Former US Secretary of State Hillary Clinton said Chinese President Xi Jinping’s decision to retain power beyond the two terms of his immediate predecessors caused problems for the country and relations with the US, while Citadel founder Ken Griffin warned the US risks a recession at the New Economy Forum in Singapore.
Day One of the three-day forum saw Chinese Vice President Han Zheng and Singapore Prime Minister Lee Hsien Loong express optimism about signs of improving US-China relations ahead of an upcoming meeting between President Joe Biden and President Xi Jinping. Lee downplayed the likelihood of Beijing launching a “D-Day” invasion of Taiwan, while numerous business and political leaders called for concerted global action in the face of surging economic, environmental and geopolitical risks.
Today will see a focus on potential future shocks from geopolitics, global decoupling, climate change and artificial intelligence. Energy-related technologies will also be discussed, and UBS Group AG Chief Executive Officer Sergio Ermotti will speak later today.
Clinton on China, Trade Talks (11:10 a.m. SGT)
Clinton said the upcoming meeting between President Biden and China’s Xi is an opportunity to “reset the table.” But she noted that Xi’s decision to remain in office (ending a precedent of two-term leaders) had created a lot of challenges for China’s system, visible through economic problems and the removal of top officials.
Following the pandemic and its challenges to supply chains, “economic statecraft” remains critical, but it must be different, Clinton said. “We need a new era of realistic trade agreements” that will help small and medium-sized companies, she said.
Leaders need to make a better case for trade agreements, and “not just negotiate behind closed doors,” she said.
Griffin on Future Challenges (9:55 a.m. SGT)
Citadel CEO Griffin warned the world has changed radically in recent years. “Now we are talking about de-globalization, re-routing supply chains,” he said. “Countries are much more sensitive to what we want to produce domestically so we are not exposed to global trade.”
Other challenges include the likelihood of higher real and nominal interest rates, Griffin said, warning that US government expenditure is unsustainable, with the country “spending like a drunken sailor.”
He said there’s a real risk of a recession next year, calling for the US to put its economic house in order and for executives to raise the issue’s prominence. Even though the country’s job market remains relatively strong, US consumers realize deep down that “something is not quite right,” Griffin said.
Xingtai Sees Recovery in Chinese Stocks (9:15 a.m. SGT)
Xingtai Capital Management, which manages a long-only China equity fund, expects a short-term recovery in the nation’s stocks as the market is at “an all-time historical low,” its founder and CEO Michelle Leung said on Bloomberg TV. “All the bad news is priced in.”
The recovery will be led by the consumer sector, Leung said. Lower-priced consumer goods such as durables, apparel and sportswear are seeing strong earnings momentum, and those stocks in her portfolio saw 60% earnings growth overall in the first half of 2023, she added.
Investors Talk Geopolitics (8:54 a.m. SGT)
Geopolitics is becoming increasingly important for making investing decisions, a panel of investors and executives agreed Thursday.
“A thousand days ago I wouldn’t have thought that having geopolitical experts on my investment staff was particularly important,” said Mark Wiseman, chairman of Alberta Investment Management Corp. “Today it may be all that matters as I try and make the calculus of risk and return and probabilities.”
Follow the Money (8:45 a.m. SGT)
Airwallex’s CEO Jack Zhang says Chinese companies have been setting up factories in Mexico. Supply chains are shifting to Southeast Asia, Middle East and the Americas.
His company has followed the money flow to conduct acquisitions of payment companies in Mexico. Airwallex has also launched in the Middle East and Latin America. It’s been investing in those regions to set up the infrastructure.
“Geopolitical issues definitely played a very significant role in these changes in the last two years,” said Zhang, adding that over the last two years there has been a “dramatic” turn in global money flows.
PwC on Better US-China Ties (8:00 a.m. SGT)
Signs of increasing cooperation between the world’s two largest economies are having a positive impact on auditing, according to PricewaterhouseCoopers International Ltd. Chairman Bob Moritz.
“The US-China relationship has actually brought it to a head where you have access to information for regulators to inspect,” he told Bloomberg TV on the sidelines of the forum. “It’s going to allow for the inspections to happen, so that tension has decreased quite a bit.”
The US audit watchdog has started auditing some firms after Washington and Beijing struck a deal last year following a long-running dispute over U.S.-listed Chinese firms’ auditing compliance. Authorities in China were reluctant to let overseas regulators inspect local accounting companies on national security concerns.
Watch COP for Carbon Capture (7 a.m. SGT)
Industry Capital Partners, the asset manager backed by Norway’s Aker ASA, expects to see more discussions on carbon capture and storage at the upcoming COP28 summit. CCS technology involves taking CO2 emissions, transporting them to a site — usually an old oil and gas field — and burying them, which “is actually quite a positive development,” Managing Director Yngve Slyngstad said in a Bloomberg TV interview Wednesday.
Industry Capital has targeted wind power and carbon capture as part of a major strategic shift toward renewable energy investments. But Slyngstad acknowledged that talks on raising capital to fund energy transitioning may be tough. “We are sitting in a situation where we spent nearly a generation discussing whether climate was a big issue or not,” he said.
Tensions over climate change are increasing ahead of the COP28 summit that’s being hosted by the United Arab Emirates from Nov. 30, including over who should pay into a fund to address losses and damage from climate change.
The World Must Tread Carefully (8 p.m. SGT Wednesday)
Singapore’s Lee said China isn’t “trigger happy” in its aim to take over self-governing Taiwan, which it views as its territory. “They would like Taiwan to be part of ‘one China,’” but aren’t sure how to make it happen, he said. Unless Beijing is provoked, the world isn’t “going to wake up one day and find that they’ve decided to launch D-Day.”
In wide-ranging remarks, Lee said there’s no alternative to a two-state solution to ensure peace between Israelis and Palestinians. A one-state solution would mean that “one side or the other has to be squeezed out and that is unimaginable.” He spoke amid global concern about the civilian toll from the Israel-Hamas war, which broke out after Hamas killed more than 1,400 Israelis and took around 240 hostage in a surprise attack. Hamas is designated a terrorist group by the US and European Union.
On AI, Lee said that more knowledge and experience of the technology is needed. It’s key to understand that “the pitfalls are so that we can make smart decisions to regulate it as we go along,” he said, noting that tech people generally know more about AI than do governments.
The New Economy Forum is being organized by Bloomberg Media Group, a division of Bloomberg LP, the parent company of Bloomberg News.
