WEBVTT - Driving the New Economy 0:00:04.360 --> 0:00:07.440 Hello, and welcome to Stephanomics, the podcast that brings the 0:00:07.440 --> 0:00:14.000 global economy to you. And this week we're in China 0:00:14.200 --> 0:00:18.320 for the Bloomberg New Economy Forum in an enormous conference 0:00:18.360 --> 0:00:22.280 complex at Yankee Lake, which is about an hour northeast 0:00:22.400 --> 0:00:26.640 of Beijing. It is truly vast. Took me ten minutes 0:00:26.680 --> 0:00:28.840 to walk to breakfast this morning. When I got there, 0:00:28.840 --> 0:00:31.560 I found myself battling for space at the breakfast buffet 0:00:31.600 --> 0:00:34.360 with the chief executive of Goldman Sachs and the former 0:00:34.400 --> 0:00:37.920 head of Google, Eric Schmidt. That was just breakfast. The 0:00:38.000 --> 0:00:42.479 place is teeming with business leaders and global thinkers, along 0:00:42.520 --> 0:00:46.720 with quite a large number of Chinese officials. To stimulate debate, 0:00:47.240 --> 0:00:50.360 we at Bloomberg Economics produced a book of original research 0:00:50.560 --> 0:00:55.160 on the global economy, including the Bloomberg Drivers and Disruptors Index, 0:00:55.560 --> 0:00:58.120 working out which countries are going to succeed in the 0:00:58.200 --> 0:01:01.000 new era for the global economy. In a minute, you'll 0:01:01.040 --> 0:01:04.280 hear a lively session I hosted here talking about that 0:01:04.440 --> 0:01:07.800 index and the research that went into it. But first 0:01:07.880 --> 0:01:11.160 a chat with one of the many, many interesting people here, 0:01:11.319 --> 0:01:15.680 Lord Nicolas Stern, an economist now and many years at 0:01:15.680 --> 0:01:19.000 the London School of Economics, who was the head of 0:01:19.000 --> 0:01:21.920 the Government Economic Service in the UK back in two 0:01:21.920 --> 0:01:25.760 thousand and six, when he chaired what continues to be 0:01:25.920 --> 0:01:29.760 a landmark review of the economics of climate change, the 0:01:29.800 --> 0:01:35.440 Stern Review. Lord Nicolas Stern, it's great to see you. 0:01:35.640 --> 0:01:39.800 I'm struck at this conference and lots of other things 0:01:39.800 --> 0:01:43.800 I go to. Now it's a very different debate about 0:01:43.920 --> 0:01:48.000 climate change than even a few years ago, let alone 0:01:48.280 --> 0:01:51.680 when you were chairing the Stern Review, which came out 0:01:51.720 --> 0:01:55.800 in two thousand and six. So and you're sitting here. 0:01:55.840 --> 0:01:59.040 You've obviously remained involved in this debate. But if you 0:01:59.160 --> 0:02:02.960 just sort of the perspective between now and then, would 0:02:03.000 --> 0:02:05.600 you say things have genuinely got better in terms of 0:02:05.640 --> 0:02:09.399 people's unders realistic understanding of what needs to be done 0:02:09.440 --> 0:02:13.160 to combat climate change or is it just louder. Something 0:02:13.200 --> 0:02:16.640 has got better, some things have got worse. Um, the 0:02:16.760 --> 0:02:20.200 science has got worse in the sense that it's still 0:02:20.240 --> 0:02:24.640 more worrying now, partly because things are coming through faster 0:02:24.680 --> 0:02:27.840 than we thought, more severely than we thought, but also 0:02:27.919 --> 0:02:32.360 that emissions have gone on rising, temperature has gone on rising, 0:02:33.200 --> 0:02:37.320 so that's more worrying. The understanding of these issues. I 0:02:37.360 --> 0:02:43.120 think is genuinely greater than it was before thirteen years 0:02:43.120 --> 0:02:45.840 ago when the Stern Review came out. I doubt if 0:02:45.840 --> 0:02:49.440 climate change was taught very much at schools and now 0:02:49.800 --> 0:02:52.280 right across Europe, and I guess in many parts United 0:02:52.280 --> 0:02:56.079 States and India and China it is taught at schools. 0:02:56.240 --> 0:02:59.960 Greater Tunberg now sixteen say she started learning about climate 0:03:00.080 --> 0:03:05.200 change at eight? Where from in school? So I'm university professor. 0:03:05.560 --> 0:03:11.480 The students coming through have all seen the subject of 0:03:11.520 --> 0:03:15.880 climate change discussed for several years of their education and 0:03:15.880 --> 0:03:19.359 their formative years, and they're putting pressure on the rest 0:03:19.440 --> 0:03:21.960 of us now. And there's some people who were a 0:03:21.960 --> 0:03:25.919 bit skeptical thirteen years ago who thought it was the 0:03:26.040 --> 0:03:35.160 best marginal Larry Summers, Bill Gates been. I remember I 0:03:35.200 --> 0:03:38.280 spoke to Bill Gates in two thousand and six, two 0:03:38.320 --> 0:03:41.200 thousand and seven, just after it come out, and he 0:03:41.280 --> 0:03:43.840 thought it was in some sense a diversion from the 0:03:44.040 --> 0:03:48.840 really big problem of poverty reduction. And it is absolutely 0:03:48.880 --> 0:03:52.120 a big problem poverty reduction. But we're seeing that climate 0:03:52.200 --> 0:03:56.640 change is a great destroyer of livelihoods, and that there 0:03:56.680 --> 0:04:01.680 are different ways of doing things which are becoming increasingly attractive. 0:04:02.480 --> 0:04:09.240 Restoring degraded land captures carbon in the soil, increases productivity, 0:04:09.520 --> 0:04:13.680 makes you more resilient against difficult weather. So I think 0:04:13.720 --> 0:04:19.360 that relationship between poverty reduction climate change is seen rather 0:04:19.440 --> 0:04:22.839 positively now, where perhaps a dozen years or so ago, 0:04:23.000 --> 0:04:26.920 good people who were interested in reducing poverty thought, oh goodness, 0:04:26.960 --> 0:04:30.039 this is an environmental diversion from our real task that 0:04:30.160 --> 0:04:33.880 I think has gone down enormously, and you pushed back. 0:04:33.920 --> 0:04:35.680 Actually in the session we were just in, that was 0:04:35.760 --> 0:04:37.920 quite a long session on climate change, and then there 0:04:37.960 --> 0:04:40.400 was a conversation with Bill Gates. But in that earlier 0:04:40.440 --> 0:04:44.160 session you pushed back on the implicit assumption of many 0:04:44.200 --> 0:04:46.960 of the speakers that there was there continue to be 0:04:47.040 --> 0:04:52.720 this trade off between economic growth and combating climate change. 0:04:53.400 --> 0:04:55.440 How is it that people are misunderstanding that, because at 0:04:55.520 --> 0:04:58.960 some level there is there can be a tradeoff. If 0:04:59.000 --> 0:05:04.920 you think of the carbon content of human activity as 0:05:05.000 --> 0:05:07.640 being in a fixed relation to the outputs of output 0:05:07.680 --> 0:05:10.600 goes up by ten percent carbon emissions go up by 0:05:10.680 --> 0:05:12.960 ten percent, then there actually there is a trade off. 0:05:13.640 --> 0:05:16.040 But of course the whole point of this is to 0:05:16.200 --> 0:05:20.719 dradic radically drive down the carbon content of what we 0:05:20.839 --> 0:05:28.000 do now. As you do that, it comes with innovation, discovery, investment, 0:05:28.200 --> 0:05:31.760 and growth. It drives down air pollution and water pollution, 0:05:31.800 --> 0:05:33.760 and that gives you cities where you can move and 0:05:33.800 --> 0:05:37.400 breathe and be much more productive and much more cheerful 0:05:37.400 --> 0:05:43.440 actually too. It um protects the natural capital and natural capital, 0:05:43.640 --> 0:05:46.640 you know, our forests and our oceans and our water, 0:05:47.000 --> 0:05:50.400 which are key parts of our productivity as human beings, 0:05:50.400 --> 0:05:54.520 are health as human beings, happiness as human beings. So 0:05:54.760 --> 0:05:59.520 if you see that process of driving down carbon in 0:05:59.560 --> 0:06:04.520 relations into output as being creative and innovative in this way, 0:06:04.680 --> 0:06:07.880 as bringing all kinds of benefits around health and so on, 0:06:08.080 --> 0:06:11.440 which are good for productivity, then you see that actually 0:06:11.839 --> 0:06:16.839 investing strongly in driving emissions down to zero is the 0:06:16.880 --> 0:06:19.480 growth story the twenty one century. Well, it's interesting when 0:06:19.480 --> 0:06:22.120 you talk about growth because we have lots of conversations 0:06:22.120 --> 0:06:24.960 on this podcast about the state of the global economy 0:06:25.040 --> 0:06:29.040 and particularly worries about slow down in the global recovery 0:06:29.120 --> 0:06:33.920 leading to another recession, which policymakers won't have enough tools 0:06:34.040 --> 0:06:36.719 to confront because we know we've sort of got closer 0:06:36.720 --> 0:06:40.040 to maxing out MONETROSSI and A constant theme which has 0:06:40.080 --> 0:06:42.920 also come up at this event is that governments are 0:06:42.920 --> 0:06:45.279 going to have to lean more on fiscal policy. It 0:06:45.360 --> 0:06:50.560 strikes me that a lot of ministers policymakers across Europe 0:06:51.040 --> 0:06:55.279 who hear the demonstrators out in the streets talking about 0:06:55.279 --> 0:06:59.440 the environment and can see the need for fiscal stimulus, 0:06:59.640 --> 0:07:03.760 will now be looking for ways of having fiscal stimulus 0:07:03.760 --> 0:07:06.760 that's also going to get you closer to that decarbonization. 0:07:06.960 --> 0:07:08.400 Is that is that going to be Is that too 0:07:08.400 --> 0:07:10.280 good to be true? Or do you think there are 0:07:10.280 --> 0:07:13.760 some genuine win wins there. It's an argument which we 0:07:13.800 --> 0:07:15.760 have to make, and yes, I do think there's some 0:07:15.880 --> 0:07:22.679 genuine win wins there. The world is demand deficient, interest 0:07:22.760 --> 0:07:27.680 rates on the floor, we have wonderful investment possibilities, we 0:07:27.760 --> 0:07:30.800 have loads of saving. So what we have to do 0:07:30.920 --> 0:07:33.960 is to have economic policies which draws through the investments. 0:07:34.360 --> 0:07:39.200 That means good policies in relation to carbon investing in 0:07:39.360 --> 0:07:42.680 R and D, stable institutions and so on that will 0:07:42.760 --> 0:07:45.840 draw through the investment. And we have to organize our 0:07:45.880 --> 0:07:48.440 finances that we have the right kind of finance in 0:07:48.480 --> 0:07:52.239 the right place, on the right scale, at the right time. 0:07:52.720 --> 0:07:55.680 And we can do that, and we can see how 0:07:55.720 --> 0:07:58.280 to make both things happen, and that will give you 0:07:58.480 --> 0:08:02.200 an increase in invest men, very good kind of investment, 0:08:02.680 --> 0:08:05.960 and the savings will come in the finance that investment. 0:08:06.360 --> 0:08:10.920 And it's a wonderful story of investment for growth, investment 0:08:10.960 --> 0:08:15.000 for increasing demand, a Schumpeterian story, the rate economic his story, 0:08:15.040 --> 0:08:18.680 and of innovation and discovery. It is a story which 0:08:18.760 --> 0:08:23.360 increases demand, accelerates the rate of technical progress, and is 0:08:23.400 --> 0:08:27.040 sustainable because it's a structure that doesn't turn in on 0:08:27.080 --> 0:08:30.440 itself and destroy its environment like a high carbon growth 0:08:30.480 --> 0:08:34.360 story would. So this is actually in our hands, and 0:08:34.600 --> 0:08:39.640 it would be overwhelmingly negligent if we didn't take that 0:08:39.720 --> 0:08:43.880 opportunity now. And I think that's increasingly seen And okay, 0:08:43.880 --> 0:08:45.800 so what if I put another layer on this. You're 0:08:45.800 --> 0:08:50.520 a policymaker who thinks, yes, I want to have more spending, 0:08:51.040 --> 0:08:52.520 I want to do it in a way that helps 0:08:52.559 --> 0:08:55.720 de carbonize. Oh and by the way, there's also a 0:08:55.840 --> 0:08:58.560 lot of concern around rising inequality. So I have to 0:08:58.600 --> 0:09:01.400 make sure that those investments have a progressive effect as well, 0:09:01.440 --> 0:09:05.480 that they don't damage the poor the way lots relatively speaking, 0:09:05.920 --> 0:09:08.760 the way lots of innovation and lots of other forms 0:09:08.760 --> 0:09:11.120 of economic growth have in the last few years. Can 0:09:11.160 --> 0:09:12.839 you give them that as well? Can you give them 0:09:12.840 --> 0:09:18.280 a progressive, a pro poor way of supporting the environment. 0:09:19.080 --> 0:09:21.800 We absolutely can, but it means we have to run 0:09:21.800 --> 0:09:24.679 out of policies much better than they've been done in 0:09:24.720 --> 0:09:26.360 the past. But we can see how to do that. 0:09:26.640 --> 0:09:29.640 Part of the story. Suppose you have a carbon price. 0:09:30.480 --> 0:09:33.240 In other words, you stop letting people to do very 0:09:33.320 --> 0:09:36.760 damaging things for nothing, so you abolish the subsidy associated 0:09:36.800 --> 0:09:38.760 with that, another way of looking at it. But you 0:09:38.840 --> 0:09:41.200 have the carbon price and you have revenues. So what 0:09:41.240 --> 0:09:44.800 do you do with those revenues. Well, one thing that 0:09:44.840 --> 0:09:46.800 you should do is make sure that the poorer people 0:09:47.000 --> 0:09:50.800 in the population are protected, and you can actually make 0:09:50.840 --> 0:09:54.120 them better off. So if you return some of that 0:09:54.160 --> 0:09:56.960 money to the population, but make sure more goes to 0:09:57.000 --> 0:09:59.360 the poorer population and they are actually better off as 0:09:59.360 --> 0:10:01.200 a result. But you have to do it, and you 0:10:01.240 --> 0:10:06.840 have to do it consciously. Secondly, we're talking about a 0:10:07.160 --> 0:10:11.880 restructuring of our industries. We're going driving down to zero 0:10:11.960 --> 0:10:16.240 carbon everywhere in the next thirty or forty years, and 0:10:16.280 --> 0:10:18.920 that means that you do things very differently. Some things 0:10:18.960 --> 0:10:22.520 you stop doing, you stop coal mining, and these are 0:10:22.520 --> 0:10:25.640 the people who are specialized in making pistons for cars. 0:10:26.320 --> 0:10:28.559 The car makers might employ the same people, but the 0:10:28.600 --> 0:10:31.280 people who supply them with bistons would be having to 0:10:31.360 --> 0:10:35.000 switch to other things. These are dislocations. This is radical 0:10:35.120 --> 0:10:38.520 change and we've been really bad in the past. If 0:10:38.520 --> 0:10:41.040 you think of the northern towns in the UK applies 0:10:41.080 --> 0:10:42.760 to other countries too. But if you think of the 0:10:42.760 --> 0:10:46.160 northern towns in the UK, movement from manufacturing to services, 0:10:46.160 --> 0:10:48.480 that's what happens as people's incomes go up and they 0:10:48.480 --> 0:10:50.720 go out to eat and they go on holidays. If 0:10:50.760 --> 0:10:53.840 you look at labor saving technical progress, that's been fast 0:10:53.880 --> 0:10:56.280 and it's going to be fast in the future with 0:10:56.440 --> 0:10:59.840 a I and robotics and so on. If you think 0:11:00.120 --> 0:11:05.280 of globalization and the changing international division of labor, three 0:11:05.320 --> 0:11:08.640 trends which they'll have their ups and downs, but they'll continue. 0:11:09.160 --> 0:11:11.520 And then you whack them with a global financial crisis 0:11:11.559 --> 0:11:15.520 on top of all that, and you get dislocation which 0:11:15.600 --> 0:11:19.080 is very geographically focused. And we have to take that 0:11:19.160 --> 0:11:23.520 on directly. And it's not just from climate policies. It's 0:11:23.559 --> 0:11:26.240 actually probably bigger from other kinds of things are there 0:11:26.280 --> 0:11:30.600 happening as well. I am fascinated by what you think 0:11:30.760 --> 0:11:34.000 when you look at the US presidential campaign as as 0:11:34.040 --> 0:11:37.320 a serious economist who has also done all this serious 0:11:37.360 --> 0:11:39.880 thinking around climate change. On the one hand, you have 0:11:40.480 --> 0:11:44.320 almost a familiar site, although surprising in some ways, but 0:11:44.400 --> 0:11:46.720 you have an administration that's kind of in denial about 0:11:46.720 --> 0:11:49.199 climate change. But on the other side, you now have 0:11:49.400 --> 0:11:54.720 a Democratic Party in Democratic candidates who are gathering behind 0:11:55.240 --> 0:11:59.640 really very dramatic efforts to combat climate change that could 0:11:59.679 --> 0:12:03.960 involve of destroying eliminating a large chunk of the U 0:12:04.040 --> 0:12:08.440 S energy business almost overnight in the case of Elizabeth Warren. 0:12:08.840 --> 0:12:10.520 When you see that, on the one hand, you've got 0:12:10.520 --> 0:12:14.640 more serious proposals by leading presidential candidates than ever before, 0:12:14.679 --> 0:12:19.679 certainly more radical ones, but um possibly a worry that 0:12:19.720 --> 0:12:22.840 they are not realistic in what you can actually achieve 0:12:22.920 --> 0:12:25.120 in a five year or ten year time frame. What 0:12:25.160 --> 0:12:27.360 do you think. I think you can put in place 0:12:27.400 --> 0:12:30.400 strong policies, and if you have strong policies that people 0:12:30.440 --> 0:12:36.360 believe will continue, then investment comes behind those policies. So 0:12:36.400 --> 0:12:40.200 I think good policies which people find credible over the 0:12:40.240 --> 0:12:44.120 medium term, would inly would lead to important investment booms, 0:12:44.440 --> 0:12:47.960 and that would lead to rising demand and stronger growth, 0:12:48.080 --> 0:12:49.800 and it would be highly productive growth because a lot 0:12:49.800 --> 0:12:52.480 of that sufficiency. But it would also, and this is 0:12:52.520 --> 0:12:55.440 what we're discussing just now, it was also carry with 0:12:55.480 --> 0:13:00.360 it dislocation. So your policies have to be not simply 0:13:00.400 --> 0:13:05.800 bringing through this very attractive, highly productive, cleaner investment, but 0:13:05.920 --> 0:13:08.439 at the same time they would have to be explicitly 0:13:08.480 --> 0:13:12.080 oriented of our managing dislocation. And if you have one 0:13:12.120 --> 0:13:16.160 without the other, well then you risk having neither. Well, 0:13:16.200 --> 0:13:18.960 that's so, and that presumably is your concern when you 0:13:18.960 --> 0:13:22.200 look at some of these more extreme proposals, if they're 0:13:22.200 --> 0:13:24.720 not well thought. Through the Green New Deal, which has 0:13:24.760 --> 0:13:27.200 a very short time frame on it, is there a 0:13:27.280 --> 0:13:29.760 risk of a backlash if you try and do too fast. 0:13:30.000 --> 0:13:34.640 Suppose you tried to go zero carbon by twenty ten 0:13:34.720 --> 0:13:38.560 years from now. Would all the internal combustion cars be 0:13:38.600 --> 0:13:42.600 off the road? Ten years from now, would all the 0:13:42.640 --> 0:13:45.760 gas fired boilers be out? I think about eight million 0:13:45.840 --> 0:13:47.319 of them in the UK. I don't know how many 0:13:47.320 --> 0:13:50.280 there are in the US. Would all those be out 0:13:50.320 --> 0:13:54.240 in ten years. I think it's hard, and thank you 0:13:54.320 --> 0:14:06.000 very much, very good. Well, I'm delighted to have found 0:14:06.280 --> 0:14:09.920 another eminent person in the corridors here at the New 0:14:09.960 --> 0:14:14.520 Economy Forum. Ju Min, former Deputy Managing Director of the 0:14:14.559 --> 0:14:18.000 IMF and former Deputy governor of the Chinese Central Bank, 0:14:18.240 --> 0:14:22.000 now running a Sinkhwai University's National Institute of Financial Research. 0:14:22.040 --> 0:14:23.640 I should say, we're hoping that this is going to 0:14:23.720 --> 0:14:26.040 be quiet. That we've just found a corner of this 0:14:26.160 --> 0:14:29.000 conference room, so it might not be quite the same 0:14:29.200 --> 0:14:32.960 broadcast quality that we used to doctors. You you have 0:14:33.080 --> 0:14:35.480 been and I have known you over the years observing 0:14:35.560 --> 0:14:38.360 the international system, both from the I m F and 0:14:38.480 --> 0:14:42.880 before that at the People's Bank of China. I spoke 0:14:42.960 --> 0:14:45.480 to the chief economist of the World Bank a few 0:14:45.680 --> 0:14:49.000 a couple of months ago, Penny Goldberg, who was a 0:14:49.040 --> 0:14:52.800 great trade economist. She says she's changed her view recently. 0:14:52.880 --> 0:14:56.880 She thought that this move away from globalization was temporary. 0:14:57.240 --> 0:14:59.560 Now she's not so sure. Maybe we will we have 0:14:59.680 --> 0:15:03.640 seen the peak period for global integration. What do you 0:15:03.680 --> 0:15:09.640 think the globalization will continue? This is driven by the 0:15:09.720 --> 0:15:14.640 human nature, driven by the product productivity and growth and 0:15:14.760 --> 0:15:19.640 efficiency on the Yes. Currently, we saw so many things 0:15:19.640 --> 0:15:23.360 in the sort of on the globalizations, particularly from some 0:15:23.440 --> 0:15:26.760 major economies, and but I don't think they were stop 0:15:26.880 --> 0:15:31.000 the tram if you're looking for the the statistics, he 0:15:31.080 --> 0:15:33.520 was in the past eighteen months after US trying to 0:15:33.560 --> 0:15:38.360 trade fractions the US inport from trying to drop ten 0:15:38.360 --> 0:15:41.080 percents and trying to import from US drop ten percents. 0:15:41.280 --> 0:15:47.120 That's that's the results. But both countries doing quite quite okay. 0:15:47.240 --> 0:15:49.520 China still have a sweep percent of trade growth, US 0:15:49.680 --> 0:15:53.040 still really more. That's the same US trade deficity even 0:15:53.120 --> 0:15:55.760 wider from two point nine percent of GDP to sweep 0:15:55.760 --> 0:16:00.320 on two percent GDP today on So it's just say, 0:16:00.440 --> 0:16:03.360 I mean the whole water still in the course. Trade 0:16:03.400 --> 0:16:07.960 slowing down, have its own course now because the technology movements, 0:16:08.160 --> 0:16:11.160 because the service trading become more important than it then 0:16:11.840 --> 0:16:17.600 the goods trading, right, And obviously the current populism has 0:16:17.640 --> 0:16:21.040 an active impact on the globalition, but fundamentally I don't 0:16:21.040 --> 0:16:24.320 think they would change because you know, sweet quart of 0:16:24.400 --> 0:16:27.360 people living in the emerging market and income countries looking 0:16:27.400 --> 0:16:29.280 for the better good life, and the people in the 0:16:29.360 --> 0:16:32.120 rich country looking for a good quality and low prices 0:16:32.600 --> 0:16:36.640 products as well, and the product surprise chair and become 0:16:36.800 --> 0:16:40.640 longer with the technology, and I will see you will 0:16:40.720 --> 0:16:45.320 see more labor divisions and in all these sections, um 0:16:45.480 --> 0:16:48.400 So in their sense, I think that that's the the 0:16:48.640 --> 0:16:52.920 bit tranpitway for the whole war, and we're just in 0:16:53.040 --> 0:16:58.360 this very short term periods for the bumping periors. I 0:16:58.360 --> 0:17:00.200 guess one of the ways, and I've heard do you 0:17:00.200 --> 0:17:03.760 say that on one of the panels yesterday, is very 0:17:03.800 --> 0:17:06.399 interesting to point out that traders continue to grow and 0:17:06.400 --> 0:17:09.879 actually we know that the the other economic policies in 0:17:09.920 --> 0:17:12.600 the US at the moment, that the stimulus that came 0:17:12.680 --> 0:17:15.679 from tax cuts and other things, we're naturally going to 0:17:15.800 --> 0:17:19.639 increase the amount of US even as the administration was 0:17:19.720 --> 0:17:26.080 trying to cut it. Yeah, that's s and I basic economics. 0:17:26.840 --> 0:17:29.040 But the one thing that I think could change the game. 0:17:29.040 --> 0:17:32.840 And I think it's interesting, especially from your perspective understanding 0:17:32.880 --> 0:17:36.800 the banking side as you do. Um people do worry 0:17:36.840 --> 0:17:41.960 about the trade war spilling into the international financial markets, 0:17:42.040 --> 0:17:45.560 and we've seen, in fact, we had one of the 0:17:45.600 --> 0:17:49.000 bloomberg scoops of the last few months has been the 0:17:49.000 --> 0:17:52.959 news that in the administration people were talking about wanting 0:17:53.000 --> 0:17:56.560 to put limits on US investors investing in China as 0:17:56.640 --> 0:18:00.600 part of the trade war. Is that something that you 0:18:00.760 --> 0:18:03.560 Is that something people are worried about here officials here 0:18:03.600 --> 0:18:07.960 in China, And do you think it could spill into that? Right? Well, 0:18:08.040 --> 0:18:11.320 we were observed the US government proposed some sort of 0:18:11.320 --> 0:18:15.000 restruction on US financial in siting investing Chinese company in 0:18:15.040 --> 0:18:18.280 the Chinese market, right for that, But in the real world, 0:18:18.280 --> 0:18:21.280 in the past twelve months, US capital actually moved in 0:18:21.520 --> 0:18:24.920 more than ever before in Chinese financial market and particularly 0:18:24.920 --> 0:18:28.879 in the tex sector. It's a very interesting The Chinese 0:18:29.040 --> 0:18:32.680 money moved to the US tech sector slowed down dramatically, 0:18:32.760 --> 0:18:37.400 incurse specific, but US money moving into the China tax 0:18:37.480 --> 0:18:42.639 actor increased quite a bit. And the US not the 0:18:42.680 --> 0:18:46.360 only US that global capital moving into the Chinese financial 0:18:46.400 --> 0:18:49.840 market in terms of acting market and financial market double 0:18:49.880 --> 0:18:53.880 the market shares in the past turn month. Do you finally, 0:18:53.960 --> 0:18:56.639 I know that you were sitting in the IMF for 0:18:56.800 --> 0:18:59.639 much of the response to the global financial crisis and 0:18:59.760 --> 0:19:04.120 see in how people were able to coordinate. Policymakers were 0:19:04.160 --> 0:19:06.719 able to come together, For example, at the G twenty 0:19:06.840 --> 0:19:11.679 meeting in two thousand and nine in London in favor 0:19:11.760 --> 0:19:16.520 of fiscal stimulus at that time. Do you think there's 0:19:16.520 --> 0:19:19.600 been there has really been a change in the capacity 0:19:19.720 --> 0:19:23.040 for international cooperation or you know when you walk around 0:19:23.040 --> 0:19:24.920 events like this, do you think actually all the same 0:19:24.960 --> 0:19:27.960 people are still talking together even with some of the 0:19:28.000 --> 0:19:32.119 noises coming from the US, and there's a big structure change. 0:19:32.320 --> 0:19:36.240 I mean the first issues in twos age what are 0:19:36.280 --> 0:19:38.800 the high risk of sector is a banking sector. It's 0:19:38.800 --> 0:19:42.479 a household death sector, right because the market you know, 0:19:42.560 --> 0:19:44.840 sub ground things and the banking sector there's a bat 0:19:45.320 --> 0:19:48.680 after ten years the banking sectors and which is stronger 0:19:48.680 --> 0:19:52.760 than the saver and the household is okay, but risk 0:19:52.920 --> 0:19:56.520 shift to wear to non bank informational situes. The s 0:19:56.640 --> 0:19:59.240 S Manu companies ST. Manu Company in the yet in 0:19:59.320 --> 0:20:03.639 ideas it today it's almost the same size of a 0:20:03.760 --> 0:20:07.480 banking section now is absolutely amazing. There was only only 0:20:07.760 --> 0:20:10.399 thirty percent of banking secuting in tools on the old age. 0:20:10.800 --> 0:20:13.879 So you see how fires and that the company is 0:20:13.920 --> 0:20:18.879 investing in shares for people's questions and so the exposures 0:20:18.880 --> 0:20:22.040 are huge, right, so non benefits, the risk is a 0:20:22.160 --> 0:20:26.200 much higher higher land tools are not for sure sector. 0:20:26.640 --> 0:20:29.160 The risk exposure is higher ensures on the old age, 0:20:29.400 --> 0:20:33.440 you know, they have a higher desk solvent deaths risk 0:20:33.520 --> 0:20:36.400 is much higher the government the condess, right, I mean 0:20:36.520 --> 0:20:39.080 in tolson A, the government test is rather level, right, 0:20:39.200 --> 0:20:43.320 I mean, but today that everyone at a roughly death level, 0:20:43.440 --> 0:20:48.560 right GDP. So, so you're right, and we do have 0:20:48.680 --> 0:20:53.359 a very different risk structure compared to the age. The 0:20:53.480 --> 0:20:57.760 policy spaces rare limitings and most importantly in Tolson A, 0:20:57.920 --> 0:21:04.160 the global political corporation us alms apart. So I think 0:21:04.200 --> 0:21:07.600 that would be very, very difficult to the others. Let's 0:21:07.600 --> 0:21:09.520 say he doesn't shoo me in. Thank you very much, 0:21:09.840 --> 0:21:18.720 thank you the tap. I mentioned earlier that Bloomberg's economist 0:21:18.800 --> 0:21:22.480 did some original research for the New Economy Forum, including 0:21:22.600 --> 0:21:26.400 a new global Drivers and Disruptors Index, which we put 0:21:26.440 --> 0:21:29.400 in a report for the delegates and published online this week. 0:21:29.880 --> 0:21:32.680 Or we just had a panel session about that research, 0:21:32.920 --> 0:21:36.879 featuring our own economists and outside experts. I've just got 0:21:36.960 --> 0:21:39.120 time to give you a taste of it here. You're 0:21:39.119 --> 0:21:42.720 gonna hear first from Bloomberg's chief economist, Tom Orlick often 0:21:42.800 --> 0:21:45.600 on the podcast. He's going to be explaining the thinking 0:21:45.800 --> 0:21:48.720 behind the Drivers and Disruptors index, and we then have 0:21:48.840 --> 0:21:53.040 a response from the author and former chief economist of HSBC, 0:21:53.520 --> 0:22:01.080 Stephen King. The main takeaway from our search is that 0:22:01.200 --> 0:22:05.480 the path to development is getting narrower and harder to follow. 0:22:06.359 --> 0:22:10.720 In general, low and middle income countries are less well 0:22:10.840 --> 0:22:15.000 positioned to deal with the disruptive forces which are reshaping 0:22:15.320 --> 0:22:18.440 the global economy. Let's just think about why that is 0:22:18.520 --> 0:22:22.080 for a second um. In general, low and middle income 0:22:22.160 --> 0:22:27.520 countries try and develop by exporting in a world moving 0:22:27.600 --> 0:22:33.160 towards protectionism. That's getting harder to do. In general, low 0:22:33.280 --> 0:22:37.159 and middle income countries either have a big factory sector 0:22:37.800 --> 0:22:41.480 or they want to have a big factory sector. In 0:22:41.560 --> 0:22:44.920 a world where the range of tasks that can be 0:22:45.240 --> 0:22:50.879 performed cheaply and efficiently by machines is ever expanding, Having 0:22:51.040 --> 0:22:54.840 a big cheap workforce isn't the advantage that it used 0:22:54.840 --> 0:22:59.920 to be. In general, low and middle income countries don't 0:23:00.040 --> 0:23:03.479 have very good communication infrastructure and don't have a very 0:23:03.560 --> 0:23:07.840 strong services sector. So low and middle income countries are 0:23:07.920 --> 0:23:12.040 not well positioned to seize the opportunity of the digital economy. 0:23:13.880 --> 0:23:17.240 Many low and middle income countries are already quite hot 0:23:17.880 --> 0:23:22.040 and have a large agricultural workforce, which means that they 0:23:22.119 --> 0:23:26.600 face some significant risks from climate change. And many low 0:23:26.680 --> 0:23:32.240 and middle income countries have high inequality, low social mobility, 0:23:33.200 --> 0:23:38.600 ineffective institutions for government, and high crime rates, which in 0:23:38.800 --> 0:23:43.040 various configurations mean that they will find it more difficult 0:23:43.160 --> 0:23:51.560 to ignore the siren song of populism. So across automation, digitization, protectionism, 0:23:52.080 --> 0:23:56.240 climate change, and populism, low and middle income countries are 0:23:56.400 --> 0:24:00.200 less robust to the challenges and less well positioned to 0:24:00.359 --> 0:24:04.960 seize the opportunities. And we think that means the path 0:24:05.119 --> 0:24:08.280 to development is going to get harder to follow. There 0:24:08.280 --> 0:24:11.199 will be less countries moving from low to middle income 0:24:11.560 --> 0:24:14.760 and from middle to high income. Let me illustrate that 0:24:14.840 --> 0:24:17.160 by spending a couple of minutes speaking about the case 0:24:17.240 --> 0:24:22.800 of China. Um So, China scores extremely well on our 0:24:22.920 --> 0:24:27.160 drivers Index. If we think about the traditional drivers of development, 0:24:27.640 --> 0:24:30.840 there aren't many countries that have done it better than China. 0:24:31.680 --> 0:24:36.920 China has a modern infrastructure, China hasn't a can do government. 0:24:37.560 --> 0:24:40.679 China spends a huge amount of money on research and development. 0:24:41.480 --> 0:24:44.640 On our Driver's Index, China ranks as the fourth best 0:24:44.720 --> 0:24:48.240 economy and the best emerging market by a wide margin. 0:24:49.600 --> 0:24:52.280 But when we think about those disruptive forces that are 0:24:52.320 --> 0:24:57.440 reshaping the global economy, China faces some significant challenges. China 0:24:57.600 --> 0:25:00.520 is significantly exposed to the risk of protect action is um. 0:25:01.800 --> 0:25:07.479 China faces risks from climate change. China's relatively high degree 0:25:07.600 --> 0:25:12.400 of inequality and low social mobility could pose a medium 0:25:12.560 --> 0:25:17.720 term challenge to social stability. Does that mean China's development 0:25:17.760 --> 0:25:22.639 story is over? Absolutely not. China's policymakers in the past 0:25:23.000 --> 0:25:27.240 have proved to be extremely smart in finding solutions to 0:25:27.359 --> 0:25:32.080 difficult development challenges. What it does mean is that for 0:25:32.240 --> 0:25:36.240