It may be time to stop referring to China, the world’s second-biggest economy after the US, as an emerging nation and focus on creating jobs now that the global recovery appears to have gotten a toehold
That’s what top business leaders, politicians and social activists discussed, among other issues, on the first day of the World Economic Forum last week.
“There is a global economic recovery,” said economist Nouriel Roubini, who gained renown for predicting the crisis of 2008 and a few months ago was still warning against the possibility of a “double dip recession.” He noted that “balance sheets are strong, confidence is rising,” credit spreads have fallen and liquidity — the availability of credit — has increased.
But he warned that in the US and Europe, growth remained low and unemployment high. The US still faced a real estate crisis and inspired little faith in its ability to tackle its deficit and debt, while in Europe markets have forced austerity measures that endanger growth. And in an allusion to China, Roubini said there was “not enough exchange rate adjustment” and warned this could lead to “currency wars and eventually trade wars and protectionism.”
The 2,500 participants at this year’s meeting have focused much of their concentrated expertise on China’s growing clout, simmering anxieties about Europe’s debt crisis and consideration of the possible aftershocks of the financial crisis that has wrought layoffs, cutbacks and austerity measures.
With China overtaking Japan as the world’s No. 2 economy last year, and growth predicted to hold steady in the upper single digits this year, panelists questioned whether Beijing hasn’t already arrived at the top table.
“We have to get out of the lexicon the words ‘developing’ or ‘emerging,’” said Martin Sorrell, chief executive of advertising giant WPP Group.
China and India have both sent their biggest ever delegations to this year’s forum, spearheaded by business leaders seeking to plant their flags on a world stage previously dominated by US and European companies.
“In 10 years the economies of the emerging world will be in excess to $20 trillion , which is equal to the US economy,” noted Azim Premji, chairman of India’s Wipro.
Zhu Min, former deputy governor of the Bank of China and now a special adviser to IMF Managing Director Dominique Strauss-Kahn, cautioned that the figures obscure huge expectations among the poorest in the developing world that cannot be met soon.
The theme of this year’s meeting is “Shared Norms for the New Reality,” and part of that includes the new economic reality, too, and the shift of jobs from West to East is on the minds of many.
“What is missing in the West is a… sense of urgency” about unemployment, especially among young people whose skills aren’t always what the fast-evolving labor market needs, said Arianna Huffington, the co-founder and editor in chief of The Huffington Post news website, at a panel on the future of employment.
The general consensus among the CEOs present was that the most promising job markets are in the East, and the West has no easy answers.
“In terms of quantitative growth, I don’t think the West can do anything,” said Lars Olofsson, CEO of retailer Carrefour SA, Europe’s largest employer.
Philip Jennings, head of the UNI Global Union, urged an end to austerity programs and said the Group of 20 should do more to create jobs. “People have to wake up. G20, wake up.”
“If I have to go to a group of workers and I say the future is in the East, there will be more Jasmine Revolutions by the day,” he said, referring to the ouster of Tunisia’s president this month after weeks of protests over joblessness and corruption.
Later Wednesday, the five-day meeting features a keynote address Wednesday evening by Russian President Dmitry Medvedev, who postponed his planned arrival by a day after a suicide bombing killed 35 people in the country’s busiest airport amid lax security.
The topic of Medvedev’s speech hasn’t been shared, but given the intense security surrounding the meeting, and the fact that terrorism remains an issue of both political and commercial concern, his audience is expected to listen keenly to what Medvedev has to say.