Home

Delegate Registration

Agenda

Hotel and Transportation

Sponsors and
Collaborators

Outreach Partners

China Resources

Local Business Leader on TEDA

Press Information

Information on Past
Conferences

Conference Report

Download a printable version of the Conference Report (PDF)

OPENING KEYNOTE ADDRESS
Xi Jinping, Vice-President, People's Republic of China

(Please refer to the article from Xinhua below)

Vice president: China makes great achievements in quake relief work

TIANJIN, May 28 (Xinhua) -- China has made great achievements in its quake relief work at the current stage, Chinese Vice President Xi Jinping said here on Wednesday.

Addressing the 18th Asian Corporate Conference of Asia Society, Xi said the 8.0-magnitude earthquake in Sichuan Province on May 12 was the most powerful quake since the new China was established in 1949.

All Chinese are united to battle the disaster headed by the strong and solid guidance of the Communist Party of China (CPC) and Chinese government, he said.

Xi spoke highly of the valuable help extended by foreign countries, international organizations and friends in quake relief efforts.

"After the quake, several foreign rescue teams and medical professionals have been sent to the quake-hit areas to search and rescue the people," Xi said, adding relief materials and funds from the international community were continuously pouring into quake-hit areas.

Xi said the Chinese people would surely overcome all difficulties to win the victory in the quake relief work, and fulfill the solemn promise of holding a characteristic, high-level Olympic Games and Paralympic Games.

The conference, with the theme of "New era for global business: Sustainable growth for China and the world," was held in Tianjin, a northern port city neighboring Beijing.

Xi sent congratulations to the annual conference on behalf of the Chinese government, saying the theme was in accordance with the trend of economic globalization and the real situation of economic development in Asia and China.

"I believe the conference will achieve fruitful results and provide valuable experience for countries and regions in the world."

Xi also elaborated on China's progress on development and sustainable development since the reform and opening-up policy implemented in 1978.

China has paid great attention to the issues as development and sustainable development, taking the path of peaceful development and concentrating on the domestic construction, said Xi.

He said after thirty years' unremitting effort, the aggregation of China's economy has mounted to the fourth place in the world and China's economy has become an important part of the global economy.

"China's contribution to the growth of the world economy and the international trade has exceeded 10 percent and 12 percent respectively," said the vice president.

Xi said that China's development provides broad market for the international capital. Foreign investment in China has amounted to more than 780 billion U.S. dollars over the past thirty years. Meanwhile, China's direct investment overseas also increased sharply.

He stressed that China will enhance the energy saving and emission reduction work in accordance with the scientific concept of development.

China's energy consumption per capita GDP has dropped 3.27 percent while the chemical oxygen demand and the sulphur dioxide emissions also declined for the first time, but the overall situation of the energy saving and emission reduction work is still facing great challenges, said Xi.

Xi called on the whole society to stick to the concept of conservation culture so as to establish the sustainable development mechanism and speed up the recycling economy in a bid to promote the construction of the energy saving and environment friendly society.

Before the opening ceremony, Xi met with the present foreign representatives. Asia Society, founded in 1956, is the leading global organization working to strengthen relationships and promote understanding among the people, leaders, and institutions of Asia and the United States.

SESSION I - Building Sustainable First-Class World Cities

Huang Xingguo, Mayor of Tianjin Municipal People's Government, opened the panel with a keynote address in which he spoke at length about pressing development issues. Tianjin has a water shortage and it need major investments in sewage infrastructure. He added that water should terminate in small steam boilers that emit less carbon dioxide than conventional boilers.

Following Huang's address, Saskia Sassen, Robert S. Lynd Professor of Sociology at Columbia University, set the stage for the discussion by laying out three question areas: environment, economic globalization, and inequality. In all of these issue areas, Sassen noted, cities are on the front line.

Grace Fu, Singapore's Senior Minister of State for National Development and Education, described Singapore's unique situation. Given its role as both a city and country with 4.5 million people squeezed into 700 square kilometers, the conservation of resources has been forced upon Singapore. Even in previous decades of enviable economic growth, Singapore has had to constantly make a conscious trade-off between growth and environmental sustainability. A stable government has made this trade-off successful, as Singapore now has 50% green space. In its current path, Fu notes, Singapore is moving to conserve biodiversity and has also set standards for green buildings - this is an area in which the market mechanism could have failed, so legislation was required. In sum, Singapore has shown that economic vibrancy is not mutually exclusive with building a livable, environmentally friendly city.

Delhi's Chief Minister Sheila Dixit then described Delhi's development path. For 2000 - 3000 years, Delhi has served as the center of India. Today, it is the seat of the central government, which has both pros and cons, and houses 16 million people, incorporating all cultures, languages, and religions in India. Under Dixit's tenure, Delhi had begun a program to a greener Delhi. This program mainly involves women and children, and within 9 years, Delhi's green cover has grown from 32 sq km to 300 sq km (out of a total 1043 sq km). Moreover, all of Delhi's public transport uses compressed natural gas (CNG) -- with over 100,000 CNG-run vehicles, Delhi is a global leader in the field. Nevertheless, with a thousand new cars registered daily, Delhi will have to work harder to reconcile a massive economic boom with environmental sustainability. In response, the city is installing more metro and bus lines, and trying to lead to a culture of conservation. With water and power needs constantly increasing, Delhi is not only putting in place greater capacity, but is also pleading with people to conserve, starting with new programs targeting schoolchildren.

Dixit noted that housing is also a big concern. As migrants move to Delhi, shanties are built to serve them, which cause massive environmental damage. Consequently, the government is now giving massive subsidies for marginalized housing. However, this mass migration is a problem that will continue to face both India and China, and the only effective way to deal with the problem will be to build up several more cities.

John So, Lord Mayor of Melbourne, seconded many of the issues cited by the other panelists. Melbourne is a sister city with Tianjin, and is also one of the fastest growing cities in Australia. So has focused much attention to green building. He notes that 95% of greenhouse gas emissions (GHG) come from residential and commercial buildings. He has set an ambitious target of having zero GHG emissions from buildings by 2020. Already, many new buildings in Melbourne, including Council House 2 and Australia's largest convention center, have earned 6-star environmental ratings and have won numerous international awards.

During the discussion, there was a frequent allusion to the carrot vs. stick problem for achieving citizen and business cooperation. Fu noted that the market mechanism and education do not always work, and that there is often a need for strict legislation (in her example, for green building). Dixit responded that it may be easy to make laws, but implementation is very difficult because India is "so terribly democratic." Fu mentioned the need to develop international consensus on environmental standards, which would make local implementation much easier.

The panelists also went on to discuss the difficulties of sustaining heritage and culture while promoting development. The last word was given to Huang, who argued that Tianjin's goal is to give its common citizens a good life. In fulfilling this goal, sustainability is the most important thing.

SESSION II - Harnessing Innovation and Entrepreneurship as Drivers of Sustainability

The need for innovation is crucial for developing nations. This panel discussion, covering a wide range of industries, examined various trends of innovation in technology, business management, and talent retention.

Shi Zhengrong, CEO of Suntech, opened the discussion. As the CEO of one of China's most innovative companies and also one of the hottest companies on the NYSE, Shi was in a good position to explain his approach to driving sustainability with innovation. China and the world are facing great challenges in terms of global warming and climate change. This is an urgent issue and even those who do not believe in climate change cannot deny the current pressures on traditional energy supply (the price of oil could easily be over $150 per barrel by the end of 2008, Shi noted). The world must find alternative energies to face this challenge, and that is what Shi has been doing by developing solar technology at Suntech. Shi concluded with a direct pitch to the audience: "I want to urge everybody - from today, start to use solar."

Ruey-bin Kao, President of Motorola China, followed Shi by discussing Motorola's development in China. After becoming an early investor in Tianjin, Motorola has been a leader in telecommunications in China for the last 15 years. Innovation has been the driving force behind this sustained growth, and not just innovation in technology, but also in processing methodology, R&D, and problem-solving. Innovation is needed in all of these fields in order to deal with ever-changing markets. China is now Motorola's largest market and also its largest talent pool. Consequently, and as a part of the development of Motorola's global value-chain, manufacturing and R&D capability have been integrated within China.

CSR and a focus on environmental sustainability have always been a key part of Motorola's culture, added Kao. R&D is in place not only to produce phones, but also to innovate in the manufacturing process, including using recycled parts and increasing green aspects. Motorola is also developing a recycling program for used phones.

Tim Minges, President of PepsiCo International in the Asia Pacific Region, spoke to the topic based on his 25-year career with PepsiCo and related a consumer goods company approach to sustainability. Minges noted that Indra Nooyi, Pepsi's Chairwoman, has rallied the company behind the mantra of "performance with purpose." PepsiCo's performance has been well-documented, but Nooyi wants PepsiCo to be a force for good in the world - it is not enough just to be high performing.

PepsiCo has three pillars for the future: more healthful products, environmental sustainability, and talent sustainability. Minges cited Pepsi's corporate mandate to provide more healthy drinks and snacks. While the company will continue to be a manufacturer and marketer of sweet sodas and salted snacks, the company also expects to be a leader in moving customers to more healthful alternatives. In terms of environmental sustainability, Minges noted that PepsiCo is well ahead of its goal to reduce water use by 20% by 2010. He argued that in the current business environment, most companies actually have higher sustainability targets than those enforced by governments - sustainability is not just the right thing to do, but it is what people expect.

Raymond Leung, Chairman and CEO of TDK China, noted that TDK has been active in China for 40 years and is selling 100,000 items on the market. Moreover, 100% of these products are green. In China's electronics industry, there is an extremely high level of competition, thus necessitating frequent updates, upgrades, and new launches. 10% of TDK's products are new at any given time, added Leung. With this need for new process development and new technologies, TDK has been forced to become an even more innovative company. To achieve this goal, TDK sponsors many university R&D projects and also invests in many up-and-coming companies in China. Moreover, a lot of stress is put on human resource development - this is manifested through in-company training and cooperation with universities.

Ganesh Natarajan, Deputy Chairman & CEO of Zensar Technologies Limited and also Chairman of the National Association of Software and Services Companies (NASSCOM), discussed the development of India's IT sector. In the last 15 years, IT has carved out a place for India in the global market. IT currently employs 2 million people in India, but within 10 years, Natarajan predicts IT will employ 8 million people directly and five times more indirectly. Innovation is necessary to sustain this. According to Natarajan, India has already begun to move from low-cost outsourcing to more innovative means of production. Firms must be encouraged to focus on product innovation, and they must create outstanding global products. Along with product innovation, Indian IT companies will need to focus on creating world-class process innovation as well as business model innovation. Natarajan noted that Zensar builds outstanding technologies for global collaboration and creates global centers of excellence to engage entrepreneurs.

The moderator of the session, James McGregor, Chairman and CEO of JL McGregor & Company, then asked the panelists whether Asia, and particularly China, would be able to shift to radical innovation from incremental innovation. Shi responded that China is putting all of its efforts into this. Innovation is a culture, and building this culture requires great financial support. As more global companies move to China and set up R&D centers, there will be a further push towards an innovation culture. Suntech spends 5% of its profits each year to further R&D efforts, and also gives in-company awards to promote innovation. Finally, Suntech allows people to make mistakes - for this reason, innovation is associated with high initial costs. Natarajan concurred, maintaining that mistakes have been institutionalized in Indian IT. He further noted that each country needs its own model of innovation. All of these models will require entrepreneurs, financing, and university/academic collaboration. With these qualities, countries will learn to innovate and succeed in their own ways.

Session III - China and World Capital Markets: Investing for Growth

The story of China's capital markets is one of big numbers. In the last two years, China has hosted two of the ten biggest public offerings of all time. ICBC, the Industrial and Commercial Bank of China, holds the top spot, having raised over $21 billion. Since 2006, Chinese companies have raised over $137 billion. Still, despite these figures and accomplishments, the Chinese market remains largely unstable. Just as the concept of shared ownership spreads to retail investors and trade volume grows, so have the fortunes of investment banks and securities firms. Some banks like UBS and Goldman Sachs have their feet in the market with representatives and experts that can explain how Chinese capital markets can achieve sustainable growth going forward. China has benefitted from having its own offshore fundraising center--Hong Kong. There is plenty of domestic savings to tap, so more companies are investing onshore in Shanghai. At the same time, cities like Tianjin are on the rise, and are slated to play major roles in China's economic future. With the rise of the Chinese domestic market, what roles will international cities like London and New York play for China?

Tianjin Vice Mayor Cui Jindu explained that Tianjin was a center of business one hundred years ago. With the exception of Shanghai, Tianjin had the most potential to become the next center of economic activity. With the application of economic reform, the Tianjin Binhai New Area is sure to become the next economic center in China. He offered some financial advice to the area-- encourage international partnership and mutual investment, offer freedom of exchange, and increase quality of services.

Credit Suisse's Asia Pacific CEO Kai Nargolwala addressed the requirements needed to establish sustainable growth patterns and overcome market volatility in China. He stated that volatility comes from the fact that the Chinese stock listings comes from state-owned companies, which are owned by the government. The uncertainty that comes from not knowing when the government will sell those stocks into public and how well they will sell causes volatility in the stock market. Clarity in the privatization of state-owned enterprises is absolutely essential.

Lately, raising money in China has been moving onshore from offshore. Many companies are looking to tap into the liquidity of the domestic Chinese market without having to look overseas. David Shuler addressed the issue of how the NYSE holds its attraction to Chinese companies when it is so easy for Chinese companies to invest domestically without having to deal with Sarbanes-Oxley rules. Last year, the NYSE rose over $80 billion and listed 20 Chinese companies. Now, the companies collectively hold a value of $1.6 trillion. China invests in the NYSE because they have to-- only New York can sustain into the trillions.

Lawrence Fok, Executive Vice President of Hong Kong Exchanges and Clearing Limited, expanded on how the Hong Kong Exchanges sees its role in going forward as Chinese capital markets develop not only in Shanghai, but in Shenzhen and Tianjin, as well. Out of all worldwide exchanges, Hong Kong Exchanges has been working with Chinese companies for the longest. Hong Kong has been dominated by property companies and financial institutions in the past, but things are changing. Competition is positive because it encourages improvement. Fok expressed that the key to unlocking sustainability in Chinese markets is boosting investor confidence. As time goes by, institutional investors will have to participate more in the market to give the market more long-term confidence. It takes time to obtain confidence-- proper maintenance of the quality of markets will ensure progress toward this goal.

Howard Chao, Asia Practice Chair of O'Melveny & Myers LLP, tackled the legal and policy issues that have impact on where Chinese companies raise their capital. He explained that, traditionally, the Chinese marketplace operates in such a way that the Chinese government has great control over how they run. These controls constrained the supply of newly offshored companies that could be listed as offshore companies. The Chinese market will wax and wane, so the market will probably open up and have more flexibility in the near future. Chao stressed that the Chinese markets need to create dealflow for Hong Kong, so as to tend to it.

Zhang Xiaoming of China International Capital Corporation Limited addressed the issue of whether Chinese companies should continue to look offshore anymore or not. Chinese issuers have different perspectives on where to go public. In recent years, the Chinese domestic market has had a good reputation, so companies could have opted for the cheaper alternative and invested in the domestic market. Still, many Chinese companies opt to go into international markets. Chinese companies would like international presence to develop business further and to establish merger acquisitions around the world.

Moderator Peter Stein of Wall Street Journal Asia proposed a question concerning sustainability. China has been a powerful force in the field of renewable energy, particularly solar energy (Jiangsu company Suntech Power is a leading firm in the field). Despite this, Chinese capital markets haven't been funding much of this research. Zhang Xiaoming explained that the Chinese government has been making efforts to play a stronger role in the sustainability movement. Before firms can go public, they need to pass the tough standards set by the Chinese Ministry of Environment. David Shuler shared two ways that the capital markets of the world can get involved-- (1) finance companies that deal with green energy like Suntech, (2) engage in cap-and-trade mechanisms. Cui Jindu stated that the Tianjin especially supports environmental awareness and the establishment of stricter enforcement of environmentally friendly practices among industry.

The panelists agreed that the Chinese market is still in a nascent stage of development. Investors and intermediaries are learning as they go along, but they should not lose the momentum that they are building through their growth.

BREAKOUT SESSIONS

Private Equity

This panel focused on private equity, a relatively new phenomenon in China. Rick Carew of the Wall Street Journal Asia informed attendees that the financial numbers are not looking so good. Globally, buyouts are down 71%. But in Asian countries, excluding Japan, buyouts are up 41% year-over-year. However, the absolute numbers are still small: 147 deals. China is up 22%. These are still the early days, Carew added, a sentiment widely shared on the panel.

Janine Feng of the Carlyle Group explained her firm's structure. Carlyle has very dedicated regional funds; it does not have a global fund. The firm is focused on local culture and its 40 professionals in greater China are all native speakers. This is a great advantage, she said. The firm is focused on the traditional LBO business.

Victor Gao's excursion into private equity in Asia began recently, when no major local currency funds existed in China. Two years ago, this changed. Now China is rife with "private equity with Chinese characteristics," as he put it. China has benefited from conducting research on private equity for over a decade. The run of private equity still has a long way to go, he predicted confidently.

James MacGregor of JL McGregor & Company also tried to put private equity in perspective. He said his Tiger Capital Management did some good deals two or three years ago, but now Beijing and Shanghai have been pretty well picked over. You have to go out to the provinces to find good deals now. MacGregor added that the Carlyle Group went to buy-in from buy-outs because they could not secure the latter.

Gao said that soon the size of RMB funds will be mind-boggling. Already, he said, they are about RMB 75 billion and each month more funds are being approved by the government. Soon there will be RMB 150 billion in 10 to 12 funds, each with a different focus, and each transparent.

Gao informed attendees that the Social Security fund has already indicated that they intend to allocate 20% of their capital into private equity. "We've gone from almost zero two years ago to all of China is a major source of private equity," adding that going forward, China will become a major exporter of funds, and RMB funds in particular will play a more and more important role.

Real Estate in China: Investing for Profitability and Sustainability

Is China experiencing a real estate bubble? What are the growth factors for real estate in China, and how will sustainable design enter the picture? The breakout session on real estate addressed these questions and more with insightful analysis.

Feng Lun, Chairman of Board of Directors of Beijing Vantone Real Estate Co. and Chairman of the Real Estate Chamber of Commerce of China, began the session describing trends in China's residential housing market over the last 20 years. Residential housing is the most important aspect of real estate growth in China, and will remain so for at least 10-15 years. The major sector problem is that buyers of residential housing in China are so young, often 25-35 years old. Feng argued that this problem is unique to China. Young buyers have the most access to new information and also the least ability to successfully finance their purchases. Nevertheless, there is a strong belief that in order to get married, one must buy a house, and this house often needs to support two generations. This leads to many unprepared individuals attempting to buy houses, driving up prices and also leading to greater complaints about available housing.

Moreover, Feng noted, the real estate market needs to adapt to new government regulations on price and size guarantees, and should also consolidate and add more technological innovation.

Charles D. Dalluge, Executive Vice President of LEO A DALY, followed up by discussing trends for sustainability in China's real estate future. The new Property Law has led to incentives for long-term investment, and this will lead to more innovative, sustainably designed projects. Dalluge argued that, "Good design is good business today in China." The market is now witnessing a decreased time for sustainable design returns to materialize, and technology and materials are now available. This all takes the market to a place where designing sustainable projects is right for the bottom line, and thus sustainable design is now happening on a more consistent scale.

Michael Klibaner, Practice Leader for Asia Pacific Global Location Solutions at Jones Lang LaSalle, discussed the impact of rising costs, new laws and legislation on the site-selection process. Increasingly, foreign firms are domestically-focused as they target domestic consumers and supply chains. This is much more sustainable than an export orientation, and is driving the emergence of real estate markets in second tier cities. Another strong trend, in response to increase in costs in first tier cities, is that companies are moving to "corporate campuses" in suburban settings. This enables them to cut costs and control employee experience, which is important for attracting and retaining employees, especially in China, with large migrant populations. With 'harmonious society' on the agenda, relocation for project development will remain an extremely sensitive issue.

As for a bubble, Feng argued that research shows that other than Beijing, Shanghai, Guangzhou, and Shenzhen, China is not experiencing a real estate bubble, as for the most part per-capita income growth has risen in line with housing price growth. To allay the risk of a potential bubble, young buyers should instead be encouraged to rent, and the government also has to fix the rental problems for rural and low-income workers. Overall, the panelists remained very optimistic.

Session IV - How is Global Competition Driving the Internationalization of Corporations & Investment?

We are currently in a historic place--Asia is a leader in the news and entering the realm of foreign markets. The question of how hard it will be for Asian companies to expand beyond familiar territory surfaces, and the concept of global competition comes to mind. Does China have the resources necessary for success in global markets?

Ni Xiangyu of the Tianjin Economic Technological Development Area addressed the issue of local businesses internationalizing by explaining that most local businesses in China are small or medium-sized, and that it would take time for them to globalize. Ni stressed that it is important for the Chinese government to encourage these businesses to expand past the comfortable domestic boundaries of China.

Shaun Rein, Managing Director of China Market Research Group, shared his thoughts on the three main ideas that China and other Asian countries should focus on as they expand: branding, HR issues, and globalization. China is currently selling on price, and Rein explained that establishing brand value takes time and concepts more complex than cheap prices. With regard to HR issues, China needs to break glass ceilings and hire a mix of locals and foreigners, as it cannot go global with limited human resources. The question of whether China is spreading itself out too far is a concern of Rein's, as he asks whether China is expanding globally merely for the sake of going global.

Michael Smith of Australia and New Zealand Banking Group Ltd. discussed the role of China's international financial institutions in China's international growth. A lot of progress has been achieved over the last ten years, but the progress needs to continue. The influence of foreign banks on China has been positive. A few years ago, there was concern that large banks would lose market shares to international banks, but it has been shown that the presence of international banks only provides competitive pressure that fuels the development of product, service, and new channels. Smith emphasized the importance of sovereign wealth funds in the future of China. The liquidity flows of Asia and the Middle East (stemming from savings/productivity and oil, respectively) indicate that sovereign wealth funds are a source of liquidity for the world.

Yu Ping covered the topic of government agencies and business organizations roles in helping China companies to expand overseas. Trade activities outside of China are strongly encouraged, as they help to balance out international trade and to help other nations develop their economies. In turn, China raises their level of management skill. Internationalization is good, but, as indicated in the past, it is not easy to compete outside of China. Companies should consider their domestic performance levels before stepping into the global market, as internationalization may not be suitable for all companies. He explained that the government has two important roles. Domestically, the government makes policies, provides incentives, taxation, and finance, and establishes rules for deregulation. Outside of China, the government negotiates with other governments to facilitate Chinese companies' operations in other places. The Chinese government plays an important role in the internationalization of companies, and they should recognize this. For maximum profit, companies should seriously consider networking with chambers of commerce, trade organizations, accounting firms, and other intermediary organizations.

Laurence Barron, President of Airbus China addressed the issue of Asian competition in the air industry. He expressed that there are currently very few choices in large scale air investment. Brazil, Canada, and Russia are emerging competitors in the field, and China and Japan are perhaps the biggest competitors from East Asia. The potential of the Chinese air industry is absolutely apparent, but its success would be another story. Success in the air industry takes time to become a reality, and it is a capital-intensive business. China possesses the will and finance necessary to compete in the air industry, but, in the global market, China would also need the right people to sell it internationally and the people to support it in the field.

The panelists proceeded to acknowledge the challenges surrounding Chinese and Asian companies that expand beyond the boundaries of Asia. Ni stated that, despite the progress made over the years, China had sacrificed time and other intangible costs. China needs to strengthen travel and invite foreigners to understand it better. For the local economy, everything is decided by markets. A focused view would yield optimal results. Shaun Rein emphasized the importance of obtaining an international education. He narrows the problem down to education and training. By introducing the concept of a liberal arts education, Chinese university graduates would not need to further invest time in receiving global training. Michael Smith agreed, stating that access to global talent is limited. Since China seems to still be on the mindset of running domestically, it is not easy for China to attract international professionals, so it may be a good idea for China to grow their own. Laurence Barron stated that the engineering industry of China is in strong need of rudimentary English language education and basic training in technical areas. He stressed the importance of the two factors for all overseas business startups. The panelists unanimously agreed that the business sector should be more involved with education policy makers in the Chinese government.

SESSION V - Competing Models of Regional Economic Cooperation and the Sustainability of the World Trading System

With the Doha round stalled and rapidly growing global trade imbalances, there is legitimate concern about the future of the world trading system. Geoff Raby, Australian Ambassador to the People's Republic of China, began the panel by discussing the ways in which the proliferation of bilateral free trade agreements (FTA) is detracting from the multilateral system. With currently weak multilateral rules, these bilateral deals detract from further international progress. Few of the FTAs are genuinely liberalizing, and a completion of the Doha round would have much greater potential gains.

Raby's views were seconded by Clyde V. Prestowitz Jr., President of the Economic Strategy Institute, who argued that bilateral deals are supported by business much more than any multilateral agreement. In response to a question by the moderator, Mary Kissel of The Wall Street Journal Asia, Prestowitz added that opposition to bilateral deals should not be looked upon as protectionist; in fact, many legitimate concerns can be raised in each specific case. Raby agreed that the U.S. is not turning protectionist, although the pressures to do so are enormous given growing imbalances.

Pramit Pal Chaudhuri, Senior Editor of the Hindustan Times, added some optimism to the conversation as he described what he sees as progress in India's acceptance of the Doha round. While China has been one of the most active global trade players, India is now beginning to step into this role as well, and India's sign-in on the Doha round could help to further the global trading system.

Prestowitz described current trade dynamics, as well as globalization as a whole, as entering a potential crisis. U.S. savings are at record lows while virtually all Asian countries (with the exception of India) have extremely high savings rates. In order to correct this situation, the dollar will have to stop being the world's reserve currency, but doing this will be a major adjustment that could lead to crisis. Prestowitz went on to describe some short term moves that the U.S. could take to raise the savings rate.

The overall message of the panel, as summed up by Kissel, was: stay tuned - the global economy is currently in tough shape, and there is no consensus on where the current multilateral trading system will lead.

Session VI - The Future of Culture in the Age of Commerce

Asia Society President and panel moderator, Vishakha Desai, opened the session on "The Future of Culture in the Age of Commerce" by asserting the significance of cultural issues within the greater context of the corporate conference. President Desai pointed out that a crucial issue of the 2007 corporate conference was sustainability, not only as it pertains to business and the environment but also as it pertains to society and, within the context of society, the sustainability of culture. Hundreds of years from now when posterity looks back on the way that we live and work today, how will we and the Asian region be remembered? "Ultimately," Desai asked, "what will be the legacy we leave behind?" Culture, she said, can be thought of as "the soul of a civilization" and it works in conjunction with economics and politics to form a national and regional identity.

Tu Weiming, a Harvard University professor and specialist on classical Chinese culture, began by explaining the way that culture features prominently into the Chinese system of governance. In particular, the Chinese government emphasizes the importance of the human within a harmonious society. Overall, Tu noted, there has been an upsurge of interest in humanity-based programs from public intellectuals, mass media, business, and those in academia. This upsurge, he claimed, could be thought of as a cultural renaissance, though Tu was also careful to warn of the potential negative effects of the strong cultural influence. It is easy, he warned, for culture to be politicized, and some may say "China suffers from the dictatorship of the engineer." Moreover, he warned of the dangers of the success of the market economy penetrating all aspects of society and creating what could be thought of as a "market society." From Tu's perspective, there are reasons both for optimism and for caution.

Frederick Dubee, Senior Advisor of the United Nations Global Compact, responded by rephrasing the session title and saying that perhaps our generation will actually be remembered as a generation that has thought critically about the future of commerce in the age of culture. Today, Dubee claimed, the business world has witnessed a trend in which the complex relationship between commerce and culture is being reevaluated.

James Fallows agreed but remarked that in fact, compared to other nations experiencing economic booms, China's development has had relatively less emphasis on cultural output and, he said, that is probably a good thing. However, Fallows noted, it appears as though the next stage of China's evolution will increasingly depend on the cultural component. Using the example of the China's stance towards the environment, the progression of cultural awareness, Fallows claimed, will be crucial to China's development and recognition on the world stage.

Kwok Kian Woon, Associate Chair & Head of the Division of Sociology at the School of Humanities and Social Sciences, Nanyang Technological University, departed from the general viewpoint of the other panelists by pointing out that in the past 10 to 15 years, there has been great recognition that culture is not just an industry but a source of creativity across society. Asia needs and deserves not just respect for its cultural diversity but also tolerance for the existence of divergent views.

Chairman of BDA China Limited, Duncan Clarke, focusing on the role of media, said that the model is moving from a top-down driven economic model to a bottom-up model, especially through the internet and ability of people to mobilize, resulting in a revolution where media is being infiltrated and changed by an influx of private capital. The big questions are: "To what extent is this a good thing? Is this something to be afraid of?" Moreover, Clarke noted the importance of the internet in the propagation of culture and the significance of intellectual property rights issues in developing countries, especially China. He also noted the revolution of traditional media in the bottom-up drive in cultural change.

In response to this evocation of traditional media and traditional culture, Professor Tu noted the search for a new kind of cultural identity, one that is open and self-reflective, with strong underlying nationalist and patriotic sentiments. He pointed out the growing collaboration between business and cultural resources among many nations and the study of classical texts and traditional culture in the pursuit of wealth and commercial success as deeply rooted in East Asian culture. In the academic realm, Professor Tu emphasized the enlarging scope of religion in China. Christianity and Islam are flourishing on university campuses, he said, but the most important change is the rise of a kind of engaged Buddhism, which again seems to suggest a reinvigoration of certain elements of classical Chinese culture.

Dubee replied by asking whether much of the social and economic developments in China over the past two decades can be attributed to a strong cultural base. In the late 1980s, Dubee remembered, the expression of cultural values was already being closely linked with China's domestic development and the nation's communication with the rest of the world. He also projected that in years to come, we may see new business models coming from Asia that will promote increased stake-holder development.

Fallows noted that when we look at other countries and cultures on the rise, we can say that there were certain things they were about. "I wonder," he said," "what people will say the rise of China has been about." While he believes that this is still an open, practically unanswered question, he recognized the attempt to bring people out of rural poverty as an essential component of China's rise.

The vibrant discussion was ended by Kwok Kian Woon, who concluded with a note of caution against viewing cultural progress as an instrument for commercial or political purposes. Creativity, he said, could be thought of as an ecosystem. He emphasized the notion of conservation of creativity and culture. "Some things," he concluded, "will go but some things you will keep because they are really precious to you."

Session VII - Sustainable Growth and the Environment

Rapid economic growth with improper regulation has caused severe environmental problems in Asia, particularly in China and India. With the Olympics almost here, China has made a great effort to cut down on its pollution levels but it still has a long way to go. Rebecca Blumenstein of The Wall Street Journal who moderated the panel, cautioned against being too harsh on China, pointing out that even cities like Pittsburg and Los Angeles went through a similar phase when they were first developing; however China and India present a unique problem (and are under a lot of scrutiny) because of their sheer size.

Steve Chapman, Group Vice President - Emerging Markets and Business at Cummins, Inc. contends that one of the major impediments of moving towards a more sustainable future is dealing with the conflicting interests of the government, private sector and customers. For instance, from the governmental and societal perspective, there is a need for cleaner air and a more efficient use of fuel. Likewise, the oil industry has to make a bigger investment for cleaner oil (with lower levels of sulfur). Similarly, the automotive industry should be looking to invest in higher technology, and better quality manufacturing processes (while also meeting the expectations of its customers). The problem is that environmentally friendly products come at a higher cost, which the customer is very reluctant to bear.

So what can be done about this? Thomas Farrell, Senior Managing Editor, Design and Construction, Tishman Speyer, believed that a better educated consumer, combined with prudent initiative from the government and private sectors are essential ingredients in realizing this goal. Farrell cited the example of the new world headquarters of the Hearst Corporation in New York City designed by Norman Foster. What was remarkable about this project was that right from the onset it had very clear sustainability goals. This project received a gold rating for sustainability, and consequently was granted tax credit from the City of New York.

Tadakatsu Sano, Partner, Jones Day, echoed the sentiments of Chapman and Farrell. Sano felt that China could learn a lesson or two from Japan, because the changes that China is currently facing are very similar to the ones that Japan had to deal with in the 1960s and 1970s. For instance, Japan introduced a law in 1967 for reducing its pollution levels as early as 1967 (3 yrs after the Tokyo Olympics, and 6 years before the oil crises). Sano asserted that the main difference between the two countries is that China has had to deal with pollution as a local issue as well as a global issue. Japan was luckier because it was able to implement relevant policy issues in a methodical way, since the pollution crises preceded the oil crises. Sano felt that implementation of incentives, subsidies, etc to environmentally friendly businesses are essential. He also suggested the implementation of proper public transportation systems (such as the one in Tokyo), and a lower reliance on luxury cars.

Venu Srinivasan, Chairman and Managing Director of TVS Motor Company, was particularly concerned with the issue of "urban waste." There is an acute water shortage in India, and the next 20 years will see a 50% reduction in water in Indian cities. Urban housing in India is also in shambles, and city dwellers are grappling with numerous issues ranging from improper sanitation facilities, illegal housing, health problems, illiteracy etc. What is even more startling is that in the next few years, urban waste in India and China will exceed that of the United States. Srinivasan concluded by saying that curbing urbanization is not the solution to the problem, and other alternatives needed to be discussed.

The panel discussion concluded by saying that in order to overcome these environmental challenges, there has to be a serious collaboration between the government, private sector, and consumers. The government should caution the public that in order to move towards a more sustainable form of development, an increase in the cost of consumer products (that are environmentally friendly) is likely. All the panelists acknowledged that it is unrealistic to expect China and India to follow a similar path of development that was undertaken by the United States, Japan and South Korea; instead one ought to be looking for different and more innovative and localized solutions. In order for countries like China and India to realize the benefits of "sustainable development," there has to be a marrying of proper policy guidelines, transfer of knowledge and technology and a genuine commitment across all sectors.

Session VIII: Sustainable Growth and Energy

The session on Sustainable Growth and Energy was opened by the moderator, Shai Oster, correspondent for The Wall Street Journal, with contextual references to the current status and projected future status of global energy consumption and, more specifically, Chinese energy consumption. "If China were to live the lifestyle that the US does," Oster stated, "the world would need to produce double the amount of oil it produces now." The impossibility of this production growth is blatant, though China's development does not look to be slowing and energy efficient resources are not being implemented as far-reaching as future threats would demand. The crucial question that Oster raised to kick off the discussion was a simple one: "How can China sustain its growth at these paces?"

Woochong Um, Director of the Energy, Water, and Transport Division of the Asian Development Bank, began by highlighting the efforts of the ADB since its inception. The efforts of the ADB over the last 40 years, Um noted, have been aimed at reducing poverty in the Asia Pacific region. From the ADB perspective, stable and affordable energy sources are a key part of poverty reduction. Looking ahead, however, energy demands are seriously daunting. Global energy demand is expected to grow by 55%. By 2010, China is expected to overtake the US as the largest global consumer of energy. All of these energy demand threats are compounded by the issue of global warming, which has become even more pertinent given the industrialization boom in China and other developing countries. Currently, Um suggested, we are at a crossroads of how to deal with these issues. Energy security is crucial for national security, but the ADB believes the issues of climate change and energy security can co-exist. One important factor to target intervention that Um pointed out was transportation. He warned that China must avoid replicating the American model of transportation in energy consumption and look towards renewable energy and the development of fossil fuels. The three issues he named as possible challenges to energy consumption intervention were: financing, technology, and policy reform.

Dan Rosen, Principal of China Strategic Advisory, LLC, pointed out that China's energy dilemmas cannot be resolved merely with policies, and that China's energy issues have an essential macroeconomic underpinning in which efficiency improvements are crucial but attention to the demands of particular industrial sectors are more pressing. Rosen laid blame on heavy industry, asking whether China really needs to be the number one producer of every heavy industry product, from steel to chemicals. Structural shits in investment back towards heavy industry are driving a lot of the nation's energy demands while the problems of price and scarcity are related to the volatility of Chinese demands. The bottom line, Rosen argued, is that China's balancing agenda corresponds with energy concerns. The banking sector, he said, needs to be sensitized to the structural needs of China and the price of production needs to be made real and enforced.

According to Bruce Quinn, Vice President of Strategic Development at Rockwell Automation Asia Pacific Limited, "sustainable" is still a pejorative term in developing countries such as China, India, Vietnam, and Indonesia, making energy efficiency much more difficult to implement among business owners. Quinn said that Rockwell focuses on three things when working with local businesses: energy efficiency, environmental controls, and workplace safety. Essentially, they focus on how to do more with less. With regards to energy, Quinn stated, the numbers tell the story. Industry accounts for 40% of global energy use and 70% of energy used in China today. 65% of that energy consumed in China is used to drive the simplest and most ubiquitous instruments in the nation's factories, a problem that could be easily alleviated with simple technological adjustments. These technologies are available and affordable and they come with paybacks, they just need to be implemented in the places that need them most.

The Chairman of the Administrative Commission of Tianjin Economic Technological Development Area, He Shushan, agreed that sustainable manufacturing is a key component of sustainable growth. He recognized that development and energy consumption go hand-in-hand, but that China in particular must work towards increasing efficiency because of its importance in the global manufacturing market.

While the Tianjin model illustrates the effectiveness of energy efficiency production, it has been a slow and arduous process of spreading the same mechanisms throughout the nation. Quinn stated that the three areas that would and should assist in helping uplift sustainable manufacturing are: government involvement, business imperatives, and investment in new technology. Um and several other panelists noted that getting people involved in energy efficiency initiatives will require positive incentives, not negative ones. Negative consequences for energy efficiency failures have become business mainstays and they need to be reversed. Subsidies, Um said, though unpopular among the general public, have actually proven to be successful as price hikes have caused general behavioral changes.

Oster raised the question of resource availability in the long term. Are there limits to how much more energy (oil and coal, in particular,) China can find? He Shushan pointed out China's extensive use of coal, a factor that has helped it avoid, at least up until now, exorbitant amounts of petroleum consumption. Compared with other countries such as the US and Japan, said He, China uses fewer natural resources and those other nations rely on China's economic development.

Finally, the issue of alternative energy sources was raised in which He pronounced the importance of nuclear energy, which remains controversial because of waste issues. The debate about clean energy and coal was raised among several panelists and the answer that seemed to prevail was that while coal is not the best or cleanest resource available, it has been crucial to Chinese production. "What choice does the country have?" asked Um. He and the other panelists agreed in hoping that renewable energy security will continue to become a part of the energy security option.

SESSION IX - What Does a Sustainable Future Look Like for the Asia Pacific Region?

The concluding discussion focused on the road ahead for the Asia-Pacific region. The panelists emphasized that regional cooperation will be imperative to ensure sustainable development and prosperous growth.

Ambassador Nicholas Platt, President Emeritus of the Asia Society, began the panel by explaining that the traditional balance-of-power notions are no longer applicable in today's international system. Due to shifts in the balance of influence, power now needs to be concerted and collective efforts institutionalized in order to sustain a future of prosperity both for the region and the world at large. Platt asserted that such cooperation is particularly important with regards to responding to potentially destabilizing realities, notably climate change.

Ambassador Wu Jianmin, Former President of China Foreign Affairs University, concurred with Platt's sentiments, articulating that the zero-sum mentality is one of the past. Wu went on to explain that globalization has not only made the world smaller, but that increased interdependence means that no country can sufficiently address prevailing global issues alone.

Bringing a business perspective to the discussion, Dr. Michael Yeoh, CEO of the Asian Strategy and Leadership Institute, similarly echoed the need for a greater focus on building stronger regional infrastructure to address concerns such as pollution control and disaster relief. Yeoh identified the important role businesses play in working with the government to establish public-private partnerships that can contribute to sustaining growth.

Building upon the theme of greater regional and cross-border collaboration, John Thornton, an Asia Society Trustee and Chair of the Board at The Brookings Institution, criticized the current lack of US leadership in facilitating such multi-lateral cooperation. Thornton stressed the need to impel a qualitative leap in US-China relations, which he believes must be driven by political leadership. There are common issues that ought to concern both the U.S. and China, but Thornton indicated that there is not enough substantive discussion currently focusing on these areas. Thornton emphasized that a new model ought to be established, incorporating key facets to address issues such as clean and efficient energy and promoting technology transfer between the U.S. and Asia - essentially, the U.S. must be more open in sharing its expertise with China and Asia as a whole, with a vision of mutually benefitting from such cooperation.

Agreeing with Thornton's observations of a lack of political leadership in the U.S. administration, Ronnie Chan, Vice Chairman of the Asia Society and Chairman of the Hang Lung Group Limited, articulated that this too is his greatest concern. Chan stressed that peace dividend is at our doors but without improved cultural understanding and sensitivities, he fears a growing disparity may develop between the US and China. Chan explained that in order to envisage a more sustainable future for the Asia-Pacific region, stronger trust and confidence building is required, which must be based upon a more nuanced understanding of the region from the U.S. perspective.

Rounding up the lively discussion, the panel moderator, John Bussey, Washington Bureau Chief of The Wall Street Journal, summarized the consensus that in order to achieve sustainable growth, heightened cooperation is required both within the Asia-Pacific region and with the world at large. The reality facing the international community is that there are critical concerns, such as climate change, that require a collective effort to ameliorate - and respective responsibilities need to be "worked out." The global landscape is shifting significantly, and by sharing resources, expertise, and technology, everyone can mutually benefit and sustain growth. In order to move forward in this new direction, common beliefs such as the zero-sum game and balance of power will have to be scrapped and sovereign nations will have to grapple with the fact that closer multi-lateral cooperation with lead to a brighter and more prosperous sustainable future.