Editor’s Note: Author Don Tapscott will be guest blogging daily from Davos.
Wen Jiabao, Premier of The People’s Republic of China exuded confidence. He says his country is taking extraordinary steps to fight the crisis. He says he’ll spend 16 percent of the Chinese GDP on stimulus this year! China is using every possible means to lesson the impact on employment, needless to say, in part, to avoid massive unrest. Talk about a powder keg.
So much good can come from this crisis — a big theme of Davos. China is doing many things, like implementing a comprehensive health care system and rolling out a national educational equity program. It has dramatically increased its social security program, and is making huge investments in infrastructure, industry, social development and science.
Wen Jiabao is confident because the fundamentals of China’s economy are strong--nine percent growth in GDP last year. The long term trend of China’s economic development remains unchanged. China has the power of confidence. Other countries must take the steps China has made to acquire the confidence China has.
Wen Jiabao says countries are tied together in our destinies. The financial crisis is a test of our ability to cooperate globally. We must each fulfill our responsibilities with resolution and purpose, and avoid further damage on the “real economy.” (LOL: Wen Jiabao doesn’t view financial services as part of the “real” economy). He outlined a five step action plan:
1. Deepen international cooperation and promote a new trading regime. Especially in crisis we need more openness and cooperation (a not so veiled statement to Obama that protectionism doesn’t work).
2. Establish a new financial system controls. The crisis shows that the current governance structures don’t work. We need global governance with greater say from all countries.
3. Global approach to risk management required (I’ve been writing about this for some time.) This would include sharing of information among financial institutions on a global basis.
4. Don’t forget the developing countries. We need to assist developing countries such as relaxing lending conditions.
5. Deal with the big problems of the world like global warming. The international community needs to respond to these problems together.