Govt, firms must unite to deal with challenges

Editor’s Note:

Alibaba founder Jack Ma Yun and some well- known entrepreneurs and experts attended this year’s China Green Companies Summit organized by the China Entrepreneur Club, with many participants focusing on the challenges faced by the Chinese and global economies. Here are some of the comments.

Jack Ma Yun, founder and executive chairman of Alibaba Group

With significant changes expected in the world and Chinese economies in the next 30 years, China’s government and enterprises should take on their responsibilities in advancing economic development. A new type of governmentbusiness relationship should be promoted to maximize the roles of entrepreneurial spirit and enterprises’ creativity, and the government should create a good environment for enterprises to contribute to the society and the economy.

In the future, poverty alleviation and poverty elimination are where enterprises could play a big role. The government has a bigger responsibility in poverty alleviation, but poverty elimination depends on the market and business. China’s most extensive poverty alleviation was achieved after the reform and opening- up, and it involved not only government policies but also entrepreneurs’ contribution.

Curbing corruption and wiping out poverty are the two areas where entrepreneurs can play a big role, which is why we have promoted a four “no” campaign – no bribery, no back pay, no tax evasion and no infringement.

I believe the best way for an enterprise to show its presence is to pay tax, and tax payment is the best “bribery” to the government. The largest social responsibility of an enterprise is offering employment. And the best protection an enterprise could have is not to infringe on other firms’ intellectual property rights. Over the past few years, the price paid by the whole country to fight against corruption has been the largest ever, but without paying this price, there would be no fair environment for future economic development. We should not call for market fairness while at the same time destroying such an environment.

Xu Xiaonian, professor of economics and finance at China Europe International Business School

The purpose of China’s supplyside structural reform is to create a good environment and offer adequate incentives for enterprises to be innovative, so as to increase effective supply – which means that enterprises must provide new products, technology and services, or they must reduce prices by lowering costs in an innovative way. In this sense, the reform does not need any industrial policy, but improving supplyside efficiency requires a series of measures.

First of all, the government should strengthen the protection of private property rights. Good protection of property rights can help enterprises build stable expectations for the future and encourage them to invest in long- term research and development for continuous product and technology innovation. It could also reduce and even eliminate pirated and fake products, improving companies’ returns on their innovation. The protection of property rights, intellectual property rights in particular, is of great significance for the construction of China’s innovative economy.

Second, the government should promote mixedownership reform, creating an equal competitive environment for private enterprises and properly downsizing the Stateowned economy in competitive industries. Both motivation and pressure are essential for innovation, and neither can be found in State- owned enterprises under the current system. Therefore, the main body of innovation can only come from private enterprises, and an equal competitive environment is needed to encourage their innovation.

Third, the government should relax controls and regulations. Control is the enemy of innovation, which requires a free environment for thought and a free flow of resources. The reason why Alibaba, Baidu and Tencent have been able to grow into global Internet giants is because there was little government control and intervention in their early developing stages.

Fourth, the government should adopt comprehensive tax cuts. Tax cuts will not only reduce the burden on enterprises and help them to survive the economic slowdown; it will also shift more resources from administrative allocation to market allocation.

Zhu Min, former deputy managing director of the IMF

The current world economic structure is mainly characterized by low growth rates in the economy, investment and trade, as well as low oil prices, interest rates and inflation. Against such a backdrop, a series of problems have emerged, such as aging societies and an imbalance in wealth distribution.

Many countries around the world are facing the aging society problem, with rapid changes seen in the global labor structure. This year, the global population is around 7.5 billion, and we estimate it will reach 11.2 billion by 2020. The peak of labor supply in developed and emerging countries was in 2008, while the peak in Southern Africa is expected to come around 2070. So who will be responsible for the education of young workers in Africa, and what impact could African immigrants bring to the world?

Meanwhile, the imbalance of global income distribution has got worse. At present, 10 percent of the rich own 40 percent of the world’s total revenue, similar to the level before World War II. This is a level that could lead to a crisis.

There is also the rise of populism, in countries including the UK, the US, Italy, France, Spain and the Netherlands. This could be seen as heralding a turning point in global politics toward instability.

The election of Donald Trump as US president has added to the uncertainties facing the world economy. The US is tightening its monetary policy by raising interest rates, while at the same time attracting capital flows back to the US to increase employment by strengthening its currency, and this is expected to have a considerable impact on the global economy.

Trump’s economic policy is the world’s largest uncertainty today. While retaining a slow growth rate on the whole, the global economy is undergoing a structural change, accompanied by a series of turning points in terms of economics and politics. Political risks, and interest rate and exchange rate risks have become the main sources of uncertainty, and further volatility is inevitable.