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					Shanghai Forum

  NEWSLETTER

Vol.1 No.5 2007




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Host: Fudan University
Sponsor:The Korea Foundation for Advanced Studies (KFAS)
Editorial Committee
Directors:
Shenghong Wang
President, Fudan University
Shaode Qin
Chancellor, Fudan University
Jae-Youl Kim
Secretary General, The Korea Foundation for Advanced Studies

Editor In Chief:
Zheng Xu
Vice President, Fudan University
Vice Editors In Chief (in alphabetical order):
Yongming Fan
Chairman, Center for Japanese Studies, Fudan University
Tae-Seok Kang
Manager, International Academy Division, KFAS
Taeg Kim

Senior Manager, International Academic Division,KFAS

Xizhe Peng
Dean, School of Social Development and Public Policy, Fudan University
Dingli Shen
Chairman, Center for American Studies, Fudan University
Yuanhua Shi
Chairman, Center for Korean Studies, Fudan University
Jingping Wu
Chairman, Center for Asian Studies, Fudan University
Zhigang Yuan
Dean, School of Economics, Fudan University
Executive Editors
Zhiqing Li
General Director, Shanghai Forum Organizing Committee, Fudan University
Ye Zhou
Director, News Center, Fudan University
Qiang Xin
Deputy Director, Shanghai Forum Organizing Committee, Fudan University
Youde Guo
Deputy Director, Shanghai Forum Organizing Committee, Fudan University


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Editors:
Mary Lee
Chief Editor, Asia Research Network, KFAS
Yan Zhang
Program Officer, Shanghai Forum Organizing Committee, Fudan University
Sandy Zhu
Program Officer, Shanghai Forum Organizing Committee, Fudan University
Wei Shi
Program Officer, Shanghai Forum Organizing Committee, Fudan University




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Shanghai Forum Newsletter



Shanghai Forum Newsletter is a publication of Shanghai Forum

Organizing Committee. It aims to promote the Forum‟s publicity and

influence in academic, political and business circles. It includes news

releases, feature reports, major projects, and consolidates the Forum‟s

progression in different phrases so as to boost the Forum‟s development.




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 Contents
ⅠNews .................................................................... Error! Bookmark not defined.5
  “Speeches,People, Papers and Discussions"----Shanghai Forum 2007 Retrospective
  Conference Held at Fudan University.................................... Error! Bookmark not defined.5

  Building A Leading Economic Forum of the Global Community Together----Shanghai Forum
  2008 Signing Ceremony Held…………………………………….5

  Topics·Scholars·Discussions·Cooperation-----Shanghai Forum 2008 Press Conference
  Held ....................................................................................... Error! Bookmark not defined.9

  Latest News ......................................................................... Error! Bookmark not defined.11

ⅡFeature·Sub-forums of Shanghai Forum 2008.... Error! Bookmark not defined.12
  Regional Economic Growth and Equity Policies .................. Error! Bookmark not defined.12

  Financial Transition in Asia .................................................. Error! Bookmark not defined.14

  Asia’s Economic Transformation and International Order.. Error! Bookmark not defined.14

  Sustainable Development of Society and Economy ............ Error! Bookmark not defined.15

  Strategic Choices of Asian Cities under Globalization ......... Error! Bookmark not defined.15

  Economic Transformation for Asia: the International Environment and Institutional
  Restructuring ....................................................................... Error! Bookmark not defined.16

Ⅲ Voices·Keynote Speeches of Shanghai Forum 2007 .......... Error! Bookmark not
defined.18
  "Towards Sustainable Urban Futures: Urbanization in an Era of Globalization and
  Environmental Change" By Prof. Dr. Hans van Ginkel, Under Secretary General of United
  Nations, President of United Nations University ................ Error! Bookmark not defined.18

  Min Zhu................................................................................ Error! Bookmark not defined.21

  Vishakha N. Desai ................................................................ Error! Bookmark not defined.24

ⅣActivities ............................................................. Error! Bookmark not defined.26
  Special Activities of Shanghai Forum 2008 1st Launch-----Special Report on China's
  Macro-economy…………………………………………………………………………………27
ⅤLearning from Others .......................................... Error! Bookmark not defined.30
  About Davos: Report on the Functioning System of World Economic Forum…………………31




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ⅠNews
· Shanghai Forum 2007 Retrospective Conference & Shanghai Forum 2008 Signing
Ceremony

The Shanghai Forum 2007 Retrospective Conference & Shanghai Forum 2008 Signing Ceremony
was held at Yifu Science & Technology Building, Fudan University, on the morning of Sep. 18th,
2007. The three Chairpersons of Shanghai Forum Organizing Committee – Prof. Shenghong Wang,
President of Fudan University, Prof. Shaode Qin, Chancellor of Fudan University and Dr. Jae-Youl
Kim, President of the Korea Foundation for Advanced Studies – attended the Conference and
Signing Ceremony. They were joined by members of Shanghai Forum‟s Committee of Experts,
who offered their specialist guidance at both events. The Retrospective Conference was hosted by
Mr. Yinzhang Chen, Executive Vice Chairperson of Shanghai Forum Organizing Committee and
Assistant to the President of Fudan University.

Dr. Zheng Xu, Vice President of Fudan University, gave a retrospective summary of Shanghai
Forum 2007, before delivering a briefing on preliminary preparations for next year‟s Forum. She
discussed various aspects of the 2007 Forum, including its guests and delegates, media coverage,
domestic and international collaborative partnerships, as well as publication of the „Shanghai
Forum Consensus‟. She also emphasized that the success of the 2007 Forum would not have been
possible without the collaboration of Fudan University‟s wide-ranging network of international
University „strategic partners‟ and academic supporters, that of the Korean Institute for Advanced
Studies, and also the close collaboration of all the departments and schools of Fudan University.
The major theme of Shanghai Forum 2008 is that of globalization, and preparation for the next
year‟s forum has four principal objectives: to make sure that academic preparations are made in
advance; to choose „hot topics‟ as themes of discussion; to provide equilibrium in the range of
delegates; and to provide more diversity in the projects and activities of Shanghai Forum 2008.

Prof. Zhigang Yuan, Director of Shanghai Forum Academic Steering Committee and Dean of
Fudan University‟s School of Economics, further expounded on the academic achievements of
Shanghai Forum 2007. He introduced the academic organizing framework for Shanghai Forum
2008, including the management of the forum‟s academic affairs, as well as organization of its
domestic and international collaborative relationships. He also summarized the academic
achievements of the 2007 Forum, outlining the various special guests and other participants
involved, the content of the Sub-forums, publication of papers, media reports, and development of
the „Shanghai Forum Consensus‟. He also discussed the theme of the 2008 Forum: “Economic
Globalization and the Choice of Asia: Change, Growth and Welfare”.

Afterwards, Dr. Jae-Youl Kim expressed his expectations of Shanghai Forum developing into an
international economic forum benefiting the whole world and aspiring to a harmonious society. He
also thanked Fudan University for all the efforts and commitment made by the school‟s leaders,
faculties and students for the Forum. Finally, Prof. Shaode Qin, Chancellor of Fudan University,
gave a speech, in which he summarized and proposed suggestions for the Forum to maintain its
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momentum and vitality in the long run.

Finally, President Shenghong Wang and Dr. Jae-Youl Kim signed the „Shanghai Forum 2008‟
cooperation agreement, and exchanged gifts, signifying the official commencement of
preparations for „Shanghai Forum 2008‟.




    Speech by Prof. Shaode Qin, Chancellor of Fudan University

“Honorable President Jae-Youl Kim, distinguished scholars, guests, and teachers:

The last speaker seemed to have brought me back to May, which impressed me deeply as a busy,
enriched, unforgettable month full of enthusiasm. Today we are meeting here to hold a
retrospective conference for Shanghai Forum 2007 so that we can share our knowledge and
experience got form the Forum and make plans for the future. It‟s also expected that through this
conference, all of us can be united together for the better preparation of the coming Forum.

First of all, I‟d like to give our sincere gratitude to the Korea Foundation for Advanced Studies
(KFAS) on behalf of our university. President Kim and the Korea Foundation for Advanced
Studies have been highly supportive of Fudan University, and this support has laid a solid basis for
the success of the last two years‟ Forums. In the past decade, we have been making great
cooperation on such programs as the Asia Research Center, the South Korea Research Center, and
of course the Shanghai Forum. Besides this, a stable system of cooperation has been emerging
between us, which is decisive to our future success. It is my belief that if this cooperation can be
constantly strengthened and improved, we will have even more successful results on a wider scale.

Secondly, I‟d like to thank all the commission members and experts in the Academic Steering
Committee of Shanghai Forum. Their academic collaboration is a cornerstone of the forum, and
crucial in determining its success. Great themes, great people, great discussions and great
publications are the four pillars upon which the forum rests, with members of the Academic
Committee providing the cornerstone of each pillar. Without their active participation, profound
thinking and firm support, success would be impossible for us, no matter how well the other work

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is done.

During the last year, the theme of the conference has been selected and the academic context of
the sub-forums has been worked out by the Committee members. They have also collected many
insightful papers and have been participating into all kinds of activities hosted by the forum. It‟s
my hope that in the coming year, all of you will support and join in the forum‟s work as
enthusiastically as you always have been, providing the momentum to make this a forum that
more than ever reflects the burgeoning spirit of Fudan University and Shanghai, and the future of
China and Asia.

Finally, many thanks should be given to the whole forum staff that has made great efforts to
ensure the success of the forum. It‟s due to the cooperation of all parties that the Forum could be
held so smoothly and efficiently. We have called upon all the staff members within our school, and
have selected able members to do the publicizing, logistics and reception work to make sure that
we can overcome the difficulties of hosting the conference. Moreover, the expense of holding the
forum has been greatly reduced by our sticking to the principle of getting everything done with
our own heads and hands. Shanghai Forum is the first large forum to be prepared and hosted by a
university. But we have made it highly successful by making use of all the facilities and systems
set up for the centenary of our university, which means that more such forums can be held in
Fudan.

The large number of our devoted staff, those working on the front-line along with the many
student volunteers working backstage, have been standing closely together while confronting
difficulties. Their careful attention to detail helped make our guests feel at home, and gave our
visitors a clear demonstration of the Fudan spirit.

The success of the last two years‟ forums can be seen as the first step we have made in the
realization of our long-term plan. They have also shown the significance and the broad prospects
of Shanghai Forum, which is becoming a worldwide forum for free discussion, and also a brand of
Shanghai. We have made our theme the heated topic of Asia in the international setting, with
Shanghai being the theme city, inviting experts from worldwide to share their experience,
knowledge, and ideas, and have extracted the Shanghai Forum Consensus from their shared
thoughts and ideas. Shanghai Forum has found its focus, and takes its mission as “Concentrating
on Asia, Focusing on Hot Issues, Congregating Elites, Promoting Interactions, Enhancing
Cooperation and Seeking Consensus.” Shanghai Forum is gradually becoming the platform for
international cooperation among universities within the Asian, even the Asia-Pacific region. Along
with the KFAS and Fudan, Yale University of the U.S., Waseda University of Japan and National
University of Singapore have all now been added to the list of our strategic partners. Still more
international partners are waiting to be involved.

Shanghai Forum has also provided great opportunities for Fudan University, for it has enhanced
the growth of related subjects and of academic research here, and has raised the position of our
opinion on significant topics. Through academic exchange with experts worldwide, our scholars
can find research subjects that are of first-rate importance in their realm. By giving presentations

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at the forum, our young experts can also play a role on the world academic stage. Also, the forum
has given Fudan a more influential international position and more opportunities for
communicating with other countries. We have learned form the last two forums that setting up a
profoundly influential brand requires our constant effort.

It‟s time to wave goodbye to the 2007 Forum and embrace a new round of preparation for 2008.
At this point, I‟d like to raise two questions for all of us to think about.

The first question is how to maintain the high vitality of the forum. One of the most important
principles in this aspect is that we stick to our philosophy, paying attention to the central problems
in Asia, and propelling communication and cooperation among Asian countries. As I said in the
2007 Shanghai Forum Consensus, I share with all of you:

“the rich diversity of Asian cultures and an ancient and splendid civilization. Asian countries
should take new steps to advance cultural exchange and economic cooperation across national and
regional boundaries. The long flow of Asian history reveals yet another lesson: Harmonious
development and economic prosperity can be achieved only through peaceful coexistence, and
only through cooperation based on equality and mutual assistance. The harmonious development
of Asia will bring substantial benefits to the whole world.”

Thus, an important topic was put forward at the 2007 Shanghai Forum: the harmonious
development of Asia. It requires a lot of hard work for a forum to raise such a topic and make it
the focus of the scholars‟ consensus. Thus we may give some consideration to the suggestion that
we should make the forum more open in order to invite more international scholars, politicians
and business elites into the forum. There are many ways we can achieve this. To put it simply,
however, we believe that the more countries and regions, the more universities, governments and
enterprises there are in the forum, the more successful the forum will be.

The second question is how to achieve the long-term vitality of the Forum. We need a sustainable
forum-hosting system and faculty, and a stable financial supporter. Besides, we should provide
clear paths for coordination and communication, specialized staff and conference-preparation
faculty, while improving our ability to hold large international conferences. We should make good
arrangements for the coming year regarding the establishment of the Academic Steering
Committee, media publicizing, gaining of academic achievements, invitation of guests, and
general preparation of the forum. Only through well-planned systems and operations can we
achieve the long-term vitality of Shanghai Forum.

In a word, there‟s still a lot for us to do.

Honorable scholars and guests, A thousand mile journey is started by taking the first step. After
this retrospective conference there will be the signing ceremony for Shanghai Forum 2008 and the
special academic report on the theme of Shanghai Forum 2008: “Economic Globalization and the
Choice of Asia: Transition, Growth and Welfare”. I believe these are the first steps towards the
success of the 2008 Forum, and I wish our Shanghai Forum a better tomorrow and a successful

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conclusion of today‟s activities.

Thank you!”




    Speech by Dr. Jae-Youl Kim, Secretary General of The Korea Foundation for Advanced

     Studies


“Thank you President Xu, thank you Dean Yuan for your all-round review of Shanghai Forum
2007 as well as the promising preview of Shanghai Forum 2008. Thank you very much for the
generous support to Shanghai Forum from the scholars, professors and students of Fudan
University. Thank you very much for President Wang and Chancellor Qin‟s diligent efforts and
support, by which I‟m greatly moved.

In the year 2003 I proposed Shanghai Forum to President Wang for the first time, and President
Wang suggested that we start in 2005, in order to coincide with the centenary celebration of Fudan
University. We also discussed the long-term blueprint of Shanghai Forum. Shanghai Forum should
be an economic Forum, as the 21st Century should be an era of global economic globalization,
with China‟s economy playing a key role. Shanghai being the economic center of China, we have
designed the Shanghai Forum accordingly. Back at that time we also talked about the 2010 World
Expo, and we thought by that time our Shanghai Forum should have become an influential
international Forum of the World.

But hearing the speeches given just now by the professors and President Xu, I think perhaps we
need not wait until 2010, as Shanghai Forum in 2008 is going to become a highly influential world
economic forum devoted to the hot issues of the global economy. I myself did not major in
economy, but in philosophy, and I‟m always wondering, what is the final end of our Forum? And
what is our aspiration from a philosophical perspective? We all know that world history is a story
of competition and rivalry. During the last hundred years of history we have experienced
colonization and invasion. Now we are moving from a period of ideologically-oriented political
development into one of economically-oriented development. The regional economy is now

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becoming more and more based on economically-oriented development, and thus we wish to
explore the concept of globalization in the context of our Forum. We have settled on our theme of
“Economic Globalization and the Choice of Asia” so as to dedicate ourselves to the two equally
important concepts of the regional economy and the global economy. Shanghai Forum has also
been conceived against the background of a period whose defining features are economic
globalization, and the hegemony of the world‟s superpowers. But my perception of the goal of
Shanghai Forum and, indeed, of the 21st Century economy, is not that of fostering competition
between rival global ideologies or power-blocs. I believe one of the key goals of the 21st Century
should be harmony. That‟s why at Shanghai Forum we also want to discuss harmonious human
development, in a spirit of welfare, well-being and freedom.

Our goal and aspiration is to organize Shanghai Forum so as to benefit the whole world and make
global society more harmonious. That requires the constant efforts of President Wang, President
Xu and all the experts and professors present today. From a short-term strategic point of view, our
benefits come from competition and rivalry, but from a longer-term perspective, Shanghai Forum
wishes to use these benefits to help build a better and more harmonious global society.

Just now we heard from our professors the topics for next year‟s Forum, and I think many of them
are imbued with this ideal of harmony. I hope that Shanghai Forum 2008 can continue to invite
outstanding experts and professors from political, commercial and academic circles to discuss the
hottest issues of today‟s world and become an outstanding world economic forum itself in guiding
the world community.

The first Shanghai Forum was held in 2005, but, in my opinion, Shanghai Forum 2008 will be an
important starting point.

Thank you again for the efforts and support from the faculties and students, scholars and
professors of Fudan University. I myself will also spare no efforts in working together with
President Xu, Chancellor Qin and you all. Thank you!”




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Shanghai Forum 2008 Press Conference & Special Report on China’s Macro-economy


On the afternoon of Sep. 18, 2007, the Shanghai Forum 2008 Press Conference & Special Report
on China‟s Macro-economic Situation was held at the Guanghua Building, Fudan University.

The first part of the press conference was presided over by Dr. Zheng Xu, Vice President of Fudan
University. Prof. Wang Shenghong, President of Fudan University, Dr. Liu Pak Wai, President of
the Chinese University of Hong Kong, and Dr. Jae-Youl Kim, President of the Korea Foundation
for Advanced Studies, all addressed the conference, outlining the preparations for „Shanghai
Forum 2008‟.

Prof. Lei Shi, Secretary of Fudan University‟s Economics Department, presided over the second
part of the press conference. Prof. Yuan Zhigang, Dean of Fudan University‟s School of
Economics, Prof. Min Hua, Director of Fudan University‟s Global Economics Research Institute,
Prof. Jun Zhang, Director of the Chinese Market Socialism Economics Research Centre at Fudan
University, and Prof. Hongzhong Liu, Director of the Finance Department at Fudan University‟s
School of Economics, all outlined and discussed the themes and topics of „Shanghai Forum 2008‟
and its various Sub-forums.

Following the Press Conference was a „Special Report on China‟s Macro-economic Situation‟.
Prof. Ruyin Hu, Prof. Ruyin Hu, Director of the Research Center of Shanghai Security Exchange,
Prof. Youwen Zhang, Director and Senior Research Fellow of the Institute of World Economy at
Shanghai Academy of Social Sciences (SASS), Prof. Zhigang Yuan, Dean of Fudan University‟s
School of Economics, Prof. Jun Zhang, Director of the Chinese Market Socialism Economics
Research Centre at Fudan University, Prof. Hongzhong Liu, Director of the Finance Department at
Fudan University‟s School of Economics, and Prof. Xingmin Yin, Assistant Director of the Market
Socialism Research Department at Fudan University‟s School of Economics all delivered special
reports. The event was presided over by Prof. Lei Shi, Secretary of Fudan University‟s Economics
Department.

Members of Shanghai Forum Organizing Committee, Shanghai Forum Academic Steering
Committee, and faculties and leaders of Fudan University presented at the Press Conference and
Special Report.




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   Speech by Prof. Shenghong Wang, President of Fudan University


“Distinguished guests from the media, Honorable President Jae-Youl Kim of the Korea
Foundation for Advanced Studies, Ladies and Gentlemen, good afternoon!

I‟d like to give all of you a warm welcome and to declare, as the Chancellor of Fudan University
and the chairman of the Organizing Committee of Shanghai Forum, that Shanghai Forum 2008,
another high-level academic forum, will be held in Fudan University from May, 25th to May 27th
in the year of 2008.

Shanghai Forum is one of the most important international academic forums held by Fudan
University and will be held the third time in 9008.The Forum focuses on the main problems faced
by Asian countries in the global economy, works at the construction of a academic forum for the
communication and clashing of ideas, and has gained broad attention and high significance both
domestically and internationally. In 2007, more than 300 representatives from more than 30
countries and regions, including many noted politicians and international entrepreneurs
participated in the Forum and work hard with all the other participants to achieve the Shanghai
Forum Consensus, offered great suggestions for the overall development of Asia‟s economy,
politics, society and culture, and gained loud applause both in and abroad.

The coming-soon 2008 Shanghai Forum takes as its theme “The Choice of Asia: Transition,
Growth, and Welfare”, and centers on the six topics of “Regional Economic Growth and Equality
Policies”, “Financial Transition of East Asia”, “Sustainable Development of Society and
Economy,” “Asia‟s Economic Transformation and Regional Security”“The Strategic Choice for
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Asian Cities under the Background of Globalization”   ,and “Economic Transformation for Asia:
the international Environment and Institutional Restructuring”. About 300 guests will be invited
and the mission of the Forum will continue to be “Concentrating on Asia, Focusing on Hot Issues,
Congregating Elites, Promoting Interactions, Enhancing Cooperation and Seeking Consensus.”
We will build a platform for communication among the academic field, the business field and the
politics field and hold discussions on important problems confronting us.

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In order to hold another successful Forum in 2008, we have made the best of our experiences
gained from the last two Forums and other high-level forums. In the 2008 Forum, we will further
enhance the international cooperation and communication. Up to now, we have invited Yale
University, Waseda University of Japan, and Chinese University of Hong Kong to be our
cooperation partners in the preparation of relative sub-forums. It is our firm belief that a
international forum should not only be a platform for the clash of ideas, but also a database for the
collection of insightful ideas. Besides the composition of the Experts‟ Committee will have the
characteristic of multi-element with Prof. Zhigang Yuan being the Chairman. The committee
includes experts from Fudan University, elites from Shanghai and all around China, and many
overseas experts. I believe that with the hard work, the Forum will have a broader influence in the
academic field. Fudan University has paid great attention to the Forum, has composed for it an
excellent leading-group, the Secretary General being Prof. Zheng Xu, our Deputy Chancellor in
charge of the public affairs, and has called upon all members of the University for into the
preparation of the Forum. This shows our strong determination to ensure the successful launching
of all preparation work from all aspects.

HSDK has been highly supportive to the holding of Shanghai Forum. For many years, HSDK has
been working hard at providing support to the ideas both within Asia and around the world.
Recently, Fudan University has been cooperating with HSDK on the establishment of South Korea
Research Center (to be finally confirmed). We believe that through the holding of Shanghai Forum
2008, the cooperation between China and South Korea will enter into a new age. The preparation
for the Forum cannot go without the participation, support, and help from all levels of the society,
especially our media friend. And standing here today, I feel a urgent need to give our thanks to all
the friend that offered us help in the preparation and holding of the last two Forums, and I hope
that the preparation work, the Forum theme and the six topics of the 2008 Forum will be presented
by our media friends to the enterprises both in and abroad, to all the friends that pays attention to
the Forum. We will also continue our communication and cooperation with all our friends through
press conferences, publicizing, and the website of the Forum.

In the end, I‟d like to impart my strong belief that with the support from all levels of the society,
Shanghai Forum 2008 will have a wonderful ending. Thank you!”




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Latest News

Shanghai Forum Organizing Committee Secretariat Meets at Mogan Mountain

On August 20-21, 2007, the Shanghai Forum Organizing Committee Secretariat met at Mogan
Mountain for its summer work conference. This meeting first summarized Shanghai Forum 2007,
before discussing issues related to Shanghai Forum 2008, like development of the Forum‟s
website, and organization of the next phase of preparatory work.

Shanghai Forum Website Now Online

Shanghai Forum‟s new website is now online at www.shanghaiforum.org. The site includes
information about the Forum, a news centre, research development materials, application
information, and details of participants. It is also possible to register for the Forum online. There
are both Chinese and English versions of the site, as well as a special section for the 2008 Forum.




Third Meeting of Shanghai Forum 2008 Academic Steering Committee

On 7th September 2007, the third meeting of Shanghai Forum 2008 Academic Steering Committee
was held at the School of Economics, Fudan University. The exact dates of the 2008 Forum were
confirmed, as well as its six Sub-forums. The meeting also involved planning the agenda of the
forthcoming press conference, as well as the publication of Shanghai Forum2007 Post-conference
Anthology.



Fourth Meeting of Shanghai Forum 2008 Academic Steering Committee




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On 16th October 2007, the fourth meeting of Shanghai Forum 2008 Academic Steering Committee
took place at the School of Economics of Fudan University. The meeting addressed invitation of
delegates and VIPs to the coming year‟s Forum. The procedure for invitation of special guests to
the 2008 Forum was confirmed, as were practical matters such as expenses.




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ⅡFeature
Exposition on the Theme of Shanghai Forum 2008

Director of Academic Steering Committee

Prof. Zhigang Yuan:

Professor Zhigang Yuan is Dean of the School of Economics, Fudan University and tutor of
doctoral candidates. He is also Director of the Employment and Social Securities Research Center,
Principal for the Post-doctoral Station of theoretical economics at Fudan University, member of
the University Affairs Committee of Fudan University, Vice Chairman of Shanghai
Macro-economics Institute, as well as adviser to the Minister of Labor and Social Security of the
People‟s Republic of China.


Exposition on the General Theme:

                      For us Chinese, the year 2008 is a year of historical importance: it is the year
                      for Beijing to host the Olympics, the 30th year since China launched her
                      successful economic transition. It is also the tenth anniversary of Hong
                      Kong‟s return and it is the 10th anniversary of Southeast Asia Financial
                      Crisis, a brand new beginning for transition.

                       Transition here is a very important subject of the choices of Asia, which
                       stands for the transition of economy, the transition of growths patterns, the
transition of finance, the transition of industrial structure and the transition of cities. With
transition being the beginning, growth being the process, we will be able to maintain a sustainable
development and growth through successful transition. But what for? For the harmonious Asian
community and the welfare of Asian people. Therefore transition, growth and welfare are linked
together, which also conforms to the Chinese-advocated scientific development and harmonious
society. (空行)

Under contexts as such and the main theme of “Economic Globalization and the Choices of Asia”,
we have deemed the 2008 Forum‟s subheadings as “Transition, Growth and Welfare”, and under
the three subheadings, we have decided that the themes of the Sub-forums as follows:



                                        Shanghai Forum 2008

 Regional Economic Growth and Equality                         Financial Transition of East Asia
 Policies
 Asia‟s Economic Transformation and                       Sustainable Development of Society and
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 Regional Security                                        Economy 社会与经济可持续发展
  The Strategic Choices for Asian Cities                  Economic Transformation for Asia: the
  under the Background of Globalization                   International       Environment    and
 Economic                                                 Institutional Restructuring
Through insightful discussions we would like to arrive at a summarization of China‟s 30 years of
successful transition, Asia‟s growth pattern transition, Asia‟s industrial structure upgrading and
transition after the Southeast Asia Financial Crisis, Asia‟s expansion of city circles, Asia‟s
restructuring of civilization, culture and society and Asia‟s growth pattern and its contributions to
that of the human race.



Exposition on the Sub-forums of Shanghai Forum

2008

Regional Economic Growth and Equality Policy

Sub-forum Principal:

Dr. Zhang Jun is Professor of Economics at Fudan University and
serves as the Director for China Center for Economic Studies (CCES) at
Fudan University. He was educated in China, Britain and United States,
respectively during 1981-1994. Since 1997, he has held visiting or
lecturing fellowships at London School of Economics, Harvard
University, Tokyo Metropolitan University and Kyungpook National
University in Korea. He also teaches for EMBA programs at CEIBS and
School of Business at Shanghai Jiaotong University.

He is one of the leading economists in China, specializing in many areas of current economic
development and growth in China. He has many publications both in Chinese and English,
including papers published in Journal of Asian Economics, Journal of Chinese Economics and
Business Studies, East Asian Review, etc. He is also a columnist, frequently writing for Project
Syndicate, Financial Times, Economic Observer, etc. His views on China have been widely cited
in mass media, including Wall Street Journal, Financial Times, New York Times, South China
Morning Post, BBC, PBS and etc.

Sub-forum Exposition

1. China’s Growth Transformation and Distribution Policies
The Chinese central government has highlighted a scientific development concept of
comprehensive, coordinated and sustainable development and has outlined the vision of a
harmonious socialist society, which has set the tone for defining development model
transformation objectives. Therefore, it is very important to explore the policies which will help to
realize the objectives. A discussion on the policies, which are not only economic ones but also
governmental and administrative ones, will help decision-makers to understand and find right
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policy approaches to transform China‟s development model.

2. Balanced Development Model in East Asia
The East Asian countries are in face of a new adjustment of the global economy. Most of them,
however, are still relying heavily on fixed-asset investment as an engine driving economic growth.
If they fail to find a right way to stimulate consumption, the over-capacity problem in supply side
will go from bad to worse. A possible economic recession outside the region could make many
export-driven East Asian economies suffer heavily. In addition, the preferential policies in East
Asia are not equally shared by the under-privileged groups, poverty-striken people and areas, and
many countries in the region are hoping “trickle-down effects” to realize balanced development,
namely, making certain social groups and regions get rich first and then pass down the fruits
achieved to poverty-stricken people and less-developed areas via consumption and employment.
This economic growth approach has created industrial-agricultural development gaps as well as
regional development imbalances within eastern Asian countries. It is now a pressing issue for the
countries to address the imbalanced development.

3. Income Distribution and Economic Growth in a Globalization Context
China‟s opening-up and reform has been tremendously successful in driving rapid and continuous
economic development, and it has not only accumulated national wealth in an unprecedented
manner but also caused profound changes in social structure. Different social groups are emerging
with different interests, while an imbalanced wealth distribution system is contributing to the rise
of social conflicts. Building up a harmonious society, as the ultimate goal of China‟s development,
requires not only rapid wealth accumulation but also a fairer distribution system; a balanced
interest distribution structure is badly in need and China has to build up a proper social mechanism
through democracy and rule-by-law to tolerate, address and coordinate interests among different
social groups. Therefore, it is quite meaningful to discuss the relationship between economic
growth and social justice.

4. Growth of Happiness and Policies
The core question in “Happiness Economics” is the “happiness paradox” or “Easterlin paradox”,
namely, why people‟s feeling of happiness decrease while income is on rise?

The happiest countries in the world are not the richest. It is true that Denmark and Dutch people
are happy, so do Puerto Rico people and Mexicans. In Asia, Japan is far richer, stronger and freer
than the Philippines, but almost all the available research results show that the Japanese are less
happy than the Filipinos. It is now a well-recognized conclusion that happiness has no correlation
with income – neither positive correlation nor negative correlation.

Prof. Yew-Kwang Ng from Australia has done many researches about this and has published
several books on the subject. In China, it is also worth talking about growth of happiness and
policies.




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Financial Transition of Asia


                           Sub-forum Principal:
                           Prof. Hongzhong Liu

                           Dr. Hongzhong Liu, Professor of Finance, Vice Director of Research
                           Institute of Finance, Chairman of Department of International Finance,
                           Fudan University, Shanghai, China. Prof. Liu received his PhD in
                           economics at Fudan University in 1998. He is also Director of Chinese
                           Monetary Society, Chinese International Finance Society and
                           Shanghai Finance Society.




Sub-forum Exposition

The theme of Financial Sub-forum exemplifies the three key words of Shanghai Forum 2008:
Transition, Growth and Welfare.

Transformation of financial system comes first. Asian countries are developing financial markets
for better financial resource allocation, namely promoting direct-financing instead of indirect
financing and building up market-oriented financial system instead of institution-directed system.
Secondly, both domestic and overseas policy makers have agreed on the role of financial system in
promoting economic development, or development of financial system in one country will
definitely help the local economic growth. Last but not the least is the welfare issue – financial
cooperation among East Asian countries is set to accelerate regional economic integration and to
boost local welfare levels.

Financial cooperation is aimed to address the flow-back of huge savings as well as large volume
of liquidity in the region, and the discussion will be carried out around the following subjects:

1. The Cooperation of Financial Markets in East Asia
Works about building up a regional bond market under the 10+3 framework have started, but the
Asian bond market and the Asian bond funds still account for a small portion in the global market.
It is an important issue now on how to promote Asian bond market development and to define
government‟s role in the process.

2. Construction of Necessary Market Infrastructure and Settlement System in Developing
    a Regional Financial Market
How do we conduct the clearing and settlement? It is a problem about both hardware and software,
and there is the issue of who will do it – 10+3? Bilateral or multilateral? By ASEAN, China, Japan
or South Korea, what roles will the U.S. and Asia play?

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3. The Promotion of Regional Integration
How to promote regional integration against the globalization background? How to build up a
regional financial market in East Asia? How to balance regional integration and globalization?
What‟s the impact of regional integration on welfare? What‟s the role Shanghai will play in the
process? What role should Shanghai play? These issues are worth discussing.

This session will be attended by 40 delegates from academic, governmental and business circles,
and the researchers are from the United States, Japan, ASEAN and China. Representatives from
Asian Development Bank, International Monetary Fund, the World Bank, Ministry of Finance,
People‟s Bank of China, China Securities Regulatory Commission and China Banking Regulatory
Commission will also present.




Asia’s Economic Transformation and International
Order


                            Sub-forum Principal:
                            Prof. Dingli Shen

                            Dr. Dingli Shen is a professor of international relations at Fudan
                            University. He is Fudan‟s Executive Dean of Institute of International
                            Studies, and Director of Center for American Studies. He is also the
                            co-founder and director of China's first non-government-based
                            Program on Arms Control and Regional Security, at Fudan.

                             His research areas cover China-U.S. security relationship, nuclear
arms control and disarmament, nuclear weapons policy of the United States and China, regional
nonproliferation issues concerning South Asia, Northeast Asia and Middle East, test ban, missile
defense, export control, as well as China‟s foreign and defense policies.



Sub-forum Exposition

There are three topics under the Sub-forum of Asia‟s Economic Transformation and International
Order; they are:

1. The Impact of the Rise of China and India on Asia

China and India,two ancient civilizations with more than one-third of the world's population, are
the two largest developing countries. The simultaneous rising of China and India promotes the
trend of the world multi-polarization and globalization greatly, thereby making significant sense in
the history of human civilization. As regards to Asia, the rising of China and India not only
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brings out prosperity and development in Asia, accelerates evolution of new Asian power pattern,
promotes further development of regional cooperation, but also increases Asia‟s voice in the
international community greatly, adds Asia‟s strategic weight in the current global configuration,
thus leading to the shifting of global economic and political center of gravity from the Atlantic to
the Pacific gradually.

Meanwhile, the rise of China and India has certainly drawn great amount of attention by great
powers beyond Asia, through managing to win over or associate with Asian major players so as to
nurture favorable strategic positioning, hence increasing the complexities of the security
environment in Asia.

2. The Ramifications of Asian Economic Integration on Regional Security

Regional economic cooperation in Asia started during the Asian financial crisis in 1997-1098.
Ten years later, it has gained momentum and appears to be an irreversible process. Economic
cooperation, which is beneficial to all, has also turned out to be a centripetal force for countries in
the region. Generally speaking, economic integration will have a “spillover effect” on regional
security. At the moment the issue has not yet drawn adequate attention.

Questions that need to be discussed and studied here include: to what extent regional economic
cooperation has bred an identification of regional common interest and what its implications are
for regional stability and the reduction of tensions; will FTA and regional economic integration
help dissipate security skepticism and the rigid structure of security alliances, and will the two
interact with each other in a positive way, etc.

3. Regional Cooperation and the Resolution of Nuclear Issues of Northeast Asia

The security situation in Northeast Asia is presenting certain new features. The DPRK new
disablement is making some headway and Pyongyang and Washington are speeding up the
improvement of their relations. The high-level contacts between DPRK and ROK continue to
help détente of the Korean Peninsula. The Six-Party Talks have not only promoted the dialogue
and implementation of a nuclear weapon free Peninsula, but offered the possibility of presenting a
platform of Northeast Asian security discussion. Nevertheless, given the complexity of security
contradictions in the region, there seems to have a paralleling of regional cooperation and
competition.

Centering on the Korean nuclear issue, this thematic subject will reassess the security situation in
Northeast Asia. It will address those issues such as the structural change of relations among the
major powers, the process and the prospects of the Six-Party Talks, the building up of peace
mechanism of the Korean Peninsula, as well as multilateral security cooperation in Northeast Asia
etc.




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Sustainable Development of Society and Economy


                           Sub-forum Principal:
                           Prof. Xizhe Peng

                           Dr. Xizhe Peng is a professor of population and development at Fudan
                           University, and serves as the Dean of the School of Social
                           Development and Public Policy. He graduated from the Department of
                           Economics, Fudan University, in 1982, and received his M.Sc. and
                           Ph.D. degrees in Population Studies from London School of
                           Economics and Political Sciences in 1984 and 1988 respectively.

Dr. Peng has been working at Fudan University since 1988. His research covers a wide range of
population-related issues, including population dynamics and policy, social protection and social
policy, sustainable development and gender studies etc..

Sub-forum Exposition

The special social and cultural environment in Asia, along with its marvelous
economic achievements, has been a focus of global attention. Owing to Japan‟s
economic growth since the 1960s and the economic rise both of China and India from
the 1990s, Asia has got involved more and more deeply in the widening globalization.
Could the economy in Asia keep developing in a rather fast manner? It is now a hot
issue which attracts attentions.

The fast growth of the economy in Asia is accompanied with many problems and
challenges: Could the value system and the culture of East Asia support the
sustainable development of the social economy? The population structure change and
the gradual close of the demographic window resulted from the sustained low birth
rate are exerting influences on the pattern of the economic development and the
sustainable social and economic development in Asia; and as the traditional
urbanization model is under reexamination in a globalization context, exploring the
possible ways to realize the sustainable future development is a pressing issue
challenging all the countries in Asia.

Centering on the problems and challenges mentioned above, this Sub-forum discusses
the following three topics.

1. East Asian Value and Asia Economic Development
The shift of the modernization center from North America to East Asia followed the
economic miracle in East Asia led to the changes of the global political and economic
pattern. The successful modernization fosters the East Asian people‟s new cultural
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consciousness and confidence, arouses their pursuit of cultural identify and value, and
encourages them to explore the approaches of obtaining sustainable development in a
balanced and harmonious society. Aiming at a referential solution to the globalization
issue, this topic focuses on the relationship between the Asian economic growth mode
and its social and cultural values, and attempts to investigate the specific economic
growth mode in Asia from the prospective of East Asian value and culture.

2. Super-low Fertility Rate and Its Economic Effects
All the East Asian countries and regions have finished successively the population
transformation, and the super-low fertility rate is becoming the dominant fertility
mode in this region. This kind of fertility trend has resulted and must result in the
rapid population aging, thus it has a serious effect on the labor structure, economic
growth mode as well as social development. Equally, it can also lead to the social
resources distribution disparity between generations, except changes of marriage and
family and other social structures. This topic centers on the population structure
change due to the low fertility rate and its influences on the economic growth,
exploring the possible political options for the Asian countries and regions.

3. Asia Witnessing Rapid Urbanization
 In an economic globalization and changing global environment context, the Asian
cities are confronted with the question of how to achieve the harmonious development
of urbanization and the economic society, and how to make the urban development an
important way of the sustainable social and economic development. Investigating the
relationship between life style, economic growth mode and urbanization, this topic
elucidates the types and motives of urbanization by giving a new definition to it, and
seeks a healthy, rescourse-saving, human-friendly and accommodative city
development mode to lead the city development in the future.




Strategic Choices of Asian Cities under Globalization

Sub-forum Principal:
Prof. Guixin Wang

Dr. Guixin Wang is Professor of Economics and Tutor of Doctoral
Candidates. He is now the Director of Population Research Center,
Director of City and Regional Development Center, Vice Director of
Academic Steering Committee of the School of Social Development
and Public Policy and Director of its Graduate Students Tutoring
Committee, Fudan University. He has been visiting professor at
Hiroshima University in Japan in 2002 and guest-professor at Renmin
University, East China Normal University and Shanghai Social Science Institute (researcher). His
major research fields include population immigration and urbanization, the sustainable
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development        and      decision-making       system      of       cities     and      regions,
population·resources·environmental economics analysis as well as management and evaluation.
He has been responsible to near 20 projects of national or provincial level, including the key
projects of National Social Science Foundation and National Natural Science Foundation of China.
His research results have been merited with such prizes as 2 first prizes, 4 second prizes and 10+
third prizes of Shanghai Philosophic and Social Science Outstanding Research Result Award.

Sub-forum Exposition

The involving economic globalization has given cities a central role in social and economic
development, and as the UN Tokyo conference in 1993 had predicted, “the 21st century will be a
century of cities”. Cities will decide the future economy and society.

Many Asian countries are still in developing stage, but globalization has profound impacts on city
development in Asia. Globalization, on the one hand, has provided Asian cities with important
chances to be integrated in the global economy, join international competition and share global
resources to promote national or even regional economic growth; but on the other hand,
globalization has also brought new challenges to Asian cities, including massive energy
consumption and pollution due to rapid economic growth, widening of social wealth disparity,
insufficient urban facilities and lack of housing and traffic jams on influx of rural migrant workers
into cities, blind expansion of urban areas as well as city management headaches. It is a consensus
now among Asian countries and regions that they should share experiences to grasp opportunities
and tackle challenges for a balanced development.

The session on Asian Cities‟ Choice in a Globalization Context will be carried out on the
following subjects:

1. Urban Energy and Environment
The session will look into effects of urban economic growth and energy consumption on
environment as well as approaches in maintaining urban economic growth with efficient energy
use in a move to find a coordinated and sustainable development path that can keep balance in
economic growth, energy consumption and environmental protection. The session will also talk
about control of greenhouse gas emissions as well as development of clean energies and recycling
economy.

2. Urban infrastructure and traffic
Improvement of urban infrastructure and traffic conditions is one of the primary ways for cities to
accommodate new dwellers, attract businesses and improve competitiveness. The session will
discuss how to increase capital investment in infrastructures and enhance the performance of the
infrastructure, how to relief traffic jam and develop efficient and convenient inner-city transport
system and how to improve the role and the overall competitiveness of a city, all of which are also
pressing issues for most Asian cities.

3. City Planning and Management

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The social and economic changes have caused transformation in urban space structure and social
structures. The session will discuss common rules and principles as well as differences in urban
planning and management, to develop coordinated and effective urban space and harmonious
social structure with innovation and scientific management with the ultimate goal of making cities
comfortable, prosperous, safe, human-friendly and accommodative living spaces for human
beings.

4. Population urbanization and Development of Cities
Population urbanization is a must trend in social and economic development. Asian developing
countries are now witnessing a massive inflow of rural residents into cities and an accelerated
process of urbanization. Countries and regions should follow urbanization principles to select right
paths according to their own conditions.




Economic Transformation for Asia: the International
Environment and Institutional Restructuring

                                   Sub-forum Principal:
                                   Prof. Min Hua

                                   Dr. Min Hua is a professor of Economics. He serves as the
                                   President of the World Economy Institute of Fudan Economics
                                   Academy, chairman of world economy department.

                              He is also the Vice President of China World Economy
                              Academy, one of the advisors of Policy-making Consulting
                              Committee of the Shanghai municipal government, consultant
                              of the Shanghai 10th Five-Year Plan and advisor of Shanghai
Entrepreneurship Assessment Agency. He has long engaged in the researches in the fields of
Global and Chinese economy.

Sub-forum Exposition

In the decades after the World War II, many economies in Asia witness rapid growth, which
strengthens the economic power of Asia as a whole. However, The Asian Financial crisis in 1997
reveals the potential risk behind the prosperity that Asia can‟t play initiative role in world
economic growth. The international division of “center-periphery” doesn‟t change with the
transition from inter-industry trade to intra-industry trade. Conversely, it reinforces itself with the
expansion and penetration of multinational corporations. US, with initiative in technology
innovation, play the key momentum of world economic growth; other developed economies such
as Europe and Japan, with comprehensive technology power, make major contribution to the
world economic growth. Asian developing economies, with China as the representative, haven‟t
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fostered institutions facilitating technology innovation, though they have made progressive rapid
growth through processing manufacturing. The export-orientation policy expects to achieve
economic development through doing by learning and spillover effect and it once proves to be
effective. Nevertheless, it failed to help the economies to win again in the new round of
technology competition. Meanwhile, Japan, as the leading economies in Asia, suffers from
“air-core” phenomenon as the large sum outflow manufacturing. Its leading and influencing power
to Asian Economy is diminishing due to its long-term recession after Asian financial crisis. As a
result, the emerging economies in East Asian once benefiting from Japan now turn to US and
European market for new trade channels and industry upgrade paths.

Currently, the endowment and restraint for Asia are as follows:
The lager population with low education is a barrier to industry reconstruction and upgrade.
1. Two-dimensional economic structure of cities and countryside with large farmer population
    and low urbanization leads to insufficient domestic demand.
2. Economic growth depends too much on spillover, lack of backup of technology innovation
    and institutional innovation.
3. The interference from government twists the market and prevents the entrepreneur from full
    play their power.
4. Asia economies are lack of resources, especially energy.

The economic structure and endowment confine Asia to manufacturing and the shortage of
resources is an obstacle of further development. Especially now, when energy products are treated
as financial derivatives, the shortage of energy aggravates the financial risk. Only by full learning
of the external economic situation and internal endowment and restraint can we achieve
sustainable development for Asia. As the external economic situation can hardly be changed, Asia
should adopt adaptive strategy by economy reform and technology innovation to realize
sustainable development. For near future, it means job creation, income improving; for far future,
it means education improving, human capital input and institutional innovation.




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ⅢVoices
Keynote Speeches of Shanghai Forum 2007

     “Towards Sustainable Urban Futures: Urbanization in an Era of Globalization and
                               Environmental Change”
                                     by Prof. Dr. Hans van Ginkel, Under Secretary General,
                                       United Nations, President, United Nations University

“In fact, what I want to do this morning is to raise your attention for the fact that the future of
human kind will be an urban future. Many people still have memories of how green pastures can
be. But when you look at reality and the choice of people, people prefer to live in cities. And so
we are at the moment in the situation that we can see in the next 20, 30 years, after two-thirds of
world population will be living in cities. In the country like Japan, already 90% of the population
is living in cities, Latin America 80%, already now. So you can see we are going to live in cities.
When you look at the projects of United Nations, then you can see that another 2 billion world
citizens will be added to the world population. That 2 billion, directly or indirectly, will end up in
the cities of the developing countries, because the population of those cities will be doubling from
2 to 4 billion. And basically, they will come to the cities that have to release the capacities to
assure so many people.

So what are we going to do? And basically, what kind of cities will it be? Will it be the cities we
have known them or can be guided in the process in a way that the cities will be more hospitable
and more livable? I am pretty sure that in policy and in science they have not leave the sort school
of disnatured trend in developments. In the U.S., less than 2% of the labor forces are working in
agriculture; in the Netherlands, it‟s less than 3%. Nevertheless, the U.S. and the Netherlands is the
number one and number two exporters of agricultural product in value around the world. So you
can see to your own population, you can export a lot if you have to be in agriculture. Then you
double basically the farmers for those who are working in services relating to farming, then maybe
5% has to live in rural the way we know it. And that‟s perhaps the perspective we have for the
future. You can see in this graph that in the world population in fact just after 2000, the percentage
of population in cities has become bigger than the percentage living in rural areas. When you look
at China, you will see this point a little bit later. It‟s expected to be somewhere around 2020. But
nevertheless, it‟s coming.

And when you look at population distribution of developing and developed countries by size of
urban area and year, then you can see that in the developing countries, most of the growth will
take place in the cities smaller than 0.5 million inhabitants. So we always think that the major
growth is in bigger cities, but rather we have to focus on the smaller ones, because there is what
the growth is happening and maybe there also the issue is more manageable. When you look at the
developed counties you see that in all sized degrees of cities, the numbers are much smaller and
certainly also the growth is much smaller. But the same trend can be seen. I don‟t pay too much
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attention to the fact that much growth is also expected in the group of 1 to 5 million big cities,
because often then when a city shifts from 0.9 million to 1 million, then all the population of the
cities all at once are counted in fatigue. So it‟s kind of missing the presentation.

Now the major problem of all these is in fact the density of population is not the fact that people
are living in cities, but when we have very high population densities over very far spaces we call
the basic resources even clean air and drinking water are not sufficient for the population that is a
mass developing in a small space. We have to think of the fact that at this moment already
drinking water for Mexico cities is piping over the distance of 200 km. And these pipelines are not
sufficient. So drinking water is tripped into Mexico cities and it‟s quite clear that this in the longer
term is not a sustainable situation. And it is high densities where people are so crowded that we
have developed concept of “Borrowed Spaces”, meaning people are living in the house which is
so small that in fact they have no kitchen so they eat in the foot stalls along the street side, that the
public space is being used as dinning room of the family. And in the same way you can see that
the living room is kind of the public parks to city, housed karaoke or pachinko where people spend
the rest of the day when they are not working. So “Borrowed Spaces” in Hong Kong are of course
the solutions by increasing the multiple-used space. You have many places in Hong Kong or
recently in Tokyo in fact were one of the best examples of multiple uses of space where you go in
Haiti somewhere you have 52 floors, even on the ground floor allow yourself to have some clean
space.

So the key questions for the future will be what kind of urban cities will exist in 2030? How can
we assure that these urban places are organized and managed in such a way so that the
eco-resource systems of which they are part are sustained and continue to provide the inputs such
as water etc. that are needed to sustain urban places? What needs to be done to develop the types
of urban places that provide the basic needs of their population so that they exist in healthy
environment which is in itself sustainable? And you will hear from what I will be saying that
much can be done by guiding the process in such a way that you have nodes of cities which are
kind of distance format but links so much by public transport that they work as from big cities.
And in this way, you can segment the problem and basically you overcome the opposition between
the rural and the urban. Generally, the rural is the much poorer part, and the urban is then the
numinous being made that you are rather integrating to rural and urban. And I think in that sense
we are going to change the policies.

While I‟ll leave aside this graph which indicates where the big cities were and by the red you can
see that in history big cities were often in Asia. And then in the last century, this changed a little
bit, but in the last decade, Asia has kind of regained this position worldwide. When you look at the
regional comparison of growth in large urban areas, then you can easily see from different tables
that Asia is in fact the only continent having more than 60 percent of the world population rate.
But much of the population is in cites. Then you look beyond Asia to Africa and also to Latin
America you can see from this graph that less developed regions will see the growth of the urban
population from 2 million in 2000 to 4 billion in 2030. So that‟s the doubling I was talking about.

Well, what kind of pattern will you see? Someone has made a major study on megalopolis. This

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first megalopolis was between Boston and Baltimore, the northeast coast of U.S. And you can just
see that over the last 50 years when you look at the red spaces as where originally the urbanization
was to the grey and blue spaces that basically the whole area is being urbanized nowadays and you
see here the intermingling of the rural and urban, because of the process of super penetration and
process of concentration of population in the rural areas. And this is not just in the U.S. When you
look at the Netherlands as a country, basically the Netherlands is not really a country and more,
the Netherlands is just one city for any foreigners going there will recognize this. And in fact the
poor city for the continent viewer and basically it‟s the poor city for Germany and the whole
European Union. And it‟s the same way Singapore is the poorest for Southeast Asia. As a
consequence, you can see the grey zones that basically the urbanization spreads two-thirds of the
whole county.

Then you look at how you can house people? In the Netherlands, it has become the major problem
discussed over the last 50 years. You have always do choice between either grouping everyone
together in big centers or to let it disperse as much as possible. The policy option that was in fact
accepted in the Netherlands is something in-between which is called “Clustered De-concentration”.
So how can you guide the process to get this clusters which are big enough for servicing the
population but not so big to get major negative consequences of overcrowding. This is the
processes being guided over the last 50 years. You can see in the Netherlands that in the past we
were talking about Randstad. Maybe others will say Holland city, and Holland city includes
Amsterdam, Rotterdam and Haiti. But nowadays we are not just talking about Holland cities any
more or Randstad. In fact, the urban area is kind of expanding to rural area. As a consequence, for
planning purposes you have to plan at different levels of geographical scale. Already, planning is
going on between Belgium to Germany and Netherlands for this overall urban area. There is
planning for the Netherlands as a country, there is planning at a level of province and there is
planning as a municipality of a city. And these plannings of different level and scale must be
coordinated, and that‟s what I think is the major challenge for China in the near future as well.

So how do we recognize where the urban development take place? Many in a way are still
working between these municipalities and then look at sense of figures. I think this leads to
comparing ample peers. They count Los Angles to be a mega city, where we never see the rural
area joint the front hood as a mega city. Why not? Because the rural area and the front hood are
registered as being different public administrative territorial unites and they never see this sense of
figure together. Nevertheless the total area of Los Angles as a mega city is larger than the front
hood and rural area together. So it‟s kind of the way in which different government in different
countries do establish the territorial unites of administration. That directly influence the way in
which people see where the big cities are. And in fact, insurance company is no better. So when
you look at the insurance company in Munich, they already list the west of the Netherlands and
also the rural area of Frankfort as mega cities. But you will never find them in scientific literature
mentioned like that.

In the past we could only, like you can see on this painting of Jan Verneer, map by measuring and
drawing. And now we have more sophisticated ways to see what is there on the surface of the
earth. They just use thermosensing and GIS and they can get excellent pictures of where the urban

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is and then we can try to match senses of areas with the outline of the urban areas that we have
found by the pictures from space. And I think in this way you can see easily when you look at the
earth by night. And you look at where the light is. Well, the light is kind of great balance of
numbers of people and levels of economic activity. And that‟s where the cities are. So when you
look at this map, you can easily see where in South Africa is Johannesburg or Cape Town. Now
you can see the Perse in Australia and Niles and that kind of things. So you can see urbanization
throughout North America and the urban points in Latin America. This is the way to see where we
can focus our research.

And of course, when you look at aero-pictures, you can in fact make very detailed pictures of what
is where. So, when you have to re-conceptualize what is urban and what is rural and how
intermingle the two are and how you have to develop the urban living hood, it‟s very difficult to
have a regional development plan for rural areas when you don‟t bring account the urban, because
much of the younger people in the farmers families will rather be in urban types of economic
activities. So when the rural comes to the urban, we have to bring the urban to the rural; otherwise
we will never meet the pleasure of migration from the rural to the urban areas. So the demographic
driving force helps shaping urban areas, as well as economy, transportation and local policies. I
just have a map of the Netherlands and I think this type of approaches can be used in many places.
What is a major characteristic for the urban is the number of job opportunities. So the darkest
color here is the places where there are more than one million job opportunities for citizens within
half an hour drive and within half an hour travel. Of course different countries may have different
limits or different idea about time that could be involved in traveling to go to work. But at the
same time, with this concentration of job opportunities, you can clearly see where the urban is,
and you can see how the urban spread over geographical space over the countries and you can see
basically that two-thirds of the Netherlands in dark colors is part of these large citizens. Now job
opportunities can be at different time, and to make this remembered by you, I got these pictures in
Abidjan that people have the job opportunities of doing laundry for commercial reasons---to earn
money by doing laundry. Of course, there are jobs of jobs and they have to be recognized. When
you would like to look what urban means for the economy of a country, then this map of the
Netherlands indicates top positions of so-called money machines. And then you look at the
companies that are located in a country, you can have the miller dress. The miller dress nowadays
is so kind of precise that you can indicate the income that generated in certain square kilometer in
a country. And basically, this map is the different levels of income generated in square kilometers
in the country, which are very precise. You start with thermosensing and end up this miller dress
which gives a very precise picture of what is going on and where. And this is not just in the
developed country like the Netherlands, I‟m pretty sure that in China you can do the same.

So the core challenge we have to solve is in particular environmental issue we have already
mentioned like drinking water and there is also pollution by light. This map is the first map I have
shown to you of how the earth looks by night. It indicates in the colors how many stars you can
see during the night, because it can be solved in the light pollution in the place that you don‟t
recognize the stars any more. And it‟s predicated that in 2050, in Italy it will be impossible to see
the stars during the night as a consequence of light pollution. It‟s a topic not many people think
about. But here in Mexico City, the author cites what I mentioned about water. You see the growth

                                                                                                  31
of Mexico City, and here for different stages of the shrinking of the lake which was the basis for
the development of the Mexico City. And you see for a large lake, till recently, no water at all, no
lake at all left. I don‟t have to say too much of traffic congestion, but of course we know that in
developed countries the traffic congestion as a consequence of cars. The densities of developing
countries can be so much that it can be congestions of trishaws of bicycles. Other element is that
when the pleasurable land becomes so big like Caracas, you build too close to the places like
landslides. So when recently in Venezuela, well by recently I mean 8 years ago, there were major
damages as a consequence of landslides to a large extent was because the lack of construction
regulations by which too many of the houses were placed and built in places that were not
sustainable and in fact dangerous, like the case for many of the Favelas. The Favelas‟ houses go up
to mountain slop some times so steep that with major natural defense happening there is no way to
maintain these houses in those places. One has to look at all these kinds of consequence in a
systematic way.

When you would like to govern cities, you know that many developments in cities nowadays are
not heavy plans by the government, are not heavy as deliberate decisions but rather people doing
things. And that‟s what we have to think about things, we have to bring in this concept of how you
can socially organize and manage a place at different scales and levels. All people would like to
have a major influence in what is happening in that direct living environment. They don‟t always
accept easily what the government is decreeing, maybe somewhere in the capital city even not in
the town hall of a very big city. So, how do you create a socially responsible urban society where
people take interest in what is happening directly from that environment? What deeply contribute
to a more systematic approach in order to guarantee good quality of life? And that means we have
to accept that all policies have to be multi-sectoral, multi-layered. Layers and sectors are not
always in a very consistent manner organized. So we have to bring in what is the formal
government and what is informal government, like civil society and others trying to solve
problems. So this kind of governing problem is the major issue to solve in order to make the future
of many urban milieus sustainable and useful.

And then nowadays, many people have a very general idea about urbanization more or less saying
that everything becomes the same. When you look more closely, it‟s not so true. Of course, in
earlier urban studies we have already developed different neighborhood concept, socially different
and economically different and so on. When the urbanization is spreading in a guided process, we
try to have urbanization not as a concentration process all at one point, but in a more segmented
way along lines of optimized public transport like pearls on a string. Each of the nodes can have
their own kind of characteristics, and they started from being different from landscape‟s point of
view, from architectural point of view. The society was already there in many new town
developments. We have recognized that in new town generally it‟s only sustainable and livable
and interesting for people when you take an older note in the settlement pattern as a kind of
starting point. So there is something being done, around which the rest of the city can be
organized. So there is something coming from the past, and something added for the future. That
blends into different what I would like to call urban formations, just as their geological formations
are quite different. They attract in different ways different groups from cities, different economic
and social groups, which I could ascertain in my studies about super-penetration of the western

                                                                                                  32
part of the Netherlands. In the super-penetration too people always say everything becomes the
same. It‟s not true. Of 128 municipalities in the western part of the country, maybe you could
group them in certain different types, but they were all individually different in the way they were
worked out.

Now this has segmented the problem, and you can see this has in some ways already developed in
practice. At the left bottom of the figure, you see Tokyo. Tokyo basically started from one center,
but now when you look at Tokyo mega city with a certain million inhabitants, there are many such
centers developed overtime. But it is a fairly concentrated city. When you look at the left upper
site, you see what I would like to call “Holland City”, the western urbanized part of the
Netherlands, which houses seven million people. But when you go there, you see green
everywhere. That‟s because the whole problem has been addressed by having different notes.
Although strong concentrated compact cities approaches around those notes, in-between a very
strong policy protecting the green not as pines of artificial planting trees but just maintaining the
agricultural land. So you get the combination of the rural and the urban in a positive manner. In
the rural area in the right upper side, it‟s basically the same. As we are now here in Shanghai, I
thought it was nice to have examples of the Pearl River Delta city. The pearl of the delta city is in
fact Hong Kong, Macao, Guangzhou and altogether that we never experience them and perceive
them as one city because they are not the same administrative regions. But I don‟t understand why
Belgium, Germany, and the Netherlands can discuss the joint development of the urban in
northwest Europe. You can have specific administrative regions, but nevertheless, we could have a
total plan for the 40 million people that live in the Pearl River Delta and developed as one city.
And you see this will not be difficult when you just build bridges instead of barriers between
Hong Kong and Macao. All at once, it will start to function as one city. This is not special because
in the west of the Netherlands, we made Amsterdam after the flooding of the early 50s, and
nowadays it becomes clear that Amsterdam and Rotterdam are basically one port. They are the
port of northwest Europe.

Now what I said about these formations is just to help you remind that this could be true. You have
from one side the old cities and many of European cities now in this middle-aged form but still
recognizable. But also you have new things which are apartments looking down on you. And
different people will be attracted by different activities. In Tokyo you see that you have the
combination of the both. Generally, we take Tokyo as a low-rise city because of the earthquakes.
But recently, we have seen more and more skyscrapers coming also for residential purposes. And
in China we see we are somewhere on the crossroads. Are we going to restore or renovate the
old-built constructions or are we just making the new ones very big and tall or a combination? It‟s
a choice. When many people rather like cities where children can play outside while parents and
neighbors can have an eye on what they are doing and make sure they are not making too many
risks, others might not. When you look at cities like Tokyo, you will see different things. This is a
planned “Glass City” in the Netherlands. At the front site, you will see the green houses, then you
see the old water, then you see big developments and also skyscrapers for residential purposes. It‟s
a combination. And I think rather there to think in the opposition one against the other, the rural
against the urban, we have to think about integrated planning of the agricultural of the rural, the
urban and the urban economic activities. This is kind of a dream. But people are always thinking

                                                                                                  33
and this is rather more a picture than would belong in Sky Trick that type of movies. But it‟s for
one million people in just one kilometer. That‟s possibility. In the Netherlands, where we have
come to the conclusion, that we are not able any more by dams to prevent flooding at all times. We
are already developing architecture that kind of designing what they call “Floating Cities”. So
normally, the city is on the ground, but when there is a flood, the whole thing floats. So you come
back to the Southeast Asian concept known of the “pool houses” and that type of thing. And of
course you can have them in a more conventional way like in this case or you can have them in a
very futuristic way. Now I would like to give these pictures so that everyone could enjoy also
something facial.

Thank you very much!”




                         China’s Over-liquidities in the Global Context

                                                      by Zhu Min: Vice President, Bank of China



“Thank you Mr. Chairman, thank you Madam, Doctor Cai of Fudan University for inviting me to
come back. I graduated from Fudan University 25 years ago, then taught here for few year, so it is
indeed a great honor to come back to Fudan to this very distinguished Forum and speak to this
very distinguished audience.

I was a little confused as to what kind of language I should use because as a Chinese in China, I
was advised to speak English. To compromise both sides, I did a Chinese PPT, but I will speak
English. I seriously apologize to non-English speakers for listening, and for non-Chinese readers
for reading. I hope in this way to compromise a little bit this kind of language conflict. I will talk
today about China‟s over-liquidities in the global context, the over liquidities that have become
such a hot issue in recent China and attracted a lot attention everywhere. I will show that it is not
only a global issue, and also show the possible consequences that could appear. So first I‟ll talk
about over-liquidities and China‟s over-liquidity issues, and then I‟ll talk about the relationship

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between the global liquidity and China‟s over-liquidity, and then I‟ll come to some very, very
simple summaries.

First of all let‟s talk about the global liquidities. If you look at the liquidities, the first thing of all
you‟re looking for is the interest rate. From this chart you can see it is very clear that the lowest
rate appears in the past 25 years. In all the major countries – U.S., U.K, Germany and Europe –
the interest rate is always very low. If you‟re looking for the real interest rates the rates are still
very, very low. Obviously because with low interest rates, the central bank has a lot of demand for
money and active investments, putting a lot of money into the system. The commercial rates are
also very low. It‟s very interesting if we compare the commercial rates, ten years overview and
three years overview, you will see the rates have almost gone to zero in the past eighteen,
twenty-four months, with long-term interest rates and short-term interest rates almost the same.

Actually we have a very flat yield curve, and almost an increased yield curve in the past few
months. This is a very, very unique situation, because long-term interest is also very, very low. In
the commercial area you will see, compared with standard treasury views, the BBD – the spreads
– of BAA and AAA all commercial paper spreads. Also on downsize you will see that. So that
means the risks and interest rates act as a convergence to a very low level. So this is a very
interesting phenomenon in roughly the past twenty-four months. One important consequence, and
I can tell you I was very surprised: in this slide you can see that the GDP growth in the past six
years is roughly 5.25 to 5.6 percent, but the money is rising up to 20 and 25 percent. There is so
much money everywhere in the system. This is an amazing chart.

If you‟re looking for more specific situations, in the United States, roughly from 1981 to 1990,
twenty years ago, the M1 – the ratio to GDP – is roughly 27.6 percent. Today it‟s 53 percent,
almost a 75 percent increase. In Europe, roughly in 1991 to 1997, the ratio was only 21.4 percent.
In Japan things are even worse. I‟m sorry to my chairman, but the numbers tell us in 1981 to 1990
the average M1 to GDP ratio is 26.5 percent. Today it‟s 75 percent – almost three times higher.
This is not an absolute number, this is the ratio of money to GDP. This means the money growth is
much faster than GDP growth. At the end of the day, there is a lot of money in the system today.
Today in Japan, for example, money in the system is three times as much as the money in the
system twenty years ago. Obviously, this is because money can do three things: promote
production; inflation; and assets and financial sectors. We can see exactly what happens. If we‟re
looking at the banking sectors, from 1990 to 1995, the banking growth is only 4.5 percent, the
next five years is 5.3 percent, and 2000 to today it‟s 14.3 percent. So banking assets are greatly
inflated, by three times are much as in the previous ten years. The same change is happening on a
global scale: 25 percent to 55 percent. If you‟re looking at the United States, banking assets
increased from 50 percent in 1990 to now roughly 80 percent.

The same thing has happened on the bonds market. The global bonds market cap increased since
1990, roughly you can see a 71 percent to 100 percent increase. So the bonds market is growing
very fast. If you‟re looking at the stock market, the global market cap increased from 40 percent in
1990, to today‟s 100 percent. So you will see that low interest rates have fuelled the money
pumping through the system, and boosted all the financial assets in three major areas: banking

                                                                                                         35
assets, the bonds market, and the stock market. And the numbers are astounding and amazing.

In the United States this started in the Alan Greenspan period. He is called the great regulator of
the central bank. During this period US GDP increased by 2.6 percent. Loans increased by 359
percent. And the money supplied increased by 335 percent. At the end of the day obviously the
wealth has increased 365 percent, and stocks have increased 554 percent. The money has to go
somewhere. So this is a typical situation. We see over-liquidity and you see the price of assets
inflating.

I did an interesting calculation that also surprised myself. I realized the global GDP 10 percent
will account for only 1 percent of global liquidity. Security bonds account for 142 global GDP and
account for 13 percent global liquidity, because security bonds can turn into cash immediately,
over seconds. The most important part is derivative products, account for 800 percent of global
GDP today, account 75 percent of global liquidity. This is an amazing, astounding chart.

I think this chart tells us a few things. Number one, the definition of liquidity changed
dramatically. Ten, fifteen years ago we talk about liquidity, money in the system as M0, M1, M2,
the Euro, M3. Ten, fifteen years ago we were talking about liquidity policy, the policies of the
central banks, and calling it relative equality through interest rates. But if you look in the charts
you will see that the total M0 only accounts for 11 percent of the liquidity of the world. And so
liquidity comes from where? The liquidity of the financial market.

I think this is a very important and fundamental change. Liquidity is no longer number one in the
hands of the central bank. Central banks can still control part of the liquidity through interest rates,
M0, M2, but only a small portion. The world has changed, shifted dramatically. The major part of
the change came from the commercial financial markets. Because today, everything can change
form and turn, any time, over seconds. A ten-year long-term loan over minutes can be bonds, over
minutes can be cash. So the derivative market becomes so powerful, it is the financial market
dominating liquidity. I think this is absolutely an important feature of today‟s liquidity issues.

Now let‟s talk about China. China‟s interest rates are very low, compared with the US and Europe.
But China has also been in the lowest interest rate categories for the past twenty years.

Looking at the US, top is lending rates, below is deposit rates. But lending rates have been low in
the past twenty years, and deposit rates also among the lowest in the past twenty years. So we still
have very low interest rates, and obviously because of low interest there‟s a strong demand for
investment activities. And with the GDP growth rates, you can see the M2 and M1 grow very
strongly, always over the GDP growth rates. In the past five years, you can see even more clearly,
US GDP growth is roughly 9 to 11 percent, but the rate the money rises is always over 16 to 19
percent, so there‟s a lot of money.

However, in China things are slightly different. Because China has a trade surplus, we have a lot
of reserves, and we‟ve used a lot of base monies. In the year 2000, the foreign exchange account
for RMB was roughly 14 percent of GDP. Today it is 50 percent. This is a major caution of

                                                                                                     36
over-liquidity in the system. A very Chinese feature. Because of low interest rates, and strong
money supplies, it‟s almost the same thing: the banking assets have increased dramatically.
Banking assets have doubled in the past five years. We expect to see another double in the next
five years, if the system remains the same.

Meanwhile, another Chinese feature that is very strong is deposit. A lot of money becomes
household deposit and is put back in the bank. Deposit rates today are roughly 17 trillion RMB,
with growth rates of 16-18 percent in the past few years. Because of over-liquidity issues, in the
banking systems we also have roughly 11 trillion RMB idle in the system, roughly 50 percent of
the GDP. So this is a lot of money in the system. The Central Bank is trying very hard to try and
control this over-liquidity, to hedge the foreign exchange, to try and stabilize the monies. The
Central Bank has increased interest rates, and reserve rates especially, several times in the past six
to nine months.

And up to today the Central Bank has raised the reserve rate 200 base points, stabilizing growth at
roughly 690 billion RMB, and also issued commercial papers. Central Bank issued this year 2.3
trillion RMB promotional papers, and because of the 1.3 trillion matured papers to date, so will
really get back roughly 1 trillion RMB of liquidities. So in this first six months, by issuing papers
and raising the reserve and interest rates, the Central Bank has tried to get back roughly 1.8 trillion
RMB from the banking system. This is an amazing operation. It‟s not an easy thing to do.
Historically and globally I‟ve never seen such a dramatic undertaking before.

So interest rates have increased a little bit, and the markets have changed. I realized that the base
money, compared with the end of last year, is actually smaller. Today it‟s roughly 7 trillion, when
compared with 7.78 trillion in the system at the end of last year. Given the kind of growth, that the
base money is downsized is a great thing to show the Central Bank has worked very hard. Also in
the commercial banking system the surplus of funds dropped from 8.07 trillion to 7.71 trillion
RMB, so is also downsizing. You see this is an effort for the Central Bank, and as a consequence
we do see some positive results from the Central Bank‟s stabilizing operations.

But we still see a lot of money. Particularly a lot of money going to the stock market. The money
goes to the market roughly in twelve-month periods. Roughly 1.2 trillion is going into the stock
market. Roughly 500 billion though funds, and 700 billion through household. Today the liquidity
in the stock market, the money from household deposit in the stock market is huge – roughly 1
trillion – but a lot of it is in the hands of the household.

This is a very interesting, and particularly Chinese, characteristic. On the one hand, we see the
Central Bank has worked very hard trying to stabilize these money issues, and has had some
impact. But meanwhile, we still see a lot of money floating around, especially in the stock market,
because the household has converted a lot of their long-term deposits into short-term ones.

This chart shows how compared with roughly a year ago you will see the deposit actually drops,
and the financial institute deposits actually increase. And the demand upon the deposits actually
increased from 33.8 percent to 37 percent. This is very interesting. If you look at the whole thing,

                                                                                                    37
in China number one is obviously over-liquidity, because low interest rates and money supplied
too strong. There‟s a lot of money in the system, and the Central Bank has worked very hard to try
and stabilize the system. Yes, it‟s worked, but meanwhile there‟s still a lot of money left in the
system, particularly moving into the stock market. Why? Because the household has changed its
behavior. There were 18 trillion household savings in existence. And today the owners have
realized they can actually make more money if they put them into the stock market. That‟s the
main reason for the over-liquidity in China today: household behavior has changed.

This is a completely new phenomenon in China today. There are some clear trends. In the first
quarter, M2 growth rates: 17.3. M1 growth rates: 19.8. It‟s a clear trend of the household shifting
away from long-term deposits to short-term. That means the status they can invest in the financial
market every second.

What‟s the linkage between the two things? It seems very clear there are global imbalances.
Because people are very familiar with this issue, I‟m not going to bother you with those charts.
But I think what‟s very interesting is that the concentration of those imbalances is becoming
bigger and bigger today. In 1980, the five major global economies had deficits accounting for 0.5
percent of GDP and accounting for 26 percent of global deficits. Today, 25 years later, the five
major economies have deficits accounting for 82 percent of the global deficits, and only 2.3
percent of global GDP. The size increased dramatically; the concentration increased dramatically.
Also, on the surplus side, 25 years ago the five major economies in terms of surplus accounted for
0.7 percent of the global GDP, and 70 percent of global surplus. And those have also jumped on.

This is very interesting, because it puts the world into two poles. The US, in particular, on one side
with Europe; and China and Asia. Very interestingly, and very clearly, it seems to me that
over-liquidity started in the US and the west in the late-1990s. Because of relaxed monetary policy,
a lot of money in the system has generated huge demands. These have in turn generated a huge
demand for imports. And through globalization China has become a major exporter.

That China has become a major exporter is not only good for China itself, but also for the whole
region. This is the reason why China has a lot of trade surplus. Obviously the huge over-liquidity
in China is also a consequence of the Chinese growth model, over-emphasizing exports and
investments.

When we go through the whole thing, it seems to me we can derive a few conclusions. Number
one, over-liquidity is a global phenomenon, resulting from relaxed monetary policy in the past ten
years. Number two, China also has serious over-liquidity issues. Number three, the Chinese
over-liquidity issue is the consequence of a global over-liquidity, particularly the consequence of
relaxed monetary policy in the west – namely the US, Japan and Europe – and through the train of
free trade. Number four, we talk about over-liquidity but the definitions of this nature of
over-liquidity are changing dramatically. It‟s no longer the same thing as when we talk about M0
and M1. Number five, over-liquidity is driven by the financial market. In China this is driven by
the household, and the behavior change of savers. This is a very, very important issue.
Over-liquidity today does have different meanings and implications compared with ten or fifteen

                                                                                                   38
years ago. Number six, obviously where we have over-liquidity we will see asset prices inflating.

But whether or not this is a bubble we have to be very careful, because it depends on economic
growth. So today, many people are talking about bubbles, but the definitions for me are still vague,
because it depends on the nature of growth. The last point, but also important: given the nature of
change of over-liquidities, the policies that are driving against over-liquidity should be very
different when compared with previous ones.

Let me give you a few charts to support this. I think I have demonstrated the first five points. Now
let me give you some points to illustrate number six. If you see the stock market, it is amazing that
last year it reached a peak. The year 2000 was a peak, but then there was the IT bubble and it
crashed and was dramatically downsized. But last year it reached a peak again. Meanwhile you
see the commodity market prices have jumped dramatically. It was very low and stable from the
1950s to 70s. Then the Nixon shock in 1972 and the „79, „82 oil shock increased the price. But
then recently there‟s been a sudden dramatic rise. Obviously demand has played an important role,
but the most important thing is that everybody does believe in the financial market and there‟s too
much money in the system.

Is this a bubble? Yes, or no, or maybe: the key issue is growth. This is particularly important for
China, so I don‟t want to draw any early conclusions. We did a chart comparing growth and
employment. As long as we have strong growth and strong employment you will be able to
support the income wealth creations, you will be able to absorb and balance a certain amount of
over-liquidity. Things should be manageable. I won‟t say things will be fine, but they should be
manageable. But if there are low growth rates, or low employment rates, then it can be very, very
difficult to handle.

I think that‟s all I can say, and would like to share with you.

Thank you very much.”




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The Rise of China and the Implications of the Particular Phenomenon in Building an Asian

                                           Community.


                                     By Vishakha N. Desai, President of Asia Society, U.S.A.

“Thank you very much for that very generous introduction. Distinguished guests, ladies and
gentlemen, it‟s a great pleasure and honor for me to be here with you this morning to talk about
the rise of China and the implications of this particular phenomenon in building an Asian
community.

I come to this topic from a variety of perspectives, but one thing I‟m not, as you already gathered,
is an economist. So what I want to talk about is really from the perspective of a leader of an
institution that is committed to building partnerships between and among Asians and Americans to
create a shared future, as well as as an Asian-American, an American of Asian origin, who is
particularly keen to look at how this region develops and its implications to the world. Last but not
least, I also come to this topic as a long-time student of Chinese history and art, with an
understanding of how China and India have interacted over some time. So you‟ll see where I‟m
going to go with this topic.

Professor Spence has already talked about the phenomenon of the Rise of China, and now, India.
We know this as a fundamental characteristic of global significance, because for the first time we
have an unprecedented situation of the two most populous nations in the world, two ancient
civilizations in the world, two modern nations in the world, and at the same time, two nations that
also have roles that are going to change the characteristics of global power. While many of the
facts are well known, we can imagine that indeed by the year 2050, more than 50% of the world‟s
GDP will most likely come from this part of the world, more than 50% of the population will
come from this part of the world. The lesser known and perhaps quantifiable fact is that also there
is a sense of confidence in the region, especially in China and India, that is also unprecedented
after some 200 to 250 years of decline and colonization. This particular kind of confidence is very
well known in terms of polling data that we see: as was in fact collected by the Asia Society, my
own organization, and the Chicago Council on Global Affairs. We suggest that in China, people
already feel that they are number two, and that probably in the next 30 years or so they can
become number one. In India, they feel they are already number two, although I have to say that
the majority of the world doesn‟t think so, but Indians do. But Indians do not think they‟ll become
number one, because they think that the United States will remain as number one in the world.

The important point is that both of these countries are beginning to play an active role in the
Asia-Pacific community. Of course China is much further ahead than India in this particular aspect.
It is very well known that China has a very well-coordinated approach to southeast Asia and other
parts of the Asian community, or at least the Asian region, both in terms of trade, geo-political, as
well as in terms of its soft power, by establishment of Chinese language institutes as well as
education opportunities for southeast Asian students in China. India, on the other hand, when it
comes to the region still has an aspirational quality of playing the role – with the look-east policy

                                                                                                  40
of the former government notwithstanding – but perhaps still has some way to go.

The point is that both these countries are rising. China, of course, ahead of India, and both of them
has a sense of playing a broader role in the region. So when we talk about the implications of
building an Asian community, I think it is fair to just briefly pause and think about what we mean
by the word “community”. Broadly defined, we say that this has to do with harmonious living,
shared values, interdependent economic situation, and perhaps also a way of living that is without
the presence of a single, hegemonic power. What are the prospects for creating this kind of
community, as we go forward? As a historian I always look to the past and I realize that I am not
in the bad company, because in fact as Chairman Mao used to say “history answers the present”.
And I just want to give you a quick tour of two times in previous occasions, previous centuries
where there was an opportunity, or some indication, of this notion of an interdependent,
value-based community. The first is 1907 – exactly a hundred years ago. A kind of movement led
by intellectuals, philosophers and scholars from India and China who came together to imagine an
Asian community, to say Asia can be one. At that point, their particular idea was based on the
historical fact that indeed there was a shared interconnection in the earlier days – of course with
Buddhism, as well as with trade – and that it was possible to create this kind of world. They were
also looking at this idea from the perspective of anti-imperialism, as well as anti-colonialism.

Why did it not take hold? I believe that it did not take hold because in fact this intellectual idea
had a philosophical underpinning, but it did not have the economic or geo-political underpinning
at that time to take hold. The fact that they were looking into the past, that particular past was
another period in the history of Asian countries, and that was the period from 6th to 8th century,
the golden age of the Silk Road, Tang Dynasty in China, end of Gupta Dynasty in India, a period
that really saw the flowering of all levels of interconnections in Asia. What I mean by this is that
of course Buddhism is well known. We know that the Tang Emperors were looking to Indian
Buddhist priests. We know about Xuan Zhuang who went to India, but a lesser-known fact is the
presence of Indian mathematicians and Chinese scholars. A lesser-known fact is also that of
India‟s presence in Southeast Asia, with the beginning of the Hindu-Buddhism kingdoms of
Indonesia, as well as Cambodia, Thailand, and Burma, or Myanmar. Similarly, the Tang Dynasty
also, of course, is the period when you had tremendous interactions between Nara Japan, Sina,
Korea, as well as direct interconnections between China and India. At this point, you also have
this situation where power is not based on the forced hegemonic tendencies of any one country.
This is also the time where three elements of building the community are all present. That has to
do with trade or commerce; religious values; people-to-people connections, royal interactions that
also get to political interactions. I think that this particular point in time at least suggests that it is
possible to imagine this kind of an Asian community again today.

The question is, can we do it? Many, many scholars today have said that in fact you can‟t even talk
about the idea of an Asian community because Asia‟s never been one. One of the points about that
particular statement is the fact that the only time that Asia has not had interdependence is after the
presence of western powers in Asia. Nayan Chanda – a great writer and journalist now at the
Global Institute at Yale – has just published a book called „Bound Together‟. He talks about the
interdependence of trade in the Asia-Pacific region prior to the arrival of the Western powers, and

                                                                                                        41
he points out that this in fact was a model where no one country sought to have a competitive edge
or to be number one in the region, and it allowed for a much greater sense of interaction between
the communities as late as circa 1500.

So where do we go from here? I think that we have an opportunity to re-vision that kind of an
Asian community. I am indeed an idealist but I realize that we have to be practical. We have to
recognize what the barriers are to creating such a community, because if we don‟t recognize that
we can‟t actually address them. It‟s clear in these three characteristics that I have just mentioned –
economic, political, cultural and people-to-people connections – that there is a growing trade
interdependence in the region. Of course we know that today China and India‟s trade is growing at
an exponential rate. China‟s trade with Japan already is in fact larger than Japan‟s trade with the
United States, and similarly we know that there is in fact much greater interconnection of China‟s
trade with the regions of Southeast Asia. So trade can at least help, but is it automatically followed
by a political interconnection? Here we have to recognize that there are many barriers, not the
least of which are the recent histories. And in this part of the world, history matters, and these
histories are not forgotten as quickly, perhaps, as we might think in the United States.

We also recognize that this recent history is one kind of history we can remember, but we can also
go back to five hundred years ago, a thousand years ago, it could also be another kind of history.
Indeed, in order for the region to work, some of the political issues will have to be addressed, and
how we would do that is going to be a crucial part of where we go from here. Even without
addressing political issues, we can also come back to mutual trust and shared values.

So how do we get there? I think this is the time for a new kind of leadership, leadership in the
region and also leadership in the United States that can foster this idea of transcending history,
learning from history but going beyond it. I just want to remind you that this was exactly what
Chairman Mao and Nixon did: they went beyond the reality of their time to create a new kind of
history. It is that kind of a profound new vision that we need to think about to create a new Asian
community in which there isn‟t a competition in terms of seeking number one status, but really a
presence of multiple players, especially China and India that actually can create what the Shanghai
Forum is trying to talk about, and that has to do with a more harmonious society within the Asia
Pacific region in which the regions of Southeast Asia as well as East Asia can begin to learn about
each other.

I was just recently talking to Professor Dingli Shen, who is here at Fudan, and we were just
noticing that how in the last fifty years almost all our contact with one another has been based in
the United States, and it‟s reflected even in the way the flights are. There are more than 20 flights
from Shanghai to the United States, but trying to go from Shanghai to Mumbai is not so easy. I
think that as we go into the future, we also have to acknowledge that America‟s role may not be
the kind of central role it has played in the past fifty years. It might be replaced by not a singular
power, but multiple powers, including Japan, coming together to really create a new sense of value
and a new sense of community. I hope that this brief presentation gives you some sense of what
we can achieve if we have the will, and it‟s that will that we need to have today. Economic
interdependence alone will not get us there.

                                                                                                   42
Thank you very much.”




                        43
Ⅳ Activities
Special Report on China’s Macro-economy

A “Report on China‟s Macro-economy” was held by Shanghai Forum Organizing Committee in
Guanghua Building, Fudan University. Illuminating speeches were delivered by Prof. Ruyin Hu,
Director of Shanghai Stock Exchange Research Center, Prof. Youwen Zhang from the Economy
Research Institute of China‟s Academy of Social Sciences, Comments were given by Prof.
Zhigang Yuan, Din of the School of Economics, Fudan University, Xing-min Yin, Vice Director of
the Socialist Market- oriented Economy Research Center, Fudan University. The Report was
hosted by Prof. Lei Shi from the Economic School of Fudan University.

   Prof. Ru-yin Hu, Director of the Research Center of Shanghai Security Exchange

Famous young economist of China, with impressive achievements in Industry Organization,
Modern Company Theory, Modern Finance Market and New-policy Economics; Director of
Shanghai Stock Exchange Research Center since 1997; The Expert for Decision and Advice of
Shanghai City Government, Standing Director of the Shanghai International Finance Research
Center, Committee Member of the Managing and Academic Committee, Shanghai Institute of
Law and Economy, Academic Committee Member of the Center for New Political Economy,
Fudan University.




The Micro-foundation and Transmission Mechanism of Assets Inflation

   China's economy has been booming in recent years, but there still remain too many financial
    regulations, which limit the space for investments. The two main problems brought about by
    excessive liquidity – excess of money and a lack of investment opportunities – have in turn
    given rise to a series of new social issues. For example, a sharp rise in real estate prices,
    caused mainly by the bullish stock market, a soaring of product prices and an inflation in
    capital prices all lead directly to the increase of the income differential. The arising of these
    problems has created a pressing need for reform of the social security system. We can see that
    China has made great achievements in developing its market from the high savings rate, the
                                                                                                  44
     rising foreign exchange reserve, the growing liquidity and the trade surplus. However, in
     many aspects we have not yet done as well as we ought to. We therefore draw the conclusion
     that we should develop the international capital market, and deepen our reform, which
     includes developing a Shanghai Stock Exchange and establishing a multi-leveled market.
     Thus, greater liberalization of domestic finance will be able to provide a larger and more
     sustainable space for domestic financial investments.



    Prof. You-wen Zhang:
     Institute of World Economy, Shanghai Academy of Social Sciences



Head of the World Economy and Politics Institute, Shanghai Academy of Social Sciences; Head of
the World Economy Institute, Shanghai Academy of Social Sciences; Managing Director of
Chinese Society World Economy; Chairman of Shanghai Society of World Economy; Vice
Chairman of Chinese Society of American Economy; Editor in Chief of “ World Economy Study”;
Decision-making and consultation research expert in Shanghai Municipal Government; Member
of the Consultation Group of the Finance and Economy Committee in Shanghai People‟s Congress;
Counselor of Shanghai Foreign Capital Center, Shanghai Overseas Investment Center, and
Shanghai Municipal Foreign Affairs Office. His main research domain is the World Economic
Theory and China‟s Opening-up Strategy.




China‟s Macro-economic Situation in an Open Economy

In advancing the development level of China‟s increasingly open economy, and increasing the
influence of China‟s economic growth, we have different tasks in the short and long run. As
China‟s foreign investment is rising in importance, we should consider the long-term influence
cast by China on the world. When the opening to the outside world is in a balanced condition, we
can see that excessive liquidity is affected by many international factors, such as the trade surplus,
and the entry of capital and international hot money into the stock market and the real estate
market. The continuing development of the opening-up economy also needs to become sustainable.
Besides, the rising of China‟s international position presents new problems to us, including the

                                                                                                   45
so-called „China-threatening‟ and „China-responsibility‟ arguments, which arose in the political
field during the development of the open-up economy. The reason why our country has set the
target of building a harmonious world is that China‟s economic development has started to
influence the international system. China needs to have its say in the political and strategic fields,
which are the essence of the political layout of the harmonious world we are striving to build.

    Prof. Zhigang Yuan:
     Dean of the Economics School, Fudan University

Prof. Yuan‟s research ranges across many fields within economics and includes work on
macro-economics, financial markets, theory of non-Walrasian equilibrium, unemployment and social
security. His publication “Non- Walrasian General Equilibrium Theory and Its Application on
China‟s Economy” received the 1997 Sun Yefang Award – China‟s top award for work of
scholarship in Economics. Yuan‟s many other papers and publications have also been merited on
numerous occasions. He has received first, second and third prizes at the Shanghai Social
Philosophy Awards, and second prize from the Social Cultural Education Scholarship Awards. His
research has also been honored with first prize from the Chinese Labor Society.




The Surge in Capital Price and the Dual Excessive Liquidity in China‟s Macro-economy.

China is strong in trading, but less strong in finance. The great boost of China‟s assets price has
two causes, one being the impact on the basic level, the other being the fast growth of China‟s
labor productivity. The great increase in real estate prices has been caused on the one hand by the
limited providing ability and on the other by the expectancy effect. The fact that savings deposits
in China are too high, coupled with the rise of enterprise savings, proves that our social
distribution favors the increase of capital amount and the decrease of work income. Nowadays, the
main features of China‟s macro-economy include the change in population age, the growth of
foreign exchange reserves, and the rising of the competitive market commodity prices. So we have
drawn the conclusion that in order to increase the income of our people, we need further

                                                                                                   46
systematic reform and we should eliminate liquidity, and give the market more control over the
economy. In this way, China‟s Economy will be even better.

Discussion and Debate

Speakers:

Prof. Jun Zhang, Director for China Center for Economic Studies (CCES), Fudan University

Prof. Hongzhong Liu, Chairman of Department of International Finance, Fudan University

Prof. Xingmin Ying, Deputy Director for China Center for Economic Studies (CCES), Fudan
University

CPI Index Fluctuation and Monetary Inflation Expectancy

Prof. Jun Zhang: Under the current situation, inflation needs a certain stimulus to become real.
This fuse could be an external variant, or also a fluctuation - which we can call “corn fluctuation”
- that will lead to price change in our domestic food market. But more important, I believe the
institutionalization of monetary inflation and the prosperity of the assets industry, as well as the
excessive liquidity caused by such prosperity are quite inter-related.

Prof. Xingmin Yin: As we know, all monetary inflation is a currency phenomenon; indeed, there
is still ample evidence of this. In 2007, the newly increased currency supply for the whole year of
2007 was released during January to April: that is monetary inflation. Also we found the interest
rate is also increasing, and there have been 5 increases already. In modern global
macro-economics, there is no precedent of this: increasing the currency supply on the one hand,
while increasing the interest rate on the other. This is a new phenomenon of the Chinese economy.

The Prosperity of Capital Market and the Danger of Excessive Liquidity

Prof. Jun Zhang: Recent changes in international payments balance have led to an increased
expectation of the RMB‟s appreciation. Such anticipation has drawn large amounts of capital into
China. This foreign capital went into assets, so our real estate market began to heat up in 2003,
and has become even more intense since 2005. Since then our stock market has entered into a
transitory phase of development
.
Prof. Hongzhong Liu: First of all, we need to cut our foreign exchange reserve by efforts. Second,
the Central Bank‟s currency policy needs to curb investors‟ expectations of inflation, which is very
important, because once the expectation is forged, there will be a tightening of money supply -
real tightening - and that will be serious trouble. That will actually depend on how the interest rate
changes. Third, we need to lessen people‟s enthusiasm for the assets market. Once there are
bubbles in the real estate market, large amounts of non-performing assets would go into the
market, and if the banking system became frail, economic crisis and financial crisis would be

                                                                                                   47
awaiting.

Prof. Xingmin Yin: China‟s economic growth will sustain in the near future. The investment
drive will not change for a relatively long time. No matter whether we want it or not, no matter
how we talk about it, this is a real issue. We must acknowledge that this is the nature of economic
growth. We can not compare China with America, or with Germany, because it‟s unfair to compare
countries with GDP per capita of USD 30,000 with our USD 2000. Furthermore, our economy
has thus far been driven by investment, and this is how it should be.

The Open Economy and the Responsibilities of Big Power
Prof. Jun Zhang: “China is a big power, but China‟s economic performance on the macro-level is
quite like that of an opened-up small country.”

Prof. Hongzhong Liu: “Trade and non-trade is at the core of the issue of trade surplus. We talk of
trade all the time, but most of such talk is unfeasible. Many of our goods can not be traded. For
example, although eggs are cheap in China, would people take a flight to China in order to eat an
egg? That is impossible. The issue of trade and non-trade needs our attention. When the internal
effects of a country become relatively mature, and the real estate and automobile industries also
become mature, what effect that will have on the exchange rate still remains to be observed.”

Prof. Xingmin Yin: “It is due time for us to lead the world. We are not talking of shoe-burning in
one country and claiming food quality problems in another. During the process of opening up to
the outside world, we need to adjust our mindset gradually so that we can emerge into the world
community in a more positive way.”


ⅤLearning from Others
             About Davos: Report on the Functioning System of World Economic Forum
                                        R&D Sector, Shanghai Forum Organizing Committee

As the highest level of non-official international economic table-talk, the World Economic Forum
(WEF) has wide influence across the globe. As a result, program officers of Shanghai Forum
Organizing Committee conducted research on the WEF at its “Summer Davos” meeting in Dalian,
with the aim of learning from the experience and gathering reference points for a better
organization and preparation of Shanghai Forum.

1、 Characteristics and features of WEF
    Independent, Non Profit-making International Organization

WEF is an independent international organization devoted to gathering leaders of all fields to
conduct cooperation and set global, regional and professional topics for discussion in order to
improve the world‟s condition. WEF was originated in 1971 from the “European Management
Seminar” initiated by Prof. Klaus Schwab of Geneva Business Institute, and the present Chairman
of the WEF. In 1970, the young Prof. Klaus Schwab of Swiss Business School, recently graduated

                                                                                                48
from Harvard University, suggested that European entrepreneurs conduct a non-official meeting to
face the challenges of the international market and competition, make development strategies and
discuss management methods. His suggestion was welcomed by the then-European Community
Committee and European Entrepreneur Union/Association. In January 1971, more than 400
entrepreneurs and scholars participated in the first WEF. With the expansion of its influence on the
globe, a system of membership was adopted five years later by the WEF. In 1987, its “European
Management Seminar” was renamed as the “World Economic Forum”. The annual Forum was
held in the small Swiss town of Davos every late January to early February, from which it takes its
name. Its headquarters are in Geneva of Switzerland, and its mission is to“Make a Better World”
and become the “Propeller of Global Common Interest”. The Forum is a non profit-making neutral
organization and does not interfere in any political, party or national conflict.

Abundant Sponsoring/Sponsorship

After 34 years of development, the WEF is still increasing its momentum. Besides the quality and
influence of the Forum per se, the commercial operation of each conference constitutes a prelude
to its operation. As a major global forum, prospective participants first need to submit a
membership fee to join. The membership fee for ordinary companies is USD 12,500 per year, and
USD 15,000 for banks. Therefore, the membership fees alone of its more than 1000 members add
up to millions of dollars, in addition to the many other items like cars, computers and even venues
renting sponsored by the WEF‟s cooperation partners.
Year                   2002/ 2003 2003/ 2004 2004/ 2005 2005/ 2006                  2006/ 2007
Total income           66,454,727 74,058,911 83,336,839 104,766,543 114,574,874
Membership Fee         25,530,325 25,137,257 26,546,382               26,410,294      27,763,874
Conference Fee         21,465,398 20,543,108 20,824,213               27,063,138      30,160,303
Sponsoring of
Cooperation            17,390,452 24,552,385 31,035,927               44,668,943      50,881,934
Partners
Currency: Swiss Franc
    *Resource: WEF Annual Report 2006-2007

         High Ranking Delegates

The participants of WEF are mainly governmental and commercial high-ranking leaders,
outstanding entrepreneurs and renowned experts from all around the world. Its aim is to explore
and discuss the problems of the world economy and improve international cooperation and
communication.




                                                                                                 49
            2007 World Economic Forum Participants Component


                            10%

                                                               41%



                 49%

                         Public     Business
                         Figures    Leaders      NGOs



                              * Resource: WEF Annual Report 2006-2007

With the changing international situation, the topics of WEF gradually extended outside of
economic fields and many bilateral and regional issues came onto the table as well. During the
recent decades, the major issues concerning politics, military affairs, security and society of the
world have been discussed and fully rendered at the Forum.
      Extensive International Cooperation

With the rise of its influence, and of the caliber of its participants, WEF has been recognized as the
“highest-level non-official table-talk of the world economy”, and is one of the most important
forces in gathering the world‟s government leaders, entrepreneurs and grassroots and social groups
leaders to conduct world economy related discussions. People even compare it to the “United
Nations of Economics”, bringing great fame to the small town of Davos. Every year, the WEF
co-hosts a variety of international economic seminars with the governments or companies of many
countries. At the core of the Forum are its members and cooperation partners. The Forum now has
more than 1000 members, all of whom are renowned companies and enterprises. The cooperation
partners are those organizations and enterprises that have greater ties with, contributions to, and
benefits from the Forum, and who are selected by the Forum from its members. Besides this, the
Forum also handles a variety of membership organizations in specific fields like politics, economy,
culture, religion, media and academia.
      Autonomous Academic Research Power and Influence

Since 1979, the World Economic Forum has been issuing an annual “Global Competitiveness
Report”. The Report gives a thorough examination of each country‟s competitiveness, including
their innovation capacity, governmental management, direct foreign investment, trade
performance, etc. the Report also gives rankings of each country‟s international competitiveness
and related statistics, as well as survey results of senior industrial and commercial managers.
Other than this, the Report contains regional and feature reports, like the Africa competitiveness
report, Lisbon Remark, and Global Information Technology Report. The Report also suggests
economic strategies and investment tools, receiving wider attention ever than others.


                                                                                                   50
In 2006, the WEF set up agencies in Beijing and New York.

2、Influential Activities Hosted by WEF
    Annual Conference: Davos Forum

The most influential activity of WEF is the annual conference held every January at Davos,
Switzerland. Each annual conference invites around 2,500 guests from around the world,
including CEOs and Chairpersons of its membership companies, government leaders, famed
experts in educational and academic fields, media icons and religious figures. The number of state
leaders present at the annual meeting every year exceeds 20, including President of USA, UN
General-Secretary, German Chancellor, UK Prime Minister, French President etc. “Davos Forum”
chiefly discusses global hot issues to draft global, industry and regional agendas for its members.

         Regional Summit

In addition to the annual meeting, the Forum also hosts regional summits in different regions of
the world. Regional Summits mainly discuss regional topics that have global impact, usually the
scale of participants is around 500 to 800. There are mainly 7 regional summits, namely, China
Business Summit, World Economic Forum on East Asia, European Economic Summit, India
Economic Summit, World Economic Forum on Latin America, World Economic Forum on Africa
and World Economic Forum USA.

      Industrial Activities
In addition to the annual meeting and regional summits, the forum also hosts many industrial
activities throughout the world, which include President Meeting of Automotive Industry,
President Meeting of IT industry and 2000 China Business Summit. These activities deal with
important problems in specific industries to enhance cross-industrial cooperation.

2000 China Business Summit attracted 300 global large enterprises and many famous Chinese
CEOs, some state leaders, authority of international economics, over 100 domestic typical
enterprises and media.

     The Forum of Global Young Leaders
The Forum of Global Young Leaders was established by the executive chairman of the World
Economic Forum Professor Klaus Schwab in 2004.

The Forum of Global Young Leaders has been hosted twice. Until now, the World Economic
Forum has selected 660 “Global Young Leaders” worldwide, including 40 young leaders from
China. The selected candidates of “Global Young Leaders” should be under the age of 40 with
5-15 years of leadership experiences, and he/she should have made extraordinary achievements in
his/her professional fields or have had clear commitment to serving society. Davos Forum will
grant this honorable title to 250 exceptional young elites from every region of the world every year.
They are drawn from over 4000 candidates by the jury which is composed of 34 world-renowned
media. They are awarded by their achievements in different walks of life, their contributions to

                                                                                                  51
public welfare and their potentials to influence the future. “Global Young Leaders” has become an
important award of Davos Forum.

3、Constituent Members of the World Economic Forum

There are mainly three types of member of the World Economic Forum: strategic partners,
industry partners, and the community of global growth companies.
Strategic Cooperation Partners
Strategic partners are select member companies of the World Economic Forum who assist the
forum in establishing its overall plan and agenda. Strategic Cooperation Partners are actively
involved in directing and advising the organization of the forum, offering theoretical guidance,
and appointing specialists to assist the Foundation‟s endeavors. Strategic Cooperation Partners
may send 5 people to every annual conference.
Industry Partners
The Industry Partnership leverages the unparalleled convening power of the Forum in a unique
way, bringing together select Members of the Forum through a series of integrated modules
throughout the year. The Industry Partnership will facilitate strategic decision-making for its
participants by providing privileged access to industry-specific and cross-industry insights.
Industry Partners can send two persons to participate the annual meeting.
Event Partners
Partners in this area represent the top thousand global companies. Whilst occupying a leading
commercial position within their own region or country, they also operate at a global scale. Within
their field they will occupy a leading developmental role in the future. Event partners may send
one person to the annual meeting.
The Community of Global Growth Companies
Candidate companies should have demonstrated the clear potential to be world economic leaders
during the coming five years. They already possess a strong reputation in their fields, as well as a
strong desire and ability to contend for a leading position in the global economy. Companies will
be selected according to the following attributes: annual growth exceeding 15%, turnover ranging
between USD 100 million and USD 2 billion, an outstanding business model, and a proven team
of corporate executives. Members of the community include CEOs of the members of the forum
and of Global Growth Companies, science & technology pioneers, leaders of the Web 2.0 world,
and people with excellent leadership under the age of 40.


Other than the above, the WEF also has other participants. These participants come from various
other smaller organizations, which spread their expertise around the forum, with the result that
each can offer a global-level contribution in their own particular specialist field.


     Industry Leader Group: Collaborators in this area include high ranking members of
     prominent global companies.

     Future Leader Group: Around 600 members under the age of 45, they are the
     decision-makers of a new, globalized generation.


                                                                                                 52
     Media Leader Group: Consisting of the most influential figures in the field of
     international media. Their participation guarantees that the event is actively fair and equitable,
     and increases the prestige of the event.


     Guest Group: Comprised of well-known and important figures from various backgrounds:
     political, economic, social, scientific, etc.


     Political Group: Including leading members of national governments, as well as
     representatives of important international organizations.


     Arts Elite Group: including around 100 well-known public figures from literary and
     artistic circles.

4、 Benefits and Obligations of Participants

     The Benefits and Obligations of Participants from the Global Business Field Include:

Benefits: Participants from the global business community are able to participate in the World
Economic Forum‟s meeting “From Davos to Dalian: Annual Meeting of the New Champions”.
The first 50 members enjoy the status of “Founding Members”. This offers the opportunity to
interview specialists and VIPs at the sub-forums of the annual WEF, at which world leaders from
various backgrounds, as well as specialist pioneers, together probe deeply the questions lying at
the heart of development.

Other than this, they also have the right to participate in regional events of the WEF, and may send
a director to participate three times in discussions at the „regional summits‟ that are related to
Global Growth Companies. Additionally, they may also send a director and a high-ranking
manager to participate in the „economic discussion groups‟ on three occasions.

In the Community of Global Growth Companies section of the website, members have access to
special areas and information regarding the annual meeting of Global Growth Companies,
regional summits and economic discussion groups. CEOs and top ranking persons automatically
receive their own usernames, and senior managers may also apply for one. The WEF also grants
each participating company an expert „community manager‟, to aid long-term mutual
collaboration between the member company and the WEF.



Obligations: Participants are required to pay an annual membership fee of 25,000 Swiss Francs,
which covers the period from 1st July 2007 to 30th June 2008.

      Appendix: Major Activities Held by WEF During 2006-2007
2007
24-28 January  World Economic Forum Annual Meeting
9-10 April     Arab World Competitiveness Roundtable         Doha, Qatar

                                                                                                    53
25-26 April       World Economic Forum on Latin America       Santiago de Chile
18-20 May         World Economic Forum on the Middle East     Dead Sea
9-10 June         World Economic Forum Russia CEO Roundtable Saint Petersburg
13-15 June        World Economic Forum on Africa              Cape Town
24-25 June        World Economic Forum on East Asia            Singapore
4-6 September     Young Global Leaders Annual Summit           Dalian
6-8 September     World Economic Forum Inaugural Annual Meeting of the New Champions
Dalian
8 November        Global Gender Gap Report                     New York
29 November       Announcement of Technology Pioneers          Geneva
2-4 December      India Economic Summit                        New Delhi

2006
25-29 January     World Economic Forum Annual Meeting
5-6 April         World Economic Forum on Latin America
20-22 May         World Economic Forum on the Middle East
31 May-2 June     World Economic Forum on Africa
15-16 June        World Economic Forum on East Asia
10-11 September   China Business Summit
23-24 November    World Economic Forum in Turkey
26-28 November     India Economic Summit




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