happening far too slowly and far too late to my Estonian taste but we are able to consolidate minds on this issue there will be a next digital summit quite soon in Tallinn where also non-EU actors will be present so we are making this message and this is the most important message the governments cannot leave their people in this whole world new world alone because the biggest problem in that world is the lack of identity you play in Facebook and Google and Amazon all the time that I mean they did something wrong but they give people the only digital identity which is global the rest isn't so people are using it and of course it's been also misused because it doesn't have a state guarantee I mean digital identity card gives you a state guaranteed internet passport and with that lots of problems with digital will go away there will be a controlled part of digital where people are not anonymous and then there will be for fun internet where you can do whatever you want of course and this is something which is the change I'm clearly seeing in Europe is right now happening well indeed if we talk about digital as you know one of the flagship projects of the European Commission is digital single market and we are currently working to address exactly the issues President Karilad just addressed because we sense that in digital we actually are not single market yet also from the point of view that we still are fragmented among 28 different countries and Estonians or Latvians make other E-identities I don't even know if we recognize each others but clearly if you go to other that's good news but if you go to other EU member states you cannot use them because they are not recognized so we indeed need to scale this up at the European level because indeed if Europeans would have state or EU level guaranteed E-identities doing business recognizing people would make actually it would become much more easy so digital single market is clearly high on our priorities list let's take another question you are certainly active this morning huh question for Mr. Ding and it's about US-China trade tension so I would like to asking the scenario if the President Donald Trump is continually imposing the tariffs on China and China is also making countermeasures what do you think the worst scenario will happen in your mind, thank you okay, I think in the short run what we feel is more about expectation so you already see that reflecting very well in the downtrend of the capital market evolution in China and then of course we have to do some more technical analysis but if you look at the trade side actually Donald Trump is taking a run horse I have to admit that because if you look at the six months of this year the current account of Chinese trade including goods and services is almost balanced which means that China still enjoys something like 150 billion US dollar surplus in goods there is a 140 billion roughly US dollar deficit in service so that means overall trade is not a problem anymore for China so even US admits the currency is not undervalued anymore and if we take that out so that means the huge surplus that China is enjoying against the US is more like a routine created by some of the multinationals that means China is absorbing a lot of components and raw material from other countries so they are running deficit and then a surplus against China so if we take that in and also take the old story a couple of years back and everybody knows here in China about the very low value-added Chinese manufacturer created on F iPhone so if you take all these component in so gradually we will see there is a drop both on the importation and exploitation side for China and actually the value-added loss for Chinese exploitation will be quite insignificant because most of the goods route through China with very low value-added of course the Chinese workers in this processing business will suffer and many of the business they are already moving away from China because of the high cost pressure labor, land, environmental protection and everything and these additional pressure will push this Chinese company moving more quickly and actually it's happening I'm sitting on board of several Chinese companies so the decision we are making is really to acquire companies now in Poland and Ukraine it's a furniture business and then they go to Vietnam so far or kind of factories in order to export with the Made in Vietnam logo so these things are happening so in the long run they were disrupt and reshift the global supply chain for sure and but that's it so for me it's more psychological it's more structural but fundamentally the impact on the Chinese exploitation will be quite limited actually this is my expectation this actually is what is going on right now to continue that track is that China is more and more relying on initiatives like the Belt Road initiative in order to change its focus and possibilities I think for the exportation especially for the goods we are talking about exporting to US that substitution effect will be quite limited the main motive to catch up and to take off and to absorb the shock is more in the internal consumption side for the company I'm working on is a board member called Minhua Group listed in Hong Kong they are the biggest so far maker in the world and actually since 2 years already Chinese market is much more important than US market for the company so because of the middle class consumption and actually the margin they get from the Chinese market is much higher because Chinese tend to buy the genuine leather type of so far so the margin is much higher so if we look into different consumption related business the substitution effect by the domestic market over this exploitation is huge for the past 2, 3 years so I'm more confident on the substitution or absorption of this shock by the internal consumption then to root that to Pakistan of course they would do it but in a way this is nothing new again I mean this has happened to all countries growing in wealth they all start sooner or later to look somewhere else to produce and for their own capital to go outside so again this is nothing special with China it's special is the way that it is a state control economy but nothing else is Mr. Naprov please on this maybe I would just add a couple of points on the Belt and Road Initiative because we had some discussions about this before because later today also we will publish a paper from European Commission's side on how we see the synergy between the Belt and Road Initiative and EU initiatives in this area like connecting Europe like invest EU plan because clearly there can be synergies and we will be coming with some thinking how we actually can link the two to the mutual benefit yes you will have a microphone and I saw you off hello my question is to President Kajelid my name is Feng I've been to Estonian Talin but I do remember my experience of trying to break 50 euro bill there with some small merchant so I feel like the cash list promotion is right now popular in Europe but in terms of online payment this kind of stuff I think China is more advanced in every way so this experience not just included in Europe much faster than the US they accept cash or credit cards so my question is what is the thing that stops this from promoting fastly why is there no such thing like Alipay and WeChat that could be making the payment in US and Europe much faster and convenient for customers thank you very much indeed this is one clear example where we have fragmentations of the markets where and I can trade with my mobile phone in Estonia I admit what not with my face and the pin code which is I hear available already some places here in China so you are there in a faster development cycle than we are these markets remain fragmented because the banking markets themselves remain relatively fragmented and there are also lots of constraints set by the rules and regulations in all internet business in all internet business which struggle with this that our business models are global but our rules are local this is exactly the clearest example of that and we need to do something about to make sure that our analogue life applies also and its rule but similar way in the digital life so in Europe we had a long discussion whether we should even have the digital freedom because it seems like we just apply all other four freedoms in digital and all these also your problems would go away of course not between Chinese and European companies there is still a limitation and big part of that is trust so our lack of trust that our personal data will be protected for example if we let these systems operate in our continent but we soon realize that it's easier to say we will create the fifth freedom even if it actually is counter-intuitive you should simply make the four others apply in the digital maybe just to add a couple of words indeed if you look at the developments here in China sometimes also visiting by do financial services FinTech part of course it's very impressive what's being done here then we have some catching up to do in Europe and that's why we put forward earlier this year a FinTech action plan and are now looking at different aspects how we can facilitate FinTech developments in Europe and not only from a start-up phase because if you look at the start-ups actually Europe has very dynamic start-up landscape because well we have all it takes we have good education systems we have lots of money in research and innovation we have entrepreneurial spirit so there are lots of start-ups there is also capital available but then if you look at how those companies are scaling up actually then maybe in two or five years into the business you'll see much less of them than you see for example in US and one of the reasons why companies face difficulties of scaling up is exactly what president just said is this fragmentation and that's why we are now looking in a FinTech action plan how we can allow FinTechs to operate based on single licenses across the EU we came with a legislative proposal for example for crowdfunding platforms in terms of payment services I hope it will develop we have our payment services directive 2 as we called PSD2 we have corresponding regulatory technical standards now which basically mandates EU banks to share data with payment services providers which allow all kind of then FinTech companies actually to provide those payment services of course we must keep into mind that there are some additional safeguards in Europe we take our privacy very seriously we have general data protection regulation which needs to be followed which puts some restrictions how you can access and use and share customers data and you give actually more right or more control for customer to determine how their data can be used so there are some things which we need to bear in mind when thinking of developing FinTechs across Europe Hi there I'm Scott I live in London and I wanted to ask the question from the UK perspective I would maybe argue that the tone in the UK right now is of complete confusion and hearing panels like this are kind of easy to maybe come home feeling a little bit reassured kind of saying it's still got 2% growth and everything's fine but that's certainly not how it feels on the ground for most people who are not engaged in politics I'm a writer myself so do you think that the sort of confusion hysteria whatever is completely unfounded and we should just be all yeah it's fine we'll just kind of leave it to the negotiations or do you think that there's a real reason to be worried and to really want to try and reverse I share that it's why I find this so refreshing it's because I've come from that and I completely share the feeling of confusion as I say I think also frustration because it's been quite a long period of time and I think that I mean it's interesting you talk about reversing I think that Europe as a whole when you come to these kind of challenges actually you also come to appreciate things and I was quite struck by your comments about the levels of support for Europe now within Europe and for me that's also quite reassuring because one of the things that we will hear all the time is that UK will be beaten down you have to show that the country will suffer for having left Europe and actually if there is the reason to do that is that others don't leave but actually if there is increasing support for Europe I think that is a very positive thing because actually we can all be pragmatic and continue to collaborate and innovate together without the need to feel that you have to do something very extreme in order to keep the union together because I just don't think that is true I think is to say when people are put under pressure they appreciate things that perhaps they took for granted before and I think London certainly feel that that the European Union was very much taken for granted but actually I do genuinely think that there is a huge amount of effort being put into reinforcing collaboration innovating together as I say you feel that from the entrepreneurial community that what was once taken for granted we now need to fight for and I think that if I have to find a silver lining I think that is one and then I think we take the last questions from over here thank you very much my name is Hongwei I run a tech company in Canada most of our business is done outside of the country traditionally with the US but now increasingly with Europe and China so my question is to the Europeans on the panel I spent a lot of my time trying to understand what's going to happen next from taxation and free trade with our southern neighbour I'm probably quite naive and ignorant when it comes to Canada's trade relations and taxation with Europe so I was wondering if there's a good suggestion from the group as to how I can efficiently keep up is it the economist or is it each individual country, is it the European Union where can I efficiently get that information thank you well as regards trade as regards trade I think it's in a sense easier because EU is acting as a trade block we are customs union and we have the same trade conditions so to say with the third country so basically wherever you enter the EU with your trades of goods and services you are basically facing the same rules in terms of customs and then it determined by the free trade agreements which we are having with the third countries and also with the WTO rules with the general system of preferences and so on and so forth for countries with whom we don't have specific free trade agreements so on trade it's relatively clear on taxation it's different because there is some harmonisation of what we call indirect taxation taxes like value added tax like excises like customs as we already discussed but still there are differences in member states and as regards direct taxation income taxation personal income tax corporate income tax social security contributions those are not harmonised so indeed if you think about taxation rules you need to look at each specific member state and if you think about doing business across Europe indeed you need to think what are the tax implications so there the landscape is relatively complicated well you can how the data kind of the general data also in European Commission website as regards tax rules from the EU side on the parts which are harmonised but then you indeed need to consult information in member states regarding the taxation in each member state frankly speaking you don't have to set a company up in every EU country you set up in one and you operate in everything else because tax competition is one of the few areas where we do compete and it's quite reasonable because redistribution of policies are countries own so we cannot harmonise the taxes as they are and unless you are starbucks or you have some specific deal with a specific government then you are really protected in staying within this one taxation regime working and doing trade with all others so it's not quite so bad as it may sound but I do admit there is competition and this is the main area where we do compete against each other because our social models differ quite a lot Estonia doesn't have a corporate income taxes only dividends for example social taxes so I'm not advertising my country I'm honestly saying we have high social taxes some others have lower social taxes but different income taxes so this exists and I think it's not so bad as it's own Ladies and gentlemen I'm afraid time has gone could I just ask the panel to shortly formulate in one sentence or two maybe what did you hope that the audience got out of this discussion should I start with George Chappell For me perspective London is an international trading city I had one message actually for a Chinese audience reacting to feedback that I'd got from people that I've spoken to apparently London is seen as a very safe city to invest in for safe assets but less want to play and when I'm talking about playing I mean innovating and trying out with really advanced technology and so my message to a Chinese audience is please come play in London it's an incredibly innovative fast paced city you talk about Alipay I just know that I need to get my other watch because everything in London is done through this but so come play in London come don't just be safe come play Longest sentence ever I'm so sorry I'm a diplomat I wish that China Europe can work together to maintain this bilateral system in the world and to make a safe and a fair world in the future well since this session was meant to be on a strategic outlook for Europe so I wish the take away would be that Europe will stick together it was very clear immediately after the British referendum that 27 countries said that they see the future together Europe's economy continues to grow it's still together with US largest economies and Europe remains open to trade and investment so it's still a great place to come and to do business from this panel I would take this feeling that I mean we talked openly we remain friendly but elephants in the room like intellectual property rights or the risks for personal data these were on the table so they were not hidden in the room so our friendly discussion and calm discussion did not stem from the fact that we were hiding what are the differences of opinion we do have them globally you would always have them where I see Europe as Valdez reminded it was supposed to be about Europe I see Europe is more and more comfortable in its common foreign policy skin as well and it's adding the defence stream to it I can see that not despite but mainly because we have this heated debate when we finally decide to act at the global scene we are more and more actually coherent and also our leaders on international skin are quite coherent and I see this is a change from maybe the old times when the EU was considerably tinier thank you very much thank you for your marvelous contributions thank you for your good questions