The World Economic Forum in the resort city of Davos, Switzerland, produced a number of significant themes. Here are the top five issues that dominated this year’s meeting of the world’s elite.
Will China be pressured to ally with the west?
East-West relations are at an all-time low as a result of Donald Trump and Joe Biden’s trade war with China. Beijing has indicated it may take a less confrontational stance, while trade tensions and Covid halved Chinese growth last year to just 3%, and western companies like Apple pulled out of the world’s second-largest economy.
Liu, vice-premier To reassure foreign investors that Covid was open for business again after three years of disruption, he made an appearance on the main stage at Davos. We need to get rid of the cold war mindset, he remarked. “We need to improve it and open up more.”
It remains to be seen if the west is prepared to accept that. Several tech company executives reported that American intelligence officers approached them at the summit with questions about their operations in China. A IT employer said, “They want to know whose side you are on.
In a lecture, FBI Director Christopher Wray argued that China will weaponize its artificial intelligence (AI) program, noting that “the Chinese government has a greater hacking program than any other nation in the world.”
Additionally, a number of experts predicted that China’s quick reopening may rekindle rapid inflation by increasing demand for commodities just when central bankers felt they had a handle on soaring prices.
Will artificial intelligence replace you at work?
AI is advancing quickly, and this has led to a flood of warnings about what this can mean for the workplace as well as the possibility that it could lead to widespread misinformation.
According to Mihir Shukla, CEO of Automation Anywhere, AI has made it possible for a machine to handle a mortgage application that would have previously taken 30 days in just three minutes.
According to Erik Bryn Jolfsson, a professor of digital economy at Stanford University, in the past, robots did not replace labor; rather, they complemented their job, allowing people to do tasks more effectively and earning more money.
Arvind Krishna, the chairman and CEO of IBM, nevertheless foresaw a tsunami of employment losses due to AI. “White-collar, clerical employment should cause you more concern than physical jobs do.” The majority of them will be replaced. What kind of occupations do you develop to take their place, then?
Bryn Jolfsson discovered a new danger. The need for a control mechanism to distinguish the real from the false was cautioned as the globe ran the risk of being inundated with emails, postings, and tweets that were automatically generated by bots and spread large amounts of misinformation.
Greta Thunberg, a Swedish environmental activist, brings her environmental campaign to Davos amid concerns that a trade war between the US and the EU over green economy ambitions will break out. Image credit: EPA/Laurent Gilliéron
Will Biden’s $369 billion plan for green subsidies help or hurt?
A $369 billion dispute between the US and EU was simmering when the two countries convened in Davos: Joe Biden’s massive green subsidy program, known as the Inflation Reduction Act (IRA). It offers significant governmental assistance to businesses that invest in green technology necessary for the transition away from fossil fuels, such as electric vehicles, batteries, and renewable energy sources like solar and wind energy.
The minister of industry and trade for the Czech Republic, Jozef Skela, compared it to “doping in sport” and claimed it was drawing businesses from Europe to the US. The International Energy Agency’s executive director, however, Fatih Birol, claimed that the IRA is the “most significant climate step since the Paris 2015 accord.”
Some have predicted that it could result in a trade conflict between the US and EU, similar to the protracted subsidy issue between Boeing and Airbus. In response, the EU has passed its own Net Zero Industry Act, which would streamline and expedite the development of clean technology manufacturing facilities.
The president of the European Central Bank, Christine Lagarde, expressed her optimism that the contest for subsidies “is not going to be a race to the bottom.” While Sir Keir Starmer, the head of the Labour party in the UK, supported the notion of a more activist government, Grant Shapps, the country’s secretary for business, had a far different opinion, labeling it “hazardous.”
The threat of another debt crisis?
A quarter of the world’s nations are either in serious debt difficulty or are about to enter it. All three multilateral organizations that monitor the financial vulnerability of developing nations—the UN, the IMF, and the World Bank—expressed alarm in Davos.
Administrator of the UN Development Program Achim Steiner stated that a comprehensive solution was urgently needed but expressed uncertainty about whether the necessary leadership or bandwidth existed.
Steiner complained that “nothing is happening proportionate to the problem.” “There is growing acknowledgment that the institutions established to address this, the G20 and the Bretton Woods institutions [the IMF and the World Bank], have been inactive for a year.”
Due to slowing global growth and increased interest rates, countries are having problems making their debt payments. Many also took out loans in US dollars, which have increased in value on currency exchanges.
Steiner said that a fresh issuance of IMF special drawing rights, a sort of money creation that increases a country’s reserves, was required along with debt restructuring. That will necessitate greater adaptability from China and the private sector, two significant borrowers.
Crypto Currency needs more regulation
According to a panel of regulators and bank CEOs, regulation is urgently needed in the cryptocurrency area to thwart money laundering and other financial crimes, comparable to the constraints placed on the traditional banking business.
In their efforts to control an industry beset by multiple high-profile failures, like as the demise of cryptocurrency exchange FTX, watchdogs must take care not to legitimize “purely speculative” activity, according to Tharman Shanmugaratnam, head of the Monetary Authority of Singapore.
Whether it’s regular money or cryptocurrencies, some things are extremely obvious. On a conference in Davos, Switzerland, discussing banking in the current uncertain environment, Tharman said, “You’ve got to regulate for things like money laundering.
Beyond that, if you have to consider regulating cryptocurrencies in the same way we regulate banks and insurance companies for prudential reasons and financial stability reasons, I think we need to step back and ask the fundamental philosophical question: Does that legitimize something that is inherently purely speculative and, in fact, a little bit crazy?
Can the Gulf states modernize and transition away from fossil fuels?
A reliable indicator of shifting economic fortunes is the corporate branding that adorns storefronts along the promenade in Davos. The Gulf states, flush with petrodollars, took over the Swiss ski resort in large numbers since China was keeping a low profile and Russia had been blacklisted following its invasion of Ukraine.
Middle Eastern names predominated on the winding, lengthy road leading to the conference center, from the United Arab Emirates’ DP World logistics firm to Neom, the $500 billion megacity that is the cornerstone of Crown Prince Mohammed bin Salman’s effort to modernize Saudi Arabia.
The Gulf states must demonstrate to the rest of the world that they can modernize as industries move away from oil and gas.
The Saudis hoped the west would ignore atrocities like the murder of Jamal Khashoggi, the Washington Post journalist whose death in October 2018 has been linked to Crown Prince Mohammed, by promoting the kingdom’s modernization plan, called Vision 2030, and the growing role of women in the economy during the World Economic Forum.
Jane Fraser, the head of US banking giant Citi, and Kristalina Georgieva, the managing director of the International Monetary Fund, spoke on a panel with many senior Saudi ministers about the need for more women in the workforce and economic development.
“It’s absolutely amazing,” said Fraser, “when one turns up in Saudi Arabia looking at what are the potential from a business viewpoint.” “One becomes frightfully thrilled as a banker,”