(Bloomberg) — Prospects for a thaw in US-China relations dominated discussions on the opening day of the Bloomberg New Economy Forum in Singapore, with current and former policy makers tempering their optimism with warnings of ongoing friction.
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US trade chief Katherine Tai said Monday’s face-to-face meeting between US President Joe Biden and Chinese President Xi Jinping was a “really good thing.”
“The body language was very powerful from the photos of the two leaders greeting each other and standing together,” Tai said on a panel at the forum in Singapore. “That’s a powerful signal to the rest of the world in terms of two leaders who are capable of managing a tremendously complex relationship.”
Former US Secretary of State Henry Kissinger praised the renewed talks, but said a long path remains to prevent conflict. It was at the New Economy Forum in 2019 that Kissinger warned relations between the two big powers were in the “foothills of a Cold War.”
Speaking via video link, the 99-year-old Kissinger said the Biden-Xi meeting had kickstarted a “bridge-building effort,” including with the resumption of cooperation in areas such as climate change and the global economy.
“The two leaders that met briefly will know the consequences of economic disaster and military impact on each other,” Kissinger said. “All we can say today is that a method for discussion has been agreed on and general statements have been made that are compatible with a cooperative world, but a long road still has to be undertaken.”
Biden and Xi broke months of silence to meet on the sidelines of the Group of 20 summit in Indonesia, after relations plunged to their worst level in decades over contentious issues including trade, technology, Taiwan and human rights. “There need not be a new Cold War,” Biden told reporters after the meeting.
Read more: Biden, Xi Take Biggest Step in Years to Avoid US-China Clash
Speaking to the NEF in a pre-recorded address, Chinese Vice President Wang Qishan pledged the world’s second-largest economy will stick to a path of peaceful development.
“Upholding world peace and stability is in the fundamental interest of the Chinese nation,” Wang said. “China safeguards and promotes world peace through its own development.”
While the meeting between Biden and Xi marked “a very important new start,” there would be constant friction between the world’s two biggest economies, Singapore’s Senior Minister Tharman Shanmugaratnam said in a panel discussion.
“But it’s much safer than a world that is decoupled,” he said, adding that the thought of the US and China severing ties is “profoundly dangerous.”
Former Australian Prime Minister Kevin Rudd said the meeting yielded “reasonable progress” and showed two competing nations seeking to ease tensions.
“Things were beginning to spiral out of control and to be frank the US-China relationship has been in freefall for quite some time,” he told Bloomberg Television. “So, if before it was eight out of 10 in terms of the heat factor, we may have brought it down to seven.”
Here are some of the other issues that are top of mind for executives on day one of the three-day forum.
Citadel’s founder, Ken Griffin, said he is skeptical that a recession can be avoided next year and added that it’s too soon to change course on monetary policy. The Federal Reserve “should get the job done now,” Griffin said, adding that he is still confident the US will finish this year with modest growth.
Griffin called Donald Trump a “three-time loser” and said he hoped the former president would “see the writing on the wall” and not run for the White House again, making way for Florida Governor Ron DeSantis.
The billionaire also slammed Sam Bankman-Fried’s FTX, saying its demise undermines trust in financial markets.
The global economy faces fragmentation as nations look to secure supply chains of strategic raw materials, according to Robert Friedland, co-chairman of Ivanhoe Mines Ltd.
“We’re seeing the balkanization of the world economy,” the mining veteran said in a Bloomberg Television interview. “The Chinese want to secure their entire supply chain, top to bottom, womb to tomb — the Americans also, the Canadians.”
PricewaterhouseCoopers LLP Chairman Bob Moritz said companies are thinking of how to structure their operations in China and around the region because of US-China tensions.
“You see a number of companies thinking through: ‘Do I need to restructure my operations in terms of what I have in China, outside of China or around the region?’” Moritz said in a Bloomberg Television interview.
“But it’s with flexibility to say: ‘I’m not sure it’s going to get worse or better so I want multiple options and flexibility to be agile to react to that market opportunity, depending on what comes up.’”
Japan’s Trade Minister Yasutoshi Nishimura said Japan and the US are working together to make the next generation of semiconductors, while also collaborating with a broad range of Asian nations to strengthen chip supply chains.
“This is something we’re pursuing within the Indo-Pacific Economic Framework for Prosperity, which includes 14 countries from India to Fiji,” Nishimura said in a panel discussion. “We’re hoping the US and Japan can be at the center of building up supply chains for key materials.”
The crypto industry has been “cut to ribbons” this year, said Anthony Scaramucci, whose firm SkyBridge Capital was caught up in the implosion of FTX.
Asked about investment mistakes involving Bankman-Fried and FTX, Scaramucci said it’s tough to protect one’s self from some types of “misrepresentation.”
“If you’re running a background check on somebody like Sam, you’re not going to find anything,” he said, adding that Bankman-Fried’s record was previously “unblemished.” US regulators are now investigating the FTX founder and his related entities for potential violation of rules.
“What should the industry do to survive and make itself better? My opinion is more collaboration,” Scaramucci said, adding that the public battle between Bankman-Fried and Binance CEO Changpeng “CZ” Zhao was an example of how things shouldn’t be handled.
“Unless bolder, more urgent global action is taken,” the climate crisis will only get worse, Michael R. Bloomberg, Founder of Bloomberg LP and Bloomberg Philanthropies, said in opening remarks at the forum.
Leaders gathered there should focus on “practical, concrete ways to tackle issues that governments alone cannot or will not solve,” he said.
The New Economy Forum is being organized by Bloomberg Media Group, a division of Bloomberg LP, the parent company of Bloomberg News.
–With assistance from Martin Ritchie, Michelle Jamrisko, Rebecca Choong Wilkins, Colum Murphy, Tom Redmond, Yoshiaki Nohara, Karthikeyan Sundaram, Sarah Zheng, Philip J. Heijmans, Adrian Kennedy, Clarissa Batino and stacy-marie ishmael.
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